"Over 80% of the world's people have never been in an airplane. 'Flight shaming' may be a social mode in Sweden, population 10 million, but China, population 1.5 billion, is building eight new airports a year."
That quotation is typical of the tough-minded, realistic approach that Daniel Yergin adopts in "The New Map: Energy, Climate and the Clash of Nations." The book is perfectly timed. Incoming U.S. President Joe Biden has pledged to take his country back into the Paris Agreement on climate change and is expected to put green investment schemes at the center of his economic recovery program.
The European Union had already committed itself to a zero net carbon economy by 2050, as has U.K. leader Boris Johnson. Japanese Prime Minister Yoshihide Suga followed suit in late December. The governments of the wealthiest countries in the world are now solidly aligned with the green agenda. What could possibly go wrong?
Quite a lot, in Yergin's view. To hit the target, these countries (gross domestic product per head of $40,000-$60,000) would need to see their per head emissions fall to the same level as India's (GDP per head of $2,000). These are tremendously ambitious goals.
Japan has followed the EU and the U.K. in proposing to ban sales of standard ICE (internal combustion engine) automobiles -- by the mid-2030s in Japan's case. In an unusually blunt response, Akio Toyoda, CEO of Toyota Motor, stated that such a restriction could force car manufacturing out of Japan while doing nothing for emissions. Indeed, unless the electricity grid itself is de-carbonized, electrification of the car fleet will achieve little.
Change in the U.S., with its high level of vehicle ownership, is far more challenging. The fleet of 280 million vehicles is currently 99% ICE-reliant. One-fifth is over 16 years old, a proportion that has been rising steadily due to quality improvements. Without a game-changing policy intervention, many vehicles bought this year will still be in service in the late 2030s.
Any such intervention will incur immense costs at the very time the economic wounds of the COVID-19 pandemic need to be healed. Is President Biden ready to raise fuel taxes to European levels and offer more subsidies to the largely wealthy buyers of battery-powered cars? If he does, America's 3.5 million truck drivers are unlikely to be amused.
Former British Prime Minister Harold Wilson once declared that a week was a long time in politics. From the perspective of today's politicians, 2050 probably seems far in the future. But in terms of a full-scale energy transition, the creation of the necessary infrastructure, the safety testing, and the delivery and commercialization of new technologies needs to start now.
Daniel Yergin is an insider's insider, who is a Pulitzer Prize winner, Brookings Institution trustee, Council of Foreign Relations board member, and a member of the U.S. Secretary of Energy's Advisory Board under the past four presidents. He knows the issues inside out, and most of the major players, too. His reputation is based on his intimate knowledge of the oil and gas industry and his analysis of the geopolitics of energy.
Most of "The New Map" is a lively description of recent events. It features a colorful cast of characters that includes Russian President Vladimir Putin, Chinese President Xi Jinping, Saudi leader Mohammed bin Salman, Uber co-founder Travis Kalanick, Tesla co-founder J.B. Straubel, shale oil pioneer Harold Hamm, and Malcolm McLean, the man who invented the shipping container that ushered in an era of explosive growth in world trade.
Yergin offers an important and controversial conclusion in the last two chapters. His main scenario is that the global aircraft fleet will double over the next 30 years; that oil consumption will hardly fall in absolute terms, although its share of total energy consumption will decline significantly; that the number of ICE-powered vehicles will largely remain unchanged, although over half of the new cars sold worldwide will be electric vehicles.
"Oil will maintain a preeminent position as a global commodity, still the primary fuel that makes the world go around," he declares. "Some will simply not want to hear that. But it is based on the reality of all the investment already made, lead times for new investment and innovation, supply chains, its central role in transportation, the need for plastics from the building blocks of the modern world to hospital waiting rooms, and the way the physical world is organized."
Unsurprisingly, Yergin has little time for the radicals, symbolized by Swedish teenage activist Greta Thurnberg, who want to ban fossil fuels right away. He quotes the response of David Swensen, the legendary head of the Yale University investment fund, when faced with student demands to disinvest from fossil fuel companies: "If we stopped producing fossil fuels today, we would all die. ... We wouldn't have food. We wouldn't have transportation. ... We wouldn't have clothes."
Yergin is no climate change denier, nor does he ignore the disruptive new technologies that are driving down the cost of renewables. He believes the energy transition is real and that breakthrough technologies such as hydrogen power have great potential. But he questions the time scale. The basis of his skepticism is the changing power balance in the world, specifically the rise of Asia.
China overtook the U.S. as the world's largest energy consumer in 2009, and now accounts for 25% of global energy consumption. Some 85% of that is generated by fossil fuels, overwhelmingly coal. It has been adding three coal-fired plants a month.
Long-term energy security is crucial in the thinking of the Chinese leadership and plays a major part in its rapprochement with Russia. As Yergin observes, "a relationship that was once based on Marx and Lenin is now grounded in oil and gas." China has made a $80 billion advanced payment to Rosneft, the state-controlled Russian energy company, for oil supplies to be delivered over the next 25 years. It has also financed the nearly 4,000-km-long Power of Siberia natural gas pipeline, part of a megadeal worth $400 billion over 30 years that cements relations between the two nations.
China is indeed a leader in electric vehicles, but the need to keep living standards rising -- a must for the Chinese Communist Party -- suggests that fossil fuels will remain the dominant source of electricity.
India, destined to become the world's most populous nation by the end of this decade, is at a much earlier stage of development. For a large part of the population -- 300 million live on the equivalent of $1.25 a day -- energy transition means moving away from the use of pollutant-spewing wood and agricultural and animal waste.
The target is "to usher in a gas-based economy," in the words of Petroleum Minister Dharmendra Pradhan. Currently, India has 37 cars per 1,000 people. China has 160, Brazil 208, the EU 520 and the U.S. 867. In the subcontinent, motorization has barely begun.
If the G7 nations still ruled the world, you could color the year 2050 a deep shade of green. But geopolitical power is flowing to countries that want to address more basic needs. Until hardcore environmentalists make converts of Indian Prime Minister Narendra Modi, Xi Jinping and other leaders of the emerging world, Yergin's highly informed skepticism seems well justified.
Peter Tasker is an analyst with Tokyo-based Arcus Research.