A new study has concluded that fossil fuels consumption is likely to grow unless an adequate price is placed on carbon dioxide emissions.
The new study, Will We Ever Stop Using Fossil Fuels, published in the Journal of Economic Perspectives, finds that fossil fuel consumption is likely to continue to increase unless clear and decisive policies are enacted to price carbon dioxide emissions and increase clean energy technology.
“The Paris agreement laid out a dramatic new vision, but there is still much work to be done to turn that broad outline into the concrete climate policy changes around the globe that are needed to reduce fossil fuel consumption and the odds of disruptive climate change,” said Professor Michael Greenstone, co-author of the study and the director of the Energy Policy Institute at the University of Chicago. “But one thing is clear: Counting on the fickle finger of fate to point the way to cheaper low-carbon energy sources, without market and policy forces pushing us there, mistakes hope for a strategy.”
The authors, in a worst-case scenario exploration, found that burning the fossil fuels currently known to us would increase global temperatures by 10 to 15 degrees Fahrenheit — which only increases between 1.6 to 6.2 degrees Fahrenheit if fossil fuel extraction techniques open up further resources such as oil shale and methane hydrates.
Greenstone and co-authors Thomas Covert of the University of Chicago and Christopher Knittel of the Massachusetts Institute of Technology also concluded that market forces alone will not be enough to cause a reduction in fossil fuel supply or demand.
“As long as markets fail to account for the environmental damages from using fossil fuels, there will always be incentives to develop new techniques to more efficiently access these resources,” said Thomas Covert, an assistant professor of microeconomics at the University of Chicago’s Booth School of Business. “It seems unlikely that our technological abilities to recover fossil fuels should stop improving any time soon. With continually improving technology, the world will likely be awash in fossil fuels for decades and perhaps even centuries to come.”
On the flip-side of the coin, the economists also studied the cost of clean technology, and found that though the trends in clean energy towards lower costs are promising, “the trends in clean technology progress are not yet strong enough” to reduce demand on fossil fuels.
“While alternative sources of energy and energy storage technologies have vastly improved, lowering costs, they still have a long way to go before they are cost competitive with fossil fuels,” said Chris Knittel, the William Barton Rogers Professor of Energy Economics at the MIT Sloan School of Management and director of the Center for Energy and Environmental Policy Research. “To change this, governments should put a price on carbon emissions and start injecting more money towards the basic R&D that is critical to making these technologies more cost competitive.”
These findings would seem to clash with some reports that solar and wind technology are nearing (or have long-since passed) grid parity with fossil fuel.
A report from UK developer PS Renewables in September, 2015, claimed that the UK solar industry has reached grid parity for large-scale solar farms — meaning that large-scale solar farms in the UK can generate power at a levelized cost of electricity less than or equal to purchasing fossil fuels from the grid.
In fact, a report from this week by GTM Research goes so far as to find that 20 US states are currently at grid parity for residential solar, and another 42 states are expected to reach that milestone by 2020.
States at Grid Parity in 2016
(Where the extra 10 states come from, I’m not sure, as the freely provided information from GTM does not explain, though presumably it is referring to the United States protectorate states.)