170CONCLUSION: THE CLIMATE HEDGEas a transport fuel, and transportation services are vital. There are no
fully viable substitute fuels that are cleaner than oil. Biofuels like corn-
based ethanol are higher- carbon and lower in energy density.^21 Ve h i c l e s
that run on electricity and fuel cells are a future possibility. But electric
vehicles are only cleaner than oil- burning vehicles when the electricity
grid that powers them is decarbonized. Other transport sectors, such as
aviation, are nowhere close to decarbonization. The lack of substitutes
makes oil difficult to dislodge. One influential paper finds that only
33 percent of global oil reserves will have to be left in the ground, even
if humanity meets its goal in limiting the rise in temperatures to two
degrees Celsius.^22
Most of the climate risk falls on coal. Coal has many substitutes in
power generation, all of them cleaner. One of those is natural gas, which
emits about half the carbon per unit of energy consumed. But gas, too,
has cleaner substitutes, including some, like wind power, which can
compete on cost. Coal and gas are therefore more exposed to risk of
abandonment. Oil simply does not face this level of competition— yet.
The second caveat relates to the possibility of technological break-
throughs. New technology has pushed renewable energy to the fore-
front of electricity capacity installation. But fossil fuel technology also
benefits from periodic advances, as the US shale revolution demon-
strates. A breakthrough that allowed fossil fuels to be burned without
damaging the climate would be a game changer, reinforcing the energy
status quo.
A green- paradox strategy of accelerated depletion might look like a
short- term “win” for the Gulf monarchies. Longer term, it would be
disastrous. One way or another, climate change is bound to disrupt life
in the Gulf. If climate policies succeed, exporters’ economies and polit-
ical systems will be undermined and need amending. Rentier governance
might not survive. If climate polices fall short, the Gulf faces an unwin-
nable confrontation with increasingly hostile summer temperatures and
rising seas. The region may no longer support human habitation. This is
the more depressing scenario.