In the long climate change negotiation process since the Kyoto Protocol, which was adopted in 1997 and entered into force in 2005, the key areas of contention regard not only the apportionment of national responsibilities and obligations in emission reduction activity, but also the rules governing the raising and distribution of public and private finance. At stake are not only questions on which country (or group of countries) does what in curbing emissions and preparing to adapt to climate change impacts, but also which countries are net recipients of climate finance and which are net contributors and by what amount. An agreement on climate change finance is now viewed as critical to the success of the ongoing United Nations Framework Convention on Climate Change (UNFCCC) negotiations that aim to reduce global greenhouse gas (GHG) emissions. However, it is only in the aftermath of the Fifteenth session of the Conference of Parties (COP15) that was held in Copenhagen in 2009, that climate change finance assumed a central role in the negotiations over climate change.

Climate change finance played a relatively peripheral role in the negotiations over the Kyoto Protocol. Although under the UNFCCC, Annex II countries (which include only the Organisation for Economic Cooperation and Development [OECD] members of Annex I) are required to provide climate-related finance to developing countries, this did not really become a pivotal issue since the developing countries had no emission reduction targets that required financial support. The only issue as far as finance was considered was how the Annex I mitigation targets could be achieved in a cost-effective manner. The Clean Development Mechanism (CDM), which allows Annex I countries to meet their mitigation obligations by financing emission reduction projects in developing countries, has been the main vehicle for financial flows to developing countries. Primary CDM flows peaked at US$6.5 billion in 2008, but have since declined to US$2.7 billion in 2009 and US$1.5 billion in 2010 as the Kyoto Protocol nears its expiry year of 2012.

The question as to whether “country competitiveness” is analogous to that of a firm's competitiveness is often assumed away, and policymakers in the United States, Europe, and Japan routinely talk of national competitiveness. Among economists, however, there is no consensus on how to measure, explain, and predict international competitiveness of countries, and “perhaps none is warranted”. In assessing the potential impacts of emission mitigation policies on countries, the term “competitiveness” is used here in reference to firms in key internationally competing industries such as shipping, aviation, and oil refining and trading rather than to any concept of an aggregate “national competitiveness index”.

Shipping, civil aviation, and oil refining and petrochemicals are three key areas of interest for Singapore, which are the subject of intense negotiations over emission reduction initiatives at the global industry or sector-specific levels. These are all industries of major significance to Singapore's role as Asia's leading transport and oil hub. Policies aimed at emissions reductions, be they local, regional, or global, will necessarily impact these key tradable goods sectors. Parallel to the post-Durban negotiations over larger strategic issues of national emission reduction targets, financing, and technology, the shipping and civil aviation industries will be subject to intense negotiations within the specialized bodies of the International Maritime Organization (IMO) and International Civil Aviation Organization (ICAO). Petroleum refining and petrochemicals, as one of the major energy-intensive, heavy industries competing in global commodity markets such as steel, cement, and primary metals, is also subject to strong “level playing field” advocacy for arriving at global sectoral agreements rather than as a subject of different national emission regulations.

SHIPPING

The port of Singapore has been amongst the top five busiest ports in the world for several decades. The American Association of Port Authorities in 2009 ranked Singapore as the world's busiest container seaport on the basis of the total number of actual “twenty-foot equivalent units” (TEUs) transported through the port and second, after Shanghai, in terms of total cargo volume. Singapore consistently ranks as one of the world's top competitive ports, in terms of tonnage and port efficiency. The Kyoto Protocol assigned responsibility for reducing bunker greenhouse gas (GHG) emissions to the IMO, an agency of the United Nations. The IMO has focused on technical discussion around standards such as fuel efficiency, fuel quality, slow steaming, etc.

The word “fossil” is taken from the Latin verb fodere, which means to dig. In modern usage “fossil” refers to any remnant, imprint, or trace of past life. Some common examples include dinosaur bones, buried clamshells, or mineralized wood. The most abundant fossils also turn out to be the smallest: shells and other remains of one-celled organisms that lived in the surface waters of the ocean and in lakes. More broadly, the term “fossil” also includes things like footprints, burrows, or leaf impressions that have been preserved in rocks.

On the basis of the modern definition of fossil, it is debatable whether the term “fossil fuel” accurately describes coal, petroleum, and natural gas. There is virtually no doubt that these substances originated in living organisms, but it is generally difficult to associate them with any unique biologic precursors. Instead they represent the highly modified remains of various different organisms that have been commingled into a kind of generic stew. Rather than being analogous to, say, a dinosaur skeleton, fossil fuels are more like a dinosaur that has been run through a meat grinder, bones, teeth, and all, along with several other types of dinosaurs and whatever smaller animals happened to wander by. It would be a clever curator who could reconstruct a meaningful museum exhibit from the resulting fossil sausage.

The term “fossil” was originally used much more broadly, however, to mean anything that was dug out of the Earth. This included not only fossils in the modern sense, but also metals, ore minerals, rock salt, gemstones, and certain materials that can support combustion. Coal, the most notable example of the latter, has been used as a heat source for millennia.

It should be clear by now that the past geological evolution of the Earth has directly influenced the present and future availability of all energy resources, in one way or another. This connection is obvious for fossil fuels, nuclear, and geothermal energy, all of which exploit the tremendous natural leverage of geologic time. In contrast, renewable systems rely solely on contemporary energy fluxes, which are very large in their own right. The evolution of the Earth has literally set the stage for their use, however, by shaping the geography of practical renewable energy. It has also predetermined the availability of nonrenewable Earth resources that are required to obtain renewable energy.

This dependency on the geologic history of the Earth places intrinsic limitations on all energy systems. Note that these limitations are not static, but instead evolve continuously through time. Three overarching principles govern the changing relationships among humans, energy, and Earth resources, as detailed in the following.

Quality, Not Quantity

Our voracious energy appetite has stimulated spirited debate over the ultimate quantities available from different sources, motivated by concerns that supplies might eventually fall short of demand. In a gross sense this concern is misplaced, however. For example, the total amount of solar power reaching the Earth exceeds current human power consumption by a factor of more than 10,000. The total amount of energy stored in organic matter buried in the Earth's crust is on the order of five thousand times greater than the presently recognized magnitude of fossil fuels. Various other energy systems hold similarly mind-boggling surpluses. The Earth clearly has plenty of energy. What matters therefore is not quantity, but quality. Energy quality can be defined in many ways; in the present context it represents the relative potential for doing useful work, at a minimal cost.

The oil and gas deposits that powered the 20th century can be elegantly summarized in a single word: mobility. Fluid hydrocarbons move freely through rock layers beneath the Earth's surface and under the right conditions can travel long distances to natural traps. Once trapped they readily flow to a well bore, making oil and gas relatively easy to transport to the surface. They can then be pumped across continents through pipelines or carried across the globe on tanker ships. Refined products flow easily though internal combustion engines, which have in turn revolutionized human mobility across the land, sea, or air.

The mobility of fluid hydrocarbons might be compared to vehicular traffic on a system of interstate highways or motorways. Just as high-speed roads transport people quickly between cities, certain porous and permeable rock types allow oil and gas to flow quickly (in geologic terms) toward underground traps. But what if there were no such subterranean superhighways? Or alternatively, what if the oil were simply too thick and sluggish to accelerate to highway speeds? Fluid hydrocarbons might then be forced to travel instead on the geologic equivalent of country lanes, gravel tracks, and muddy back roads, perhaps never reaching their destination at all.

In fact, much of the oil and natural gas that has been generated from source rocks in the Earth's crust has never moved very far. Some of it is retained within the source rocks themselves, which constitute less permeable, organic-rich mudstone, and some has migrated tens to hundreds of meters into adjacent beds that are only slightly more permeable. The relative immobility of such hydrocarbons means they do not become highly concentrated in localized traps; instead they remain spread out across large areas of sedimentary basins, just as coal is spread out across the Powder River Basin (see Chapter 8).

The U.S. Geological Survey describes these immobile oil and gas accumulations as “continuous,” because of the observation that they lack the well-defined spatial boundaries imposed by conventional petroleum traps (see Chapter 9).

Save the Planet! This slogan has been often repeated, and with good reason. The world we live on seems to be under heavy assault on numerous fronts, ranging from biological extinctions to potential shortages of key natural resources. Energy use and its consequences currently rank among the most pressing of these concerns, and not surprisingly are among the most hotly debated and divisive issues of the day. Our use of fossil fuels lies at the heart of the debate, largely because fossil fuels supply the vast majority of our current energy use (∼86 percent in the United States). It has also become increasingly clear that emissions from the burning of fossil fuels are altering the composition of the atmosphere, carrying the potential for catastrophic climate change.

So how did we get to this point? We live in a world made possible by the use of fossil fuels, but it was not always so. Prior to the 19th century virtually all energy was “green” energy, mostly derived from standing biomass in the form of agricultural crops and native vegetation. This biomass could be burned directly for warmth or fed to animals and humans to produce mechanical power (the horse still represents the reference point for some power measurements today!). Most people worked in the fields, went to sleep when it got dark, and rarely traveled far from their homes. This lifestyle may have been dull, but the boredom generally did not last very long. Average life expectancy at birth was far lower than today, estimated at forty years or less. Famine and pestilence were ever-present threats, and few means were available to combat them.

Dramatic change began with the Industrial Revolution, during the late eighteenth to early nineteenth centuries. The initial rise of machines was powered largely by coal, which fueled steam engines. The origins of the Industrial Revolution are undoubtedly complex, but it clearly occurred most rapidly in countries possessing rich supplies of coal (most notably Britain, Germany, and the United States).

Sunlight is abundant, free, and, from the human perspective, eternal. However, as noted in the previous chapter, sunlight is not particularly strong in its natural state, and requires artificial concentration if it is to do any really ambitious work. Fortunately when it comes to concentrating sunlight, nature has already taken the lead. This is true because sunlight causes dramatically unequal heating of the Earth's surface at different latitudes, between land and sea, and between night and day. Uneven heating sets air and water into motion, leading to a complex and sometimes violent sequence of events that act to spread warmth more evenly across the globe. These events never reach an end, however, because the Sun continues to shine and the Earth never stands still. We therefore experience perpetually dynamic weather.

Wind can thus be thought of as solar energy converted into motion. The interaction between wind currents and surface topography help to focus this flow, resulting in localized areas where surface wind speeds exceed the regional average. An opportunity therefore exists for the wind to do real work, if we are somewhat selective about where and when that work is to be done. This is of course no great revelation; wind has propelled sailing ships and turned windmills since the dawn of recorded history. However, wind has also developed a well-deserved reputation for inconstancy. Some days it arrives with a destructive vengeance that precludes any peaceable use; other days it fails to show up at all.

The preceding chapters described mobile, naturally concentrated hydrocarbon fuels (Chapter 9) and relatively immobile hydrocarbons that remain “stuck” near their source (Chapter 10). There is yet a third category that must be added to complete this list: oil and gas that successfully escape their source beds but then lose their mobility as they approach the Earth's surface. They now lie imprisoned, condemned to a monotonous and indefinite existence in one of two forms: thickened crude oil that has ceased to flow, or natural gas frozen into an exotic form of ice. Superficially these two could not appear more different; thickened crude is sticky and dark, whereas gas hydrate is crumbly and white. However, they share an acquired immobility. Rather than flowing through their host rock these deposits have become a part of it. They may reasonably be considered “petrified” oil and gas.

Thickened crude oil and gas hydrate both owe their existence to the intervention of microorganisms. Remarkable as it may seem, the petrification of crude oil results primarily from scavenging by specialized microbes that eat hydrocarbons. These microbes fall within two different groups of organisms that evolved billions of years ago: bacteria and archaea. The first group breathes oxygen (or sulfate, SO42-) and is responsible for most of the decay that normally inhibits the geologic preservation of dead organic matter (see Chapter 7). The second group includes methanogens, microbes that live off the organic remains left behind after bacterial decay. They earn their name by emitting methane as a by-product. Unlike the aerobic bacteria that started the job, methanogens operate entirely without oxygen and in fact cannot tolerate its presence. They are among the earliest inhabitants of Earth, having evolved before the atmosphere contained free oxygen. By necessity they now hide from the light of day, buried in oxygen-depleted sediment beneath mires or the ocean, or within our own lower digestive tracts.

Where do fossil fuels really come from? Misconceptions about the true origin of these substances abound. One chain of gas stations uses an image of a green dinosaur as its logo; does this mean that the gasoline it sells comes from dead dinosaurs? If so, where are those rotting carcasses actually located? Directly under the gas station? The idea that oil is produced from dinosaurs is not quite so comical as it might first appear, since historically we have indeed obtained oil from the carcasses of large animals. The most famous of these are whales, some species of which were hunted nearly to extinction in the 19th century for lamp oil and lubricants. Oil in the form of animal fat continues to be rendered in large quantities for food use, but has not been widely burned for illumination since the advent of fossil fuels.

Most people's direct experience of petroleum begins and ends with the self-service pump at a gas station. The fill-up procedure is deceptively easy and quick, but in fact the hose transfers energy to your car at an astounding rate. Power is defined as the rate at which energy is transferred; delivering the energy content of 15 gallons of gasoline in 2 minutes works out to be the equivalent of about 20,000 horsepower! If you could afford to keep this flow rate going continuously it would be enough to power one engine of a medium-size jetliner. For the most part though consumers do not have direct contact with fossil energy sources at all. Natural gas, for example, travels invisibly in underground pipelines, and coal-fired power plants are often located far from the end users of the electricity they generate.

Our local star has continuously bathed the Earth in sunshine for the past four and a half billion years, interrupted only by the occasional solar eclipse. The Sun is expected to continue shining for billions of years to come, setting a gold standard of sustainability that no other major energy source can hope to match. The Sun supplies the energy for all plant life, and therefore is also the source of energy contained in both biofuels and fossil fuels. The Sun also powers the weather, through solar heating of the ocean and land surfaces. As will be discussed in the next chapter, hydroelectric and wind power are really just cleverly disguised versions of solar power. In fact, only two presently used energy sources can claim true independence from the Sun: nuclear fission and tidal energy. Nuclear fission relies on uranium, an element forged in the violent explosions of other, more massive stars called supernovae. Tidal energy results from the gravitational pull exerted on the ocean by the Moon, and to a lesser extent the Sun.

As powerful as it is, one thing the Sun cannot do on its own is to boil water at the ambient conditions found on the Earth's surface. At high noon on a clear day at the equator, sunlight heats the Earth's surface at a rate that is roughly equivalent to a portable electric hair dryer aimed at an average-sized desktop. The desktop (or ground surface) becomes warm, but not painfully so. At all other locations on the Earth the average rate of incoming solar power is less, because of clouds or to a Sun angle that is less than 90° relative to the horizon. Nowhere on Earth is it ever really hot enough to fry an egg on the sidewalk, a fact that can easily be demonstrated through independent study.

Biofuels built Rome! The motive force behind Rome and every other preindustrial civilization came almost entirely from muscle (human and animal) and was thus fueled by agricultural food production. Cooking and heating were mostly accomplished by directly burning wood and other plant matter. During the Industrial Revolution we gradually moved away from biological energy sources, initially for practical reasons related to the greater energy density offered by coal and petroleum. Coal, for example, provides about twice the energy contained in an equal weight of biomass, and about eight times as much energy by volume (Figure 5.1). Oil and gas offer even larger advantages. Fossil fuels also reduced the need for human and animal labor, since higher quality fuels make mechanization more practical.

Despite its historical decline in popularity, energy derived from recently living plants continues to offer two potentially key advantages over fossil fuels. First, living plants continuously recycle carbon dioxide from the atmosphere, a process that in principle means their use should cause no net change in greenhouse gas abundance. Second, plant biomass is renewed with each new growth cycle, implying that biofuels should always be available (with certain important caveats). Increasing concern over both the future availability of fossil fuels and their inevitable net addition of CO2 to the atmosphere has therefore led to renewed interest in biofuels.

The most immediate questions for biofuels are whether their potential advantages can be achieved without sacrificing the well-known advantages of fossil fuels, and whether industrial-scale biofuels production can be accomplished without threatening food supplies or the environment. These questions are by nature complex, and informed debate requires a deeper grasp of the inner workings of biological energy systems and their interactions with the Earth.

Picture a herd of woolly mammoths grazing amid grass-covered, rolling hills on an autumn morning. They are moving slowly along a river that is muddy with silt, derived from melting of the last remnants of a glacial ice sheet that once covered half the continent. There is a chill in the air, with a strong breeze blowing in from the northwest. A group of fur-clad hunters stalks the mammoths from the opposite direction, discussing details of their attack plan with hand signals and low guttural grunts. If the hunt is successful they may survive through the long winter ahead; otherwise their future is in doubt.

Although incredibly primitive by modern standards, this scene could actually have played out as recently as ten thousand years ago, hardly a blink of the eye in geological terms. Agriculture began to spread through the eastern Mediterranean region only about two thousand years afterward, and the earliest pyramids in Egypt were built at the approximate midpoint in time between the disappearance of woolly mammoths and the appearance of cell phones.

The historical details have been lost to the ages, but it seems clear that massive environmental change, brought on by a respite in continental glaciation, set the stage for early human civilization. If Stone Age and earlier humans had any thoughts at all about the future of energy, they would almost certainly have been along the lines of “How can I keep warmer?” The idea that global warming might eventually become a problem would have been utterly unimaginable.

Since that time, the cutting edge of technology has advanced from stone axes to lasers, and our dominant energy sources have evolved from human muscle to fossil fuels. The historically recent emergence of the latter has transformed the world at unprecedented rates, leading many to worry about how long we can maintain the standard of living that we have come to accept as our birthright.

Perhaps the most iconic image of the bounty of fossil fuels was the well drilled at Spindletop Hill in east Texas, which began to gush oil in the opening days of the 20th century (January 10, 1901; Figure 9.1). Oil spewed more than 150 feet in the air, at an initial rate estimated at approximately 100,000 barrels per day. This flow rate translates to a power output of about 6 gigawatts, roughly equivalent to the rated capacity of three Hoover Dams (power is defined as the rate at which energy is transferred). Remarkably, the liberation of this staggering energy resource only required drilling 1,139 feet into the Earth, a depth less than that of many municipal water wells. Once unleashed, it took nine days to bring the gusher under control. With such immense power waiting literally to leap from the ground, it is small wonder that oil went on to reshape the world.

Uncontrolled eruptions of oil like the one at Spindletop are of course hugely wasteful and pose great danger due to their flammability and to the contamination of the surrounding area. The petroleum industry and government regulators therefore go to great lengths to prevent such catastrophes, which have ironically become all the more shocking for their rarity. The fundamental geologic truth of conventional oil fields remains unchanged more than a century after Spindletop. All such accumulations comprise fluid hydrocarbons that have been highly concentrated by natural geologic processes. These concentrated fluid accumulations lend themselves to comparatively easy (and controlled) extraction, encouraging an analogy to the cream that can be skimmed from the top of a pail of raw milk.