Study predicts world economy unlikely to stop relying on fossil fuels

February 10, 2016
A pumpjack in Texas. Image: Wikipedia.

On the heels of last year's historic climate agreement in Paris, a new study concludes that fossil fuel consumption is likely to grow without clear and decisive global action to put an adequate price on carbon dioxide emissions and increased clean energy technology.

"The Paris agreement laid out a dramatic new vision, but there is still much work to be done to turn that broad outline into the concrete climate policy changes around the globe that are needed to reduce and the odds of disruptive climate change," said Prof. Michael Greenstone, a study co-author and director of the Energy Policy Institute at the University of Chicago. "But one thing is clear: Counting on the fickle finger of fate to point the way to cheaper low-carbon energy sources, without market and policy forces pushing us there, mistakes hope for a strategy."

Writing in the Journal of Economic Perspectives, Greenstone and coauthors Thomas Covert of the University of Chicago and Christopher Knittel of the Massachusetts Institute of Technology found that the continued use of fossil fuels would lead to dramatic changes in the planet. In measuring their impacts on warming, the study finds that burning the fossil fuels known to us today would increase global temperatures by 10 to 15 degrees Fahrenheit. Those numbers don't account for advances in fossil fuel extraction techniques that could make resources we can't even extract today economically accessible, such as oil shale and methane hydrates, potentially adding another 1.5 to 6.2 degrees Fahrenheit of warming.

The economists explored whether market forces alone would cause a reduction in fossil fuel supply or demand. By studying the history of fossil fuel exploration and technological progress for both clean and dirty technologies, they concluded that it is unlikely that the world will stop primarily relying on fossil fuels soon. As one piece of evidence, the economists studied the amount of reserves in the ground over the last three decades compared to world consumption. For the last 30 years, reserves of oil and natural gas have grown at least as fast as consumption. As a result, the world has always had 50 years of future consumption stored as reserves in the ground. This was equally true in boom years (when prices were high) and bust years.

Technological progress, such as the development of hydraulic fracturing and the ability to extract oil from tar sands, is at least partially responsible for a long-term pattern of consistent worldwide growth in fossil fuel reserves. Looking at the average growth rate of these reserves, the study shows that both oil and natural gas grew at a steady rate of 2.7 percent. While coal reserves fell consistently through the late 1990s to 2008, they too have since taken a fairly consistent turn upward; further, there are currently roughly more than 100 years of reserves.

"As long as markets fail to account for the environmental damages from using fossil fuels, there will always be incentives to develop new techniques to more efficiently access these resources," said Thomas Covert, an assistant professor of microeconomics at the University of Chicago's Booth School of Business. "It seems unlikely that our technological abilities to recover fossil fuels should stop improving any time soon. With continually improving technology, the world will likely be awash in fossil fuels for decades and perhaps even centuries to come."

The study's authors also found that technology has improved significantly in cleaner energy sources. This is encouraging because cheaper clean technologies would reduce demand for fossil fuels. Unfortunately, the trends in clean technology progress are not yet strong enough. For example, the levelized cost of solar power fell from nearly $450/MWh in 2009 to $150/MWh in 2014. Though the downward trend continues today, the cost of natural gas-fired power is still cheaper, even when accounting for the cost of climate-related damages.

The story is similar when looking at alternatives to fossil fuels in the transportation sector: namely, battery-powered electric vehicles. At the current battery cost of $325 per kWh, the authors find that the price of oil would need to exceed $350 per barrel before an electric vehicle would have a lower cost of ownership than an equivalent gasoline powered vehicle. Unfortunately, oil traded at an average of $49 per barrel during 2015 and is currently trading below $30 per barrel. Thus, batteries need to be much cheaper before electric vehicles could cause reductions in demand for fossil fuels.

"While alternative sources of energy and energy storage technologies have vastly improved, lowering costs, they still have a long way to go before they are cost competitive with ," said Chris Knittel, the William Barton Rogers Professor of Energy Economics at the MIT Sloan School of Management and director of the Center for Energy and Environmental Policy Research. "To change this, governments should put a price on carbon emissions and start injecting more money towards the basic R&D that is critical to making these technologies more cost competitive."

Explore further: Emissions pricing revenues could overcompensate profit losses of fossil fuel owners

More information: Thomas Covert et al. Will We Ever Stop Using Fossil Fuels? , Journal of Economic Perspectives (2016). DOI: 10.1257/jep.30.1.117

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gkam
2.5 / 5 (8) Feb 10, 2016
Gosh,the headline writer "forgot" the second part: ". . . without clear and decisive global action to put an adequate price on carbon dioxide emissions "

It seems we are not doomed to die like Deniers, but have a chance to save ourselves if we can get rid of the fools depending on political prejudice for their science.
WillieWard
1.8 / 5 (5) Feb 10, 2016
"Study predicts world economy unlikely to stop relying on fossil fuels"
reliable as backup for wind/solar to compensate intermittency, mutually-beneficial relationship, hahaha.
gkam
2.8 / 5 (9) Feb 10, 2016
We can do it, both individually and with changes in the structure and operation of the grid for distributed power.

I am worried about the world-wide turn to conservative governments, though. they think the world is made for money, and not people. Selfishness is their only guide.
MR166
2.5 / 5 (8) Feb 10, 2016
"Gosh,the headline writer "forgot" the second part: ". . . without clear and decisive global action to put an adequate price on carbon dioxide emissions "

It seems that more taxes and government controls are the answer to all our woes, right Gkam?

Well I have news for you most of these controls have done nothing but make it impossible for the average person to support themselves without government assistance. 50 years ago it was quite easy for two HS graduates to get married and actually get jobs that paid enough to allow them to support themselves. Now two college graduates get married, cannot find work and live in poverty. I ask you, exactly how have the tens of thousands of government regulations passed since the 60s helped?

If only the "Intelligentsia" were if full control all of the world's problems would magically disappear. Don't make me laugh!
gkam
2.6 / 5 (10) Feb 10, 2016
" 50 years ago it was quite easy for two HS graduates to get married and actually get jobs that paid enough to allow them to support themselves"
---------------------------
It all changed with Reagan,didn't it?

Did you not get your trickle-down?
MR166
2.2 / 5 (6) Feb 10, 2016
Oh please stop the partisan BS and address the fact that a rational unbiased person would not lay this at the feet of one party.

It is a result of two parties that would like nothing more than to see the other party fail. Ever since, I'd say Kennedy or perhaps Nixon era, the 2 parties have been conducting an ideological/power war with each other and the citizens of our nation have become nothing more than victims of the collateral damage. The 1% of the world have been funding the war through political donations and reaping the spoils. Sorry but the whole AGW movement is nothing more than the latest WMD utilized in the conflict.
MR166
3 / 5 (6) Feb 10, 2016
The 1% also control our so called "Free Press". Most of these outlets have become nothing more than distributors of propaganda that insures the compliance of the masses.
MR166
1.8 / 5 (5) Feb 10, 2016
The internet remains the only source of dissenting speech. But don't worry Progressives, Twitter is disabling the accounts of Trump supporters as we speak and our government will soon have laws that can eliminate it altogether. Of course, this is all in the best interests of fairness and the creation of "Safe Zones"!
gkam
2.5 / 5 (8) Feb 10, 2016
Did 166 "forget" who imposed the Republican Police State on us after their Criminal Negligence on 9/11?
MR166
2 / 5 (4) Feb 10, 2016
The dissection of American Entrepreneurial values has been in progress for many years. As an example when I was a child it was very easy to start a business raking leaves or shoveling snow in my neighborhood. Now due to liability laws a homeowner would have to be an idiot to do so. Oh yea, as a child, just try to sell lemonade in front of your home and see how many tickets you collect.
gkam
2.3 / 5 (6) Feb 10, 2016
You can blame that on capitalist lawyers. This thread concerns how much we can rid ourselves of dirty fuels.
MR166
2.3 / 5 (6) Feb 10, 2016
"You can blame that on capitalist lawyers. This thread concerns how much we can rid ourselves of dirty fuels."

No, it has to do with the overreach of of government regulations instituted for " The Common Good"!
MR166
2.3 / 5 (6) Feb 10, 2016
Via case law lawyers, judges and juries create government regulations or at least the practical application of them. The effects of this process have created a system where only large well funded corporations survive. Large government by it's very definition amplifies this effect to the point of total economic stagnation.
MR166
2.5 / 5 (6) Feb 10, 2016
"The dissection of American Entrepreneurial values has been in progress for many years. As an example when I was a child it was very easy to start a business raking leaves or shoveling snow in my neighborhood. Now due to liability laws a homeowner would have to be an idiot to do so. Oh yea, as a child, just try to sell lemonade in front of your home and see how many tickets you collect."

OK that was very poorly written. I meant to say that a home owner would be out of their mind to allow anyone to do work on their property including snow shoveling and lawn mowing that was not licensed and insured let alone a neighborhood kid.
gkam
2.7 / 5 (7) Feb 10, 2016
MR 166, you can't be scared of everything and still have a life.
MR166
2.3 / 5 (7) Feb 10, 2016
"MR 166, you can't be scared of everything and still have a life."

Gkam I can just see the courtroom when the opposing lawyer claims that I am exploiting child labor. After all, according to progressives, all free market labor is exploitative. Of course, government labor is never exploitative and as such it is pretty much beyond reproach.
richk
3.7 / 5 (3) Feb 11, 2016
"For example, the levelized cost of solar power fell from nearly $450/MWh in 2009 to $150/MWh in 2014. Though the downward trend continues today, the cost of natural gas-fired power is still cheaper, even when accounting for the cost of climate-related damage"

"The story is similar when looking at alternatives to fossil fuels in the transportation sector: namely, battery-powered electric vehicles. At the current battery cost of $325 per kWh, the authors find that the price of oil would need to exceed $350 per barrel before an electric vehicle would have a lower cost of ownership than an equivalent gasoline powered vehicle"

doesn't/this/contract/their/argument?
gkam
1.8 / 5 (5) Feb 11, 2016
Their numbers are old and out of whack. And they do not tell us how they get from the kWh capacity of a battery to equate to the cost of oil, since one is capacity and the other price/Btu.
Uncle Ira
4.5 / 5 (8) Feb 11, 2016
Their numbers are old and out of whack. And they do not tell us how they get from the kWh capacity of a battery to equate to the cost of oil, since one is capacity and the other price/Btu.


glam-Skippy you got to be kidding, right? And after we corrected you on this very same thing just last month. He was comparing the $$$$ per kWh in a battery to the $$$$ per barrel of oil (yeah, Btu) kWh are a quantity of energy. Btu are a quantity of energy. But since you are not in the business we will forgive you for not knowing it is easy to convert from one unit of measure to another as long as you are measuring the same property.
Uncle Ira
4.2 / 5 (10) Feb 11, 2016
Though the downward trend continues today, the cost of natural gas-fired power is still cheaper, even when accounting for the cost of climate-related damage"


That is not a lie, it is the damned lie.
gkam
1 / 5 (4) Feb 11, 2016
Ira, please sit down, and stop making a fool of yourself thinking you outsmarted someone else.

Ira is comparing the price of the auto fuel to the cost of the container for electric power. Apples and Pineapples. Just because they both reference kWh somewhere, you assume they are the same thing. They are not.
Uncle Ira
3.9 / 5 (7) Feb 11, 2016
Ira, please sit down, and stop making a fool of yourself thinking you outsmarted someone else.

Ira is comparing the price of the auto fuel to the cost of the container for electric power. Apples and Pineapples. Just because they both reference kWh somewhere, you assume they are the same thing. They are not.


glam-Skippy. You are not very good at assuming what I am assuming. You have been at it for about 18 months now and you are not getting any better.

So Mr.Six-Kinds-Of-Engineer-Skippy. Answer a few very basic questions that engineers (real engineers) love to contemplate.
Size for size hp to hp. What is the cost of owning and driving an electric car and gasoline car for 15 years, with about 15,000 miles per year?

Should be easy for you. How many engines for the gas car will you have to buy? My guess is none if you don't drive like an idiot and take reasonable care of him. How much do a battery bank for the car cost?

I'll P.S. for you with the rest.
Uncle Ira
3.9 / 5 (7) Feb 11, 2016
P.S. for you glam-Skippy so you can show how a real engineer thinks about the real world as opposed to new-agey old hippies.

To drive that 15.000 miles every year for 10 years how many charge cycles are you going to have to put that battery bank through? Oh yeah? That many? How many charge cycles is the battery bank good for? Now you can tell me how many battery banks you are going to end up buying.

The electricity you put in your car is NOT free. You have to buy the panes, or pay P G and the E. How many years are they good for? You are thinking you don't need to spend anything but the simple costs of "this" NOT considering all the extra costs that "this" needs in the order to be used like the gasoline car the same size doing the same job.

Now I got nothing against subsidies for clean energy to replace gas-oil-coal-nuclear (in that order). But tit for tat, the electric cars can not compete with gasoline cars yet. They need a lot more subsidies in my opinion.
kaf
5 / 5 (3) Feb 11, 2016
Okay, I'll bite: How long DOES an EV battery last, and how much does it cost to replace?
gkam
1.8 / 5 (5) Feb 12, 2016
We do not know, none have worn out yet. Mine is guaranteed for 100,000 miles.
gkam
1 / 5 (5) Feb 13, 2016
"The electricity you put in your car is NOT free. You have to buy the panes, or pay P G and the E."
---------------------------------------
The electricity is not free? Really? I have to buy the system? Really?

OMG, nobody thought of that!
gkam
1 / 5 (5) Feb 13, 2016
Ira, I did not do this to get "free electricity", I did it to be a good citizen, and provide for myself, cleanly. I essentially bought an annuity which increases in value in times of inflation, not the other way around.

Of course, the oil merchants, in their greed and hunger for power, killed their own market with ego and politics, pushing down fossil fuel prices and hindering the growth of alternatives. But alternative energy market penetration is permanent, now.
greenonions
4.3 / 5 (6) Feb 13, 2016
richk
At the current battery cost of $325 per kWh
I know you are quoting from the article - but just picking up on the thread. Battery costs are now down to around $150 per Kwh - http://www.autobl...-to-145/ and the trends suggest that within a few years - it will be down around $100. Of course the real factor is the cost of electricity to charge her up. I own a Leaf - and the numbers are showing that life time (or per mile) costs on the Leaf are very comparable today to a gas car. I pay 11 cents per Kwh for electricity , and 5 cents overnight in the summer. Gives me a per mile cost of around 2 cents (averaged). My Civic runs around 5 cents. The difference offsets the higher cost of the leaf - even without tax subsidy. Also lower maintenance costs.
philstacy9
3.7 / 5 (3) Feb 13, 2016
There has been speculation about quantum effects in the human brain which, if true, could explain the entanglement of scientific and political thoughts in brain tissue.
gkam
1 / 5 (4) Feb 13, 2016
phil, will you be okay?
kochevnik
2 / 5 (4) Feb 14, 2016
@gkam you can't be scared of everything and still have a life.
Since your government is instigating war with us, your life may be very short
gkam
1 / 5 (4) Feb 14, 2016
Whose government, and who is "us"?
kochevnik
3.7 / 5 (3) Feb 14, 2016
Whose government, and who is "us"?
Obviously your woman can't even prepare tea to wake you up
gkam
1 / 5 (4) Feb 14, 2016
I don't drink tea.

Who is "us"?
gkam
1 / 5 (5) Feb 14, 2016
"Since your government is instigating war with us, your life may be very short"
-----------------------------------

Wow, . . a threat?

Tell me more. Are you Pootie? Vlad I, Czar of all NovoRossia?

In order to stay on top of the heap, he is making the heap smaller and worth less and less, as he infuriates all but the poor ill-informed Rooskies, who buy the propaganda, as they sink into third-world status.
gkam
1 / 5 (6) Feb 14, 2016
Wow, I got a one from Ira for that last comment regarding Putin and NovoRossia. I guess that means Ira favors Pootie and his thugs. Either that, or he is caught up in some emotional furor he cannot control, following me around, trying to hurt me with his silly "ones".

Try Twitter. It's more your speed.
Uncle Ira
3.9 / 5 (7) Feb 14, 2016
Wow, I got a one from Ira for that last comment regarding Putin and NovoRossia. I guess that means Ira favors Pootie and his thugs. Either that, or he is caught up in some emotional furor he cannot control, following me around, trying to hurt me with his silly "ones".


You got a one because it was a silly lame postum that you obviously were thinking was wise witty glibby and smart.

Try Twitter.

Why you don't try him?

It's more your speed.

Naa, one sentence bumper stickers slogans is not enough letter spaces for me. Choot, the 1000 they give me here is sometime not enough. But I can see now where you honed your sloganeering skills.

gkam
1 / 5 (6) Feb 14, 2016
Ira, you'll feel better about yourself after you accomplish something.
Uncle Ira
3.9 / 5 (7) Feb 14, 2016
Ira, you'll feel better about yourself after you accomplish something.


No wonder I am so happy and feeling fine all the time. As opposed to hanging out on places where I am grumpy everyday like you do.

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