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OIL, ENVIRONMENT, AND FUTURE

An Interview with J. Matthew Roney, Earth Policy Institute

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The Montreal Review, May, 2010

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The Montreal Review: What damages to the environment do you expect from the oil spill in the Gulf of Mexico? What would be the long-term consequences on environment if the oil leak continues for months?

J. Matthew Roney: Unfortunately, the outlook for the sensitive ecosystems of the Gulf of Mexico looks grimmer by the day. Over the past few days we've seen barrier islands and coastal marshlands inundated with oil, and pictures of brown pelicans - removed from the Endangered Species List just last November - covered in oil, trying desperately to clean themselves but to no avail. And these images are just those that can be observed at the surface. We have no way of knowing the damage being done in the water column by a toxic combination of oil and the chemical dispersants being dumped by the hundreds of thousands of gallons into the Gulf.

To say that this spill, and the inability to stop the leak more than a month after it began, will be (indeed, already is) an environmental and economic disaster is in my view a vast understatement. The wetland ecosystems along the Gulf Coast are extremely sensitive areas, which serve as spawning grounds for many species, including some that are vital to the region's economy. Aside from the grim environmental repercussions, the lifeblood of this region, namely fishing and tourism, will suffer immensely.

 

The Montreal Review: Do you think that the disaster in the Gulf of Mexico will change the legislative dynamic in America as it happened after the oil spill off the coast of Santa Barbara in 1969 and the Exxon Valdez oil spill in 1989? It seems that this time the disaster in the Gulf of Mexico has not prompted President Obama to reconsider his position on off shore drilling.

J. Matthew Roney: President Obama has ordered a hold on issuing new offshore oil drilling permits while he awaits Interior Secretary Salazar's report on the BP disaster (this seems to be largely symbolic, as there were no drilling permit applications pending during the time period affected by this hold). He seems at this point not to be backing down from his intention to expand offshore oil exploration in the coming years, but this may very well change as the crisis unfolds and he receives more pressure from politicians and the public alike.

Early after the spill began, Governor Schwarzenegger retreated from his previous pro-expansion stance, and democratic Senators from California, Oregon, and Washington are all calling for a complete ban on offshore drilling leases on the West Coast's continental shelf. Governor Crist of Florida may pursue a similar prohibition for his state. So as the disaster becomes embedded in the public eye and perception of the environmental dangers inherent in deepwater oil extraction grows, we may very well see more politicians' offshore drilling enthusiasm wane. Perhaps it will be the catalyst needed for a fundamental shift in thinking and leadership on U.S. energy policy.

In case you have not seen it, a May 12, 2010, publication by our Director of Research Janet Larsen touches on the contrast between further offshore oil exploration and offshore wind development. She cites a 2009 journal article in the Proceedings of the National Academy of Sciences (PNAS) that calculated that the 10 countries leading the world in carbon emissions from burning fossil fuels could easily meet their electricity needs with wind.

The Montreal Review: In a recent article, published in McClatchy.com, Kevin Hall argues that ultra-deepwater production matters because conventional U.S. oil production has been in decline since the 1970s, and near-shore production along the Gulf Coast peaked in 1997. U.S. consumers and businesses get nearly half their oil from domestic production, most of it from the gulf region. Hall quotes Leta Smith, a leading oil analyst, who says that globally, one in every 10 barrels of oil produced in 2030 will come from ultra-deepwater operations... In my observations, the majority of politicians and oil analysts tend to suggest that there is still no alternative to oil. Do you believe that there are no other alternatives?

J. Matthew Roney: "Peak oil," or the stage at which conventional oil production stops growing and begins its descent, looms on the horizon if it has not already occurred, a point which many oil analysts now concede. Luckily there is a viable alternative, and that is electricity. By electrifying the transport sector, we can take advantage of the enormous efficiency gains from switching to electric motors from the internal combustion engine (ICB). The former is three times more efficient than the latter (~65-70 percent of the energy stored in the battery of the plug-in hybrid or electric vehicle goes to actually moving the car, compared to just ~20 percent of the energy embodied in gasoline burned by an ICB). Even with our current electricity mix, this leads to a significant reduction in carbon emissions. The climate benefits are further realized with a switch to renewably-generated electricity from the wind, the sun, and the earth.

We also envision shifting a large portion of freight traffic from road to electrified rail; improving and expanding intercity high speed rail and intracity public transit systems; and making cities more bicycle- and pedestrian-friendly. All told, the Plan B transportation measures cut fossil fuel use in the transport sector by some 70 percent.

The Montreal Review: Environmentalists insist that major ecological problems have been masked by cheap energy. Is it true that the traditional non-renewable sources of energy are cheaper than the renewable sources such as wind, sun and bio fuels?

J. Matthew Roney: Not when the true costs to society and the environment of coal and oil are taken into account. If we include all the costs the market currently ignores with respect to fossil fuels - from mountaintop removal mining, respiratory problems from reduced air quality, mercury deposition and bioaccumulation in the food chain, acid rain, and the myriad human and ecological problems associated with climate change - there is no contest. Encouragingly, even without this full-cost accounting, wind-generated electricity is already competitive with conventional sources in many markets.

The Montreal Review: Some specialists argue that the production of bio fuels can influence negatively the food production. What do you think about this?

J. Matthew Roney: Grain-based ethanol production was certainly a key driver in the record food price inflation of 2007-2008. The huge volume of corn diverted to produce ethanol in the United States alone, following the oil price jumps after Hurricane Katrina in 2005, doubled the annual growth in world grain demand. Whereas before this new source of demand came into focus grain demand (consumption) was rising at roughly 20 million tons per year, after massive amounts of U.S. corn started going to fuel ethanol distilleries this annual growth doubled to 40 million tons. This all-out push to expand ethanol production capacity was key in the tripling of staple food prices that helped push the number of hungry people in the world to over 1 billion in 2009. Prices for corn, wheat, and rice have ebbed since mid-2008 due to the economic crisis, but are still well above their historical levels (and in contrast to the world average, in many of the poorest parts of the world, prices for staple foods are still at or near record highs).

The Montreal Review: The so-called "green revolution" of the 1970s based on industrial farming, fertilizers and chemicals evoked expectations that the times of famine are behind us. But in his book Plan B 4.0: Mobilizing to Save Civilization, Lester Brown argues that today we are entering a new food era, one marked by higher food prices, rapidly growing numbers of hungry people, and an intensifying competition for land and water resources. Why is our civilization threatened with famine at the beginning of 21st century and what can we do against this threat?

J. Matthew Roney: It looks more and more as though the weak link in our global civilization is food. Trends pushing grain demand higher and constraining the growth in supply, some of which have been present for years and others of which are relatively new, are converging to create unprecedented pressure on the world's farmers: Aquifer overpumping that leads to falling water tables and dry irrigation wells; livestock overgrazing that leads to erosion of precious topsoil; the annual addition of some 80 million people to the world's population; some 3 billion people increasing the amount of grain-intensive meat, milk, and eggs in their diets; the aforementioned surge in demand for grain to fuel cars; and the threats to agriculture of climate change, in the form of rising temperatures and floods from rising seas. If we are going to restore and sustain global food security, we need action on all of these trends simultaneously. This is what we call Plan B, which Lester lays out in Plan B 4.0: Mobilizing to Save Civilization.

The Montreal Review: During the Great Depression, the state governments showed profound inability to cooperate economically and politically. In the newspapers from the 1930s, there are hundreds of articles and reports about futile international conferences, rising protectionism, egoistic foreign policy and populism. Then the horrors of the Second World War came. Only after the bloody end of the war, the European and North American countries have started a real economic and political integration based on cooperation and mutual interest. Now, we see the same short-sighted governmental policy towards the environment. Do you think that only an ecological disaster with epic proportions can force governments and people to take serious steps for saving the planet?

J. Matthew Roney: The problem is that if an environmental catastrophe is what it takes for governments to get serious on climate change, it may already be too late at that point for any action, no matter how drastic, to address the problem. No one knows the point at which the atmospheric concentration of carbon dioxide will guarantee the melting of the Greenland and West Antarctic ice sheets due to runaway climate change. What we do know is that continuing to pump growing amounts of carbon into the atmosphere brings us that much closer to a threshold we cannot afford to cross. I think that governments overwhelmingly realize that action needs to be taken to reduce carbon emissions - but it is also clear that few of them are thinking on the scale and with the urgency that is necessary.

The Montreal Review: Market economy and free trade are the best systems for allocation of resources and creation of wealth. How could the market economy help us to overcome the current business practices that destroy the environment? There is fear that if the governments start to regulate free market in favour of environment, they could go too far in destroying the economy. Do you believe that a balance between economic freedom and state regulation could be achieved?

J. Matthew Roney: The most important priority in achieving a market that tells the ecological truth is tax shifting. Lester Brown lays this out quite effectively in Plan B 4.0. To answer the latter question, if we just take the examples of tax-shifting in Germany and Sweden (also described at Plan B 4.0), it's clear that there are great economic benefits in raising taxes on environmentally harmful activities and lowering taxes on income. One side-note: a tax on carbon would send a clear market signal encouraging the growth of the energy efficiency and renewable energy sectors, which are by and large much more labor intensive than traditional energy sources. This would be advantageous to countries trying to emerge from the economic downturn and put more of their people back to work.

The Montreal Review: Thank you.

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J. MATTHEW RONEY is a staff researcher at Earth Policy Institute and a graduate student in environmental sciences and policy at Johns Hopkins University.

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