Will Wilkinson is optimistic about energy. Don’t worry about peak oil, he says: as oil prices rise, alternative energy sources will become more attractive, and eventually innovation and competition in the alternative-energy space will drive alternative-energy prices down below the "historical trend" of oil prices. That’s how we get to environmental nirvana: it’s a natural consequence of fossil-fuel scarcity.
But the problem is that fossil fuels aren’t scarce, and they are cheap — coal, especially. There’s still enormous amounts of coal left in the ground, and there’s no sign that any alternative will be cheaper than coal for the foreseeable future. And even if we have reached peak oil, there’s still a hell of a lot of oil left — especially if you start including tar sands in Canada and Venezuela.
There are no meaningful limits to growth from either the scarcity of energy, or from negative environmental externalities from economic production, since in the medium run, those externalities are positive.
But he has no reason at all to believe that in the medium run environmental externalities are positive rather than negative. It’s entirely possible that in the medium run fossil fuels will remain cheaper than alternative energy sources, and that externalities will remain negative. It’s also entirely possible that by the time fossil fuels are so scarce that alternative energy sources are cheaper than their carbon-emitting counterparts, we will have pumped so much carbon dioxide into the atmosphere that it will be too late: environmental catastrophe will be upon us.
Will’s argument, it seems to me, seems to rely on the peculiar idea that we’ll run out of fossil fuels just in time to avert environmental catastrophe: that even if we don’t change our ways unilaterally, the finite supply of oil and coal wil force us to do so before it’s too late.
But scientifically speaking, there’s no reason to believe this. Carbon levels in the atmosphere are already too high, and they’re rising fast. There’s more than enough carbon left in the ground to bring atmospheric carbon concentrations up to catastrophic levels, if we burn it rather than leave it untouched. So we have to start reducing our emissions now — not in Will’s vaguely-defined "medium run".