Good and bad of expensive oil

PARIS - Surging oil prices are a mixed blessing for the environment, experts say. Clean renewable energy and recycling are getting a major boost from US$100-a-barrel crude - but so are coal, a massive contributor to global warming, and nuclear power, which remains shadowed by safety concerns.

Oil briefly topped US$100, driven by escalating energy demand in China, stagnant oil supplies and unrest in oil-producing Nigeria. Less than a year ago, a barrel of crude could be had for US$50, and in November 2001 the price was as low as US$16.70 in New York. What is painful for consumers, though, may have benefits for planet Earth.

Alternatives To start with, triple-digit oil prices can prod users into switching to more fuel-efficient cars or public transport. They also push wind, solar power and other “alternative” energies, once marginalised as too costly or exotic, into the mainstream. “As gas-fired electricity becomes more expensive, there are more and more places where you can build wind farms that are competitive or cheaper,” said Steven Sawyer, executive director of a Brusselsbased industry group, the Global Wind Energy Council (GWEC).

“At current international gas prices, there would be some place in just about every country in the world where wind would be a better economic option,” he told AFP. Preliminary figures show that in 2007, total installed wind power capacity increased from 74 gigawatts to between 92 and 93 GW, maintaining an approximately 25% annual increase as compared to the year before, according to GWEC.

Recycling The surge in oil prices is also causing smiles in the recycling industry, especially in plastics, which are made from oil and gas. The higher the price of virgin materials to make plastics, the greater the incentive to recover, melt down and re-use old plastic bottles, shopping bags and other wrapping. “Prices for plastics of all kinds have doubled in the last 10 years,” says Peter Sundt, secretary general of the European Association of Plastics Recycling and Recovery Organisations (EPRO).

The long and enduring rise in oil prices in the first decade of the 21st century is particularly important. Past, sudden downturns in oil prices in the 1990s badly hit recycling, he told AFP. Leading the charge is China, which handles around 10m tonnes of discarded plastics a year, about five million of which is imported from Europe, the US and other rich economies. With oil scaling new peaks, and China becoming choosier about its garbage imports, more and more European firms are investing in hi-tech plants with low labour costs to recycle plastics for their domestic market, according to Sundt.

Yet the same economic imperatives driving the development of cleaner energy and better recycling are also driving the exploitation of other fossil fuels that are even more noxious than oil. “High oil prices also make really nasty oil and petroleum development projects financially attractive,” said Sawyer, pointing in particular to a flurry of investment in tar sands, especially in Canada. “In terms of per unit of energy delivered, that is about the most polluting, greenhouse-gas intensive activity imaginable,” he said.

Tar or oil sands are a mixture of sand, water and heavy crude that is difficult and expensive to extract. But several major oil companies, including Shell or early this month British Petroleum, have invested heavily in extraction operations that produce oil costing about $40 a barrel, leaving a huge margin for profit. Coal An even greater environmental danger, though, is coal, which accounts for 40% of the electricity produced in the world, according to the International Energy Agency (IEA) in Vienna. Several of the world’s largest economies - including China, the US and India - are digging hungrily into domestic reserves of coal that are cheap and, unlike oil, have no geopolitical risk.

“In 2006, China built on average three coal-fired plants per week,” says Cedric Philibert of the IEA. Nuclear power is benefitting from both the high price of oil and worries about climate change, despite lingering fears about plant safety, storage of highly-radioactive waste and nuclear proliferation. At present, nuclear accounts for 15% of the world’s electricity needs, according to the IEA.

China, India, Thailand, Indonesia and Vietnam have all put in place ambitious strategies to expand or introduce nuclear power, Britain, France and Finland are pushing ahead with plans for next-generation reactors while the US has passed laws aimed at accelerating atomic plant construction. In September, US President George W Bush said rich countries should help developing nations obtain “secure, cost-effective and proliferation- resistant nuclear power.” “Nuclear power is the one existing source of energy that can generate massive amounts of electricity without causing any air pollution or greenhouse- gas emissions,” Bush said.