IMG.gif
Opinion

Where Have All the Horses Gone?

Copyright © 2022 Energy Intelligence Group All rights reserved. Unauthorized access or electronic forwarding, even for internal use, is prohibited.
Clapham-Common-London-horse-carriage-cars-wikicommons.jpg

London in 1900 was home to 300,000 horses providing transportation for people and goods. Today, about 200 horses live in the city. If you watched Queen Elizabeth II’s funeral procession on Sep. 19, you saw many of them: those that belong to the Household Cavalry. What became of London’s — and the world’s — horses is a lesson for climate activists and hydrocarbon producers: Despite their carbon emissions, fossil fuels are not going to vanish instantly (as some campaigners advocate), nor will their consumption continue to expand indefinitely (as some industry leaders imply). Everyone can learn from that earlier energy transition.

Lessons for Climate Activists

People living in London and other large cities in the late 19th century were fed up with the manure disposal problems related to reliance on horse-powered transportation. However, horses persisted in London for decades despite the stench. Horses disappeared only when cleaner, faster, more comfortable means of transport became available at affordable prices. By 1912, the number of automobiles in London exceeded the number of horses.

Activists who seek a rapid end to the oil era would do well to focus on the demand side of the market. Petroleum use in transportation will dwindle not as a result of protests against the oil industry, but because electric vehicles (EVs) become a popular alternative to the internal combustion engine. EVs require an ample network of charging stations. These, in turn, require additional investment in renewable power generation and in an enhanced grid to carry the power.

Here, the environmental movement has an important role to play. A rapid expansion of green electric generation facilities and power transmission lines will have impacts on the environment, and in many cases will require diverting areas of land and sea to these uses. Controversies have already arisen over which new renewable generation sites and which powerline routes will involve the least environmental impact. Expertise will be needed to identify and explain optimal choices. Zero environmental impact will rarely be an option.

Advocates who prefer simplistic, absolute answers will find themselves increasingly uncomfortable with necessary compromises. Blaming the oil industry has been until recently a feel-good alternative. Now, those wishing to accelerate the decline of fossil fuels in transportation and other applications must focus instead on finding fair, balanced, rational solutions to land- and ocean-use dilemmas.

Lessons for Fossil Fuel Producers

Meanwhile, oil producers should not mistake current growth of oil demand for a permanent trend. The war in Ukraine has contributed to this growth by compelling temporary deviations from energy transition plans. Scheduled closures of fossil-fired power plants have been postponed. Governments have imposed sanctions on Russian fuels, and companies have scoured the world seeking to diversify sources of oil, natural gas and LNG.

World War I (1914-18) caused a similar surge in demand for horses, but it did not constitute a reversal of trend. Every fighting force in the war experienced a shortage of horses and mules needed to transport soldiers, munitions, artillery and provisions. This surge did not outlast the war, nor avert the long-term decline in equine numbers. By 1917, the number of horses in London had declined to 200,000, or a 30% decrease from 1900.

Current high oil prices, combined with Central Bank efforts to deflate economies, are limiting oil demand growth. In addition, the energy crisis has spurred governments to accelerate investments in renewable energy and other emissions-reducing infrastructure. Energy security concerns propelled such programs as the UK's energy security strategy, announced in April with an accompanying program of investment in “energy technologies of the future.” Security concerns also inspired the EU’s REPowerEU Plan, announced in May. The EU Plan was introduced “in response to the hardships and global energy market disruption caused by Russia's invasion of Ukraine.”

The US Inflation Reduction Act of 2022, signed into law in August, despite its name authorizes major investments that will reduce fossil fuel use. The legislation, previously known as “Build Back Better,” had been held up in the Senate for months and might still be stalled were it not for widespread voter concern about high energy prices reflected in the bill’s last-minute name change. While these and other recent initiatives may fall short of the hopes of some climate campaigners, they constitute major steps toward the goal of sustainability, and will advance the timing of the peak year of global oil demand.

At the moment, ironically, the oil market needs an expansion of global production capacity. For decades, major producing countries maintained idle capacity, ready to compensate for unanticipated supply interruptions wherever they occurred. Such idle capacity was called upon, for example, during the Iran-Iraq war in the 1980s, and during the Iraqi occupation of Kuwait in 1990-91. Currently, only about 3 million barrels per day of idle capacity is available, mostly in Saudi Arabia and the United Arab Emirates.

At the present time, an oil producer must hesitate to expand capacity. A global peak in oil demand is approaching, but the timing is uncertain. No oil producer wishes to invest in production capacity that may be required only briefly before becoming useless. Only the lowest-cost producers, such as Saudi Arabia, who can earn a return on their investment even under weakening market conditions, are likely to undertake such an investment.

Cooperation for a Smoother Transition

Meanwhile, petroleum suppliers looking decades ahead may be reassured to know that the horse population did not entirely disappear. Horses everywhere continue to be valued for herding cattle and controlling crowds. Thoroughbred racing, show jumping, steeplechase, polo and horseback riding for pleasure remain popular. Today, about 850,000 horses continue to reside in the UK.

Just as horses did not completely disappear, fossil fuels will not vanish from the world economy. Beyond transportation uses, various industrial processes requiring fossil fuels cannot easily switch to using green electricity. The decline in global oil demand, which has not yet begun, will be influenced by the pace of introduction of industrial users’ alternatives and new process technologies. Also, the decline may be moderated to the extent that carbon capture, utilization and storage and direct air capture become commercially viable.

The transition away from fossil fuels could be smoother than the transition away from horse-drawn transportation. Horse breeders did not have skills needed in the new automotive industry in the 1910s and ‘20s (although a few buggy manufacturers and their suppliers did). Oil companies, on the other hand, have numerous transferrable skills that could aid and hasten our current energy transition: experience in planning, managing and financing giant infrastructure projects, experience in developing new technologies and applying them in new situations, and experience in ensuring the security of their industry, from wellhead to end-user.

Some environmentalists unrealistically advocate for instant elimination of fossil fuels, while some oil producers irrationally hope to preserve the status quo. Instead, they could work together to facilitate the transition. A new forum is needed in which everyone involved in the transition has a place. The UN “conference of the parties” climate conference series is inadequate because only governments — as signatories of the Framework Convention on Climate Change — are officially invited. A wider collaboration will be necessary to ensure that every possible contribution to the transition is heard, and an optimal path can be sought.

But even in the absence of such collaboration, the transition will advance, just as the motorcar inexorably replaced the horse-drawn carriage.

Nordine Ait-Laoussine is a former Algerian oil minister and John Gault is an independent energy economist based in Switzerland. The views expressed in this article are those of the authors.

Topics:
Mobility, Electric Vehicles
Wanda Ad #2 (article footer)
#
Coal and gas may last longer in the energy system than oil, which faces multiple, growing threats to its dominance of transport.
Thu, Nov 24, 2022
Move by European Parliament to leave industry-friendly treaty reflects continued push away from oil and gas despite the energy crisis.
Fri, Nov 25, 2022
High natural gas prices have slowed the conversion of gasoline and diesel-fired private cars over to cleaner compressed natural gas.
Mon, Nov 7, 2022