Energy Issue Brief
Total Page:16
File Type:pdf, Size:1020Kb
Energy Issue Brief By Matthew Ocheltree Carnegie Endowment for International Peace INTRODUCTION ......................................................................................................................................................... 3 GLOBAL ENERGY USAGE ............................................................................................................................ 5 THE EVOLVING CONCEPT OF ENERGY SECURITY .......................................................................................... 8 TYPES OF ENERGY ............................................................................................................................................... 12 FOSSIL FUELS .......................................................................................................................................... 12 Oil ...................................................................................................................................................................... 15 Oil Markets ................................................................................................................................................................... 17 Oil Demand .................................................................................................................................................................. 20 Oil Supply I: Production ........................................................................................................................................... 23 Oil Supply II: Producers ........................................................................................................................................... 28 Government Policy .................................................................................................................................................... 33 Coal ................................................................................................................................................................... 36 NUCLEAR POWER ..................................................................................................................................... 39 Nuclear Nonproliferation ............................................................................................................................. 42 Nuclear Energy and Development ............................................................................................................ 45 RENEWABLE AND ALTERNATIVE ENERGY SOURCES ................................................................................... 47 Biofuels and Ethanol .................................................................................................................................... 50 Wind Power ..................................................................................................................................................... 55 Hydrogen Power and Fuel Cells ................................................................................................................ 58 Solar Power .................................................................................................................................................... 60 Hydropower and Tidal Power ..................................................................................................................... 63 ENERGY AND THE ENVIRONMENT ................................................................................................................... 66 ENERGY CONSERVATION ........................................................................................................................... 68 ENERGY EFFICIENCY ................................................................................................................................. 72 Fuel Efficiency Standards ........................................................................................................................... 74 CLIMATE CHANGE ..................................................................................................................................... 77 Emissions Standards and Air Quality ...................................................................................................... 80 The Kyoto Protocol ....................................................................................................................................... 84 ENERGY AND DEVELOPMENT ........................................................................................................................... 88 RURAL DEVELOPMENT AND MICROPOWER ................................................................................................. 90 THE RESOURCE CURSE ............................................................................................................................. 93 “THE FIRST LAW OF PETROPOLITICS” ....................................................................................................... 95 APPENDICES ........................................................................................................................................................... 96 A. THE REFINING CHALLENGE .................................................................................................................... 96 B. DEMAND IMPERFECTIONS: BOUTIQUE GASOLINE REGULATIONS .............................................................. 99 C. HUBBERT’S PEAK THEORY ........................................................................................................... 100 D. THE CYCLE OF NUCLEAR POWER GENERATION .................................................................................... 101 E. HYBRID CARS AND FLEX CARS ................................................................................................ 105 F. ENERGY AUDITS ............................................................................................................................. 106 G. THE ENERGY STAR PROGRAM .................................................................................................... 106 H. CHINESE COAL ............................................................................................................................... 107 I. THE EUROPEAN UNION’S EMISSION TRADING SCHEME ........................................................... 109 1 J. EXAMPLES OF MICROPOWER....................................................................................................... 110 K. THE RUSSIAN STABILIZATION FUND ........................................................................................... 110 L. THE NIGERIAN BACKLASH ............................................................................................................ 110 M. FREEDOM IN PETROLIST STATES ......................................................................................................... 112 GLOSSARY ............................................................................................................................................................. 114 REFERENCES ........................................................................................................................................................ 128 2 Introduction Terese is a 20-year-old mother living in a small village in Senegal. She spends most of her day laboring over simple everyday tasks that a woman living in a developed country with reliable access to energy could perform in minutes. In order to cook meals, Terese must grind her homegrown grains using traditional tools like a mortar and pestle. Even though the village has a grain-grinding machine, it requires several liters of expensive gasoline in order to function—resources Terese does not have and cannot afford. Cooking this meal into an edible form over a simple fire can take up to two hours, not counting the time it takes to gather the wood. In addition, she must spend several hours a day walking to and from a well to gather water because the village lacks the electricity to run a modern water pump. Most people take energy for granted, never realizing how much they use—and waste—to accomplish even the most basic activities in their daily routine. Yet, energy is a scarce and valuable commodity, one that will play an increasingly important role in the lives of all global citizens in the coming years. One day, the forces of globalization may bring a supply of energy and thus greater opportunity to Terese’s village. But globalization is also complicating the global energy landscape in ways that we are only beginning to understand.1 Energy usage has been such a basic element of human advancement for so long that it is perhaps not surprising it has acquired mounting significance in the era of globalization. It pervades every aspect of life: enabling the simplest everyday tasks, shaping the environment around us, underpinning economic growth, and increasingly affecting the geopolitical calculations of all governments. In addition, an estimated $38 trillion dollars needs to be invested in the energy supply infrastructure between 2011 and 2035 to meet the growing demand.2 First and foremost, energy in all its forms, perhaps more than any other commodity, has fueled the continuing integration of the nations of the world and their economies. Higher energy consumption has both influenced and been influenced by the forces of globalization, raising the stakes involved in the formation of national energy policies and the proper operation of global energy markets. Strong