Strategies for the Energy Crisis

SK: Left to its own devices, the market will not price the externality of carbon dioxide, nor will it effectively deal with the security-of-supply problem. I think [that's] because it's longer term, and the markets have a shorter-term focus. I think markets are good for tactical allocation, but it's not obvious to me that they're the right thing for strategic allocation [or] longer-term planning.

TR: Are you hopeful we're going to be able to meet these challenges?

SK: I'm optimistic about security of supply. I see many sources for liquid hydrocarbons. I see great potential for efficiency improvements in U.S. transportation fleets. I am less optimistic about carbon dioxide emissions reductions. The world should give it its best shot, but there are so many forces aligned against it that I think it's going to be very difficult for the world to stabilize emissions, let alone stabilize concentrations of carbon dioxide in the atmosphere.

Carbon dioxide lives in the atmosphere for a very long time--a thousand years or so. What that means is that the atmosphere is accumulating emissions, and emissions right now are on an exponential growth path--2 or 3 percent a year. If we manage to make modest reductions in emissions, it will only be in the rate at which the concentration grows, but it won't stop the growth. So the usual societal response of dealing with a problem partially is not good enough to deal with the CO2 problem. We really need major changes in the ways we produce and use energy if we're going to prevent concentrations from rising. I don't think people understand that.