Opinion Technology is the easy part

The 19th century is talked of as the era of coal; the 20th century as that of oil. Similarly,people are hopeful that the 21st century will be the age of renewables. The sweep of these comments misses one essential point. The growth of oil in the 20th century did not lead to the end of coal. Equally,the onset of solar,wind and bio energy will not result in the displacement of fossil fuels.The reasons are not simply because of cost and convenience,although these are compelling. It is also because of embedded energy infrastructures and the gestation period between the development of a new technology and its commercial deployment.

Edison illuminated New York City in 1885. It was not however until 1935 or so that the factories of mid-west America were able to switch from steam power to electric power. This was because of the architecture of the factories. They had to be redesigned and in many cases totally rebuilt before Edison’s revolutionary technology could be deployed.

A more contemporary example,LNG (Liquefied Natural Gas) was first exported from Algeria in 1964. This was made possible through a transformative technology that converted gas into liquids which enabled its shipment in specially designed cryogenic tankers across oceans. Small countries like Qatar,Trinidad and Brunei were consequently able to monetise their huge gas reserves. The LNG business has grown spectacularly over the past four decades. But its share of the energy basket is still only 2 per cent. Coal continues to be the dominant fuel for power generation. Similarly wind turbines were first installed in the US and Denmark twenty-five years back. But wind energy still occupies only a miniscule share of the market today. And it will not be until sometime in the next decade that it will reach a one per cent share. Were America desirous of replacing all of its coal-based power plants with wind energy,it would require 200,000 wind turbines and a land mass equivalent to the state of Gujarat.

The point is that given the nature of the energy sector and the embedded linkages between the infrastructure (i.e. land,distribution,logistics etc) and consumption patterns, it will take a long time for new technology,however cost-competitive and environmentally attractive,to make a material inroad into the domain of ‘incumbent’ fuels and technologies.

Here it might be worth pointing out that unlike the telecom and computer sectors where every 18-24 months the industry is convulsed by a new technology,success in the laboratories of an energy company is often simply the prelude to a 5-10 year phase of experimentation. A demonstration unit is first built. This can take upto a year. Then the technology is tested. This can last anywhere between 4-8 years. Thereafter,and on the assumption that the technology has passed the tests of reliability,a commercial-sized plant is constructed. But usually only one. The investment programme will seldom approve the construction of multiple plants. This would be too expensive. In other words the scientists may have uncorked the champagne bottles but management has to wait many years for a similar celebration. When they do,it is with the knowledge that the new technology will gain market share slowly and incrementally.

What do these examples suggest for the future?

First,technology per se will not be the obstacle to creating a new energy system. Industry will find a technological answer to existing or emergent concerns — as it has always. Thus offshore drilling when supplies from onshore fields could not keep pace with demand; thus 3D seismic,horizontal wells,‘smart’ production tools, enhanced oil recovery etc when ‘easy oil’ was no longer accessible and companies faced increasing geologic and topographic complexity; thus GTL (Gas To Liquids) and CTL (Coal To Liquids) technology to combat the problems of environmental pollution and GHGs. The technology will be there and if it is not, the companies will develop it. This is the positive lesson. The negative is the problem of dissemination. This has been slow because of the structure of the energy sector and the plethora of infrastructural,policy and regulatory issues that surround it.

The question is whether history offers any lesson on how to overcome these obstacles? The specific answer is not clear but there is a generic signal. It is that no one entity,whether government,corporate or NGO can unilaterally remove these obstacles. Many countries have announced national climate mitigation plans. Some of the plans are impressive in their breadth and targets. Indeed so impressive that several leaders have wondered aloud,perhaps rhetorically,whether an international agreement is really necessary. The lesson of history would forewarn against such unilateralism. It would posit that given the globalised nature of the problem a shared and collective commitment is the most effective way of accelerating the pace of technology deployment and the transition to a sustainable energy system. History also posits that there will be no energy silver bullet,at least not in the foreseeable future. The world will depend on and require multiple energy sources and sustainability will depend on the creation of new ‘green energy’ and the ‘greening’ of existing energy.

The writer is chairman,Shell group in India; the views are personal