Summary: With a focus on “Greener, Cleaner and Cheaper” energy, we are overlooking the possible negative consequences of cheap energy. More expensive energy can be seen as a big negative as it will slow economic growth, but cheaper energy could accelerate degradation of planetary resources. Damned if you do, damned if you don’t?

About the publisher: Richard Norris is a leading business developer and advisor to energy investors, developers, bankers and the public sector.

A binary choice?

  • In the complex world of energy, economics and environment the world can be split into two kinds of people: those who think energy will be cheaper in the future and those who think it will be more expensive

Truth be told, this simplification might be true if it was restricted to “those people who have ever given it a moment’s thought”. Most people are not even aware that this question is the only question that really matters, which is a shame as it is fundamental to every other debate. Energy is not cigarettes – it is the nebulous ether that powers the world’s economy, without energy the economy would dissipate and fade just as a hurricane does when it loses the oceanic heat-input as it tracks inland.

The pessimistic view is that energy will become increasingly expensive, with a consequent squeeze on wealth and human well-being. The optimistic view is that technology will evolve and continue to find ways to access energy as cheaply, or indeed more cheaply, than at present. Of course, it’s not as simple as this either: the optimistic view could actually be catastrophic – but more on that later.

One of the mantras of the Energy Transition is that “the technology is already there, it just needs the political will…”.

Which is odd because it is a stark contrast to the endless stream of news stories of the latest “silver bullet” technology breakthrough (examples herehere and here and countless others). Why the obsession with silver-bullets if we already have the means in hand? There is a bit of a conceptual gap between the view that “the technology exists” and yet every other news story is lauding the next great breakthrough. The obvious conclusion is that there is a real gap, and that current technology won’t be enough.

In the absence of an existing “disruptive” technological solution, most rational views of the next two decades (at least) indicate a continuing reliance on fossil fuels. I have discussed how this looks from an oil supply point of view here. A simple conclusion is that we will need a lot of oil (700 billion barrels between now and 2040), and even more gas, and that this is likely to be harder to access and consequently more expensive. This leads to a quite pessimistic view.

My somewhat catastrophiste world-view was recently challenged by a much more optimistic and pro-technology colleague, who rightly pointed out that (amongst other things) current low oil prices are due to technological innovation coming through, and that you should not bet against the massive momentum into low-carbon energy.

Don’t bet against momentum

There is indeed huge momentum and there are vast resources being deployed in the energy transition, along with activism of “boycotts” and divestments from “old-tech”. It is not uncommon to see comparisons of the effort needed in the Energy Transition to either the Apollo moon landings (where NASA budget hit 4.5% of total US Federal Budget, see image) or even the war-time mobilization, where single purpose objectives pull in the focus of all activity. These analogies are debatably applicable, but the idea that a huge global effort is needed is not incorrect. In fact it is likely that many of the loudest voices clamoring for an urgent transition do not really understand the magnitude of the ask.

But as per the moon landings, we won’t be doing it because it will be easy. It will be hard.

One of the most compelling descriptions of this by Roger Pielke and can be found here. Simply put, the world uses 11-12 billion tons of oil equivalent (all energy sources combined) per year (11,865 mtoe in the notation of the article). To replace this with carbon-zero energy (and for it to be on-demand) the author uses a nuclear power-plant as a simple benchmark. A standard nuclear plant produces roughly 1 mtoe/year, so you would need to build 11,000 to completely remove carbon-based energy. Conveniently there are roughly 11,000 days between now and 2050, so the math is quite simple – build one nuclear plant every day for the next 30 years and Robert is your father’s brother. The same math can be done with wind-farms if you prefer, but the result is worse (due to the irregular generation capacity).

One of the other features of both major wartime industrialization as well as the space-race is the rapid advances in technology. For example, the Second World War started with armies reliant upon horses (including cavalry divisions), and ended six years later with unmanned long-range jet-powered missiles, and the atomic bomb. The technological progress was astounding as it was during the space race. It is logical therefore to suggest that a massive global effort, a “pseudo” war-footing, will produce equivalent technological progress, and not incidentally great investment opportunities for those who can pick the winners.

Thus, to believers in technology (and let’s face it, all Malthusian scenarios in modern history have been made obsolete by technological advances… ), the above “one nuclear plant/wind farm per day” is not strictly relevant, as technology will provide a more radical solution, even if we don’t know what it is just yet.

As Art Bermann has noted:

Americans have more faith in technology that has not been invented yet than they do in God

Oil and Gas

Somewhat surprisingly, compelling arguments for the role of technology can be found in the Oil and Gas space. The last decade has seen radical changes in both commodities. Peak worry about “Peak Oil” was about 2009. As I have noted previously the theory may well not be wrong, but the timing clearly was. In addition, instead of the world economy being in terminal decline due to scarcity of oil, we are (apparently) awash with it. The net surpluses of recent years have seen OPEC+ making voluntary output reductions and major incidents in the gulf have been blips on the oil-price radar. The simple answer to this is US shale. The combination of the uber-efficient US marketplace, low interest rates and particularly significant advances in technology have created a production monster. Production has grown from zero in 2009 to almost 9 million bbls/day end 2019. Indeed, roughly 70% of the increase in demand over the last six years has been met by increased production from the US shale. The surplus thus created has partially fulfilled the forecast “lower for longer” view of oil prices. So a technological advance has kicked peak-oil at the very least “down the road” and temporarily at least, has helped keep prices low. It is worth noting that whilst impressive, the shale boom is really just incremental technology – not disruptive, and that the current “cheap” oil is still well above levels considered normal even 20 years ago.

Likewise for gas, the 2010-20 decade will be remembered as the coming of age of LNG. Gas has always been a binary outcome – if near a market like Groningen or the Southern North Sea, it has been immensely valuable. If it was distal to any market, it was a problem. Massive infrastructure such as the Soviet pipeline networks could solve for distance if the resource was big enough and pure market forces ignored, otherwise it would be re-injected or flared if it was associated gas, or left in the ground if a primary gas resource.

The development of super-cooled refrigeration (liquification) has been a game-changer. Gas can now be shipped around the world at costs that make it competitive with other bulk fuels. This has opened stranded gas assets to world markets, and the abundance of cheap gas has started to create new markets. Whilst natural gas fits into the hated “fossil fuel” category, it is rightly recognized as a very important fuel. Either in its own right, or as a “bridge” fuel to keep the lights on as we transition to zero-carbon. Natural gas also has the advantage that it can be used as a direct substitute for coal in existing power-plants with only modest conversion costs.

It is only hugely ironic that the US has significantly reduced its CO2 emissions – well below its Kyoto targets, whilst simultaneously pulling out of the Paris accords. This has been almost entirely driven by the equally hated “fraccing” business. Huge amounts of cheap gas have been accessed from both gas plays in the north-east as well as associated gas from the liquid rich areas in the south and south-west. Pure economics, likely accelerated by public opinion, have caused price-driven substitution, and the beating of emissions targets. US emissions are as low in 2019 as they were in 1985, with an economy that is vastly bigger.

Unlike the upstream part of this equation which as noted above is somewhat incremental, the development of LNG has been a disruptive technological step.

The US is now a significant exporter or natural gas, and discoveries of giant gas resources have vastly outpaced oil discoveries in 2000-2020. The pivotal role of LNG as an enabling technology is only just beginning to be felt. Oil on the other hand is unlikely to have anything other than incremental (although potentially significant) advances in technology… and overall, I still believe that future oil will be more expensive oil.

No technological solutions

We are accustomed to problems having technical solutions, but this is not always the case. As exemplified by the cold-war arms-race, there is a class of problem that does not have a technological solution. Simply building bigger and badder weapons has no technological solution. Whilst the American development of the atomic bomb “solved” the war in the Pacific in 1945 due to its extreme asymmetry, it did not (and does not) provide a conclusive solution. Indeed the continued development of weapons led to the situation where both the USA and the Soviet union had sufficient firepower to destroy the world many times over. The “Mutually Assured Destruction” doctrine has helped keep the peace for many decades, but it is certainly no long-term guarantee. Weapons technology is now expanding into space and cyber domains, so clearly there is no technological solution.

Likewise, if we step back from the rather narrow question of carbon-dioxide in the atmosphere and the “energy transition” we could argue that there is no technological solution to the complex problem of energy, economics and the environment… Nuclear Fusion is a case in point.

Journalists and politicians love the “Greener, Cleaner and Cheaper” headline… but is it really possible?


When I was in school, many moons ago, we got to visit the Joint European Torus (JET) project in Culham, near Oxford. This was the cutting edge of fusion research and results were “thirty years away”.

Thirty-five years later, having visited my brother-in-law’s biotech company in the same Culham science park.. I got an invitation to come visit the JET project, where Fusion technology holds the promise of limitless free energy… It is a long-standing joke that it will always be thirty years away, and it may well still be.

Oddly, I think this is a good thing, and is probably worthy of a separate post. But simply put, limitless clean free energy would tick all the boxes of the carbon-zero lobby, but would have a more problematic side effect. When we step back and listen to the growing chorus of concern and activism, CO2 and climate-angst leads the orchestra, but the more nuanced views include concern about pollution, biodiversity, ecosystem degradation, species extinctions and ultimately the incompatibility of rampant capitalist consumerism with a finite and balanced planet. Limitless free energy, no matter how “clean” would drive consumerism to frenzied extremes – everything would be come stupidly cheap if the primary (embedded) energy was free (or close to free), and if the last 40 years are anything to go by, it seems unlikely that the human race would collectively decide to auto-limit its consumption. Yes there is increasing consumer awareness and lots of small everyday gestures – but as the wise David Mackay once said – if everyone does a little, only a little gets done.

For every anecdote of the rejection of plastic straws and/or the adoption of vegan-months, we should remember sobering figures such as the fulgurant rise of the SUV and/or the continuing popularity of bottled water in OECD countries… and unbelievably given the ESG focus on oil companies, the total lack of consumer focus on bottled water (where actively seeking increased sales is somehow OK)…. completely bonkers.

In my humble opinion, technological “success” in developing Nuclear Fusion and limitless cheap energy would be a nightmare not a liberation.

Silver Bullets

The focus of the press on “silver bullets” is borne of the view that Greener, Cleaner and Cheaper is both a “good thing” and is achievable. Indeed desirable. Let’s assume it is achievable. Greener and Cleaner – so far, so good. The “Cheaper” part seems to me to be a very nasty double-edged sword.

More expensive energy (the “pessimistic” view from the top of this article) may turn out to be the optimistic view – we will all be a bit poorer, but the planet may take less of a beating as a result. Conversely, Greener, Cleaner and Cheaper will feed the consumer beast – albeit with lower CO2 emissions, but ultimately moving the problem from climate-emergency to planet-emergency.