Mario Toneguzzi wrote for the Haskayne School of Business about the key takeaways from the event, Global Energy Challenge: What is the Future of Fossil Fuels?, presented by Haskayne and Ivey.
Fossil fuels remain a key driver powering economic growth around the world with demand for energy continuing to rise despite global challenges involving increased air pollution, and greenhouse gas emissions.
Michael Greenstone, an American expert in economics and energy policy, told a Calgary crowd at the Haskayne School of Business downtown campus recently that there is a very tight relationship between GDP and energy demand.
“We just don’t have examples of countries reaching high levels of living standards without using lots of energy. Energy is critical for achieving the living standards that all countries and all people around the world are striving for,” said Greenstone, adding energy demand is expected to grow very rapidly in developing countries.
The future of fossil fuels
Fossil fuels are expected to meet most of this growth. Even with all the advances in renewables, in 2014, 81 per cent of total energy consumption came from coal, oil and natural gas. And by 2020 it’s not projected to change very much, dropping only to 74 per cent.
“Fossil fuels were an incredible invention. They produce energy very inexpensively,” said Greenstone. “The economics are pushing towards using fossil fuels.”
Greenstone was the keynote speaker at the Global Energy Challenge: What is the Future of Fossil Fuels? event on September 13.
The event was a collaborative effort between the Haskayne School of Business and the Ivey Business School.
Greenstone, the Milton Friedman Professor in Economics, University of Chicago as well as the Director of the interdisciplinary Energy Policy Institute at the University of Chicago and the Energy & Environment Lab at the University of Chicago Urban Labs, previously served as the Chief Economist for President Obama’s Council of Economic Advisers, and currently serves on the Secretary of Energy’s Advisory Board.
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Following the keynote speech a panel discussion was held that included Greenstone; Steve Williams, President and Chief Executive Officer of Suncor Energy Inc.; and Richard Dicerni, former Deputy Minister of Industry Canada and Deputy Minister of Alberta Executive Council.
How do we avoid climate change?
Greenstone described the global energy challenge as a stool that has three legs. How do we get access to the inexpensive and reliable energy that’s so critical for economic growth? Energy sources that have allowed China to have one of the greatest advances in a 25-year period, pulling hundreds of millions of people out of poverty, have relied on the use of fossil fuels and an unintended and unwanted by-product of them is air pollution. The same fuels that are powering economic growth and causing air pollution are also involved in the release of CO2 so how do you avoid climate change?
Policies at work
“There’s no magic bullet here. It’s not hard to think of policies that can make progress on one or sometimes two of those (stools) but to find policies that can make progress on all three is really in general not possible,” said Greenstone. “The toughest one is addressing climate change – which disproportionally negatively impacts developing countries – because it requires global co-operation. The Paris Agreement is a step in the right direction. And government policies that are market-based – carbon pricing and cap-and-trade – are the most efficient way to drive innovation and achieve global climate goals from an economic perspective. Government investment in R&D can also sometimes be effective. Canada appears to be a leader in climate policy.”
He said fossil fuels also remain incredibly abundant. In 1980, experts believed there were 35 years of reserves. “And had we never found another barrel of oil that turned into reserves by 2015 . . . we should have been at zero.” But instead, in 2015 it was determined there were 52 years of reserves. The reason? The industry has been clever in coming up with new ways of gaining access to petroleum and natural gas.
The event was organized and moderated by Harrie Vredenburg, Professor of Strategy, Suncor Chair in Strategy and Sustainability and Director of the Global Energy EMBA at the Haskayne School of Business and Guy Holburn, Professor of Business Economics and Public Policy, Suncor Chair in Energy Policy and Director of the Energy Policy Centre at the Ivey Business School.
