Humankind has known of fossil fuels for thousands of years, but it is only in the last two centuries or so that they have powered the world’s economy. In 2012, fossil fuels supplied 84 percent1 and 82 percent2 of the world’s and the United States’ commercial energy, respectively.
A Very Brief History of Fossil Fuels
England faced a looming energy crisis in the 1700s. The primary energy source was firewood, but supplies were becoming scarce and prices were rising. As domestic resources dwindled, imports from Scandinavia, Russia, and New England increased. There was some coal use, but it was primarily restricted to areas close to the coalmines. Then, as industrialization spread, coal use grew rapidly, to the point that it became the fuel that powered the Industrial Revolution.
The modern petroleum industry started in Titusville, Pennsylvania, in 1859, with the drilling of the first oil well. Until then, oil was either gathered at seeps or extracted from the ground by digging shallow holes. One major use of this oil was lamp oil, replacing whale oil, for lighting. In the early 1900s, oil demand intensified, with the mass marketing of the automobile and its internal combustion engine. Gasoline, which is refined from crude oil, was by far the best fuel to power the automobile. This has not changed in over a hundred years.
Many of the oil wells also produced natural gas that was “associated” with the oil. However, this associated gas was too expensive to transport any significant distance, so what could not be used in the immediate area was “flared”—burned—at the oil field. Gas was used in the nineteenth and early twentieth centuries for lighting and cooking. This was not natural gas, however, but “town gas.” Cities and towns would have “gashouses” in which they produced the gas from coal and then distributed the gas throughout the town via a local pipeline network. The widespread use of natural gas in the United States took off after World War II with the building of a national pipeline network. This led to new uses such as home heating, electricity generation, and industrial use as both a chemical feedstock and a heat source.
Fossil Fuel Fundamentals
Fossil fuels, also known as hydrocarbons, are composed primarily of carbon and hydrogen, along with smaller amounts of other elements like sulfur and nitrogen. When combusted, these elements combine with oxygen (O2) to form carbon dioxide (CO2) and water vapor (H2O), along with trace components like sulfur dioxide (SO2) and nitrous oxides (NOx). To avoid environmental problems like acid rain and smog, these trace elements must be reduced to low levels in the exhaust gas before it is emitted into the atmosphere.
There is wide variation in the chemical makeup and properties of the fuels we extract from the ground. For coal, these properties include heating value (the amount of energy contained in a kg), moisture content, carbon content, ash content, and sulfur content.3 Oil ranges from light, sweet crudes to heavy, sour crudes, with everything in between. “Light and heavy” refers to the density of the crude oil, “sweet and sour” to the sulfur content, where sour oils contain more sulfur than sweet oils. Light oil is more desirable because it flows more easily out of the ground and has higher yields of valuable products like gasoline. While natural gas is primarily methane, it also comes out of the ground with a range of compositions for CO2, H2S, and heavier hydrocarbons such as ethane and propane. As will be discussed later, high CO2 content natural gas has been an important target for carbon capture.
Carbon intensity is the amount of CO2 emissions per unit of energy in the fuel. Coal is the most carbon intensive, meaning that its chemical makeup has the highest percentage of carbon. Natural gas is the least carbon intensive. There is a range of carbon content for each fossil fuel, but a good rule of thumb for the ratio of carbon per unit of energy content in coal, oil, and gas is 5:4:3. To predict the relative CO2 emissions, one must also take into account the efficiency of converting the fuel into heat or power. For example, assuming the same efficiency of the furnaces, heating your home with oil instead of gas results in a 33 percent higher carbon footprint. Since the conversion of natural gas to electricity is more efficient than the conversion of coal to electricity, the carbon intensity of electricity from coal is about double that of natural gas, making it 100 percent more carbon intensive, versus 67 percent if the conversion efficiencies were equal.
Fossil Fuel Use
Because fossil fuels are ubiquitous, just about everything we do has a carbon footprint; every day, we make dozens or even hundreds of decisions that affect its size. This includes what we eat, because meat has a higher carbon footprint than vegetables, and how we get around (automobiles, mass transit, bicycling, and walking all have different carbon footprints). When we go shopping, everything we buy makes an impact, from the manufacturing of the item to its transport. The impact of heating or cooling your home depends on the kind of fuel you use, the efficiency of your heating system, the insulation of your house, and the setting of the thermostat. Turning on the television or computer adds to your carbon footprint as well.
In 2016, the United States used 103 exajoules (EJ) of energy. An exajoule is 1018 joules or a trillion MJ (megajoules or million joules). A gallon of gasoline contains about 120 MJ. The amount of energy needed to produce one kilowatt-hour of electricity (kWhe) in a coal-fired power plant is about 10–11 MJ. For a natural gas combined cycle power plant, that number is 7–8 MJ. A typical US household uses about 8800 kWhe in a year.
Table 1 shows the breakdown of US energy use in 2016 by type of fuel and by end-use sector. By examining these numbers, we can better understand how our society relies on fuels. The first thing to notice is that oil dominates the transportation sector, supplying 92 percent of energy needs; it fuels our cars, trucks, trains, ships, and airplanes. The next biggest contributor is renewables in the form of biofuels (mostly ethanol) at 5 percent. While there is much talk of electric cars, electricity contributes only 0.3 percent, which includes trains and public transport, in addition to cars.
Table 1 Breakdown of 2016 US Energy Consumption in EJ by Fuel and End-Use Sector
Source: U.S. Energy Information Administration, Monthly Energy Review (July 2017), 27–45.
The most fuel-diverse sector is electricity production. Oil, which dominates transportation, has almost completely disappeared from the electricity sector, primarily due to cost. Fuel input for electricity comes from four major fuels: coal (34 percent), natural gas (27 percent), nuclear (22 percent), and renewables (15 percent). The numbers by electricity output are natural gas (33 percent), coal (31 percent), nuclear (21 percent), and renewables (15 percent). Breaking down the renewables percentage further: hydro (6.6 percent), wind (5.8 percent), solar (0.9 percent), biomass (0.8 percent), and geothermal (0.4 percent).4
The industrial sector has three main inputs that are similar in magnitude: oil, natural gas, and electricity. In addition to providing energy, oil and natural gas are also used as chemical feedstocks to produce items ranging from plastics to fertilizers. Electricity (73 percent) and natural gas (20 percent) fuel the residential and commercial sectors.
The fuel use pattern varies for different countries, depending on their particular situation. For transportation, oil dominates worldwide. For electricity production, oil has only a minor role in the United States, but in the Middle East, where oil is abundant, it plays a much bigger role. Developing countries like China and India are more dependent on coal than countries in the developed world, where coal is used almost exclusively for electricity production. China also uses coal in the industrial sector, and for home heating. Some countries, like Denmark and Germany, have strong renewable policies. This results in renewables capturing a much larger share of electricity generation compared to the world average.
Fossil Fuel Supply
There were many times over the past hundred years when society felt it was running out of oil. The concept of “peak oil,” where oil production would peak and then irreversibly decline, was once widely accepted. At first, the theory made a lot of sense; everyone knows there is only a finite amount of oil in the ground, and eventually it will run out—something so obvious, it has to be true. In 1919, David White of the United States Geological Survey predicted oil would peak in three years; in 1956, geoscientist M. King Hubbert—the most renowned advocate of peak oil—analyzed the production and discovery data, conducted statistical analysis, and predicted that oil production would peak in the United States between 1965 and 1971.5 These and many other predictions based on the peak oil theory had one thing in common: they were all wrong.
Professor Morris [Morry] Adelman (now deceased) was an economist at MIT and an expert (in my opinion, the expert) on the oil and gas industry. In 2001, Morry gave a talk at a meeting I was running. He started by saying that “people always ask me when are we going to run out of oil. The answer is never.” You could hear some laughter from the room. Morry was not trying to be funny, however; he was quite serious. In his view as an economist, if we started to run out of oil, the cost would rise. At some point, the cost would rise to a level where we would have found substitutes for oil, leaving the remaining oil in the ground. We will never extract every drop of oil from the Earth.
Through much of his career, Morry was a voice in the wilderness. People wanted to believe in peak oil because it made so much sense. I vividly remember a talk we had after another prediction got a lot of press. I asked how people could still believe in a theory that was always wrong (the proponents blamed their failures on faulty data). Paraphrasing his answer, “Oil follows the laws of supply and demand, just like every other commodity. However, people don’t view oil as simply a commodity; they view it like a religion.”
So, how should we view our supply of oil, as well as of coal and natural gas? Morry talked about a tension between depletion and technology. As we take oil out of the ground, it depletes. We exploit the easy oil reservoirs first, raising the difficulty and cost in finding and extracting more oil. This is what the peak oil proponents focused on. However, they did not appreciate the power of technological change, which makes it easier and cheaper to find and extract oil. Today we are producing oil and gas from places that just a decade or two ago people would think impossible. The most recent example is the extraction of oil and gas from shale formations, sometimes called the “fracking revolution.” Two key technological innovations that made this revolution possible are horizontal drilling and hydraulic fracturing technology. Horizontal drilling allows one well to extract oil or gas from a much larger portion of a reservoir than a vertical well, resulting in improved productivity and lower costs. Hydraulic fracturing is a set of techniques that fracture or crack the rocks to allow the oil or gas trapped in the rocks to flow. Since the first oil well, in 1859, technology has consistently bested depletion. This may not always be the case in the future, but right now, there are no indications that things will change anytime soon.
How much fossil fuel, then, do we have? One set of estimates are termed reserves. A good source for reserve data is the BP Statistical Review of World Energy (see table 2), which defines reserves as “generally taken to be those quantities that geological and engineering information indicates with reasonable certainty can be recovered in the future from known reservoirs under existing economic and operating conditions.” Table 2 presents the worldwide reserve numbers as of the end of 2015 in their natural units, barrels for oil, m3 for gas, and tonnes for coal, as well as their equivalent heat content in EJ. Also presented are the worldwide consumption of these fuels for 2015, allowing the calculation of years of reserves remaining at current consumption. There are over five decades of both oil and gas reserves and over a century for coal reserves. If these numbers were static, then the peak oil theory would be correct. However, due in part to technological advances, new reserves are being added every year.
Table 2 Estimates of Fossil Fuel Reserves from 2016 BP Statistical Review of World Energy
Source: BP, BP Statistical Review of World Energy (June 2016).
The total amount of fossil fuels in the ground (the resource) is many times larger than the amount of reserves. The IPCC defines the term “resources” as hydrocarbons that are “potentially recoverable with foreseeable technological and economic developments.”6 Estimates of resources include reserves. The IPCC’s estimates of resources for oil, natural gas, and coal are 26,000, 48,000, and 103,000 EJ, respectively. Dividing these by 2015 consumption from table 2 yields 144, 367, 638 years respectively.
However, the story does not stop here. The IPCC uses the term “occurrences” to define hydrocarbons in the ground that are “not considered potentially recoverable.” These include methane hydrates whose size is estimated at greater than 800,000 EJ, or 1684 years at our current consumption of all fossil fuels. Technology advances not even imagined today could one day make these “occurrences” recoverable. Research into exploiting methane hydrates is being conducted today. The bottom line is that we are awash in fossil fuels.
Fossil Fuels and Climate Change
All the fossil fuels in the ground can potentially have a major impact on climate change. The amount of CO2 that would be released by burning all the reserves and resources of fossil fuels can be calculated using emission factors. Figure 2 shows the results using emission factors of 0.0733, 0.0561, and 0.0961 GtCO2/EJ for oil, gas, and coal, respectively.7 Also plotted on the figure are the carbon budgets for a 50 percent and 80 percent chance of not exceeding 2°C and 3°C warming.8 What this graph tells us is that if we want to stabilize at 2°C or less, we will need to leave about 50 percent of our current fossil energy reserves in the ground, and a whopping 90 percent of the total recoverable fossil fuels. If we did burn all our recoverable fossil fuel resources and emitted the CO2 to the atmosphere, global temperature would rise by 9°C.9
Figure 2 Amount of CO2 emitted if we burned all recoverable fossil fuels or fossil fuel reserves compared to carbon budgets required to stabilize global warming at either 2°C or 3°C.
The fossil fuel era has spanned the past two centuries. During this time, there has been a free and open energy market, of which fossil fuels have captured over 80 percent. We have enough fossil fuels in the ground to extend the fossil fuel era at least another two centuries and probably a lot longer. However, because of climate change concerns, we will need to end this era much sooner. To think that we can achieve this without strong policy is naïve. It has been twenty-five years since the United Nations Framework Convention on Climate Change said we needed to limit our CO2 emissions, yet these emissions are still rising and fossil fuels are just as dominant today as they were then. Renewable energy has seen very significant technological progress during that time. However, the technological progress related to fossil fuels has been just as significant. The only way to dislodge fossil fuels from dominating the energy marketplace is through strong climate policy. Chapter 7 explores this topic.
If we do adopt policy to limit CO2 emissions into the atmosphere, we do not necessarily have to strand hundreds of trillions of dollars of fossil fuels in the ground. There is one and only one mitigation option that will allow us to reduce our CO2 emissions but continue to use our valuable fossil fuel assets. That mitigation option is carbon capture.
There is a saying that many people involved in climate change like to quote: “The Stone Age did not end due to lack of stones.” The point they are making is that the fossil fuel era will not end because we run out of fossil fuels, but because of restrictions on CO2 emissions. What they neglect to say is that we still use plenty of stones today, much more than we ever did in the Stone Age. Therefore, we may end dumping CO2 into the atmosphere, but with carbon capture we can continue to use our fossil fuels. How much fossil fuel we will use depends on how carbon capture technology evolves. As the story of fossil fuels demonstrate, we should not underestimate the power of technological change.
