I attended a fascinating briefing on Energy Future 2050 at the Council on Foreign Relations in New York. Shell CEO Jeroen van der Veer led the discussion (Disclosure – Shell is an Edelman client).

Key points:

There are three hard truths about energy:

a) energy demand in world will double by 2050 due to 50% population growth and rise in incomes so many more people can afford to drive
b) supply of energy cannot meet that demand based on conventional oil and gas alone—will need renewables, nuclear etc—partly because the Easy to Get Oil is shrinking as percentage of total
c) huge issue of CO2—likely to see rise in acceptable standard to 450-550 parts per million

There are two possible scenarios:

First is every man for himself (actually every government for itself). There will be a surge in demand for coal, which fills the supply gap but causes greenhouse gas emissions to rise. We will see second generation bio-fuels which don’t compete with food sources and more centralized solar/wind power generation.

Second is global rules of the game. A coalition of business, NGOs and government will make change together, as in California. Incentives are introduced for broader use of wind/solar; carbon capture and storage comes to scale. CO2 emissions are priced so business can have certainty. Forty percent of cars will be powered by electricity and the other 60% will have much higher miles per gallon.

On specific forms of alternative energy:

1) Second generation bio-fuels can be used for transport. They are based on nonfood parts of plants such as stems, first generation bio-fuels have driven up the price of foodstuffs
2) Hydrogen fuel cells can power cars but there is perceived safety risk
3) Heavy oil and shale—huge reserves but big CO2 problems in production

On hydrocarbons:

1) Need carbon tax to raise price of gasoline. Note that European cars are 40% more fuel efficient than American cars because gasoline costs twice as much
2) Coal and nuclear are the “balancing fuels”, not oil and gas. This means we can create supply quickly but there are side effects with each of these options
3) Nuclear will decline as percentage of total energy production, because so many plants built 20 years ago will be decommissioned. The uranium mining and disposal system for waste must be rebuilt, while new construction of plants must accelerate
4) Need cap and trade system in the US to cut emissions; also congestion pricing in cities
5) Need efficiency standards on buildings, cars and appliances to make sure we are progressing on learning curve to use less energy

Trade-offs need to be made explicit for all parties; there will be no free lunch and the status quo is not acceptable given climate change and fast-rising price of energy. There is a critical role for public relations in this evolving market place. As a New York City resident, I have been pleasantly surprised by the turn in public opinion on congestion pricing, so that 70% of city residents are now in favor of the $8 tariff for driving in the central business district. This was achieved through intensive media relations and a stark ad campaign. There were also forums for consumer input, including town hall meetings or via the web on Campaign for New York’s website. Behavior change will not come with price incentives alone; there must be an understanding of the benefits to all of us.

I look forward to your comments.

About Edelman

Edelman is the world’s leading independent public relations firm, with 3,100 employees in 51 offices worldwide. Edelman was named a top-10 firm in Advertising Ages 2007 Agency A-List, the first and only PR firm to receive this recognition, and CEO Richard Edelman was honored as "2007 Agency Executive of the Year" by both Advertising Age and PRWeek. PRWeek named Edelman Large Agency of the Year in 2006 and awarded the firm its Editor’s Choice distinction. For more information, visit www.edelman.com.

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