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AB 2000 studies

Alain Boublil Blog

 

Barack Obama and Climate Change

The American president recently set a new goal for the United States: reducing gas emissions. The resolution has been praised all over the world, notably in France by Ségolène Royal. This is a good signal and it anticipates the significant breakthrough to be made at the Paris conference on climate that will be held at the end of the year. But one must not be mistaken and look at the background and scope of such decision.

Sure, the country that emits the most important amount of CO2 has finally decided to fight for a cause that is unanimously considered as a priority. One cannot deny anymore the violence of climate change consequences exemplified by the media effects: the entire world knows about every storm or landslide caused by heavy rains or climatic phenomenon. It is like Pascal’s wager. A doubt will always remain on the genuine responsibility of human actions but what do we have to loose in trying to correct them and following the recommendations made by climate experts?

Yet, one must not deny the political – if not vote-catching – message conveyed by Barrack Obama’s announcement. The Democrat party is loosing one election after the other and they are trying to motivate and gain the vote of the people who are concerned by climate change – a reality that remains controversial according to the Republicans. The political view comes out clearly of the proposal. The most spectacular proposition aims to reduce the proportion of coal in the American power generation mix. In January 2010, it represented almost 50% of the latter. 5 years later it fell down to 38% and in April 2015, for the first time, more gas than coal was used to produce electricity. This spectacular evolution has led the country to considerably reduce its CO2 emissions. They have been cut by 400 millions of tons every year, which corresponds to the total amount produced by France.

But the most political statement made by the American president is not his promotion of natural gas, but rather his stronger call for renewable energies. Despite the good results and its contribution to the decrease in CO2 emissions, shale gas is not really well seen by American ecologists. Moreover, the fiscal advantages that have been granted to solar and wind energies must be renegotiated in 2016 and part of Congress clearly does not favour them. By rightly stigmatizing coal and offering to rely on renewable energies to carry on the energy transition  - which is not realistic – Barrack Obama killed two birds with one stone.

New norms have been implemented and they will undermine power plants using coal. They will accelerate the decline of this polluting fossil energy. The American president will have the support of the public opinion, which is sensible to climatic disasters and the governmental aids for renewable energies will consequently be maintained. But one must not forget an obvious fact. The only realistic alternative to coal is natural gas. First because it is not an intermittent source and second because it is economically and ecologically more efficient. Along with coal, the other looser is nuclear energy and the American president did not say much about it.

It seems that Europe has not clearly realized the real stakes of the American shale gas revolution that has occurred for five years and that has allowed the United States to increase their gas production by 40%.  The country will soon export it when the LNG terminals – currently under construction – will be operational. Then, the fossil products exchange will be reversed. Once the legal issues will be fixed, the United States will also be able to export their oil. This new gas resource has rapidly found such outlet because it was “competitive”. It is abundant, close to the markets it is meant to serve and power generation costs have consequently and dramatically decreased. It imposed itself. The “spark spread” – measuring the benefits made by the operators using natural gas – has suddenly overcome the “dark spread” – measuring the benefits made by the one using coal – explaining thereby the fast evolution of the American generation power mix.

Due to juridical issues and the opposition of many States, it will be hard to implement the legal measures announced by Barack Obama in order to reduce the use of coal. They will not really impact on the situation. But the law of the market shall prevail. Consequently, the American president did not have to support shale gas, as he would have lost the political benefit that results from the statements he directed to the American ecologists.

The increasing share of natural gas in the American power generation mix will contribute to reduce the trade deficit, even before producers would feel the need to find ways to export their production surplus and this will comfort the considerable advantage the United States have gained by producing their own fossil energies.This competitive advantage will extend to industries that require a lot of energy and will encourage them to relocate in the United States. The process has already started for refining and chemical products. The south of the country is already feeling the difference.

Europe must not be mistaken. It is not a local and temporary phenomenon. The new natural gas – and potentially oil – abundant resources will last and be global. All continents hold considerable stocks and history has shown that you can trust engineers to design efficient techniques in terms of recovering as well as environment protection so that these deposits could be exploited and the energy costs be reduced.  This so-called competitiveness that, according to economists, determines the exchanges among concurrent countries, will be affected. The United States and the American continent will not be the only one taking advantage of this process. China has started to produce shale gas and the construction of natural gas pipes is, for the first time, part of a revival plan that the government is preparing.

We are looking at Uber, Google or Amazon. What if, finally, the most important change of the next thirty years, will come from this new abundance of natural resources that will bear important geopolitical consequences? These natural resources will certainly be better allocated all over the planet and the story will be different from the time England, in the early 19th century, led the industrial revolution thanks to its coal mines.

 

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