Several days ago I finished reading Charles C. Mann’s article in The Atlantic titled “What If We Never Run Out Of Oil?”, a long-form discussion of the history and technology of established sources of energy like oil and natural gas, as well as relative newcomers from hydraulic fracturing or methane hydrates.

If you haven’t read it yet, please do so. It’s hard to sum up the article (which is quite lengthy – in the good way), but here are several main takeaways:

  • Fossil fuels will continue to be an important and dominant fuel source for the foreseeable future.
  • As history shows, previously unattainable sources (oil in shale layers) or new sources (like methane hydrates) become more economical to extract and use or new technologies are developed allowing for extraction (which affect the economics).
  • Unconventional fuels are a Big Deal. The influx of relatively inexpensive shale oil and gas is influencing the global dynamics of energy supply, and we should expect more unconventional hydrocarbons.

The third point above deserves more attention.

In reading the criticism of Mann’s post, I get the sense of well-intentioned folks confronting an inconvenient truth: we are an energy-hungry society and there will be demand for more and more energy and we’ll find new ways of meeting that demand, likely with unconventional hydrocarbon resources. Technological advances and economics will make previously untapped resources available, as we have seen with hydraulic fracturing and (as Mann believes) we will see with methane hydrates (methane frozen in ice).

What really complicates matters is that energy sources are not isolated to one country or another. The criticisms I have read seem to downplay the global systems aspect of energy. Similar to a game of whack-a-mole, one cannot simply stomp out a carbon-intensive fuel in one part of the planet without having it appear halfway around the world.

This is apparent in Mann’s discussion of coal in light of cheap natural gas:

The U.S. coal industry has taken to complaining of a “war on coal.” But the economic hit has been less than one would expect; U.S. coal exports, mainly to Europe, almost doubled from 2009 to 2011. In the sort of development that irresistibly attracts descriptors like ironic, Germany, often touted as an environmental model for its commitment to solar and wind power, has expanded its use of coal, and as a result is steadily increasing its carbon-dioxide output.

I wrote about this in November 2012. The coal that the United States is not burning is not staying in the country. More and more of it is destined for Europe and Asia for both thermal power generation and metallurgical processes. Both are carbon-intensive (you are still burning coal). To say that “it doesn’t matter if we run out of oil, we won’t want to burn it anymore”, as one criticism of Mann’s article says (the same can be said for coal), misses the global systems aspect: the United States might not want to burn it, but someone else will.

To further emphasize the global energy system, I direct your attention to a recent article in Foreign Policy about the reversal of Russia’s “gas weapon”.

After years of bullying and strong-arming its neighbors, the Russian-controlled gas monopoly is now on the receiving end of the “gas weapon”. The gas weapon refers to Russia’s ability as an “energy superpower” to bend foes to its will by cutting off supplies of natural gas. Gazprom flexed its muscles in 2006, 2008 and again 2009, when it shut of natural gas to millions of Europeans during winter to make a point to middlemen in Ukraine, Belarus, Georgia, and Moldova.

But Russia’s gas weapon is weakening, or even being turned on Russia with the influx of cheap, North American shale gas. Alexandros Petersen writes:

But in just the last two years, the tide has started to turn. Low energy prices across the globe are allowing consumers to use Russia's "reverse dependence" on European markets against Gazprom. Russia's export options outside Europe are increasingly limited, allowing European consumer to demand better terms. Meanwhile, Central Asia is no longer Moscow's vassal, but has finally emerged as competition for cheap energy, with producers such as Turkmenistan, Uzbekistan, and Kazakhstan not only willing to give consumers (still largely in East and South Asia) a better deal, but without treating them as former colonies to be manipulated.

The point is: unconventional energy sources are affecting the global energy system.

Mann is inclined to believe that methane hydrates will be a Big Deal in the coming years, and I agree. The pace of research and development, and what we know from the history of hydraulic fracturing, suggests that methane hydrates and other unconventional fuels warrant our attention. In an article for this blog, Melissa Lott wrote about the potential methane hydrate reserves – by some estimates about “15 times the amount of gas as the world’s shale deposits”. Throw in oil sands in Alberta, shale oil in Utah, and other unconventional sources all over the world, and the potential to disrupt global energy systems is a possibility. Many more years of carbon emissions is also a strong possibility.

Transitions to low-carbon fuels will likely need a global approach to externalities associated with burning the fuels. If carbon is the rationale, then a price on carbon (through a fee or an emissions trading scheme) is the most straightforward way to address this. That is one way to account for the economics of producers and consumers, technology investments, and global trade all in one go.