Several serious issues--including energy insecurity, resource scarcity, an accelerating demand for energy, and climate change--are interfering with the energy landscape. Oil prices have increased by a factor of 11 in real terms over the last 10 years. That change is largely driven by market fundamentals--put simply, demand has been growing faster than supply.
Energy insecurity is also a concern because the fraction of oil reserves that are controlled by nationalized oil companies is increasing rapidly. Those companies don't necessarily respond to market forces the way private firms such as Exxon or British Petroleum do, because oil exports can be used as a geopolitical tool. In 2005, for example, Russia cut off gas supplies to the Ukraine.
Climate change is particularly challenging because it represents the mother of all market failures. Since nobody owns the atmosphere, everybody uses it as their personal garbage dump. It is, when you think about it, the tragedy of the commons on a global scale.
The simplest option is to sustainably harvest biomass from prairies or forests, combust that biomass for energy use, collect the resulting carbon dioxide, and inject it into a geologic formation where it's likely to remain for millennia. The key is that trees, grasses, and crops naturally remove carbon dioxide from the air and convert it to biomass through photosynthesis. Another process is to use chemical engineering to "scrub" carbon dioxide out of the air. These processes usually involve reacting a very basic solution such as sodium hydroxide with air. The carbon dioxide in the air reacts with the sodium hydroxide to make sodium bicarbonate (i.e., baking soda), which is heated in a controlled environment to release and contain the carbon dioxide. A third approach is to enhance the ocean's natural ability to take up carbon dioxide from the atmosphere by reducing ocean acidity using electrochemistry.
But all of these technologies are very expensive compared to removing carbon dioxide from smokestacks, and there's a lot of carbon dioxide coming out of smoke stacks to capture at the source before we bother with the stuff already in the atmosphere. I would bet against ambient air capture as a commercially viable approach for at least 50 years.
Depleted oil and gas reservoirs, deep saline aquifers, and deep sea sediments. The depleted oil and gas fields are attractive options because we know that their structures held buoyant fluids for millions of years--otherwise, the oil and gas wouldn't have been there in the first place. But all of the extraction wells that were drilled into these formations could serve as potential conduits for carbon dioxide to escape.
Deep saline aquifers, sub layers of porous rock saturated in salt water, are another option. But their ability to retain carbon dioxide varies significantly. The last option, deep sea sediments, is particularly attractive because at high pressure and low temperature at ocean depths of more than 2,700 meters, carbon dioxide turns into a liquid that's denser than seawater. Hence, the carbon dioxide gets trapped by gravity.
Sequestration is not very dangerous from a human-health perspective. Many detailed studies have shown that if the gas is properly stored, there's essentially zero risk of dangerous leakage.
That isn't to say liability isn't an issue, though. There's liability associated with pipeline explosions as well as with the prospect of stored carbon dioxide leaking into and polluting surrounding aquifers. Overall, however, carbon sequestration isn't any more dangerous than myriad other industrial projects operating around the world.
The International Energy Agency projects that total primary energy demand will roughly double in the next 50 years. I think that growth in the electricity sector will be met easily. The question is whether or not we can manage the growth in carbon dioxide emissions.
I'm more concerned with the transportation sector. I think it's quite unlikely that conventional oil production will grow to the almost 140 million barrels per day that would be required for per-capita consumption in China and India to reach European levels--let alone U.S. levels. That means unconventional oil, biofuels, and electric transport will be necessary. Those things can and probably will happen, but how we get there in a carbon-constrained world isn't obvious.
There are three elements--call them the energy trifecta--that must be developed to provide the needed energy while managing the climate: Carbon capture and storage, nuclear power, and electrification of the transportation sector.
By far, carbon capture and storage and nuclear power are the cheapest options to produce base-load power without carbon dioxide emissions. With an appropriate price on emissions and regulatory support for project developers, it's likely that over the next 50 years, the majority of global base-load power will become carbon free.
Yet, the electrification of transport is also essential. Transportation contributes 40 percent of global carbon dioxide emissions and that number is growing. The only plausible way to deal with these emissions is to slowly transition to a plug-in electric/gas hybrid fleet that derives most of its primary energy from nuclear power or coal plants with carbon-capture-and-storage technology. Electric cars with onboard diesel or gasoline generators such as the Chevrolet Volt are a promising step toward greater efficiency and the goal of electrified transport. But there's no doubt that we'll be dependant on some liquid hydrocarbon fuels for quite a while.