Needed: bailout of our energy future
November 19th, 2008 by Jim JustThe absolute quantities of renewable energy needed to replace a significant share of the wold’s fossil fuel energy are huge because the scale of the coming global energy transition is of an unprecedented magnitude. Vaclav Smil at The American points out that replacing only half of worldwide annual fossil fuel use with renewable energies would require the equivalent of about 4.5 billion tons of oil. That’s a task equal to creating de novo an energy industry with an output surpassing that of the entire world oil industry – an industry that has taken more than a century to build.
Al Gore described his July 2008 proposal to “repower” America – to produce 100% of our electricity from renewable energy and truly clean carbon-free sources within 10 years – as “achievable, affordable, and transformative.”
Achieving Gore’s goal would require an enormous capacity addition – in excess of 1,000 GW – in a single decade. Since the year 2000, actual additions in all plants have averaged less than 30 GW/year.
The financial cost would be enormous: Smil estimates at least $2.5 trillion to build the new capacity {but then again, we’re approaching that amount in bailouts, within a single year). It would also mean writing off the entire fossil-fuel and nuclear generation industry, an enterprise whose power plants alone have a replacement value of at least $1.5 trillion (assuming at least $1,700/installed kW). It would also rewiring the nation, at a cost of close to $100 billion.
We’re not off to a good start. The financial crisis – which has resulted in “demand destruction” and the collapse of oil prices – has resulted in the delay or cancellation of myriad energy projects and, counterintuitively, may have caused the peak of global oil production to occur earlier than it otherwise would have.
Reuters has compiled a list of energy projects that have been scaled back or delayed projects. Fortunately for Earth’s climate, expensive ventures in the Canadian oil sands hardest hit.
The list is far from exhaustive, but it gives some idea of the scope and scale of the cutbacks. For example, the Gulf Times reports that Saudi Arabia is making a much more extensive review of its energy investment plans than the Reuters article indicates.
Renewable energy projects are not escaping the carnage. It’s not just that renewables become less profitable or even unprofitable as fossil fuel prices decline. As Jerome a Paris reports, even if wind or solar still pencil out “zombie” banks have no money for wind farms.
Maybe it’s not a bad thing that we’re slashing investment in fossil fuels. It is a bad thing to be slashing investment in renewable energy, at a time when we need to be redoubling and redoubling again our efforts to transition from fossil fuels. One thing that the financial crisis has shown us is that in an emergency, trillions begin to sound like chump change.
If we can afford to throw hundreds of billions at the “masters of the universe” who destroyed the financial system and at the industrial dinasaurs of Detroit, we surely can muster the political will to invest in the renewable and energy system needed to fuel our future.