The Modern Energy Context
Energy is at the very foundation of modern economies. Since the Industrial Revolution more than 200 years ago, all countries have developed on the back of the production and burning of fossil fuels. There is no doubt that the comfortable lives many of us live today would not be possible without the fossil-fueled development of the past. But the merits of fossil fuels now seem less and less convincing.
First, take subsidies. Currently, we throw about 10–12 times more taxpayer money at fossil fuels than we put into renewables—and those are just direct subsidies. In addition, local air and water pollution and related health consequences cost trillions of dollars worldwide. The U.S. National Research Council estimates the “hidden” costs of fossil fuels in the United States (the real costs to society that are not reflected in the fuels’ market prices) at $120 billion annually. The Chinese government believes pollution and related healthcare costs amount to 10 percent of that country’s GDP.
Then there is the volatility of fossil fuel markets, which has arguably led to enormous economic instability in the recent past. Just to give an idea of what this volatility means to some nations: An increase in the world oil price of just $10 can mean a decrease in the GDP of some small nations of 2–3 percent.