The Wall Street Journal turned 125 years old this month. To celebrate, the paper published a twenty-five page look at the future titled, “WSJ 125”.
Daniel Yergin the well-known energy commentator and the author of The Quest gave his take on what energy will look like two decades from now. The chart at the bottom shows that the world may consume 39% more energy in 2034 than it does today. Almost all of the increase will come from the emerging world, especially China and India. It is estimated, for instance that China will sell 41 million cars a year in 2034 versus 17 million sold in the U.S. right now.
And what will the principal fuels be in twenty years? Probably the same ones as today according to Yergin. Right now oil, natural gas and coal provide 82% of world energy needs. Twenty years from now the big three will still account for 75% to 80%.
What could change the picture? An energy shock (i.e. higher oil prices) could certainly be a factor or higher taxes on fossil fuels. And alternatives such as wind and solar could get more competitive. They are already closing the gap with conventionals and further breakthroughs in energy storage would be a big game changer.
But there is another way to look at our energy future, this time from the environmental side and it comes from the International Energy Agency. If you want to limit global warming today the IEA says you cannot let average temperatures rise more than 2 degrees Celsius from where they were at the start of the industrial age. President Obama agrees with this objective. But according to the IEA meeting the goal means leaving two thirds of all known fossil fuel reserves in the ground. Wow, this is a big number. On the one side you have the Chinese and Indian middle classes wanting the same consumer comforts we have, which means burning a lot more energy. And on the other side you have the environmental consideration of needing to leave 2/3 of energy reserves in the ground.
Does the U.S. public believe strongly enough in global warming now to pay the price for all this? Are the oil companies on board leaving 2/3 of fossil fuel reserves in the ground? And how about India and China cutting back on their consumption? I’d say there is a lot of debate still to go here.