In talking with various other writers and visitors to this site, the question of “OK, so where do you think we’re headed?” often comes up. Since I think this is a useful way to address all these interlocking issues in the energy + environmental arena, I will lay out my views on all the various sub-topics in two posts, beginning with this one.

Please note that in this sweeping exercise I’m focused mostly (but not entirely) on the US, and mostly (but not entirely) on the next 10 years. I also reserve my right, as detailed in the US Constitution, to be wildly, laughably, stupefyingly wrong.

Oil
The world production of oil will peak around 2011/2012. It won’t be a sharp peak-and-decline, but an undulating plateau as rising prices make it economical to bring ever more expensive supplies online and also constrain demand. In particular, those rising prices will provide the political pressure needed to make the US drill wherever we can find oil. And drill we will–ecologically sensitive offshore areas, ANWR, etc., will all be tapped, in time. The same basic conclusion applies to oil extraction in the Arctic or anywhere else on the planet. This is an inescapable conclusion once you accept that peak oil is real and imminent.

The price of oil will fluctuate a lot, with a generally upward path. There may be a slight dip in the next couple of years, but this will be a short-term anomaly, not a “return to the good old days of cheap oil”.

The biggest wild cards in oil demand over the next decade will be China and the domestic consumption of the exporting nations. Both of these factors could make the tight world oil market effectively much tighter from an oil importer’s viewpoint.

The war of words over peak oil will continue and get ever louder and more annoying. Every time someone finds a new oil field, it will be trumpeted by the cornucopians as proof that peak oil is “wrong”, and every shortage or price spike will be paraded around the blogosphere as proof that we’re all going to die shivering in caves in five years. I will continue to detest both groups and complain about them here, or on whatever online form this blog evolves into during the next decade.

Coal
The big political battle in the energy and environmental world will be in the building of new, non-CCS coal plants in the US, as the pressure to “do something” about coal will become overwhelming, even as CCS technology looks less and less promising.

The third rail of US enviro-politics will be what we do with the nearly 1,500 coal plants already in service here. No one will come up with a good plan to retrofit them with CCS (carbon capture and sequestration) technology, and any attempt to replace them with natural gas or nuclear or renewables will be an extremely hard sell, thanks to the sheer number of coal plants.

The US coal-fired electricity issues will be nothing compared to the growing mess in China. Getting Kansas to forgo new coal plants was a struggle; getting China to stop using coal in dirty plants will be virtually impossible.

As oil prices continue to rise, possibly with some supply interruptions added to the mix, the pressure to convert some of the US’ vast coal reserves into liquid fuel will be overwhelming. Can it be done in a way that doesn’t aggravate the global warming situation? Can it be scaled up to replace a meaningful portion of US transportation fuel demand?

Natural gas
The very general price trajectory will follow that of oil, but with less volatility and likely less of a percentage increase. But the overall scenario–higher prices, more difficulty in meeting worldwide demand, more exploration and development of previously off-limits or marginal reserves, and some perverse above ground factors (such as local opposition around the US to the building of new LNG terminals)–will look hauntingly familiar to anyone who follows oil issues.

It’s not clear to me how much new electricity generation will rely on natural gas. Utilities will like the greatly reduced CO2 emissions, relative to coal, but they’re probably quite nervous about the prospects for prices decades from now.

Ethanol
The boondoggle of starch-based ethanol in the US will continue. The political influence of corporate agriculture and Iowa (thanks to its early position i the US presidential primary process) will guarantee it.

Cellulosic ethanol will continue to develop, and we’ll likely see the first large scale plants online within five years. That’s when things will get interesting, as the market interaction between starch and cellulosic ethanol supplies, plus the change in the biomass supply infrastructure, all begin. Will we see land currently used for growing food converted to growing genetically modified poplars and switch grass? Probably not on a large scale, but such effects are influenced by so many other factors–public policy, world oil price, the food/fuel interaction potentially pushing some farmers to revert corn acres back to wheat and other grains–that it’s almost impossible to make a firm prediction.

Unless there is a stunning advance in cellulosic ethanol production (with a matching transformation of the infrastructure), it will become obvious pretty quickly that the US government mandate for producing 35 billion gallons of ethanol per year won’t be reached and was a ridiculous goal.

Hydrogen
Hydrogen fuel cells for cars will continue to draw lots of research money (i.e. government grants), and will never be able to answer the simple question: How can you fuel a significant number of such vehicles at a lower price/mile than plug-in hybrids or electric vehicles, and without creating an unacceptable amount of CO2 emissions? It may well take more than a decade for the hydrogen fairy tale to die.

Algae biofuels
This is one of the biggest unknowns in our energy future. Current work in this area seems extremely promising, and I would love to see algae farms popping up near coal plants worldwide turning some of those CO2 emissions into something that can then be refined into motor fuel. But how well will it really scale, and at what cost? This could turn out to be anything from a “niche of a niche”, a parlor trick technology that never makes a meaningful contribution to our energy needs, to a game-changing breakthrough. I’m optimistic, as it seems like the technology is simple enough and inherently scalable enough that it should be a significant player in just a few years.

US consumers
US mainstream consumers will continue to present a very mixed picture. Many more of them will become much more efficient in their transportation choices: More efficient vehicles, less driving, more use of public transportation, etc. Similarly, we’ll see a lot more interest in improving the performance of homes through better insulation, windows, and doors, more efficient heating and cooling systems, more adoption of solar thermal water heaters, plus more use of alternative strategies, including zone heating and cooling, using auto-setback thermostats, etc.

Some will even take the astonishing steps of educating themselves about energy and environmental issues and getting involved in the political process. They will write to their elected representatives, volunteer and vote for better candidates, and work to help educate others about the myriad of issues involved in our consumption of energy.

Sadly, not nearly enough Americans will take these steps. Many will continue to insist that high oil prices are just another example of “the oil companies screwing us” and spend all their time complaining about their gasoline and heating bills instead of taking action. There will be no end of peak oil and global warming deniers getting more than enough free press to help feed these perverse, uniquely American, tendencies.

US politicians and public policy
A far greater disappointment than US consumers will be US politicians. Nearly all of them will continue to shun “peak oil”, at least openly, and will focus on global warming and the every candidate’s favorite canard, “achieving energy independence”.

This head-in-the-sand approach is partially due to demographics–politics is dominated by old, rich people who have never studied economics or energy issues in any detail outside of the legislative process or campaigning for office, so they can’t grasp that such fundamental shifts are happening right before their eyes. But mostly it’s the influence of money, which badly warps the entire US political system in favor of those entities with the resources and the most to gain from buying politicians.