Climate and Energy Policies: Two Sides of the Same Coin?

In a 2006 statement, former UK Prime Minister Tony Blair said, “We must treat energy security and climate security as two sides of the same coin.” Are energy security and climate change best addressed by reducing fossil fuel combustion, as he suggested?

Enhancing Energy Security

Diversifying energy sources and suppliers and, especially, increasing supply from more stable countries are the most reliable paths to long-term global energy security. Increased substitutability among energy sources also increases resilience to supply disruptions.

National energy security is also enhanced by a greater variety of domestic energy sources. The U.S. and Canada in particular could substantially increase their energy security by exploiting their huge remaining endowments of coal, conventional and unconventional oil and natural gas, oil shale, and methane hydrates. Absent concern about carbon dioxide (CO2) emissions, they could produce, at costs comparable to the current price of crude oil, all the petroleum products they will consume until alternative energy technologies become competitive.

Trying to Limit Climate Change

Burning fossil fuels, however, adds CO2 to the atmosphere, and since CO2 is a greenhouse gas, this should raise global surface temperatures and may trigger other harmful changes in our climate. The main proposal for dealing with threatened climate change thus has been to force an immediate shift to non-fossil energy sources. Without a doubt, curtailing fossil fuel use will reduce economic growth by raising the cost of energy. Fortunately, there are other options.

Emissions could be offset by sequestering CO2. Already CO2 is used for enhanced oil recovery, but the sequestration is partial. Since more permanently burying CO2 does not produce anything worthwhile in exchange, however, it is expensive and unlikely to be extensively used without further technological innovations.

Since CO2 is “food for plants” it also is sequestered via plant growth. Increasing forest cover sequesters some CO2 until the wood decays. Burying charcoal sequesters carbon for longer and can improve soil quality, but it would be expensive on a large scale. Biofuels sequester CO2 until the fuels are burned, at which time the CO2 is recycled. But biofuels currently are expensive, compete with food production, and have their own environmental costs.

Geo-engineering projects aimed at increasing the reflection of incoming solar radiation have also been proposed. Once again, however, these are unproven and expensive.

A Better Alternative

Instead of trying to limit climate change, policies could instead reduce harmful consequences from climate change. For example, levees and/or dikes, or depopulating low-lying areas, can reduce flood damage. Improved building materials and building codes can lessen damage from strong winds. Better weather forecasts can reduce the costs of extreme weather.

Alternatively, measures could be taken to cope better with damaging weather events, and other events such as earthquakes or terrorist attacks, after they occur. Examples include faster evacuations, provision of temporary housing, and stockpiling emergency supplies.

When many policies could address an issue, we should implement first those policies with the lowest expected costs per unit of expected net benefits.

In this regard, reducing fossil energy use would both reduce energy security and be enormously expensive. Investments in the current system for producing, delivering, and using energy would have to be replaced, reducing the funds available for other worthwhile investments. Alternative energy sources also are currently much more costly, especially when one takes into account their frequent unavailability and short-term variability, the inability to schedule their time of supply, their remoteness from markets, their low energy density, and their non-CO2-related environmental costs. Funding basic research into these problems could be justified, but solving them will take time.

Meanwhile, technological developments in producing natural gas from shale have substantially increased economically recoverable reserves. Since natural gas is the least carbon-intensive fossil fuel, its increased use will reduce growth in CO2 emissions without raising energy costs and reducing economic growth.

Eventually, scarcity will make fossil fuels more expensive than the alternatives; at that time, forcing their reduced use will be unnecessary. In the meantime, CO2 emissions would have some beneficial effects to offset costs from climate change.

For example, abnormal cold snaps cause more deaths than abnormal heat waves. As another example, experiments and observations around natural CO2 seeps have shown that increased CO2 increases plant growth and yields, plants’ resistance to drought and disease, low-light conditions, and pollutants like ozone. In addition, the effects of CO2 on climates will vary geographically, and not all changes will be harmful. In particular, Canada, Russia, and northern Europe could benefit considerably from less-severe winter cold and longer growing seasons.

Finally, climate is always changing from many natural influences and other anthropogenic actions such as land-clearing, large-scale irrigation, and urbanization. Limiting CO2 emissions at best treats just one source of climate change. The climate will still change regardless of what happens to CO2. This reduces the value of measures to control CO2 by reducing the certainty of their benefits. It also strengthens the case for taking measures to limit harmful consequences from climate change and improve recovery from damaging weather events while simultaneously retaining any benefits from increased CO2.

Peter Hartley, PhD (hartley@rice.edu) is a professor of economics at Rice University. He is also a Rice scholar of energy economics for the James A. Baker III Institute for Public Policy.