We're crying too much over spilt oil

The damage done by the oil spill from the Sea Empress will, eventually, be healed. There have been environmental consequences and anyone with human decency will be distressed about the destruction of birds and the threat to colonies ofrare starfish. Meanwhile, the highly politicised debate will continue, with people using this accident to blame the Government, the oil companies, the shipping managers, international maritime legislation, flags of convenience, or simply greedy "society", whatever that means. But the sea has wonderful powers of recovery. In a couple of years, with luck, you will not know the oil spill ever happened.

There will be more oil spills, but - however politically incorrect it might be to say so - that should be one of the lesser concerns about our oil economy. It is infinitely more important to recognise that fossil fuels, in particular oil and natural gas, will continue to drive the world economy for perhaps another two generations; and to deal with the consequences of that fact.

To pretend otherwise - to believe that more research into renewable energy sources will solve the problem, to bang on about the awfulness of the motor car, to wish that our society was less materialistic - is to live in cloud-cuckoo-land. No, it is worse, for the more frequently the idea is peddled that we should search for ways of living without oil, the less likely we are to think through the environmental implications of our continued dependence on it.

Some numbers will make this clearer. The total amount of commercial energy produced in the world is about 330 exajoules. (Commercial energy is that which is bought and sold and excludes, for instance, firewood, the principal source of energy for cooking in much of the world. An exajoule is 1018 joules.) Out of that total, 130 exajoules come from oil and 80 from gas. In other words, oil and gas account for roughly two-thirds of all the energy traded. Coal accounts for 90 exajoules, while nuclear and hydro, the two non-fossil technologies used to generate electricity, produce a little more than 20 and rather less than 10 exajoules respectively.

So fossil fuels provide 90 per cent of the world's energy, and the two "renewable" technologies 10 per cent. Everything else - wind power, solar, tidal barrages, fuel cells - is much less than 1 per cent of the total.

Energy use has grown from about 230 exajoules 20 years ago to today's 330, and it seems safe to assume that it will grow by another 100 over the next 20 years. Even were we to flood every potential power-producing valley in the world and double the number of nuclear power stations, with all the ghastly environmental consequences of that, fossil fuels would still be providing 90 per cent of our energy a generation from now.

Actually, it is far more likely that the contribution of nuclear and hydro power will shrink. Nuclear is a failed technology, killed by the market. No commercial organisation will build nuclear power stations because of the liabilities it would have to assume. The whole industry would not have existed at all were it not for government finance. Hydro is limited by the small number of commercially viable sites, for big rivers with valleys in areas of low population tend to be a long way away from the concentrations of population where the power is needed.

So it has to be fossil fuel, which raises the obvious question: is there enough? The answer, on a 30- to 50- year horizon, is yes. Oil is the most scarce: proven reserves are equivalent to 45 years at present consumption. But that has risen from 33 years in the mid-Eighties. In other words, we are discovering oil more than twice as fast as we are using it up. There is more than 50 years' worth of proven gas supply; more than 200 of coal. So the biggest concern about fossil fuels is not that they are likely to run out, but that theycontribute powerfully to global warming.

There is so much uncertainty about global warming that is difficult for the non-expert to reach a sensible judgement. But I have been rereading the measured and sensible 1990 Climate Change report from the intergovernmental panel that studied global warming on behalf of the World Meteorological Organisation and the United Nations Environment Programme. Its central conclusion was that global mean temperature would rise by 1 degree Celsius by 2025 and 3C by the end of the next century: a greater change than anything seen in the past 10,000 years.

The levels of uncertainty are high, but it seems to me that we are mad to risk such an experiment with the earth's climate: stupidity and arrogance akin to that displayed by European leaders which led us into the First World War and wrecked the first half of this century. Accordingly, the fact that we are and will remain a fossil-fuel economy highlights the case for conservation. It is precisely because there is plenty of oil around now that we must work harder to use less of it.

The market cannot do this on its own. It can be a powerful tool encouraging good environmental practice (why could the anti-nuclear lobby never grasp that privatisation of our nuclear electricity industry was the answer to its dreams? It is market pressure that will ensure the industry quietly withers away). But the market cannot cope with very long-term changes such as global warming. It needs to be harnessed.

The mechanism to do that exists. It is taxation. One of the absurdities of the tax system of every developed country is that it discourages the thing it ought to encourage: work; and fails to discourage the thing it ought to discourage: pollution. So we penalise work by making people pay income tax and social security contributions - and wonder why there is unemployment; and we insufficiently tax, or even subsidise the use of power - and wonder why we use so much of it.

The worst culprit is, of course, the US, where the real price of petrol is the lowest it has been for 50 years. While legislation has cut the fuel consumption of the car fleet, Americans have beaten this by switching to four-wheel-drive and pick-up trucks. Britain still has about the cheapest petrol in Europe and subsidises company cars, and when the government did try to impose VAT on fuel in the home,MPs forced it to scale down its intentions. Hopeless.

Of course we need to try to stop disasters like the Sea Empress happening, just as we need to improve road safety or discourage people from smoking. But the overriding environmental imperative is to conserve energy. And only by taxing fossil fuels enough, forcing the price up, harnessing the power of the market, will we start on the long path towards energy conservation.

Britain is not a particularly big player in the world energy league, but if this country committed itself to a much more fundamental shift to higher energy taxation, just as Japan did after the 1974 oil shock, it would have a disproportionate impact. All governments are desperate to find new sources of revenue to help finance cuts in income tax and hence to reduce the disincentive to employment. For once, good environmental policy makes sound fiscal sense.