Fossil Fuels | Renewable Energy | Buffalo, NY | New Orleans, LA | Certified B Corp
As long as technology continues to advance, humans will always find a way to survive. The issue with fossil fuels are it inhibits our ability to innovate by lulling us into a false sense of energy security. Look at countries like those in OPEC. Ones that have garnered substantial wealth by exporting fossil fuels. Their innovations have almost exclusively been extraction related and one cannot blame them. Why would smaller countries invest in other sectors when they maintain a significant advantage in energy?
However, advancements in fossil fuels like shale fracking and opening the arctic to drilling does not advance our chances of survival, but instead reduce the window of opportunity to create appropriate alternatives. Climate Change aside, fossil fuels are still a finite resource, and the technology used to extract fossil fuels does what all inventions are supposed to do (limit the cost of inputs and increase the quantity of output). In other words, it’s accelerating us towards a finish line we aren’t prepared to face. We are not at a point where we could globally shut off the use of all fossil fuels, and if we do not begin a transition into renewable energy we will eventually face a global energy crisis.
While this crisis will not be in our lifetime, it is not an exaggeration to fear for the next generation, or the following generation, to deal with the consequences. While sources vary over the exact amount, the global consumption of fossil fuels is in the billions of tons annually, and growing. In 2015, even with the decline of coal at the time, the global consumption of petroleum had a net rise of 0.6%, which is about 127 metric tons of fossil fuels. That number will rise now that coal jobs are a primary goal of the current White House.
As stated above, the arguments in this article are not about the need to protect the planet from man-made climate change. It is an economic discussion on our need to preserve a finite resource our planet heavily relies on, and use the fossil fuels we currently have to appropriately transition to renewable energy. As it stands, with a global consumption of around 11 billion tons of fossil annually, the world will deplete its supply of fossil fuels by the end of the century. While exact dates vary, reports have our primary fuels depleting in the next four or five decades, and coal depleting in the next six.
These estimates are only if we continue extracting as aggressively as we currently are. Most likely, full depletion will come much later, and reservoirs and wells become more protected with higher costs.
This is why there needs to be a global effort to begin a transition to renewable energy. While renewables have become more affordable through technological innovations, they still maintain a higher initial cost than most fossil fuels. If we wait for the energy crisis before pursuing alternatives, we ruin any hope of a seamless transition and heighten the conflict. Investments in renewables today do not mean total replacement today. It’s more preventative care, attempting to heal a problem before the flare up to reduce the cost of treatment when the time comes.
Views expressed are the opinions of Jeffrey Goldfarb and the Financial Advisors at Goldfarb Financial and not necessarily those of Raymond James.