The assumption of cheap conventional energy consumption is wrong and we can’t wait for another energy shock to scramble for solutions. By Ron Mahabir
ANYONE still keen on nuclear power generation after Chernobyl, Three Mile Island, Idaho Falls and most recently Fukushima, should be encouraged to move their family within close proximity of the nearest nuclear power plant or radioactive waste disposal site.
The oil spill in the Gulf last year will result in hundreds of billions in clean up costs and years of lost revenue to local businesses. Significant changes in weather patterns have led to horrific floods in Pakistan and Queensland, destruction of crops and shortages of water.
Our consumption of conventional fuels comes at a huge cost that goes well beyond the per kilowatt hour price.
We have made significant progress in so many areas with advancements in technology, yet we are still in the dark ages where it relates to sourcing, generation, distribution and consumption of energy.
And we will remain in the dark and at the mercy of more resource-rich regimes until we truly commit to an accelerated and wide-ranging plan focused on efficiency, clean energy generation and alternative transport fuels.
What will it take though, for us to wake up to the economic, environmental, social and national security related costs of fossil fuel and nuclear consumption? We have entered an era of increasingly scarce resources with a planet that is many times oversubscribed. Not only do we have declining energy resources, but also we are facing crises in water, food production, pollution and climate change, all of which are fundamentally centred around energy.
We are making a major mistake in pricing resources on the basis of short-term supply and demand fundamentals without taking into account longer-term shortages and other environmental and social costs. The past century has been built on cheap conventional energy and despite all of the obvious warning signs we continue to use the same assumption of cheap resources.
Those nations that fully embrace cleaner, more sustainable and decentralised alternatives will dominate in the years ahead. Countries such as China, Germany, Israel, Korea and Sweden all get it because they realise that energy poses the greatest risk to their economic growth and political stability.
In fact, the 1973 oil crisis pushed Japan towards nuclear and coal as it was seemingly easier to obtain than oil from the Middle East. Now, as we have seen even those alternatives have significant pitfalls, and ‘black swan’ events keep showing up more often than we expect.
We have recently crossed a major tipping point in the energy sector. For three years in a row now, more than half of new power generation infrastructure installed annually in the US and Europe was renewable. Installed costs of clean power generation continue to decrease with improvements in technology and scale, while conventional power costs continue to increase.
Over recent years, we have seen impressive growth rates in areas such as wind and solar PV, but are we really making enough of an impact quickly enough to address the crises at hand?
Singapore, more than any other country, has no choice but to fully embrace the challenge of, and opportunity in, clean resources. Without any resources of our own and surrounded by countries that heavily subsidise fossil fuels and continue to demand more energy, Singapore needs to tap even further into its intellectual capital, governmental support, flexible business environment and ability to test-bed technologies and services.
With most major economic regions in the world distracted by unemployment and growing deficits, Singapore is extremely well positioned to take a leadership position in the new energy field.
But we can’t make the mistake of having a 20-year view on this. We need to continue improving existing technologies and innovating new ones. We need the clean-energy equivalent of the Manhattan Project focused on this, looking into areas such as algae, ocean power, solar, capacitors and electric vehicles.
And, while philosophically subsidies are generally a bad idea, the incorrect assumption we are making in the pricing and supply of conventional fuels warrants support of clean technologies to accelerate advancement in technology and achieve scale.
Human ingenuity is at its best when economic incentives are there, but we do need to accept that the fundamental assumption of cheap conventional energy consumption is wrong. Those days are over and we can’t wait for another energy shock to scramble for solutions.
Finally, we need to start factoring in the massive real costs that conventional fuels have on the environment and disasters like Fukushima as well as national security issues we are experiencing from tensions in the Middle East.
Resource scarcity and nationalism are approaching quickly, and the black swan is becoming more visible. Once you truly understand where we are headed, the solutions are not coming quickly enough. With kids of my own, the biggest question I ask myself is what kind of world are we creating for them?
Is Singapore sustainable in the longer-term? Will they have the same opportunities in a world centred on resources and geopolitical tensions?
While extremely sad, I hope we view the recent tragedies as a major wake up call. We have an opportunity to act now, but time is another rapidly declining precious resource.
- The author is the founder and managing director of Asia Cleantech Capital