Global energy: The ice bucket challenge

20 Jul 2015 | Noel Forrest

post-11

The challenge being to look at the chart above.

I am all for celebrating successes, of which I can think of many in the renewable energy industry. But while the lowest, dark blue line is moving upwards, I cannot help but notice the red lines above are moving upwards also!

Perhaps the only advantage, from an environmental perspective, to increased fossil fuel demand, pushed up yet further by recent price falls, is that when supply constraints bite (as they generally do when oil/gas/coal depletes; ignoring capital investment cycles), the consequent increase in price will be all the more rapid.

To put that in supply/demand terms (for oil): This demand increase represents a steepening of the demand curve, while the the price falls of the last year are explained mostly by a downward movement in the supply curve as a result primarily of improvements in shale gas extraction technologies. A cut by OPEC might traditionally have moved the supply curve back up again, though has not been forthcoming.

My point is that while we may debate the relative importance of market forces and government or international policy in the transition to a low carbon energy system, it’s fair to say neither has done the job yet.

Noel Forrest

Manager

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