When Peak Oil Advocates Disappeared

What is needed is not the subsidization of renewables, but better and cheaper technology.

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A new poll finds solar power is America's preferred alternative energy.

Michael Lynch is the president and director of global petroleum service at Strategic Energy & Economic Research.

The past couple of years have seen an amazing transformation of the argument that oil and gas production will soon peak with catastrophic consequences, which has given way to the insistence that we don't really need fossil fuels. In a perverse reversal, the peak oil advocates have mostly stopped arguing that the petroleum resource is scarce, instead saying it is abundant but expensive, while the renewable proponents insist that renewable resources are enormous, and suggest that the costs are not unreasonable.

Elizabeth Rosenthal summarizes these arguments in the New York Times Sunday Review of March 31, and it is indicative of the general state of the debate. She states that many countries rely heavily on renewables (thirteen get more than 30 percent of their electricity from renewables), but by including hydroelectric power she exaggerates the case. Some of the analysis is also crosscutting, talking about the viability of wind, then jumping to wind and solar market shares.

[See a collection of political cartoons on energy policy.]

Further, it is true that there are technical concerns about modifying national or regional grids to accommodate highly variable and uncertain renewable sources of power, but these are not insurmountable. Indeed, grid management is improving rapidly simply because of better software and control devices.

No, although land concerns are important (even liberal Massachusetts is seeing opposition to so-called "industrial" solar plants and offshore wind towers), the real issue is the cost of these various sources. These are due to the extremely low energy density of solar power, which is somewhere around two and a half times the cost of conventional power, according to the US Department of Energy. Wind, being concentrated solar power, is much cheaper, and roughly competitive with conventional power, depending on the site. Large hydro plants tend to produce very cheap electricity, but this country has no more unexploited sites.

And as so many have noted, costs for renewables are falling, and it is possible that rising natural gas prices will make them competitive sooner rather than later. But having studied (and made) energy price projections for nearly four decades, this is a slender reed to base a policy on. Carter's justification for the Alaska Natural Gas Transportation System, a $30 billion pipeline to the lower-48 states, included the projection that gas prices would rise about 2 percent per year above inflation. If such expectations had been fulfilled, prices would be about four times the current levels.

[See a collection of political cartoons on gas prices.]

A decade and a half ago, I wrote an article warning renewable power advocates not to rely on rising prices for fossil fuels or regulations that would require use of renewables to make renewable energy viable beyond niche markets. This was a lesson learned in the 1970s energy crises, but forgotten by, or unknown to, most.

What is needed is not the subsidization or support for renewables, but better and cheaper technology, which does not come from the learning curve, which promises only marginal advances. Research is need to bring these costs down, and the subsidies for the installation of the current technology are largely wasted.

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