Why has technology advanced so slowly in the energy sector?

At the International Press Institute* World Congress in Helsinki, Royal Dutch Shell Chairman Jorma Ollila explained that there was no "overnight" solution to the climate change crisis. Ollila is well qualified to address this subject, as I blogged previously:

There has been a lot of optimism -- especially in the US about the possibility of solving the climate change crisis with technology. Today's panel discussion focused on how this can be made to happen; on how technology can make for a green future. But this process will invariably take time. More time, in fact, than most people with a technology background who think about the problem tend to realize at first.

Longer, for example, than someone like Ollila had assumed when he first arrived at Shell. Ollila, it so happens, came to Shell from the telecom industry, where innovation happens in the blink of an eye. Today Ollila serves not only as chairman of Shell, but also heads Nokia. It's a clearly a testimony to the perceived importance of technology to the energy industry that Shell brought a former Nokia executive to the helm. Speaking with Ollila after the presentation he told me, "Shell has long been the most technologically-driven of the big oil companies." He added, "Shell invests 50% more in renewable technologies than any other big oil company."

The discussion might not have touched on this critical theme to such an extent were it not for an excellent question posed by Simon Li, formerly of the LA Times:

Simon K.C. Li: The Nokia/Shell gentleman is talking about success by 2050. Forty years! Now, if we look back forty years, observe how technology has changed our lives in portions of that period, say the last 20 years. Why in this matter do we project such slow technological change? First mobile phones cost $$$$, now same mobile phone costs $ -- for tiny phones! What is it about this kind of R&D that makes it so much slower; why must it take so much longer with respect to the energy sector?

Jorma Ollila: I asked this myself when I entered Shell from Nokia. It took a while. You have Moore's law in effect in telecom. When that exponentially kicks in you can do wonders with the products. But the energy laws of thermodynamics limit what you can do in this other area. Nobody can figure out how to get around these. Mr. Chu (scientist who is new US energy secretary) can do a good job, but he hasn't been able to go around these laws.

Bill Gates was saying to me that it's not a problem; that the sun radiates 18,000 times more energy than what we consume. But we can't figure out how to do it cheaply. Bill Gates became interested. So are many others. The Google founders are funding venture work in renewable energy. It's an intriguing problem for them.

Later in the discussion, Ollila made this remark:

Jorma Ollila: So where are we? With respect to biofuels? Wind? Solar? When will they be significant?

Today 80 percent of energy is carbon-based. (And if all goes as planned) we will only be down to 70-75 percent by 2030. However, by 2050 renewable would account for much more -- the renewables really kick in around then.

Another explanation for the slow progress is lack of investment. As Ollila pointed out -- during another segment of the talk (see here) -- investment in alternative energy is now declining!

Ollila noted that another obstacle to more a rapid reduction of carbon emissions is billions of dollars of investment tied-up in existing infrastructure and durable goods.

Jorma Ollila: Pace of change is limited by the trillions of dollars tied up in US capital investments. For example, a car lasts 20 years. A power plants last 40 years. To speed up the pace of change would mean premature scrapping of capital investments. In the recent Shell Energy Scenarios, that is. [Jotman: presumably, by scrapping investments prematurely you waste a certain amount of energy].

Concurring with Ollila, environmental economist Charles Kolstad of UC Santa Barbara agreed that the new alternative energy technologies that can save the planet would take years to emerge. However, the the bright side of such a gradual shift is that the transition that lies ahead need not be painful:

Allow me to close with the old "frog in water story" in which the frog is slowly brought to boil, but told differently (positively). If we slowly increase the pressure to reduce carbon, we will find ourselves in new world and not even miss old world.

Being speedy and in a hurry will increase costs. Don't prematurely phase-out infrastructure. [Jotman: I guess because it costs so much energy to produce the new infrastructure.... I suppose that's the calculation].

As for the economics: it will not be cheap or easy; but doable, and considering magnitude of the risks, justified.

The IPI panel discussion on climate change also included Ali Sayigh of the World Renewable Energy Network (WREN), and Curtis Brainard of the Columbia Journalism Review. Jotman live-blogged the entire panel discussion. See "Technology and innovation: Climate change Rx?"
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* "The International Press Institute is a global network of editors, media executives and leading journalists . . . dedicated to the furtherance and safeguarding of press freedom, the protection of freedom of opinion and expression, the promotion of the free flow of news and information, and the improvement of the practices of journalism."