There is an old joke about an economist and an engineer stranded on a desert island, who find a case full of cans of beans washed up on the beach. After the engineer has tried various ways to open a can, without success, the economist steps up: “It’s easy! Assume we have a can-opener . . . ”

Much of the debate about how the world can minimise the risk of the worst effects of climate change has a similar flavour: we may be on a worrying trajectory today, but we can assume that amazing new technologies will emerge to enable steep cuts in greenhouse gas emissions.

An interesting report, from a team led by Daniel Yergin of IHS Markit and former US energy secretary Ernest Moniz, this week tried to set out an approach for developing those technologies that goes beyond simple wishful thinking. To extend the analogy, they are making a plan for lighting some torches and trying really hard to find a can-opener, or several.

The chart below, showing fuel shares in US energy consumption since the 19th century, gives a sense of the scale of the challenge. Shifting the mix from one energy source to another has taken many decades, and the US is still heavily reliant on fossil fuels. It is worth remembering, too, that as energy consumption has been growing for most of this period, a lower share for a particular fuel often does not mean it is declining in absolute terms.

The report was commissioned by Breakthrough Energy, the group led by Bill Gates and a who’s who of the world’s billionaires that is trying to find transformational technologies for cutting greenhouse gas emissions. The goal is sometimes compared to the Manhattan project that developed the atomic bomb, or the Apollo programme to put a man on the moon, but Mr Moniz argues that those analogies are misleading. They had specific, limited and well-defined goals, whereas transforming the energy system is likely to need a diverse range of technologies, and requires innovations that are capable of large-scale commercial deployment.

The report lists as many as 10 areas — including battery storage, advanced nuclear reactors, hydrogen and carbon capture — as offering promise for potential breakthroughs. To help deliver that innovation, Mr Yergin and Mr Moniz have a long list of suggestion for how companies and governments could work better, including developing regional hubs to specialise in different technologies.

As they point out, many business and government leaders have made the case for doubling or tripling the funding of energy research and development, and the uncertain support from the US Congress and the Trump administration “makes it difficult to plan an effective energy innovation portfolio”. The International Energy Agency warned in 2017 that a faltering commitment to energy R&D was “a cause for concern”. (It is worth noting that companies backed by Breakthrough Energy Ventures, the group’s investment arm, could be beneficiaries of increased government support for energy innovation.)

Even if all of Mr Yergin and Mr Moniz’s recommendations were implemented, it might still seem like a hope-based policy to trust that the innovations the world needs will emerge within 20 or 30 years. But they say they are in fact very confident that such technologies can be developed, even if they are unable to predict exactly what they might be.

The US shale revolution, which followed decades of tax breaks and grants for “unconventional” gas production, is the textbook example of how government support and incentives, used by the private sector, can deliver world-changing breakthroughs. The idea is not to pick a winning approach in advance, but to set the right conditions to allow the best ideas to flourish and grow.

The hope is that some combination of batteries, reactors, biofuels and other technologies can emerge to change the course of global greenhouse gas emissions, the same way that hydraulic fracturing and horizontal drilling have transformed the oil and gas industry.

The Green New Deal

Mr Moniz drew a contrast between his approach and some versions of the “Green New Deal” strategy that is rapidly gaining momentum in the US Democratic party. He praised the idea of “getting to a low carbon future with social equity considerations front and centre”, but raised concerns about the idea of limiting the programme to certain prescribed technologies. In particular, he argued, the idea of sourcing 100 per cent of America’s electricity from renewable energy in 10 years, endorsed in a version of the proposal from last year, was “a practically impossible goal” that risked slowing progress in cutting emissions.

That tension was on display at the Thursday launch of the Green New Deal resolution led by Alexandria Ocasio-Cortez, the newly elected Congresswoman from New York, and Ed Markey, the senator from Massachusetts who is a veteran campaigner on climate and energy.

Mr Markey was at pains to point out that the latest version of the plan, backed by most of the leading contenders to be the Democratic candidate for president next year, was “silent on any individual technology”. It includes a commitment to meeting 100 per cent of US electricity demand from “clean, renewable, and zero-emission energy sources”, not just renewables.

But a set of questions and answers released by Ms Ocasio-Cortez’s office expressed opposition to nuclear power, saying the Green New Deal would not include investment in new reactors, and adding:

“The plan is to transition off of nuclear and all fossil fuels as soon as possible.”

The interpretation from Gavin Bade of Utility Dive was that nuclear power and fossil fuels could play some role in the Green New Deal, “but their contributions are likely to be shortlived in a rapidly decarbonising economy”.

The return of Nopec

Amy Klobuchar, a Democratic senator from Minnesota who is expected on Sunday to announce that she will run for the presidency, was among the leading figures in the Democratic party who backed the Green New Deal resolution on Thursday. The same day she joined a bipartisan effort led by Republican senator Chuck Grassley to change US antitrust law so that Opec can be prosecuted as a cartel.

With a similar bill in the US House of Representatives securing rapid approval from its judiciary committee on Thursday, the long-running effort to punish Opec member countries for price-fixing seems to be building up a fresh head of steam.

The White House has not said what Donald Trump thinks about the “Nopec” legislation, as it is known, but he is on the record as supporting it in his 2011 book Time to Get Tough. There is no reason to expect that the US president should be bound by something he wrote in a book eight years ago, and considerations about the potential impact on the American oil industry and US interests in Opec member countries might tip him towards opposing it.

But the proposal seems likely to win strong support in Congress if it comes up for votes, and Opec members with significant interests in the US are clearly taking the threat seriously.

For further reading, the always excellent Congressional Research Service wrote a useful explainer on Nopec legislation last year. The acronym, by the way, is for the “No Oil Producing and Exporting Cartels” Act, coined for the first attempt at legislation all the way back in 2000.

Meanwhile, Saudi Arabia and other Opec members are reportedly trying to lock in Russia and other allies to working together to control crude oil production for up to three more years.

In brief

• France recalled its ambassador from Rome, for the first time since 1940, in protest against Italy’s “interference” in its domestic politics, meaning a meeting with “gilets jaunes” activists. Reuters suggested that competition between France’s Total and Italy’s Eni over oil in Libya was one of the root causes of the dispute.

• Jaguar Land Rover, Britain’s largest carmaker, has reported heavy losses and faces a bleak outlook, in part because of its bet on diesel engine technology, which is increasingly falling out of favour, especially in Europe.

• Australia is on track to meet 50 per cent of its electricity demand from renewable sources by 2024, at a net cost of “approximately zero”, according to researchers from the Australian National University.

• The US Energy Information Administration last week set out its projections for the next three decades in its Annual Energy Outlook 2019. Independent analysts told Greentech Media that those projections looked “overly conservative in some places”.

• There is a new book on carbon taxes, called Paying for Pollution, written by Gilbert Metcalf, a professor at Tufts University. A review by James Handley of Carbon Tax Network gave a good summary of the issues. Ed Dolan of the Niskanen Center argued that a carbon tax should be the centrepiece of any Green New Deal in the US. Ms Ocasio-Cortez’s office has said she would not rule it out, but “a carbon tax would be a tiny part of a Green New Deal in the face of the gigantic expansion of our productive economy” that she envisages.

• High US oil and gas production over the next decade would be expected to increase global greenhouse gas emissions significantly, according to Daniel Raimi of Resources for the Future.

• Desalination plants are creating a growing problem of waste brine.

• And finally: it will be the 172nd anniversary of Thomas Edison’s birth next Monday, and a quote regularly attributed to the great man was used at a briefing by the Edison Electric Institute in New York this week: “What you are will show in what you do.” It is a good line, but there is one slight problem with it: it seems pretty clear that Edison didn’t write it.

Other views

Nick Butler — Turkey has a chance to become a regional gas hub

Edward Luce — Fiddling while the world simmers

Colby Smith — Could climate change spark the next financial crisis?

The Economist — The truth about big oil and climate change

David Hart — The Green New Deal’s Achilles’ Heel

Kevin D. Williamson — Climate Change, Fiscal Change, and Risk

John Kemp — Storytelling in oil and other markets

Quote of the week

“The only thing the president hates more than Iran or Venezuela’s Maduro is high pump prices. And if he’s forced to choose between the two, he’ll go with getting oil prices down.”

— Bob McNally, a former energy official at the White House under President George W Bush, now president of Rapidan Energy, gives his assessment of the current occupant’s likely calculus when the time comes to think seriously about tightening the screws on Venezuela and Iran.

Mr McNally was speaking at a Columbia University event to discuss his book Crude Volatility, a history and analysis of how oil prices go from boom to bust and back again.

Chart of the week

This comes from Total’s 2019 presentation for investors. It shows the French energy company’s view of the demand outlook for oil, with growth of about 10m barrels a day over 2015-40, from 92.5m b/d at the start of the period to roughly 103m b/d at the end. That would imply much slower growth than in the past 25 years, when demand rose by about 27m b/d, but it would still mean the world would be highly unlikely to meet the Paris climate agreement’s goal of limiting the rise on global temperatures to “well below” 2C.

The important point in the chart is the composition of the increase. Discussion of oil demand often focuses on electric cars and fuel economy standards but, partly because of those factors, only 1m b/d of the projected oil demand increase by 2040 is expected to come from light passenger vehicles.

The big influences on demand are expected to be petrochemicals, aviation and heavy road transport. If anyone wants to think seriously about curbing oil demand growth, those sectors should be their targets.

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