Oil Analyst Says Renewables Get Competitive

Those who believe that oil is running out have a special scorn for prominent oil industry consultant and analyst Daniel Yergin, chairman of Cambridge Energy Research Associates. Yergin, who wrote The Prize, the Pulitzer Prize-winning book that stands as the definitive history of the oil industry, has often dismissed concerns that the world is at or near "peak oil," or the point at which petroleum production will begin an inexorable decline.

Peak Oilers even recently issued a $100,000 wager—not accepted yet—challenging CERA's June 2007 forecast that global oil capacity would rise from its current 91 million barrels per day to 112 million barrels per day by 2017.

The run-up in the cost of oil over the past five years has indeed made CERA's price forecasts seem optimistic, although the consultants haven't been totally sanguine about the oil scene—particularly about the geopolitical factors that limit access to petroleum.

In any case, Yergin this week offered his take on the role of oil's (and coal's) clean competitors in the energy market. "Renewable energy is crossing the divide towards a competitive role in energy markets," he said at the government-sponsored Washington International Renewable Energy Conference. "But there is still more terrain to cover among the different renewable energy sources in terms of economics, technology, and scale."

Depending on how well renewables traverse that terrain, CERA forecasts that clean power could supply as little as 7 percent or as much as 16 percent of the world's electric needs by 2030. If either of those numbers sounds low to you—and let's face it, they are—remember, the U.S. government until recently forecast that wind, solar energy, and ethanol together would just make up 4.2 percent of the nation's energy mix by 2030. (The government is adjusting that figure upward, mainly to account for the increase in ethanol mandated by Congress.)

"We are going through a period of what I call the 'great bubbling,' a high degree of innovation all across the energy spectrum," Yergin told the 5,000 attendees, including cabinet-level officials from more than 70 countries. "This is boosting the competitiveness of renewables and efficiency, and is also evident in terms of conventional energy."