Transcript Security Scenarios And The Global Economy

NS4054
Fall Term 2015
Climate Change
and Energy Security
Overview I
• Peter Hartley, Climate Change and Energy Security
Policies: Are They Two Sides of the Same Coin
• Tony Blair Quote “We must treat energy security and
climate security as two sides of the same coin”
• His point:
• Industrialized world would not be so concerned with Middle East
politics if it were not so dependent on Middle East oil supplies
• For ensuring energy security reducing oil consumption is a
substitute for a military presence and military action in the Middle
East
• At same time fossil fuel combustion adds carbon dioxide
to the atmosphere
• Hence reducing fossil fuel consumption should increase energy
security while also slowing climate change
• The two policy goals should be treated as one
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Overview II
• Paper asks: should the two alternative policy goals be
treated as once since one policy instrument can
simultaneously further both goals.
• To answer question need to
• Be more specific on what we mean by energy security and
climate policy
• Also need to investigate the range of policies that could address
the two policy goals
• Only then can we assess whether:
• Both goals are best addressed by the same policies or
• Policies that are best to further one goal might compromise the
attainment of another goal.
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Energy Security I
Possible meanings of energy security
• Above argument identifies energy security with national
security
• Can associate increased energy security with a reduced
need to maintain influence in countries such as those of
the Middle East – substantial energy resources, but
politically unstable or hostile to the West
• Another connection between energy security and
national security is fact that modern military forces
require substantial refined oil products
• Notion of energy security also has economic dimensions
• Sudden large increases in energy prices have preceded most of
the post World War II recessions
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Economic Security
• Large energy price increases are thought to retard
economic growth via a number of mechanisms.
• The need to spend more on energy commodities constrains
household consumption of non-energy goods and services
• Similarly to save on non-energy related costs, firms reduce
employment and investments in non-energy related capital
• Productivity also declines as resources are reallocated in
response to the energy price changes.
• Energy price variability also
• Increases uncertainty about future energy prices which in turn
• Deters investments in competing types of energy or competing
high cost locations such as the deep water in the Gulf of Mexico
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Hard Trilemma
• Such investments typically are large and long-lived and
thus made much more uncertain
• Insofar as volatile energy prices reduce investments in
domestic alternatives they exacerbate the initial
instabilities by concentration in less stable region
• Before share could argue a hard trilemma with reduced
fossil fuels use increasing energy security and improving
the climate.
• Most cost effective strategy might have been to focus on
R&D in lowering the costs of alternative fuels
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Soft Trilemma
• Being less dependent on ME over time should reduce oil
price volatility since it is that region that has generated
most of the oil price shocks
• With shale oil and gas the trilemma softens and reducing
oil use at least improves energy security and the climate
• Shale oil is lighter with less CO2 component
• Domestic production lessens imports
• Cheap gas shifts reduces CO2 in power generation
• The increased use of natural gas at the expense of coal
will be a slowing in the growth of CO2 emission in a way
• That does not raise energy costs and
• Therefore is consistent with continued growth in economic
prosperity
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Energy/Climate Transition
• Shale based natural gas will provide a period of transition
for the development of alternative fuels
• When gas is less abundant the shift to these
technologies and alternative fuels can occur without
economic dislocation.
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