No discussion of energy trends would be complete if it neglected environmental concerns. Preserving the wonder and purity of nature has been an American concern since The-odore Roosevelt and has intensified over the past few decades. Environmentalism has been called a "consumption item of elites," but economic progress creates large new elites and concerns will not disappear as long as problems are perceived. In many places the current concern is the release of greenhouse gases, which include pollutants as well as carbon dioxide. CO2 lingers in the atmosphere for 200 years if it is not inhaled by plant life. Concentrations of carbon in the atmosphere, as recorded by observations and ice core data, show a correlation with anthropogenic emissions. This is one of the few areas in the global warming debate on which both skeptics and alarmists agree.
There are, of course, serious disagreements about almost every other aspect of the global warming discussion, and strong passions rage on both sides of the Kyoto Protocol. While serious reductions in carbon emissions may be difficult to attain, there are some steps that could achieve lasting environmental and economic benefits. We could take these steps with no regrets.
One is the economic advantage mentioned earlier of natural gas power plants over coal plants. Combined-cycle gas-fired plants cost about half as much to build as coal-fired plants. They can be built in about a third of the time. They also have a better heat rate in converting raw energy into kilowatts. Unlike coal plants, gas plants can operate at 95% utilization. Since these advantages only accrue from new construction, it will be especially useful in areas of rapidly increasing electricity demand. As explained above, this includes every region of the world (but especially developing regions).
Assuming 3.3% per year GDP growth and no carbon emissions reduction treaty through 2015, emissions are projected to increase by half: 33% in OECD countries and 67% in others. If GDP is higher, we could see a 70% increase. However, even if natural gas and renewables entirely substitute for new coal capacity, the carbon emissions will increase by 38% from 1996 levels.
A concrete example of the natural gas advantage is the United Kingdom. In the 1980s, the British ridiculed the concept of generating electricity from gas. However, in 1993, Enron began operating one of the world's largest gas-fired combined-cycle power projects, at Teesside, on the east coast of England. When you add coal-to-gas substitutions in other areas, you understand why UK CO2 emissions are declining and are well below 1970 levels. If the United Kingdom can resist the temptation of a gas moratorium, it will have less trouble than its peers complying with a greenhouse gases treaty. This is because natural gas plants emit much less carbon dioxide, nitrogen oxides and sulfur dioxide than coal.
Renewable sources, of course, are cleaner still. Al-though wind and solar plants are not yet competitive with natural gas for grid use, solar power is used increasingly for off-grid locations and wind power is closing in on coal. Solar costs have fallen 75% since the early 1980s but remain high; wind costs have fallen 70%. We expect renewable sources to increase to satisfy a tenth of world demand by 2015, but this estimate depends on strong hydroelectric growth, which is controversial among some environmentalists.
We expect to see not only a convergence of gas and electricity, but also a convergence of environmental and economic efficiency. Efficient power is clean power.
