At this writing, the XXI World Energy Congress (WEC) is wrapping up in Montreál, Quebec. While the conference has been all-encompassing, a major theme running through most of the presentations is the rapid rise of alternative energy within the next 35 years.
So who are the biggest players? As a whole, the International Renewable Energy Agency estimates alternative energy to have an 18% position in the global mix. Of this, hydroelectric power currently holds the lion’s share, producing 920 gW. Certainly hydroelectric power is the oldest form of renewable energy and is established in most parts of the world. Because there are fewer possibilities for expanding in this arena, however, it is expected to have the least amount of growth in the period to 2050.
Wind energy experienced a boom in the last several years and is expected to continue to grow. Although there has been enormous localized investment in wind energy, it still accounts for a very small portion of the renewable sector. Interestingly, solar energy is the current darling of most analysts. Today, solar energy makes up 0.5% of the global mix, but it is expected to increase rapidly by 2020. According to Attila Toth of SudEdison, who spoke at WEC, “China,” for example, “is expected to be the largest producer of solar energy with an increase of 143%.”
In transportation fuels, Petrobras is forging ahead with its Brazilian biofuels operations. While renewable transportation fuels will continue to grow regionally in some parts of the world, these sources will not compete effectively with oil and natural gas for quite some time.
The key point garnered from the WEC is in the statistics used to identify growth potential in the renewable arena. Almost all of the energy sources outlined in this column experienced a spike in 2007. That was due in great part to the meteoric increase in oil prices.
As Daniel Yergin, co-founder and chairman of Cambridge Energy Research Associates, pointed out in his keynote address on Sept. 13, speculation on oil supply, demand, and price led to a rapid increase in 2008 to US $147/bbl. “Many people thought price didn’t matter. We found out that it did matter,” Yergin said.
The underlying point is that as oil prices rose, renewable sources of energy became massively more appealing. Market-driven response led to additional investment in this historically lagging sector. As a result, many proponents have redefined this point in time to imply that renewable energy can sustain its own market. Despite this claim, there remains a consistent echo for extensive subsidies to level out the energy playing field.
As it is, “Drill baby drill!” does not sound nearly as cute as it did in 2008, but drilling is the initiating factor in the spike in renewable energy investment. Historically, these systems have not been scalable. From a utilities perspective, wind and solar have definite benefits, but they cannot compete with coal on price point. It is not until proponents work in the emotive signifiers of “clean” versus “dirty” that people begin to detract from traditional utilities supply.
The real answer is to take full advantage of the shale gas revolution, or “Shale Gale,” as Yergin called it, and adopt this massive resource for utilities consumption. Solar and wind supply make a good fit for regions like Morocco where oil and gas are not in great supply. The call to subsidize expansive growth of alternative energy is not really about “leveling out the playing field;” it is more about undoing the field altogether.
By stripping the oil and gas industry of its historical prominence in helping civilizations bridge to the future, providing themselves with capital, and improving their entire population’s standard of living, the alternative energy set discredits the oil and gas industry. They assert that they can do this better. And they want you to pick up the tab.
Common sense determines that renewable energy will take a stronger hold over the next 35 years. Not if, but when oil and natural gas become unprofitable, all other forms of power will begin to see their day in the sun. Nevertheless, this transition will never come to fruition without placing ample pressure on natural resources to maintain volatile prices, encouraging further investments in alternatives.
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