Government should put more energy into regulation

If you think the world is about to run out of oil, you haven’t spoken to Mark Jaccard. The guy’s a salve for those guilty of driving…

If you think the world is about to run out of oil, you haven’t spoken to Mark Jaccard.

The guy’s a salve for those guilty of driving fuel-sucking trucks to the corner store or who like to crank their houses to a subtropical 25 Celsius.

If you’re simply worried about wasting a precious, non-renewable resource, don’t lose any sleep, suggests Jaccard.

There’s plenty of fuel, said the Simon Fraser University economist in an interview on Wednesday.

“I might agree that the amount of conventional oil, the global production, could very well peak in five years, 15 years, 25 years,” he said.

“But the point of my book is that that may matter very little.

“We have other fossil fuels.”

Jaccard has been studying energy issues for more than 25 years.

The book he mentions — Sustainable Fossil Fuels: the Unusual Suspect in the Quest for Clean and Enduring Energy — debunks the widely held belief that oil reserves are running out and a global energy crisis is upon us.

There are huge reserves of untapped fossil fuels, like natural gas and coal, and unconventional sources of oil and gas, like the oil sands of northern Alberta, said Jaccard.

Oil, gas and coal will satisfy 58 per cent of global energy needs in the year 2100, if emerging industrial nations like China continue to drive demand, he said.

“There’s a huge amount of energy available to human beings, so I don’t think we’re at a threat of running out of energy, whether its from fossil fuels or from renewable flows going through the surface of the earth or from nuclear energy,” said Jaccard, who drafted two energy plans for the Yukon in the 1990s.

“We should not misinterpret periods of high prices as indicating the imminent demise of our still-plentiful fossil fuel resources.”

It’s about electricity, really, and technologies already exist to harvest electricity from unconventional sources, he said.

For instance, Jaccard’s research shows that 40 per cent of South Africa’s gasoline comes from coal.

Coal gasification, as it’s known, is profitable as long as international oil price stays above $35 a barrel, said Jaccard.

Currently, oil is worth more than $65 a barrel.

“We have all these resources to keep making gasoline and diesel and so on,” said Jaccard.

“We’re not going to run out of energy for a long time, in terms of using fossil fuels.”

How long is a long time?

Jaccard’s book says there’s enough coal in the Earth to supply current demand for 800 years.

And natural gas could last even longer, “if we can exploit untapped resources.”

So there’s lots of juice for the petroleum age.

But as global temperatures soar and glaciers melt and city air pollution worsens and species die off, should we continue to burn them?

Here, Jaccard morphs back into economist jargon.

Specifically, he brings up “externalities.”

It’s a $50 word for irritants that bean counters would just as soon ignore — stuff like pollution, environmental destruction, and waste that stem from industrial production, but which don’t currently have any value in the equation.

Simply put, an “externality” is a dodge.

For example, free marketers like to slap an “externality” label on greenhouse gas emissions, and leave them out of the moneymaking equation.

If you can turn a blind eye to such things, profits improve.

However, Jaccard sees them differently.

He considers them a problem to be solved.

Society shouldn’t treat emissions as an “externality,” as something that it can’t do anything about, he said.

“People will not deal with externality without government policy. If you can use the atmosphere as a free waste receptacle, you’ll do it.

“But you shouldn’t use fossil fuels in a way that sends out emissions.

“The key thrust of my book is to look at the possibilities for zero-emission uses of fossil fuels.

“There are technologies available to use fossil fuels without emitting anything.

“We’ve never developed them, because governments have never enacted policies to make us do that.”

Oil sand extraction, coal gasification and creation of hydrogen electricity “are all things that we have been doing for decades,” said Jaccard.

Often, such techniques require carbon dioxide to be “sequestered” into the vast underground basins of the Earth.

Such techniques exist, and so do their markets.

They’re just not that common, said Jaccard, and what’s needed is strong public policy to make them economic.

In an commentary he co-authored for the Globe and Mail, Jaccard criticized former Prime Minister Paul Martin’s approach to greenhouse gas reduction, saying “politicians take the easy path by allocating modest funds to ineffective voluntary efforts, hopeful that the misspent money will go undetected.”

The Kyoto Protocol is a “baby step” towards what the world has to do, he said.

“In that sense, Kyoto is a very good thing. But we need to start talking about the post-Kyoto world, which involves dramatic cuts in emissions and very strong policies.”

Governments can design regulations, like taxes, that encourage investment and research and development in clean fossil fuel technologies without crippling industry, according to Jaccard’s research.

The most obvious would be an emission tax, said Jaccard.

But there are other examples, such as an emission cap and a system of tradable permits, where all sectors of an economy are forced to reduce emissions by a certain percentage, but can trade credits to achieve that goal.

Technology regulations also work, said Jaccard.

Vehicle-emission standards introduced in California in 1990 were “mainly responsible for the introduction of very efficient cars and also the hybrid car,” he said.

Fossil fuels won’t run out, but electricity will gradually become more expensive, he predicted.

“Estimates from independent researchers suggest that zero-emission fossil fuel production of electricity would increase final electricity prices by 25 per cent to 50 per cent, were this technology to become universally applied,” he said.

“To shift our use of fossil fuels to these zero-emission processes over the course of this century would result in real energy price increases of much less than one per cent per year during the next three to five decades.”

But there’s no shortage of energy looming in the near future, said Jaccard.

Critics suggest otherwise.

“We are approaching peak oil, and if we’re not already there we’re going to get there very quickly,” said Yukon Conservation Society spokesman Lewis Rifkind.

“To suggest otherwise is to go against a lot of experienced and very knowledgeable thinkers.”

There’s no doubt that there’s lots of coal in the world, but whether or not it can be used cleanly and economically is debatable, said Rifkind.

And current oil sand technology takes almost as much energy to extract as it produces.

The consensus is that fossil fuels are becoming more trouble than they’re worth, said Rifkind.

“There are energy sources, but are they effective energy sources? I’d say no.

“And are they environmental energy sources?

“At the current technological levels that we’re using, definitely not.”

The debate continues, and the future will tell.

But Jaccard’s argument is about regulating fossil fuels, not whether or not they cause global warming.

Energy conservation is still key, he said.

“It’s good for us as people, in our souls, not to be using huge amounts of energy.

“I am a supporter of all types of energy efficiency.

“Where I think we’re challenged is that we enact policies that subsidize people for energy efficiency.”

Regulation is simply a better approach, he said.

“A lot of research is showing that throwing money at the problem of energy efficiency doesn’t get you very far.

“You’ve got to look to alternatives, like policy and regulation, for household appliances, building codes, industrial equipment and so on.

“There are opportunities for governments to do a lot there without running into political resistance.”