Will Renewables Be the Death of Oil?

oil drill

By G. Allen Brooks 01-08-2016 06:19:41

(Article originally published in Sept/Oct 2015 edition.)

Not likely, says the author, despite the clamorings of environmentalists and the hype surrounding the upcoming climate change conference in Paris.

Thousands of environmentalists, government policymakers and media will descend on Paris shortly in an attempt to forge a global agreement to reduce carbon emissions and limit the rise in future temperatures. The meeting’s objective is to secure a legally binding and universal treaty on climate change from all the nations of the world.

While there have been a number of such high-profile conferences over the years, all sponsored by the U.N., the Paris confab is seen as having the greatest potential to achieve its goal since the disastrous Copenhagen meeting in December 2009. At that time, President Barack Obama, on his way back from Oslo where he collected his Nobel Peace Prize, dropped in on the conference in its final days to try to negotiate an agreement that would satisfy both the U.S. and China, the world’s two largest carbon polluters, along with the rest of the world.

Despite his efforts, which included seeking out a secret negotiating session to which the U.S. President and his Secretary of State were not invited, the conference agreement was greeted with a giant yawn.

A Decarbonized World?

The Paris meeting is expected to produce the global treaty that environmentalists see as leading to a decarbonized world by 2050. Their optimism is based on an earlier agreement between the U.S. and China, dealing with climate change and clean energy, in which Obama agreed to reduce net U.S. greenhouse gas emissions by 26-28 percent below 2005 levels by 2025 and President Xi Jinping of China declared that his country’s target date for peak CO2 emissions would be around 2030 with the intention to try to peak earlier. Xi also pledged to increase non-fossil fuel’s share of all Chinese energy consumed to around 20 percent by 2030. 

Under the U.S. portion of the agreement, the pace of carbon pollution reduction of 1.2 percent per year on average during 2005-2020 is to double to 2.3-2.8 percent per year on average between 2020 and 2025. Exactly how that increase will be accomplished remains unspecified.  The goal is to keep the U.S. on a trajectory to achieve economy-wide carbon emissions reductions on the order of 80 percent by 2050. 

For China to meet its target of zero-emission sources constituting 20 percent of total energy consumption by 2030 means it will need to deploy an additional 800-1,000 gigawatts of nuclear, wind, solar and other zero-emission electricity-generating capacity. That total exceeds all the coal-fired electricity generation in China today. 

Critics of the U.S.-China agreement point out that one nation has agreed to an aggressive carbon reduction program while the other is merely saying it will slow its emissions’ growth rate.  Regardless, the agreement was hailed as a significant climate change breakthrough and has buoyed expectations for the upcoming meeting in Paris. 

We can only imagine what a circus this meeting may become based on the events that transpired in Copenhagen. According to the U.N., 34,000 people were registered for that meeting. During the first half of the two-week event, the U.N. was forced to restrict the crush of humanity by issuing secondary passes for meetings that would limit the number of eligible attendees to only 30 percent of those initially registered. With 115 heads of state in attendance, the security and logistics – limos, media coverage and housing, etc. – were challenging and expensive.

Now add to this the attraction of Paris, and one can easily assume an even larger number of attendees, especially if there is the possibility that the conference may finally produce the desired outcome. Everyone will want to be present, regardless of the amount of carbon burned to get there!

Civilization Depends on Fossil Fuels

With the world on the edge of committing to decarbonizing the global economy, it would look like oil is on its way to oblivion along with the other fossil fuels that have formed the backbone of our planet’s energy supplies. Fossil fuels are what brought the world its 21st century lifestyle and its economic wealth, even though many people on the planet still lack electricity – the first step to a developed economy and a healthy society.

The energy contained in the pounds of coal, barrels of oil and cubic feet of natural gas burned over the years is responsible for lifting people up from their dependence on human and animal labor. The Industrial Revolution, ushered in by harnessing the energy of fossil fuels, reduced people’s working hours and the burden of labor while boosting output.

Since the early days of the industrial era and despite carbon pollution, global health and well-being have vastly improved with less illness, higher educational attainment and improved living and working conditions. People have enjoyed more leisure time due to the use of carbon fuels that have enabled global travel and increased social interaction, leading to a more connected world.

Higher standards of living have come from the increased use over time of fossil fuels that have greater concentrations of energy per unit than earlier energy sources. This has been the hallmark of our transitions in the use of primary fuel sources. From human and animal power, society moved to generating power by harnessing the wind and then by burning trees and finally by mining coal.

The dirty outputs from wood and coal encouraged the use of less-polluting energy sources such as whale oil, kerosene and, eventually, crude oil and natural gas. In each case the new fuel was more expensive but less polluting, and the world benefited from this progression by experiencing cleaner air, improved health, and greater and more flexible power sources.

Climate and Health Concerns

Now we are confronted with growing concerns over the amount of carbon emissions in our atmosphere and the potential long-term damage to the earth’s climate and human health. For those scientists and policymakers leading the climate change movement, restructuring our energy choices is the appropriate course of action to ensure that future generations do not live in a world substantially hotter and with more dangerous weather than we are currently experiencing. The cost of that shift, however, is often ignored.

This means governments, at the behest of these leaders, seek to replace our coal and oil resources with non-carbon emitting ones such as solar and wind. In 2014, according to BP plc, oil was the leading source of global energy with a 32.6 percent share. However, oil’s share has declined for 15 consecutive years, falling from just over 38 percent in 2000. The major beneficiary of oil’s decline has been coal, along with renewables, as their share of primary energy consumption has increased. 

Non-carbon fuels, including nuclear, hydro and renewables, now account for 13.7 percent of global energy production, although that share is essentially flat over the past 15 years.  However, the use of renewables, primarily wind and solar, has grown dramatically over that period, increasing from a 0.6 percent share to 2.5 percent, almost totally at the expense of nuclear. 

The greatest change for renewables and nuclear fuel has been their importance within the power generation sector. Last year, renewables held a six percent share of the power market while nuclear was at nine percent. The primary fuels for power generation are coal, natural gas and hydro, with the first two dominating the market. But coal is clearly under attack in the U.S. and maybe now in China too.

Limitations of Renewables

The major challenge for renewables is that they are intermittent sources of power. They produce when the wind blows and the sun shines, which means they require back-up energy supplies for when they aren’t producing. Those back-up choices are limited to either fossil fuels or batteries. So far, despite substantial research efforts, the power industry has yet to achieve a technological breakthrough allowing larger battery storage at reduced unit costs. Until there are cheaper ways to store surplus intermittent power, the market opportunities for renewables will be limited. 

California, a leader in social trends, recently saw its legislators vote down their governor’s proposal to cut the state’s petroleum use by half over the next 15 years. That would be achieved by more electric cars, although the public already sees higher gasoline prices and restricted vehicle use in their future and considers both alternatives unacceptable. The primary reason electric vehicles are not the answer is that they suffer from limited range per charge and long charging times. Once again, technology breakthroughs are needed to solve consumers’ “range-anxiety” concerns. Until then, electric vehicle use will be limited. 

Despite the hype over climate change and the clamor to restrict the use of fossil fuels, economies will struggle to achieve high growth rates if powered solely by renewables. Yes, renewables will play an increasing role in the world’s energy mix, but they require many technological breakthroughs in order to boost their dependability. As a result, oil and other fossil fuels will continue to dominate our power supplies for decades into the future. – MarEx   

The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.