DJ->Opinion

Imagining a World without Oil
Imagine, for a moment, a world where fossil fuels are no longer burned to generate power, heat and light. A world no longer threatened by global warming or geopolitical conflict in the Middle East. A world where every person on earth has access to electricity. That world now looms on the horizon .
We are in the early stages of an historic change in the way we organize the Earth’s energy. The Industrial Age, which began with the carrying of coal from Newcastle several hundred years ago, is now winding down in the oil fields of the Middle East. Meanwhile, a wholly new energy regime is being readied. Hydrogen – the lightest and most abundant element of the universe – is the next great energy revolution. Scientists call it the “forever fuel” because it never runs out. And when hydrogen is used to produce power, the only byproducts are pure water and heat.
It’s difficult to comprehend a world beyond oil when so much of the Modern Age has been built off the burial grounds of the Jurassic Era. We heat our homes and businesses, run our factories, power our transportation and light our cities with fossil fuels. We grow our food and construct our buildings with materials made from fossil fuels, treat illness with pharmaceuticals made from fossil fuels, and produce our clothes and home appliances with petrochemicals. Virtually every aspect of modern life is made from, or powered by, fossil fuels.
Experts had been saying that we had another forty or so years of cheap available crude oil left. Now, however, some of the world’s leading petroleum geologists are suggesting that global oil production could peak and begin a steep decline much sooner, as early as 2020, sending oil prices through the roof. Non-OPEC oil producing countries are already nearing their peak production, leaving most of the remaining reserves in the politically charged Middle East. Increasing tensions between Islam and the West are likely to further threaten our access to affordable oil. Rising oil prices will assuredly plunge developing countries even further into debt, locking much of the Third World in the throws of poverty for years to come. In desperation, the US and other nations could turn to dirtier fossil-fuels – coal, tar sand, and heavy oil – which will only worsen global warming and imperil the earth’s already beleaguered ecosystems. Looming oil shortages make industrial life vulnerable to massive disruptions and possibly even collapse.
Hydrogen has the potential to end the world’s reliance on oil from the Persian Gulf, the most politically unstable and volatile region of the world. Indeed, making the transition to hydrogen is the best assurance against the prospects of future oil wars in the Middle East. Hydrogen will also dramatically cut down on carbon dioxide omissions and mitigate the effects of global warming. And because hydrogen is so plentiful, people who have never before had access to electricity will be able to generate it.

In October 2002, the European Union became the world’s first superpower to announce a long-term plan to make the transition out of fossil-fuel dependency and into a renewable based, hydrogen economy. Romano Prodi, the President of the European Commission said, at the time, that weaning Europe off Middle East oil and making the shift to a hydrogen future would be the next great integrating task for Europe after the introduction of the euro and he compared the ambitious effort to the American space programme in the 1960’s to put a man on the moon.

How Hydrogen Power Works
Hydrogen is found everywhere on Earth, yet it rarely exists free floating in nature. Instead, it has to be extracted from either hydrocarbons or water. Today, the most cost-effective way to produce commercial hydrogen is to harvest it from natural gas via a steam reforming process. Yet the supply of natural gas is as finite as our oil supply, and therefore not a dependable source. But there is another way to produce hydrogen – one that uses no fossil fuels in the process. Renewable sources of energy – photovoltaic cells, wind, hydro, geothermal and biomass – are increasingly being used to produce electricity. That electricity, in turn, can be used, in a process called electrolysis, to split water into hydrogen and oxygen. Once produced, the hydrogen can be stored and used, when needed, to generate electricity. Storage is the key to making renewable energy economically viable. That’s because when renewable energy is harnessed to produce electricity, the electricity flows immediately. So, if the sun isn’t shining or the wind isn’t blowing, or the water isn’t flowing, electricity can’t be generated and economic activity grinds to a halt. But, if some of the electricity being generated is used to extract hydrogen from water, which can then be stored, for later use, society will have a continuous supply of power.
While the costs of harnessing renewable technologies and extracting hydrogen are still high, new technological breakthroughs and economies of scale are dramatically reducing these costs every year. Moreover, hydrogen powered fuel cells are two-and-one-half times more efficient than internal combustion engines. Meanwhile, the direct and indirect costs of oil and gas on world markets are going to continue to rise. As we approach the nexus between the falling price of renewables and hydrogen and the rising price of fossil fuels, the old energy regime will steadily give rise to the new energy era.

The Future is Now
Stationary commercial fuel cells powered by hydrogen are just now being introduced for home, office and industrial use. Portable fuel cell cartridges will be on the market in a few years. Consumers will be able to power up their cell phones, laptop computers, and other appliances for forty days or more with a single cartridge. The major automakers already have spent over $2 billion developing hydrogen cars, buses and trucks, and the first mass-produced vehicles are expected to be on the road beginning in 2009.
The hydrogen economy will make possible a vast redistribution of power, with far-reaching consequences for society. Today’s centralized, top-down flow of energy, controlled by global oil companies and utilities, could become obsolete. In the new era, every human being with access to renewable energy sources could become a producer as well as a consumer of his or her own energy, using so-called “distributed generation”. When millions of end-users connect their fuel cells into local, regional and national hydrogen energy webs (HEWs), using the same design principles and smart technologies that made possible the world wide web, they can begin to share energy – peer-to-peer – creating a new decentralized form of energy generation and use.
In the new hydrogen fuel-cell era, even the automobile itself becomes a “power station on wheels” – with a generating capacity of twenty kilowatts. The average house only requires two to four kilowatts of power. Since cars are parked most of the time, owners can plug them into the home, office or the main interactive electricity network, during non-use hours, selling the electricity they produce back to the grid. If just twenty-five percent of drivers used their vehicles as mini-power plants, we could eliminate all the giant, environmentally-polluting power plants we now depend on.

The Marriage of Software, Communications and Hydrogen Energy
The really great economic revolutions in history occur when new communication technologies fuse with new energy regimes to create a wholly new economic paradigm. The introduction of the printing press in the 1400s, for example, established a new form of communication that, when later combined with coal and steam technology, gave birth to the industrial revolution. Print provided a form of communication that was information intensive and quick enough to coordinate a world propelled by steam power. It would not have been possible to coordinate the increase in speed, pace, flow, density and interactivity of commercial and social life, made possible by steam power, by relying on script or oral communication technologies. Similarly, the telegraph and later the telephone, provided forms of communication that were fast enough to accommodate the quickened pace, flow, density and interactivity made possible when coal gave way to an even more agile hydrocarbon, crude oil.
Today, hydrogen and the new fuel cell distributed generation technology are beginning to fuse with the computer and communications revolution to create a wholly new economic era. Before the distributed generation of hydrogen can be fully actualized, changes in the existing power grid will have to be made. That’s where the software and communication revolution comes in. Connecting thousands and then millions of fuel cells to main grids will require sophisticated dispatch and control mechanisms to route energy traffic during peak and non-peak periods. Encorp, a US company, has already developed a software programme for remote monitoring and control that would automatically switch local generators onto the main grid during peak loads when more auxiliary energy was required. Retrofitted existing systems are estimated run about $100 per kilowatt-hour, which is still less costly than building new capacity.
The problem with the existing power grid is that it was designed to ensure a one-way flow of energy from a central source to all of the end users. It is no wonder that Kurt Yeager, President of the Electric Power Research Institute (EPRI), recently remarked that “the current power infrastructure is as incompatible with the future as horse trails were to automobiles.” In many ways, the current grid resembles the state of the broadcast industry before the advent of the World Wide Web, when connections flowed only in one direction, from the media source to the viewing audience. Similarly, today’s transmission systems are not set up to direct specific quantities of energy to specific parts of the grid. The result is that power flows all over the place, often causing congestion and energy loss. A new technology developed by EPRI called FACTS (flexible alternative current transmission system) gives transmission companies the capacity to deliver measured quantities of power to specified areas of the grid.
The integration of state of the art computer hardware and software transforms the centralized grid into a fully interactive intelligent energy network. Sensors and intelligent agents embedded throughout the system can provide up to the moment information on energy conditions, allowing current to flow exactly where and when it is needed and at the cheapest price. For example, Sage Systems, in the United States, has created a software programme that allows utilities to “shed load instantly” if the system is at peak and stressed to the limit, by “setting back a few thousand customers’ thermostats by 2 degrees...[with] a single command over the Internet.” Another new product, Aladyn, allows users to monitor and make changes in the energy used by home appliances, lights and air-conditioning from a Web browser.
In the very near future, sensors attached to every appliance or machine powered by electricity – refrigerators, air-conditioners, washing machines, security alarms – will provide up to the minute information on energy prices, as well as on temperature, light and other environmental conditions so that factories, offices, homes, neighbourhoods, and whole communities can continuously and automatically adjust their energy requirements to one another’s needs and the energy load flowing through the system.
The People’s Energy
Whether hydrogen becomes “the people’s energy” depends to a large extent on how it is harnessed in the early stages of development. The first thing to keep in mind is that with distributed generation, every family, business, neighbourhood, and community in the world is potentially both a producer and a consumer and a vendor of its own hydrogen and electricity. Because fuel cells are located geographically at the sites where the hydrogen and electricity are going to be produced and partially consumed, with the surplus hydrogen sold as fuel and the surplus electricity sent back onto the energy network, the ability to aggregate large number of producers/users into associations is critical to energy empowerment and the advancing of the vision of democratic energy.
Like the struggle to control the World Wide Web, we are likely to see a hard-fought and protracted struggle for control over hydrogen energy webs. In the former instance, end users have long argued that information ought to run free over the web. AOL-Time Warner, Microsoft and other global software and content companies, on the other hand, have fought hard to control access to the portals of cyberspace. Expect global energy companies and the world’s leading power and utility companies to attempt to exercise similar control over every aspect of the emerging hydrogen energy web.

The aggregation of distributed generation has much in common with the aggregation of labour in the early union movement at the beginning of the 20th century. Industrial workers, alone, were too weak to negotiate the terms of their labour contracts with management. Only by organizing collectively as a block within factories, offices, and whole industries could labour amass enough power to bargain with management. The ability to withhold labour collectively by using “the strike”, gave labour a powerful tool in its campaign to shorten workweeks, improve the conditions of work, and increase both pay and benefits.
Similarly, empowering people and democratizing energy will require that public institutions and non-profit organizations – local governments, cooperatives, community development corporations, credit unions and the like – jump in at the beginning of the new energy revolution and help establish distributed generation associations (DGAs) in every country.
Eventually, the end users’ combined generating power via the energy web will exceed the power generated by the utility companies at their own central plants. When that happens, it will constitute a revolution in the way energy is produced and distributed. Once the customer, the end user, becomes the producer and supplier of energy, power companies around the world will be forced to redefine their role if they are to survive. A few power companies are already beginning to explore a new role as bundler of energy services and coordinator of energy activity on the energy web that is forming. In the new scheme of things, power companies would become “virtual utilities” assisting end users by connecting them with one another and helping them share their energy surplus profitably and efficiently. Coordinating content rather than producing it becomes the mantra for power companies in the era of distributed generation.
Utility companies, interestingly enough, serve to gain – at least in the short run – from distributed generation although, until recently, many have fought the development. Because distributed generation is targeted to the very specific energy requirements of the end user, it is less costly and a more efficient way of providing additional power than relying on a centralized power source. It costs an American company between $365 and $1,100 per kilowatt-hour to install a six-mile power line to a three-mega-watt customer. A distributed generation system can meet the same electricity requirements at a cost of between $400 and $500 per kilowatt-hour. Generating the electricity at or near the end users location also reduces the amount of energy used because between 5 and 8 percent of the energy transported over long distance lines is lost in the transmission.
US power companies are anxious to avoid making large financial investments in capital expansion because under the new utility restructuring laws, they can no longer pass the costs of new capacity investment onto their customers. And because the field is now very competitive, power companies are reluctant to take funds from their reserves to finance new capacities. The result is that they put stress on existing plants beyond their ability to keep up with demand, leading to more frequent breakdowns and power outages. That is why a number of power companies are looking to distributed generation as a way to meet the growing commercial and consumer demand for electricity while limiting their financial exposure.

Towards a Third Industrial Revolution
The harnessing of hydrogen will alter our way of life as fundamentally as the introduction of coal and steam power in the 19th century and the shift to oil and the internal combustion engine in the 20th century. Championing a fifty-year plan to build a hydrogen economy is a grand economic vision on the scale of the first and second industrial revolutions. By taking a commanding lead in building a hydrogen infrastructure for the whole of the European continent, and by developing renewable resources and hydrogen technologies and related products and services, the European Union can set the 21st century economic agenda for the rest of the world.
Investing in a hydrogen economy will reinvigorate capital markets, spur productivity, create new export markets, and increase the GDP of Europe. According to a recent study by Price Waterhouse Coopers, the hydrogen economy could generate 1.7 trillion dollars in new business by the year 2020. It should be emphasized that no other single economic development will have as great an effect on the global economy over the course of the next several decades.
The transition from a fossil-fuel energy regime to a hydrogen age will require a dynamic partnership between European businesses and local, regional and national governments. European business will provide the entrepreneurial know-how to create the software and hardware of the new hydrogen era and redesign and manage the decentralized hydrogen energy grid. Government, at every level, will need to ease the transition by partnering with business. In the early stages of creating a new energy regime and laying out a new energy infrastructure, government assistance, in the form of research and development funds, tax credits and incentives, early technology adoption agreements by government agencies and their contractors, and favourable regulatory changes are all critical to making the transition workable.

A government-business partnership quickens the pace of the change by helping industry underwrite the large direct and indirect costs involved in getting to the kind of economies of scale and speed that make the new technology and infrastructure commercially viable. All earlier energy revolutions were similarly underwritten by the forging of a government-business partnership. The European Union has traditionally supported public-private partnerships and, therefore, is ideally suited to steward a new working relationship between government and industry to make the transition into the hydrogen era.
Organized labour will also benefit from the shift into the hydrogen economy. While new “smart” technologies are moving the global economy away from mass labour and toward small professional work forces over the long run, in the short run – the next 30 years – millions of new jobs will be required to install renewable technologies in every community, reconfigure the nation’s power grids, and create a hydrogen energy infrastructure. Qualitative leaps in employment always occur during periods in history when new energy regimes are being established and accompanying infrastructures are being laid out. The harnessing of coal and steam power and the laying down of a continental rail infrastructure between the end of the civil war and the beginning of World War I created millions of jobs as did the harnessing of oil and the introduction of the internal combustion engine and the laying down of roads and the electrification of factories and communities in the first 60 years of the 20th century. Once operational, these new energy regimes – the first and second industrial revolutions – spawned great leaps in productivity and made possible new kinds of goods, services and markets, again resulting in the creation of still more jobs.

The point is, fundamental changes in energy regimes and accompanying infrastructures are traditionally the source of new employment opportunities. And because the installation of renewable resource technologies and the establishment of a hydrogen infrastructure as well as the reconfiguration and decentralization of the nation’s power grid are geographically tied, the employment generated will all be within Europe. If both the technologies and technical know-how that comprise the hydrogen economy are also produced by research institutes and European based companies, additional domestic employment will be generated.
Making the transition to a hydrogen era provides a unifying vision for the environmental movement and offers the first real hope of creating a truly sustainable global economy for future generations. By eliminating CO2 altogether from the economic equation, the hydrogen economy leaps ahead of the current paltry and piecemeal efforts to reduce greenhouse gases. The shift to hydrogen energy is a bold plan to confront, head on, global warming, the single most dangerous problem facing humanity and the earth in the coming century. The ambitious and uncompromising nature of the plan will reinvigorate the green spirit, especially among the young, who will likely identify both with the high-tech and democratic vision of peer-to-peer energy sharing.
The hydrogen economy will also improve the lot of Europe’s most disadvantaged citizens. The rising price of oil and gas in the years ahead will fall disproportionately on the poor. Already, the poor, many of whom have lost part-time minimum wage jobs in the recent downturn of the global economy, are increasingly unable to pay their electricity, gas, and heating bills and cannot afford the rising price of gasoline at the pump. A European wide hydrogen energy game plan that emphasizes the installation of renewable energy technologies and a hydrogen fuel cell infrastructure in poor urban and rural neighbourhoods and communities can help create energy independence among Europe’s most
vulnerable populations.

Empowering the Developing World
Incredibly, sixty-five percent of the human population has never made a telephone call, and a third of the human race has no access to electricity. Today, the per capita use of energy throughout the developing world is a mere one-fifteenth of the consumption enjoyed in the United States. Narrowing the gap between the haves and have-nots means first narrowing the gap between the connected and the unconnected. Lack of access to electricity is a key factor in perpetuating poverty around the world. Conversely, access to energy means more economic opportunity. Electricity frees human labour from day-to-day survival tasks. It provides power to run farm equipment, operate small factories and craft shops, and light homes, schools and businesses. Making the shift to a hydrogen energy regime, using renewable resources and technologies to extract the hydrogen, and creating distributed generation energy webs that can connect communities all over the world, holds great promise for helping to lift billions of people out of poverty.
As the price of fuel cells and accompanying appliances continues to plummet with new innovations and economies of scale, they will become far more broadly available, just as was the case with transistor radios, computers and cellular phones. The goal ought to be to provide stationary fuel cells for every neighbourhood and village in the developing world. Villages can install renewable energy technologies – photovoltaic, wind, biomass, etc. – to produce their own electricity and then use the electricity to separate hydrogen from water and store it for subsequent use in fuel cells. In rural areas, where commercial power lines have not yet been extended, because it is too expensive, stand-alone fuel cells can provide energy quickly and cheaply. After enough fuel cells have been leased or purchased and installed, mini-energy grids can connect urban neighbourhoods as well as rural villages into expanding energy networks. The HEW can be built organically and spread as the distributed generation becomes more widely used. The larger hydrogen fuel cells have the additional advantage of producing pure drinking water as a byproduct, a not insignificant consideration in village communities around the world where access to clean water is often a critical concern.
Distributed Generation Associations (DGAs) need to be established throughout the developing world. Civil Society Organizations (CSOs), cooperatives, where they exist, micro-credit lending institutions, and local governments ought to view distributed generation energy webs as the core strategy for building sustainable, self-sufficient communities. Breaking the cycle of dependency and despair, becoming truly “empowered”, starts with access to and control over energy.
National governments and world lending institutions need to be lobbied or pressured to help provide both financial and logistical support for the creation of a hydrogen energy infrastructure. Equally important, new laws will need to be enacted to make it easier to adopt distributed generation. Public and private companies will have to be required to guarantee distributed generation operators access to the main power grid and the right to sell energy back or trade it for other services.
The fossil-fuel era brought with it a highly centralized energy infrastructure, and an accompanying economic infrastructure, that favoured the few over the many. Now, on the cusp of the Hydrogen Age, it is possible to imagine a decentralized energy infrastructure, the kind that could support a democratization of energy, enabling individuals, communities and countries to claim their independence.
In the early 1990s, at the dawn of the Internet era, the demand for “universal access” to information and to communications became the rallying cry for a generation of activists, consumers, citizens and public leaders. Today, as we begin our journey into the Hydrogen Era, the demand for universal access to energy ought to inspire a new generation of activists to help lay the groundwork for establishing sustainable communities.
Were all individuals and communities in the world to become the producers of their own energy, the result would be a dramatic shift in the configuration of power: no longer from the top down but from the bottom up. Local peoples would be less subject to the will of far off centres of power. Communities would be able to produce many of their own goods and services and consume the fruits of their own labour locally. But, because they would also be connected via the worldwide communications webs, they would be able to share their unique commercial skills, products and services with other communities around the planet. This kind of economic self-sufficiency becomes the starting point for global commercial interdependence, and is a far different economic reality than that in colonial regimes of the past, in which local peoples were made subservient to and dependent on powerful forces from the outside.
By redistributing power broadly to everyone, it is possible to establish the conditions for a truly equitable sharing of the Earth’s bounty. This is the essence of the politics of reglobalization from the bottom up.
Two Approaches to a Hydrogen Future
While the EU understands that much of the hydrogen will have to be extracted from fossil fuels in the immediate future, its long-term game plan is to rely increasingly on renewable sources of energy to extract hydrogen [the EU has set a target to generate twenty-two percent of its electricity and twelve percent of all of its energy from renewable sources of energy by 2010].
Now, the US business community is worried that it might fall behind Europe in getting to a hydrogen future and has begun to put pressure on the Bush White House to spearhead a similar effort. Even though the President embraced the hydrogen future in his State of the Union Address in 2003, in reality, the energy bill he sent to Capitol Hill for deliberation focuses almost entirely on subsidizing research and development aimed at extracting hydrogen from fossil fuels and by harnessing nuclear power to the task, with little emphasis on developing renewable sources of energy to extract hydrogen. In other words, the Bush administration would like to head into a hydrogen future without ever leaving an old-fashioned fossil fuel and nuclear energy regime. The failure to imagine a new energy era and to take the steps to get there could put the United States woefully behind Europe as a world power by mid-century.
The opportunity to make a fundamental change in energy regimes, remake the underlying technological infrastructure, and spur wholly new types of commercial activity occurs only occasionally in history. This is one of those moments. We find ourselves at the dawn of a new epoch in history. Hydrogen, the very stuff of the stars and our own sun, is now being seized by human ingenuity and harnessed for human ends. Charting the right course at the very beginning of the journey is essential if Europe is to make the great promise of a hydrogen age a reality for its children and a worthy legacy for the generations that will come after them.
Jeremy Rifkin serves as an Advisor to Romano Prodi, the President of the European Commission, the Governing Body of the European Union. In that capacity, Mr. Rifkin provided the strategic white paper that led to the EU adoption of a new energy initiative to become the first fully integrated hydrogen superpower in the 21st century. Mr. Rifkin is the author of The Hydrogen Economy: The Creation of the World Wide Energy Web and the Redistribution of Power on Earth (Tarcher/Putnam: 2002). He is also the President of The Foundation on Economic Trends in Washington, DC. Since 1994 Mr. Rifkin has been a Fellow at the Wharton School’s Executive Education Programme, where he lectures to CEO’s and senior corporate management from around the world on new trends in science and technology and their impacts on the global economy, society, and the environment.