Drive to make energy cleaner has stalled. Shale gas could help.

As usual, the real news belongs to a couple of things you may have missed this week.

One, at first completely unrelated to energy, but of major consequence to everything else was the  discovery that the Reinhart/Rogoff economic study that underpinned austerity economics world-wise had a key error in it.You couldn’t make this up. Reinhart and Rogoff certainly didn’t but they did make two key errors in the 2010 economic study that was cited world-wide as the reason why governments should cut back spending during the recession instead of spending their way out. In short, it was all down to an Excel error and leaving some key information out. This was easy to miss due to the newsflow from Boston and Texas, but seek this amazing story out or go directly to Paul Krugman in the NY Times or just one of several places in the FT. Think of this as paradigm shift equal to that of shale energy, only bigger and quicker.

The second story was within an IEA report last week Tracking Clean Energy Progress Reduction. Or, as we see from the Guardian, the complete lack of it:

The drive to clean up the world's energy system has stalled," said Maria van der Hoeven, the IEA's executive director, at the launch of the agency's report on clean energy progress.

"Despite much talk by world leaders, and a boom in renewable energy over the past decade, the average unit of energy produced today is basically as dirty as it was 20 years ago."

Stalled? Try drove into a ditch:

This is the International Energy Agency’s (IEA) third comprehensive tracking of progress in clean energy technology. It is a reality check for policy makers: it reflects what is happening here and now. Stark messages emerge from our analysis: progress is not fast enough; glaring market failures are preventing adoption of clean energy solutions; considerable energy efficiency potential remains untapped; policies must better address the energy system as a whole; and energy-related research, development and demonstration all need to accelerate.

The report provides a valuable reality check, although dark greens drew the wrong conclusions and felt that the fact that renewables haven’t penetrated the generation mix for 20 years is only due to lack of effort or failure to understand the true consequences of the looming apocalypse and so on. In short, the same response as When Prophecy Fails.

When Prophecy Fails: A Social and Psychological Study of a Modern Group That Predicted the Destruction of the World is a classic work of social psychology by Leon Festinger, Henry Riecken, and Stanley Schachter which studied a small UFO cult called the Seekers that believed in an imminent Apocalypse and its coping mechanisms after the event did not occur. Festinger's theory of cognitive dissonance can account for the psychological consequences of disconfirmed expectations. One of the first published cases of dissonance was reported in this book.

The IEA did point that renewable investment was steaming ahead, but so too is coal outside the United States, which as we know has been the bright green alternative since the US has cut carbon levels below what their commitments would have been under the Kyoto Accords. If they had ever signed them.

What hasn’t been reported anywhere else as far I’ve seen, is cunningly hidden from the press on page 45 under Advice to Governments, reproduced in full with the obvious highlight

Recommendations for governments

■■ It is vital to enhance carbon pricing and other regulatory mandates in order to encourage a coal-to-gas switch in regions where gas is uncompetitive with coal. Current carbon prices will not drive switching in the near-term.
■■ Development of unconventional gas resources would help bring down gas prices and potentially trigger coal-to-gas switching in regions that currently rely heavily on coal. In the absence of additional gas resources, price differentials between regions are likely to remain high. Scaling up unconventional gas extraction requires careful regulation and monitoring, in order to avoid adverse effects on the environment.
■■ Governments should assess the role of natural gas in their energy futures, including estimating the needs for flexible generation capacity. The strategic increase in gas infrastructure required to meet 2DS goals means that government policy and infrastructure planning must be carefully undertaken.

Strategies for deploying gas-fired power generation should be designed so that the benefits of gas can be realised while not over-investing in infrastructure that may be under-utilised in the longer term.

The IEA at least, points out the obvious, even if dark greens choose to ignore this inconvenient truth: Replacing coal with natural gas reduces emissions and we should all develop gas resources so that they compete better on price with coal as what has happened in the US. Development of unconventional gas resources, i.e. increasing supply,will  help bring down gas prices via the fairly obvious law of supply and demand.

As we see from places like Texas and Oklahoma, where wind supplies up to 30% of all generation, shale gas and renewables can work together to build a low carbon future.

But there’s hope on the horizon. Going back to the Guardian story:

Global clean energy investment in the first quarter fell to its lowest level in four years, driven by cuts in tax incentives at a time of austerity, according to a separate report by Bloomberg New Energy Finance this week.

Will austerity be permanent? That returns us to the story which wasn’t about energy but the economy: A world where austerity is less severe at least, or chucked out the window entirely, can be the best of both worlds. All of a sudden, government subsidies of renewable, among boring things like education and health, may return. We’ll even be able to pay them off ultimately via the benefit of economic expansion from shale energy. 

The best of all possible worlds.That’s ironic. I’ve often described the battle between pragmatists and purists, or Bright Green v Dark Green, as dark greens making the perfect the enemy of the good, a quote from Voltaire via Barack Obama.

When I was a kid in the United States every one in high school heard about Voltaire’s Candide where his mentor Pangloss talks of “all is for the best in the best of all possible worlds”. This was often the only French thing an American high school student might ever hear, and in these fear of socialism days they may not hear it at all. My kids in the UK today, of course, say Voltaire who?

With a bit of luck, and abandoning outdated concepts, I think we could be in the best of all possible worlds. But since I’m an optimist, and there are thousands of others who make a good living describing and most important of all, perpetuating, problems, it will be a slow road. Slow, but inevitable.