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Deciding the Energy Future by Default

Welcome to the world we’re building by default.

Or, to be more precise, welcome to the world that other countries are building while we stand by squabbling and splitting hairs.

One of the first things students in business schools and public policy institutes learn is that refusing to make a decision is, in fact, a decision, and one that has just as many consequences as a deliberate choice. The status quo may be terrible, but it usually continues unless people decide to change it.

The International Energy Agency, in its respected World Energy Outlook report, said last week that we’re on our way to locking in pivotal energy and climate decisions, and that the window is closing to change that.

You see, while Americans have been dithering about what kinds of energy to subsidize, whether climate change is real and caused by humans, and where, if anywhere, to drill for oil and natural gas, the rest of the world has gone ahead and built its power plants, because they don’t have a choice.

World energy demand is projected to increase by one-third over the next 20 years or so. Ninety percent of all that energy demand will come from booming economies in the developing world, and fully 30 percent will come from China alone. If you look at rates of demand, they’re growing even faster in India, Indonesia, Brazil and the Middle East. Those are also the countries that have a lot of the fossil fuel supply, whether it’s oil, coal or natural gas.

They need power. They need it now, and they know they’re going to need it tomorrow.

So they’re building their power plants, and while these countries are making big investments in renewable and nuclear energy, they’re also building fossil fuel-based plants, because that’s what they have. It’s the easiest option right now. In fact, during the last decade, coal made up nearly half of the increase in world energy use, most of it coming from emerging economies.

And power plants aren’t like paper cups – you don’t use them and throw them away. Power plants, pipelines, oil refineries and electrical grids all have lifespans that are measured in decades.

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The IEA says we're adding more renewables, we're also locking in fossil fuels.

So, here’s the daunting quandary the world faces as outlined by the IEA. In 2009, world leaders agreed to work to hold global warming to a target of 2 degrees Celsius. The agreement was seen as something of a breakthrough, even though some climate scientists say that even this level leaves “a strong chance of provoking drought and storm responses that could challenge civilized society.”

But according to the IEA, in five years the world will already will have built enough infrastructure to have “locked in” all the carbon emissions needed to raise the world’s temperature by 2 degrees Celsius. To avoid going beyond that target, nearly every piece of energy infrastructure built after 2017 would have to produce no carbon at all, and that’s not likely.

That finding is staggering from an environmental viewpoint, but it also means the world is locking in other troubling aspects of our energy system as well: higher costs, as oil demand rises and production plateaus, and continued economic turmoil as the world continues to get its energy from unstable regions. Just about everything that’s problematic about energy is being locked in, not just greenhouse gases.

So how do we avoid the world of default? For a start:

Stop fiddling while Rome burns. In the United States, we’ve spent well over a decade arguing about the small steps that can build a greener future. All those changes we make in our daily lives are worthwhile, but it’s simply not enough anymore. We’ve reached the point where we’ve got to make the big, fundamental decisions: What kind of power plants will we build, and how quickly can move away from older, more polluting ones? Do we stick with liquid fuels in our cars or go electric? Those are the basic decisions that set the tone for the next 20 years – and if we don’t make them now, we’ll be stuck with the default setting again.

Realize that we don’t hold all the cards anymore. The cold fact about energy is that we – meaning Americans – are not actually in the driver’s seat anymore. We have to make those fundamental decisions about power plants and cars, but so do countries like China, India and Brazil. And if ninety percent of that new energy demand is coming from developing countries, then their decisions matter more than ours. At the very least, we need to lead by example. And we also need to be willing to encourage others financially.

Homer Simpson once declared “Default? Woo-hoo! The two sweetest words in the English language!” But that was on an occasion where Homer was winning by default. On energy, we’re losing by default—and we’re jeopardizing more than most of us can even contemplate. Perhaps it’s time to put up more of a fight.