If you were following my tweets today, you got a taste of the lively debate happening at the Aspen Environment Forum. A huge snowstorm shut down the highways preventing some of the speakers from attending, including Executive Director of the UNEP (United Nations Environment Program) Achim Steiner.
In his place, five climate change pundits took the stage to discuss the unprecedented challenges that lie ahead for the energy industry:
• Libby Cheney, VP of Corporate Sustainability at Shell (not related to Dick)
• Tsutomu Toichi, director of Institute of Energy Economics, Japan
• Jim Rogers, CEO of Duke Energy
• Randy Udall, former director of CORE (Community Office for Resource Efficiency)
• Chris Flavin, president of World Watch Institute
Udall started off with a bonfire metaphor to describe the social issues associated with our fossil fuel consumption. In his eyes, fossil fuels are a "precious gift" that should be shared by all of humanity. Like a giant bonfire, fossil fuels provide cheap access to heat and energy. But the wealthiest 2 billion of the planet are standing the closest, consuming the lion's share of that resource.
A second ring of 2 billion benefits from some access to fuel, but the bottom third of the population is out in the cold. Because access to cheap fossil fuels is rapidly diminishing, finding renewable renewable alternatives is not just about solving climate instability, its also about curing social inequity.
Both Libby Cheney of Shell and Jim Rogers of Duke Energy agreed about the need to transition from fossil fuels to renewables. Despite rumors that they were moving away from R & D on renewable energy sources, Shell has been and will continue to invest in renewables, particularly biofuels and wind.
To that, Chris Flavin quipped, "I’m glad Shell is not leaving the renewables. I would feel sorry not for world, because there are so may great entrepreneurs out there...but for for Shell shareholders." He stated that all the oil companies need to get that they are energy companies, not fossil fuel companies.
In order for that to happen, everyone agreed with Jim Rogers when he said that we need a price on carbon and we need cap-and-trade legislation. The price on carbon will force a new math that looks at longer term financial paybacks, and thus justifies to shareholders the necessity of starting up costly new business units.
And we need cap and trade legislation before Copenhagen, so that when the U.S. signs a new global treaty on carbon it will be coming from a position of leadership. He did state, as I've heard him say many times before, this should not be a 100% auction system, and should allow a certain amount of carbon offsets that diminishes over time. He thinks the recession is the best time for the treaty, as economic considerations will be more closely examined.
Jim Rogers then "channelled" the missing Achim Steiner and said, "When we are in Copenhagen, we need to realize this not really a G20 treaty, or a G8 treaty, it's G2 treaty -– China and the US." He said China is in a unique place to take the lead. They have 2.5 time more coal plants than the U.S. on the boards. They are also leading the world in wind and solar. They have a national RPS (renewable portfolio standard) and they have one of the toughest fuel economy standards, and their recently funded energy stimulus bill is highly focused on battery technology.
In other words we have a lot of catching up to do, and we can't be protectionist about it. Copenhagen has as much to do with climate as it does with building a "collaborative economy" with other countries joining together to solve the energy crisis while bolstering the economy.
Udall pulled out another memorable metaphor when talking about Obama's challenges in all this. He likened Obama to "one certain US airways captain" who has hit with a bird strike in both engines -- Lehmann and AIG. Obama has to land the plane, rebooting the prosperity engines. And the only way is to take the greatest challenge -- energy -- and turn it into the "safe landing" that we are hoping for.
Everyone also agreed on one fundamental principle: “Cheap energy is the most desirable condition for the individual citizen, but the most dangerous for society.” In the U.S. energy is almost considered a "free good." In Japan, the gas tax is $4 per gallon! And in Europe heavy energy taxes forced Europeans early on into energy efficiency. We tend to put them on a pedestal of good behavior, but in fact they were just responding to a tight market.
That's why Udall is for a tax. "We need to tax labor much less an energy much more." he cited an interesting factoid...1 gallon of gas is equivalent in production as one month of a man’s labor (in terms of BTU's). But it's still taboo to directly tax fuels.
That will change with peak oil. Everyone on the panel agreed, even Cheney, that we seemed to have reached a major turning point. "The easy oil is gone. Absolutely." But it will be around for a long time. Wind & solar has doubled but together only makes up 0.15% of global energy demand.
After this, the debate heated up a bit. Everyone seemed to have a different idea of what to focus on to make he transition. Udall got on his knees and begged Rogers to start retiring coal plants. Udall thinks natural gas could be a good transition as it burns cleaner (50% less CO2 for power generation, but only 20% less for fuel emissions).
Jim Rogers said it's nuclear because that is the only thing that can produce steady energy. He is not a fan of natural gas and said it would be like "putting a needle in the other arm."
Flavin disagreed with both approaches and thinks the Cogeneration is the key. Gas is still too dirty and the costs of nuclear will ultimately take it off the table. In Europe, 40-50% of energy supply comes from combined heat & power plants. Each power plant produces more waste heat from the production of electricity than the electricity itself. Recapturing this energy could buy us the time we need to switch to renewables.