Last week, on the evening of June 9th, at the University of Calgary Institute for Sustainable Energy, Environment and Economy, I attended a much-anticipated lecture of John M. Deutch, a revered American expert on energy policy and technology.This lecture was the final instalment in this year’s ISEEE Distinguished Speaker Series . The series is now in its fifth year (as far as I could ascertain), and the 2011 version is generously sponsored by Cenovus. It was a well-attended event with ample representation (again, as far as I could tell) from the oil and gas industry and from the academe.
Mr. Deutch’s 45-minute or so lecture discussed the topic “The Outlook for Progress on Energy Policy”.
Why energy policy in the first place? In an earlier post I mentioned that in many ways the situation-above-ground may be the most important factor to actually developing and exploiting an oil reserve and bringing production to market. The elements that comprise this “situation-above-ground” would include, but would not be limited to, peace-and-order situation, socio-political climate, and of course the obtaining policy and regulatory framework. By extension, and in a much-larger and far-reaching context, energy policy is a key determinant of the global situation-on-the ground as it relates to energy development and supply stability.
From my notes, which I fleshed out to the best I could that same evening while the recollection was still sharp, I would like to make the following “gleanings”. I would rather let these notes speak for themselves as I withhold for now my own comments. At a subsequent blog I would gladly add my own 64 Mexican Peso worth of musings and insights, plus any comments I would have received from my colleagues at my workplace. (By an FYI internal email I had shared these notes with them and had asked for their own comments and reactions).
I must declare one caveat lector (i.e., reader beware): these notes are not a verbatim recording of Mr. Deutch’s lecture. While I did my best to ensure that the essence remains true to his presentation, to flesh out the notes I made liberal use of my own paraphrases. I am looking forward to the lecture being made finally available at the University of Calgary/ISEEE Podcast ; then I will definitely review and validate this blog and make necessary corrections and/or amplifications. Even at this point, though, I make a pre-emptive and conditional apology for any errors of omission or commission on my part.
Here are my notes, then:
John M. Deutch Speaks on
“The Outlook for Progress on Energy Policy”
- Basic question: In North America, how are we managing our energy future, particularly in the context of having in place a well-rounded, well-thought through, and well crafted energy legislation? Such legislation would necessarily cover strategies to effect a shift to renewable energy, and cultivating less dependence on fossil fuel.
- Verdict: In spite of President Obama’s high profile position on energy, the outlook is not encouraging considering the US Congress is a house woefully divided – House of Representatives controlled by Republicans; the Senate by Democrats.
- Comparatively Canada has performed much better than the US in this aspect of legislation and governance in regard to energy.
- We are, therefore, faced with the not-so-encouraging prospect of having to deal with and work through the existing mandatory regulations of the US Environmental Protection Agency. The main weakness of such a regime is that EPA’s regulatory framework is, of necessity, an incomprehensive basis for energy planning and action.
- Some notable quotes:
- “President Carter is the only US president who has shown a sustained, intelligent, and informed attention to energy policy even as early as the ‘70s.”
- “US elected officials avoid using in the same sentence a date and a number when referring to energy legislation and policy”.
The Role of Technology
- Is technology the answer to ensuring a bright energy future? NO and YES.
- No, because despite tremendous and continuing advances in technology we will remain hard-pressed (in the short-term, perhaps) to come up with viable technology that will satisfactorily and simultaneously address the twin issues of energy supply stability AND mitigating environmental effects.
- Yes, because in the long-run, and given proper support and framework for technology development and deployment we should have viable answers.
- Continuing growth and advance of energy technology faces distinct challenges which distinguish it from our experience of great success with defence and aerospace technology.
- With defence and aerospace technology much success has been achieved because its user is the government. Government pushes, finances, develops, and deploys demonstrably successful technologies. Industry basically adopts proven technologies and applies the same to industry and commerce; such industry spin-offs have produced great business outcomes.
- In the case of energy technology, the user is industry; it is expected to provide the huge expenditure outlay to develop and deploy the technology. Understandably, it may not be inclined to do that in the absence of a policy framework that will cover, among other things, a fair and significant incentive and subsidy program. American experience in this regard has been spotty and government subsidy/incentive programs for private technology development have been the subject of heavy criticism from several concerned sectors.
- Indeed, it would be unrealistic to expect industry to take risks, including huge investment in technology research, development and deployment, in the absence of a clear roadmap that a comprehensive energy policy would provide.
For a nation like the USA, it is important to realize its domestic action produces global consequences, and vice-versa. The weakness in the US, policy-wise and in relation to energy, is that domestic matters appear to be dissociated from national security concerns.
Arab Spring: The movement sweeping the Middle East and North Africa among Arabic and predominantly Moslem countries is a cause of worry. Rightly so and in the short-run; in the long-run it should not be so. This is because in the end, whether the desired transformation of those countries succeeds or not, oil revenue will remain a key liquid economic asset. Regimes, new or old, will necessarily find a way for their oil and gas to be available in the world market.
- Shift in Global Locus of Energy Demand. A remarkable change in world energy demand has taken place in the past 10 years which saw a shift away from OECD countries. Now the greatest demand comes from huge emerging non-OECD economies — the so-called “BRIC” countries (Brazil, Russia, India, and China) plus Indonesia and to some extent South Africa. And these countries exhibit some tendencies worth looking into:
- A propensity NOT to seek integration into world agreements or global bodies that have a say on, among other matters, energy and environment; and
- A propensity to enter into bilateral agreements with supplier or resource countries that cover not just commercial or economic terms but also strong political relationships.
- Global Repercussions of Japan’s Nuclear Accident. Just when the world seemed to have warmed up to the idea of clean, efficient nuclear energy assuming a greater role in global energy supply the Fukushima incident happens. And this continuing incident appears to have set back many countries’ nuclear energy program.
- US Legislature’s Inability to Adopt a Global/Comprehensive Climate Policy. The Kyoto Protocol is set to end in 2012; and yet the US, which is a signatory country to the protocol, has remained adamant in its lack of intention to ratify the treaty. This only exemplifies the situation of lack of comprehensive global climate policy. The likely result is for a shift of national and global strategies away from mitigation of climate challenges to adaptation to effects of climate challenges.
- The Growing Importance of Unconventional Oil and Gas. Unconventional sources of oil and gas have leapt in importance globally. Although the focus of much attention is North America there is now a renewed interest in exploring and exploiting these unconventional sources worldwide, whether in Asia, Europe or Africa.
Significance of Canada and Alberta
- Canada cannot and should not count on the US having a comprehensive and strategic energy policy soon. With its Congress deeply divided the prospect of successfully putting in place soon a comprehensive energy legislation is dim.
- But in spite of and maybe because of an absent US comprehensive energy legislation there is greater reason for Canada to adopt a more integrated view of the North American energy market (i.e., Canada, US, Mexico).
- The continuing rise in global energy consumption will enhance Canada’s role in meeting such demand. In the final analysis whether the proposed Canada-US pipeline expansion project (Keystone Gulf Coast Expansion) pushes through or not Canada’s role in meeting energy demands of surging Asian markets, for one, will become even more important.
- Canada and Alberta have had a string of significant achievements in terms of efficient and groundbreaking technology in oil sands operations; however, such achievements have not reached a commensurate level of recognition.
- Canada must continue to pay close attention to the global perception of the huge environmental footprint that oil sands production entails.
- The challenge to reduce GHG emissions from oil sands operations must remain a high priority for policy and action.
- The issue of oil sands operations’ impact on the environment will continue to be closely scrutinized by the American public and Congress.
- Canada must give sustained attention to the intertwined issues of energy and environment and should continue to pursue more studies and sustained efforts to mitigate global warming risks and effects.
- Canada has to take a closer look at production of shale natural gas with a view to its sustainability, especially in light of findings about 4:1 GORs becoming commonplace.