Despite Federal Funding, Renewables Will Take Backseat To Fossil Fuels

Even with political forces and billions of taxpayer dollars aligned behind renewable energy, the energy mix two decades from now will look similar as wind and solar power face daunting challenges, according to a report by IHS CERA and the World Economic Forum.

In short, the future is natural gas and oil, according to the study, Energy Vision 2013.

Rex Tillerson, chairman and CEO of ExxonMobil Corporation, USA, said that in the decades ahead the scale, affordability and versatility of oil and natural gas will continue to provide the majority of the world’s energy needs.

Oil and gas “will provide close to 60% of the energy used in the global economy through 2040. Oil will remain the most widely used fuel, but we project that natural gas will grow fast enough to overtake coal for the number two position,” Tillerson said.

He noted that at the beginning of the 20th century, coal and wood provided more than 95% of the world’s energy needs. It took more than 50 years for petroleum to surpass coal as the world’s largest energy source. Renewable energy sources face even more roadblocks.

In 2010, the United States directly and indirectly subsidized renewables to the tune of $14.7 billion, according to the U.S. Energy Information Administration (EIA).

The natural gas and petroleum liquids sector received a fifth of that amount, $2.8 billion, mostly in tax breaks. Wind plants received the largest share of direct federal subsidies in 2010, accounting for 42% of total electricity-related subsidies.

For all that money, in 2011 U.S. renewables made up 12% of energy production, according to EIA. Worldwide, 87% of total primary energy demand is met by hydrocarbons: oil, coal and natural gas. Wind, solar, geothermal and other non-hydro renewable resources provide just 1.6% of total world energy, according to the HIS report.

And wind has already had a long run. Windmills have been in use since at least the 12th century. However, power generation by wind turbine has decreased to $0.06 per kilowatt hour from $0.55 per kilowatt hour in 1980.

Nevertheless, the biggest transition so far this century has been toward coal. Since 2000, coal has added nearly 10 times more energy to the mix than renewables. And unconventional oil and gas may change energy supply in ways not even imagined half a decade ago.

All of the hubbub over sun and wind may signify not much for some time. The rise of natural gas as the world’s most important fuel will headline the global energy shift in the next two to four decades, the study said.

Renewable energy’s obstacles go beyond their small market space.

While policymakers are searching for the next energy transition to tack on more low-carbon and renewable sources of energy to the mix, reality will likely intrude.

A transition to low-carbon and renewable sources would require a fundamental shift in the nature of the electricity system, the study says.

Renewable power is likely to require new transmission infrastructure. The sheer scale of the current delivery system is a key impediment. The amount of energy provided by conventional sources and the size of the embedded infrastructure has taken years to build. Such immensity suggests a move to another energy system would be slow.

Steven Koonin, director for the Center for Urban Science and Progress at New York University, said compelling reasons to improve the energy system exist, including increased accessibility, affordability and reliability. But the timeline is in the decades.

“It took eight decades for oil to overtake coal as the US primary energy source, while mp3s replaced CDs and tapes in only three years,” he said. “For energy transformation, we need not only scientific innovation but also large-scale deployment.”

Getting power where it needs to go is also a potential problem. Moving to wind and solar power involves replacing a higher energy density but generally lower-cost source – such as oil and natural gas – with a lower energy density substitute that is generally more expensive.

While advanced biofuels may be “dropped into” existing systems, renewable power “is likely to require new transmission infrastructure.”

“A more distributed energy supply system in future decades could also pose a competitive challenge to the current structure of the electric power industry,” the study says.

Other problems linger for wind and solar, especially their inconsistency when weather conditions interfere with energy production.

“Whereas traditional power plants can run nearly continuously and ramp up and down to follow demand, wind and solar require other sources of power to compensate when the wind does not blow or the sun does not shine,” the study said.

And while the recent focus has been on the unfolding transition from fossil fuels to renewable sources of energy such as modern biofuels, wind and solar, the most consequential global shift during the coming 20-40 years will be the rise of natural gas to become the world’s single most important fuel.

Nevertheless, solving access to energy is a critical goal. Globally, 1.3 billion people do not have access to modern sources of energy. However, the amount of energy required to achieve those goals – perhaps 30% more in the next 20 years – creates debate and anxiety about the ability of conventional energy supplies to meet the needs of economic growth, the study said.

Vaclav Smil, professor emeritus at the University of Manitoba, Canada, said goals to generate 30% of all electricity from wind by 2030 are “at best aspirational goals and not realistic.”

“Between 2000 and 2010, global output of renewable energies grew by 2% but that of fossil fuels by 2.65%,” Smil said. “During the first decade of the twenty-first century the world has been running into fossil fuels, not away from them, a reality that will not change rapidly.”

While the contributions of wind and solar power have more than tripled during that decade, the world is now more dependent, in both absolute and relative terms, on fossil-fueled generation than it was in 2000, he said.

Fuel switching is not something that happens quickly. For thousands of years, humans used wood and other biomass to make energy. In the 1700s and well into the 1800s, whale oil provided the key ingredient used for lamps, lubrication and soaps.

Coal took over in the 1880s as steam began to power electric generation.

J. Craig Venter, founder and CEO, J. Craig Venter Institute and Synthetic Genomics, noted that natural gas produced from shale fracing has the potential to decrease the use of petroleum.

“Natural gas or methane is a great improvement over coal and oil burning because methane is a much cleaner burning fuel,” Venter said. “Coal, petroleum and natural gas are all the result of biology from decay and compression of ancient plant and animal life, including algae, from hundreds of millions of years ago, so it could be argued that they are all by origin biofuels.

“The problem is that they are not renewable biofuels and their burning results in a net increase in CO2 accumulation in our atmosphere as well as a variety of toxic byproducts,” he said.