Evolved engines
An economist says the climate needs lots more electric and hybrid cars soon.
It’s going to take much more than the Paris climate accords for the world to escape the worst of climate change over the next 25 years, even if everyone sticks to the script, Statoil chief economist Eirik Waerness says.
The population of electric cars and hybrids will have to explode like the combustion engine did in the early 20th century. Power plants will have to shed half the coal they use today and replace it mostly with wind and solar power. World leaders will have to set much tighter carbon emissions rules for broad swaths of the economy – including the oil industry. All by 2040.
“It’s possible, but it’s an extremely challenging pathway,” Waerness said. “It requires a price on carbon.”
In the energy industry, forecasters aren’t hard to find. From Exxon Mobil Corp. to the Organization of the Petroleum Exporting Countries, plenty of players claim to know how the oil business will turn out in coming decades. But Norway’s Statoil is unique: The oil company has had to pay the high carbon taxes it advocates for more than two decades, thanks to the Norwegian government — the company’s largest shareholder.
Waerness argues the only way to curb rising temperatures enough to avoid the most disastrous effects of climate change involves replicating the model around the planet, as well as quickly speeding up the major changes unfolding in the world of energy, especially the slow transition toward renewable and electric cars. That’s not to say the oil industry — including Waerness’ employer — will go out of business anytime soon. Just to replace the crude production lost to natural declines over the next quarter century, the industry needs to extract somewhere between three and six times the oil pumped in the United States today. Waerness recently spoke with the Houston Chronicle about how Statoil sees the future of energy markets. Excerpts, edited for clarity, below:
Q: Given the sweep- ing changes in the energy market, how do you think oil and gas will do in 2040?
A: We have oil and gas demand being around 45 percent to 50 percent of all energy in 2040 — the same as today. When you look at how much we can potentially produce from existing fields, we won’t be even close to producing the oil and gas needed unless we invest significant amounts of money. If we stopped investing now, you end up with somewhere between 20 and 50 million barrels of oil. We need at least 80 million barrels a day.
Q: How does the world limit rising temperatures to 2 degrees Celsius above preindustrial levels?
A: We need fantastic growth in renewables where the share of sun and wind in the energy mix today goes from below 2 percent worldwide energy use to 15 percent. But the key to reaching the 2 degree target in addition to this renewable growth is to reduce global coal demand by roughly 50 percent.
Q: Why advocate a price on carbon?
A: If you have a very high carbon price, coal is going to be more rapidly phased out of the electricity mix. If you have extremely tough fuel emissions efficiency standards, you have to phase out many coal-fired plants. We’ve had a carbon price on the Norwegian continental shelf for 25 years, and there’s no doubt that has contributed to us finding energy-efficient solutions to producing oil and gas. Our CO2 emissions are, on average, half of what they are in global oil production.
Q: How do you see transportation evolving?
A: We assume a rapid transition from combustion engines to something else that is dominated by electricity in coming years. Today electric cars can’t compete with combustion engines because it’s too expensive, and they have range issues. The question is how you will completely flip the car sales. Volkswagen recently announced a goal to increase sales of electric vehicles to 25 percent. To fulfill fuel efficiency requirements, they have to make new cars available that are modern plug-in hybrids or electric. There’s a photo of Manhattan in the 20th century packed with traffic — there’s one car and the rest are horse carriages. If you had forecast that in 25 years from then, the traffic would be all cars, you would have probably been looked upon as very radical. But it happened in 10 years.