The global fight against climate change has been largely discussed for years now. But still there are a lot of unsolved problems. In the faculty’s new video series “A coffee chat with…” Professor Marc Oliver Bettzüge gives some explanations and evaluates in what sense German energy policy contributes to reducing global CO2-emissions. Marc Oliver Bettzüge is a Full Professor of Economics and Director of the Institute of Energy Economics (EWI) at the University of Cologne.
You can watch the interview with Prof. Prof. Marc Oliver Bettzüge on YouTube and also read it here:
The oil price has dropped from over 100 US Dollar per barrel to less than 50 just within a year. What are the reasons for this, Professor Bettzüge?
As in every other market the oil price is determined by supply and demand. Supply has increased on the global level, mostly due to developments on the US market. And demand has been weaker than expected. Together, these two effects have depressed the oil price.
Energy suppliers from the United States flood the market with oil which was produced via the unconventional new fracking-technology. How does this influence the oil price?
The additional supply coming from the U.S. adds to global production with obvious price effects. What is more, it has undermined market power potential for OPEC countries, thus removing certain price mark-ups we had seen before.
Does this mean that fossil fuels are more abundant than many have thought?
Yes, I think that the significant drop in the oil price shows that reserves can be expanded by improvements in production technology, especially during periods of high prices. As a consequence, reserves still are abundant, and production can potentially be even increased for at least a few more decades.
What does this mean for the global fight against climate change?
Well, from the CO2-perspective, it is actually bad news. The fact, that mankind has such an abundant supply of fossil fuels means we can actually extract and burn them - and thereby continue to increase the concentration of CO2 in the atmosphere. So, the CO2-challenge and the abundant fossil reserves are like two faces of the same coin.
This sounds like a vicious circle you cannot stop that quickly.
Maybe not a vicious circle, rather a classical tragedy of the commons. In a certain sense I would say that the abundance of fossil fuels is a second inconvenient truth adding to the one inconvenient truth about manmade climate change popularized by Al Gore some years ago.
But is it then possible to reach the ambitious climate targets?
The answer to that question contains a technological, an economic, and a political dimension. On the technology side, already today we dispose of technologies which would be substitutes for the use of fossil fuels. Economically, we know that doing so would entail additional costs. But these cost certainly don’t look prohibitive if the burden were appropriately shared within the World community. In essence, therefore, effective mitigation of CO2-emissions boils down to the political dimension, and to the question who is paying for these additional costs. Agreeing on such burden sharing is politically hard for the 200-odd national governments in the World.
Germany praises itself much for its so called Energiewende. But what does the “Energiewende” actually contribute to reduce global CO2-emissions?
One has to acknowledge that current German energy policies are not contributing much to directly reducing global greenhouse gas emissions – if at all. In the last decade, Germany has only slightly reduced its total CO2-emissions. E.g. reducing the use of nuclear and using coal instead did not necessarily help to get rid of CO2-emissions.
How do you evaluate the increasing number of wind turbines and solar systems in Germany?
The expansion of wind and solar in Germany is an expensive and inefficient investment program with no direct effect on CO2-emissions due the fixed European emissions cap. However, the German program has contributed to making these technologies available at much lower costs than a decade ago. This cost reduction makes it easier for all countries in the world to engage in more ambitious CO2 -mitigation strategies. So, one could argue that German policy has indirectly contributed to the global efforts to fight climate change, albeit at very large cost to the German electricity consumer.
Professor Bettzüge, thank you for talking with us!
Interview: Jennifer Garic & Kristina Wollseifen