I had the pleasure of hearing Michael Greenstone, former Chief Economist to President Obama and now professor at UChicago, speak about the Global Energy Challenge. These are my notes and my thoughts.
Note: I wrote down notes and thoughts shortly after the talk finished, and wrote this blog post a day later. Some details may be inaccurate, but I’ll do my best to not misrepresent anything discussed. A shorter, 3 minute version of this talk can be found on YouTube.
Energy and economic development
Greenstone opened his talk by talking about how “climate crisis” is a misleading term, and that a more appropriate term for what the world is facing is a “global energy crisis.”
Developed countries, Greenstone posits, use more energy per capita than developing ones. This is easily verified from The World Bank or Wikipedia. He cited examples of Canada (14,930 kWh / person / year) and the US (12,071), compared to China (4,475) and India (1,181). Bihar (one state in India) was even lower (in the 200s, I believe).
It follows that using more energy is a necessity for a country to have a strong economy, but by far the cheapest source of energy is fossil fuels. Of course, we know the adverse effects of fossil fuels–they pollute the air so badly as to knock 3 years off the average life expectancy in certain regions, like Northern China. They’re also causing an unprecedented increase in global temperature.
It’s also projected that up to 70% of the use of fossil fuels in the next 20ish years will come from developing countries. On one hand, this is necessary for them to develop their economies … on the other, it makes the environmental problems (air quality, temperature increase, life expectancy) even more dire.
So what can we do?
Greenstone proposed a couple of solutions, both of which are extremely politically challenging.
The first is to price carbon based on its true social cost. If you just look at the cost of raw materials and extraction, natural gas is very cheap; but if you look at the environmental impact on human life expectancy and the global temperature, it gets a lot pricier when compared to cleaner alternatives. It’s still cheaper in some cases, but the gap gets closer.
The other is to fund R&D in clean energy. Clean energy industries have to innovate and push the limits of what’s possible, because in their current state they’re not practical alternatives fossil fuels.
This is especially important because the fossil fuel industry is also innovating. A report (PDF) that Greenstone co-authored discusses this in depth, and the media has picked up on this as well. Clean energy needs more than just innovation–it needs innovation (and funding)! that outpaces innovation in fossil fuels.
Thoughts
Greenstone’s central thesis was that it’s about more than just climate–it’s about energy, and global energy at that.
At the end, he talked about this problem having three legs: getting people access to inexpensive, reliable energy; reducing the reliance on fossil fuels; and intervening with climate change. This was a refreshing way of looking at what we usually call the “climate crisis.”
The talk helped me to understand a complex problem from another angle, and I appreciate it for that reason. I usually hear the problem framed as fossil fuels causing climate change, but getting people access to energy is tightly coupled with those.