Kicking the Fossil Fuel Habit

If we don't choose to wean ourselves off oil, coal, and gas, nature will force us to quit cold turkey.

We’ll eventually kick our fossil fuel habit. We have no choice. If peak oil doesn’t dictate the terms and timing, then climate change will force our hand. And recent events in the Gulf of Mexico reveal more immediate dangers.

Yet our response to these threats remains tepid, insufficient by any measure. Serious action is aggressively opposed by those who hold out an irrational hope that business-as-usual might continue. We seem content to let nature decide the terms and conditions on which we kick the habit. Why?

I believe there is an assumption, often implicit, that underpins the North American energy debate: clean, renewable energy is just not up to the job. For the lights to stay on, and factories to hum, we need coal and oil. This assumption is why Stephen Harper talks up the tar sands as Canada’s contribution to North American energy security. This assumption is why Canada plays possum on climate change.

But this assumption is flat-out wrong.

Clean energy – mainly solar, geothermal, hydro, wind, and unconventional biofuels – is perfectly capable of powering our economy. It can be made reliable, large-scale, and cost-effective. But that's true only if we commit to build clean energy infrastructure on a scale comparable to the fossil-fuel apparatus built over the past century. That scale is enormous.

The U.S. Energy Information Agency estimates we need to invest more than $45 trillion in our energy infrastructure over the next 40 years to meet future demand. That’s the kind of money we invest in fossil fuels. It’s only fair then to ask how clean energy might perform with similar levels of capital. What do you get for a trillion dollars?

That’s just the question I’ll ask in a series of 10 articles on The Mark about clean energy over the coming weeks. The answers may surprise you. Some clean technologies scale up, bringing costs down. Others hit supply constraints and can’t substantially displace fossil fuels. But make no mistake – clean energy performs if given a fair shake.

At that scale of investment, giant solar plants produce energy well after the sun goes down, at a lower cost than melting tar. Unconventional bio-fuels grown in the desert replace half the world’s oil supply. By drilling for heat instead of oil, we use enhanced geothermal energy to replace North America’s entire coal infrastructure. Our aging grid is replaced by a new continent-wide energy internet, which connects multiple, distributed energy sources.

We're kidding ourselves if we think we can escape peak oil or move the needle on carbon emissions for anything less than trillions. Spending that much may sound absurd. But what's the cost of the war in Iraq? According to economist Joseph Stiglitz, it's about $3 trillion. The liquidity injected to save North American banks was more than three times that much.

To spark this massive green investment, we need to intervene in the marketplace. Coal is still cheap to burn, and there's lots of tar to melt in Alberta. Cap-and-trade and an escalating price on carbon emissions are clear requirements to shift the economic incentives away from fuel that burns.

But most important is providing low-cost capital to the sector. The cost of clean energy is almost entirely dependent on the cost of capital. Just as carbon pricing increases the cost of fossil fuels, low-cost capital reduces the price of clean energy. The sun, wind, and heat of the earth are free. The technology to harness them is not. And we have ways to produce that capital – I’ve written before about government-backed Green Bonds as one suggestion – we just need to decide we want to do so.

It might sound daunting, but we've done this sort of thing before, and it creates wealth over the long term. The U.S. interstate highway system was funded by the federal government in the 1950s. That paved the way for the auto sector to fuel the North American economy for almost half a century. Silicon Valley was founded on military and academic support for the microchip processor. Neither of these bonanzas would have happened without government intervention.

Countries that move quickly to develop clean energy will sell that technology. Countries that don’t will buy it. It looks increasingly certain that Canada will be a buyer, not a seller.

Canada is dangerously distracted by its fascination with the tar sands. It may seem a source of wealth now, but every dollar invested will make it harder – politically and economically – to join the rest of the world in the new energy economy. While investment pours into tar sands infrastructure, we ignore more fruitful possibilities. We commit ourselves to a losing game.

Canada has a strong history of innovation, world-class research in our universities, and access to capital through our strong banks. We have unbounded amounts of energy in our wind, waves, rocks, and fields. Canada could be more than an energy superpower; we could be a clean energy superpower. It’s time our policy reflected that possibility.

Back in 1989, Margaret Thatcher – no shill of the environmental movement – called climate change the “single greatest threat facing mankind.” More than 20 years later, we view this existential threat as a political football. Instead of confronting the evidence that now informs our senses, we bicker. Our prime minister is loath to even say the words. This is the defining challenge of our time, and it’s time to stand up and face it.

Building a low-carbon economy will mean making the largest investment in infrastructure in human history. A massive undertaking, but this task is neither optional nor leisurely. We can start to build that infrastructure on our own timetable, or we can wait for nature to dictate the terms.