To an extent renewable energy development is not economical and that fools rush in because of heavy subsidies, there is a bubble in the making. Be sure to get out before this bubble bursts.
How green is renewable energy? Energy is the essential element that drives our global, modern economy. Without it, the world as we know it would come to a complete stop. And the three primary energy sources – coal, oil and natural gas, which account for over 85% of our energy needs – are all fossil fuels.
You would have thought then that we, the consumers of such valuable resources, would be grateful for the contribution they have made to our living standards. After all, we don’t have to burn foul smoking wood to heat ourselves, shovel manure off the streets left by our carriage horses, and kill all those whales so we can read by the oil lamp at night anymore.
Instead, for many of us, we act worse than a bunch of ingrates. Not only do we take fossil fuels for granted, we also openly denounce their use, as if fossil fuels were toxic drugs to which we are addicted. Never mind that perhaps our addiction has to do with the fact that fossil fuels are so convenient, efficient, and economical to use.
So why is there so much angst over the use of fossil fuels and such strong emotions evoked? There are three primary reasons: first, the use of fossil fuels, especially that of coal, and to a lesser extent oil, do emit pollutants into the air, as evidenced by China’s foul air from factories, power plants, buses, and cars.
Second, there is a view that fossil fuels are finite resources and that we are either running out of them – as in the case with oil, or that we will soon.
Third, there is the perception by some that emissions of carbon dioxide from burning fossil fuels causes global warming which, if unchecked, will destroy the world as we know it. This last reason has certainly amped up the antipathy towards fossil fuels in the last 20 years.
But what are the facts? Well, in terms of reducing air pollutants from fossil fuels use and improving air quality, the world has made great strides. Effective pollution control technologies such as coal scrubbers for power plants, desulfurization units for petroleum refineries, and catalytic converters for automobiles have contributed immeasurably. In fact, given the size of our economy, the world has never been cleaner. In the 1960s and 1970s, you wouldn’t be able to see the mountains behind Los Angeles and Tokyo Bay was covered in smog. Both cities have grown in populations but they are much cleaner and more visible. As to the supply of fossil fuels, this column has been consistent in its view: there are plenty of fossil fuel supplies that can be economically extracted in the foreseeable future, so no need to worry yet. Finally the case that carbon dioxide is strongly linked to a mild warming trend since the 1860s becomes shakier by the day as more contrary evidence surfaces and more people jump off the climate change bandwagon.
Nevertheless, perceptions die hard, and the idea that we need alternative sources of energy (that is the old term) to replace fossil fuels has always been seen as a good and necessary thing. And the fanciful thought that “wouldn’t it be great if these new sources of energy are actually renewable” can indeed be intoxicating. And if these energy sources happen to be green – presumably meaning clean and, of course, sustainable – surely that would make us giddy. Why, we must develop them at any cost!
Well, in many ways, develop them at any cost is what the world has done with many of these green energy types. But are they truly green? Let’s look at some of the poster boys of green energy- solar energy, electric car, wind, and bio-fuels, and see how they stack up.
With respect to solar panels, all you need to know about them is this: “They have a 20 year life span and a 100 year payback period”. Of course, solar energy’s appeal is that sunlight is limitless and free. But intuitively we know that capturing such a diffused energy form is costly. Besides, solar energy is land intensive and works best in sunny regions, and its reliance on sunlight
availability means that, on a large scale basis, it will require a standby power generation source – i.e. coal or natural gas – which then increases its total cost. Today, solar energy accounts for less than 0.01% of electricity generation and, as such, is really not a serious contributor to our energy balance. Worse, production of poly-silicon used to coat the panels is dirty and environmentally hazardous, and it competes directly with the production of computer chips – a much more valuable use – thus potentially driving up the cost of computing.
The widespread use of emission-free and clean electric cars is another Holy Grail for the green energy enthusiast, and it has the added benefit of being a substituting for petroleum use. Alas, the electric car has an Achilles Heel – a good battery. While millions of dollars are spent on battery technologies, to date, a long life, high storage capacity battery capable of thousands of charges still remains a dream. And the full cycle of battery production is just downright dirty, toxic, and environmentally hazardous. Disposal of lead acid batteries, the most common types used, is a hazard, not to mention leaked chemicals. Now, as long as electric cars comprise a miniscule percentage of the fleet, these issues are manageable, but if they were to number in the tens of millions, then both the resource impact and environmental effect could be exponentially problematic. And the irony is that to the extent widespread electric car use increases electricity demand, the marginal provider of power generation is – you guessed it – coal, or in some cases natural gas, the combustion of both contributes to greenhouse gas emissions. Rather a Catch 22 situation, isn’t it?
Wind energy from turbines is possibly the most hyped energy source, promoted even by the likes of Boone Pickens, the legendary Texas oilman. However the bloom is off the roses in some places, including Denmark, which went into large-scale wind farms in a big way. Some studies have shown its net benefit to carbon dioxide emissions reduction is negligible. Also wind farms are land intensive, which require frequent maintenance, are unreliable, and not to mention that they kill birds and bats. And, naturally, they are expensive and require massive subsidies from utilities and governments. The prospect of wind energy becoming a significant source of power generation is grim indeed.
Finally, bio-fuels, a subset of biomass, have enjoyed mixed success. Brazil’s production of ethanol for automobile use has been largely a success as it uses cheap and plentiful sugarcane as feedstock. In the US, in which the production of ethanol from corn is heavily subsidized, ethanol production has created the unintended effect of raising the price of corn – a vital feed for livestock- and meat products. The intensive energy required to produce bio-fuels makes for challenging economics. And large scale production of them requires vast amounts of farmland and copious quantities of fossil fuel based fertilizers.
In short, green energy produces little energy and requires heavy subsidies – they are less than what they seem. And any thought that they could replace fossil fuels in any significant manner in the for-seeable future is purely delusional. The truth is, in terms of energy use, the world has been decarbonizing or greening since its first use of energy. And nuclear energy was goin
g to be the next source of energy to sustain that trend until the Three Mile Island accident and growing opposition to nuclear energy by environmentalists. Perhaps the renewed interest in nuclear energy worldwide could put us back on that path.
But this we know: to the extent renewable energy development is not economical and that fools rush in because of heavy subsidies, there is a bubble in the making. So, if you are contemplating investing in green energy, be sure to get out before this bubble bursts. BM