Some energy experts have recently predicted that renewable sources (including wind, solar and hydroelectric) could provide up to 43% of the world’s energy supply by 2030, according to recent trends. However, the pace of renewable energy development is most rapid in those countries with national energy policies and incentives favoring renewable energy, which presently do not include the United States.
According to an October 10 report in the New York Times, the energy industry worldwide is undergoing a major realignment away from carbon fuels. This shift is being driven by forces including doubt about the safety of nuclear energy following the Fukushima disaster in Japan, and concerns over safety and environmental risks of oil and carbon fuels spurred by the BP Oil disaster in the Gulf of Mexico and climate change exhibited by extreme weather patterns throughout the world.
“The energy sector is undergoing a major transformation globally,” Dr. Rajendra K. Pachauri, director general of The Energy and Resources Institute in New Delhi and chairman of the Intergovernmental Panel on Climate Change of India, told the Times.
“There are new concerns arising out of the Fukushima nuclear disaster and the serious Deepwater Horizon oil spill that expansion in supply of energy would be associated with larger risks,” Dr. Pachauri said. “Therefore, many countries are rethinking energy supply strategies and the very drivers of energy demand.”
As reported in the Times, Dr. Pachauri predicts that growth in the renewable energy market will be one of the defining features of the future of energy. “Already during the year 2010 new investment in renewable energy reached $211 billion,” he said. “In a number of specific applications, renewable energy is already available at costs that can compete with conventional power.”
His predictions: Under fairly conservative assumptions, he said, renewable sources could provide 17 percent of the primary energy supply globally in 2030, rising to more than 27 percent by 2050. Under more optimistic assumptions, he projects 43 percent renewable energy by 2030 and up to 77 percent by 2050.
However, Dr. Pachauri cautioned that even his conservative predictions are based on the assumption that countries act individually and together to adopt policies encouraging the phasing-out of fossil fuels and adoption of cleaner, renewable power sources in their place.
The Role of Government Incentives Internationally
The countries in which movement toward renewable energy sources is progressing the fastest are those countries that have adopted government policies favoring renewable energy and incentives to promote its development.
For example:
- Germany. Following the Fukushima nuclear disaster in Japan, the government of Germany has adopted official policies aiming to eliminate nuclear power in that country by 2022 — even though nuclear power currently provides 23 percent of that country’s electricity. The German government is also implementing plans to increase the portion of electricity generated from renewable sources to 35 percent by 2020. Due to aggressive government incentives, renewable energy sources already provide about 18 percent of Germany’s electricity. In support of its policies, the German government has also put in place an aggressive program of energy conservation and efficiency to reduce demand.
Private industry in Germany has also adopted policies consistent with the Government’s aims of eliminating nuclear power and moving toward renewable energy sources. For exampls, Siemens, the largest engineering company in Europe, announced that it was ending plans to cooperate with Rosatom, the Russian state-controlled nuclear power company, in the construction of dozens of nuclear plants throughout Russia over the next 20 years. Siemens’ Chairman Peter Löscher said that Siemens will no longer build nuclear power plants anywhere in the world. Instead, he said, Siemens plans “to expand significantly its portfolio of renewable energy technologies,” as reported by the New York Times.
- China. According to a recent article in RenewablesBiz Daily, China leads the world in renewable energy development. Fueled by China’s aggressive government support for renewable energy development, RenewablesBiz reports that:
- Chinese companies control half the $45 billion global market for wind power.
- 60 percent of worldwide solar power production is based in China.
- China intends to produce 20 percent of its power from renewables by 2020.
- Clean energy technology investments in China soared to $51.1 billion last year, an increase of 30 percent from the previous year and one-fifth of the amount spent worldwide.
Trends Resisting Renewables Growth in U.S.
In the United States, both economic and political factors have recently put brakes on the relative expansion of renewable energy as a share of the nation’s energy supply.
Unlike Germany, China, Scandinavian and European countries, and many other countries, the United States still does not have an official national policy requiring renewable, noncarbon-emitting power generation by any given target date.
“Because the United States has not adopted a national climate change policy that would drive demand for nonpolluting energy sources, the prospects for alternative energy sources like wind, solar, geothermal and hydro are poorer in the United States than elsewhere else in the world,” the Times reported.
In addition, “Republicans in Congress seized on the collapse of [Solyndra, a once-promising solar energy venture in California that received $535 million in federal loans] to question the Obama administration’s approach to supporting alternative energy ventures and the concept of so-called green jobs,” the Times report said. This has dealt a “sharp blow” to renewable energy development in the United States, according to the Times.
Meanwhile, economic forces have been favoring the development of cheap and plentiful natural gas resources in the U.S. Natural gas prices are currently down to $4 to $5 per thousand in the United States. This has shifted industry focus to natural gas development in the U.S.
Experts Call for Increased Government Investment in Renewables R&D
The American Energy Innovation Council (AEIC) called recently for a tripling of government investment in clean energy research and development. The AEIC said that the U.S. energy sector spent only a fraction of what other U.S. industries, such as pharmaceuticals, invested in advancing new technology.
The AEIC is a group of American business executives focusing on what they have termed under-investment in basic energy research. The group includes such business leaders as Bill Gates, chairman and former CEO of Microsoft; Norm Augustine, former chairman and CEO of Lockheed Martin; Ursula Burns, chairman and CEO of Xerox; John Doerr, partner at Kleiner Perkins Caufield & Byers; Chad Holliday, chairman of Bank of America and former chairman and CEO of DuPont; Jeff Immelt, chairman and CEO of GE; and Tim Solso, chairman and CEO of Cummins.
In a recent business plan for the nation’s energy future, the AEIC called for a government investment of U.S. $16 Billion per year in clean energy innovation. Their recommendation stated, in part:
The benefits of this investment will far outweigh the costs. By comparison, the United States sends $16 billion overseas for petroleum every 16 days. [emphasis in original]
Underscoring their call for government involvement, the American Energy Innovation Council (AEIC) issued a new report in September, 2011, entitled, Catalyzing American Ingenuity: The Role of Government in Energy Innovation. In this report, the AEIC documents that “US government investment in technology research has been integral to American economic competitiveness in many sectors.” However, they find that “needed investments in energy breakthroughs are simply not being made” in the U.S.
“We are in critical need of a government commitment to research into new energy technologies that can free us from our dependence on foreign oil and create affordable clean-energy alternatives,” Bill Gates said. “Yet today, the U.S. government spends only one-sixth as much on energy innovation as it does on medical research.”
“Understandably, especially in this period of tight budgets, people ask why the private sector can’t fund the necessary R&D into energy alternatives,” Gates said. “No matter how well intentioned, utility companies and other private investors simply are not going to invest deeply in the kind of R&D needed to create scalable, low-cost, low-carbon energy innovations. They have little or no economic incentive to do so. This is a unique but critical role for government, one central to our long-term economic competitiveness.”
“Neither the private sector nor the government are making investments in research even remotely commensurate to the vast opportunities in the $5 trillion global energy market,” said Norm Augustine, former chairman and CEO of Lockheed Martin, who is also a former Undersecretary of the Army. “Energy innovation is a matter of national and economic security given oil reliance, nuclear power, climate change and related issues, and must be treated that way by Congress and the Administration in terms of investment priorities.”
Geopolitical Implications
Daniel Yergin, an energy historian, predicts in his new book, The Quest, that more than 80 percent of world energy will still be supplied by carbon-based fuels 20 years from now. He does note some continued encouraging developments in alternative energy technology, however he notes that lead times for implementation of innovative technologies may be long because of the complexity and scale of the global energy supply network.
“What kind of energy mix will meet the world’s energy needs without crisis and confrontation?” Mr. Yergin asks in The Quest.. That is yet to be seen, he concludes. He predicts that there will be a continuing competition for energy investment dollars between oil, gas and coal (which he calls “the incumbents”) and the renewables, wind, solar and biofuels (the “new entrants”).
“A transition on this scale, if it does happen,” he writes, “has great significance for emissions, for the wider economy, for geopolitics and for the position of nations.”
