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The Reality of Renewables

by Rob Gordon
October 03, 2008

In explaining why the United States has failed to tap its own energy resources, China’s People’s Daily explains: “The underlying reason is for environmental considerations.” According to the Chinese paper, “It would be a joke to say the US is short of oil.” The American public has figured out the joke’s been on them and is demanding that Washington do something. But the joke—or really, myth—of exhausted supplies is not the only bogus information in the public energy discussion. Another fallacy is that we can simply opt for a “sustainable” economy based on renewable energy.

As Ben Lieberman notes in his article starting on page 4, government efforts to pick winners and losers among energy alternatives has been a fool’s errand. Many in Washington, D.C., however, are bowing at the altar of renewable energy.

Calling some proponents of renewable energy fanatics isn’t itself a disparagement of renewable energy. Renewable sources have a part to play in meeting our energy needs. The fanaticism comes from those who seek to cut crucial energy sources that are somehow “bad” (fossil fuels, nuclear, and even hydropower) and peddle the myth that a renewable energy panacea where “good” energy like biomass, wind, and solar replace “bad” is just around the corner.

Energy, whether it’s the sort favored by renewables fanatics or not, is great stuff. It has created a world in which people have longer lives, the ultimate environmental metric. Physicists define energy as the capacity to do work. As such, it is the oxygen of economic growth. We could save a lot by doing less work—what economists call recession. But while a “sustainable”—read “smaller”—renewables-fueled economy might seem like nirvana to some, it’s not for most Americans. The reality is that if Washington follows the fanatics rather than a secure and affordable energy supply, our policies will generate a mirage that vanishes as we try to compete with a tighter, more expensive, and perhaps less reliable energy supply in an increasingly competitive global economy.

No energy source is good or bad. Each presents different considerations and has different attributes making it more or less efficient. What the much maligned fossil fuels—oil, natural gas, and coal—have that some of the touted renewable sources don’t is that they are energy-rich: Each drop of oil, chunk of coal, and wisp of gas is packed with energy. They are also portable. They can be taken where they are needed and used there. And they are reliable: We know coal will burn to make electricity, natural gas will ignite to heat our water, and gas will combust to drive our engine’s pistons. Those characteristics make these on-demand energy sources. But the future of our energy supply is increasingly in question.

Right now our energy supply is caught between the twin pincers of policies that stymie the most important and efficient energy sources and policies that push the substitution of the less efficient “good” renewables. Subsidies and mandates for “good” energy sources and restrictions on “bad” sources—drilling moratoriums, taxes or caps on CO2 emissions—are common Washington stock-in-trade. And a majority of states have already adopted policies pushing technologies like wind and solar. Despite this political meddling and the hype over renewables, some of the shine is starting to dull.

Ethanol’s political wheels have started to come off—if they haven’t already rolled across the median. Ethanol is kind of a “fossil fuel light.” Fossil fuels are the original biomass energy sources. Geologic processes—immense heat and pressure over time spans—converted biomass into rich energy sources. We are somewhat trying to emulate that process with renewable biomass, but doing so consumes quite a bit of energy itself. And while the fuel produced may be portable and reliable, there are a number of other problems such as the fact that the resources used to make ethanol have alternative uses. Instead of growing corn for ethanol, farmers could grow crops for food or fiber, or the land could be set aside for wildlife habitat. The loss of land for these uses is a real cost—one that consumers in particular have been feeling in the form of higher food prices.

Peaking under wind energy’s hood reveals some squeaks and rattles portending of stormy weather like the biomass squall. While wind-generated power has rocketed upward in absolute terms, its relative contribution was still less than 1 percent of the net electricity we generated in 2006. And that little bit isn’t cheap. Professors Bernard Weinstein and Terry Clover at the University of North Texas report that for every $100 million of investment, wind-power developers received over $74 million in federal tax credits and other benefits, not to mention additional corporate income tax breaks and local property tax abatements in Texas. Just how sustainable is that?

The answer is iffy—but relatively better than it would be for solar. Pointing out any of the freckles and warts of solar is taboo to renewables fanatics. But just like the myth of exhausted fossil fuels, the myth of an imminent solar panacea has got to go.

Sun worshipers point out that the Earth is bathed in sunlight. Perhaps one year’s worth is double the energy packed into all the Earth’s coal, oil, natural gas, and mined uranium. Such factoids are batted about while touting the potential for technologies like photovoltaic panels to capture solar energy. But we can’t blanket the Earth with the panels. Approximately 71 percent of the Earth is covered with water, and Antarctica and forests comprise about one-third of the rest. Do fanatics of renewables really want to replace our forests with solar panel farms? Other areas still are too far north or too far south to capture solar energy efficiently. But what really matters is all the sunshine that escapes the photovoltaic panel itself. After decades and millions of dollars, photovoltaic panels can’t efficiently collect much more than about 10 percent of the sunshine that hits them. This is not to say that there isn’t solar energy to be tapped, just that there’s even more hype.

There are sufficiently sunny places, but they’re not always where you need them. And as the three rules of real estate say, location matters. Solar energy isn’t really portable, and the greater the distance between where it’s collected and used, the more is needed. It’s just a law of physics. Energy is lost when it’s transferred over power lines—actually, a lot of it. So plunking solar panels in the Arizona desert to power New York City isn’t such a hot idea.

This reality is one of the reasons many solar advocates focus on distributed generation, i.e., putting things like photovoltaic panels close to where the captured energy will be used. Yet, according to Severin Borenstein, Director of the University of California Energy Institute at Berkeley, the cost of electricity generated from photovoltaic panels located near the point of consumption is too large for solar panels to be competitive. His analysis shows that even when plausible estimates of the value of reducing greenhouse gases are included, “it does not come close to making the net social return on installing [photovoltaic panels] today positive.”

Photovoltaic panels require a fair amount of space. Unlike relatively energy-rich fossil fuels, uranium, or even a flowing river, solar energy is diffuse. To meet U.S. electricity needs with solar panels we’d have to blanket thousands of square miles. That’s a huge footprint compared to the three square miles or so needed to tap the immense quantities of energy resources in the Arctic National Wildlife Refuge.

Then there’s the weather. Even in places where there’s lots of sunshine, solar isn’t 100 percent reliable. You can be sure, though, that the sun doesn’t shine at night, which means that solar power must be backed up by some other source.

The bottom line is that these realities, not energy executives, are to blame for keeping the adoption of solar energy so limited. Solar power’s contribution to our net electricity generation in 2006 is measured not in tenths but hundredths of a percent—about one one-hundredth of 1 percent to be precise. And while wind now has far more potential than solar, it suffers from many similar problems.

It would be great if technological breakthroughs change these realities. And some entrepreneurs certainly are trying. According to Dow Jones Venture Source, investment by venture capitalists in U.S. companies was down about 12 percent in the second quarter compared to last year. Despite the down tick, renewable energy set a record with 26 deals pulling $650 million, and solar companies accounted for the top three second-quarter deals.

Kudos (and huge profits) to the entrepreneurs who develop the next big energy source. As soon as a renewable or another energy source becomes competitive, those who want to make a buck supplying it will do so. However, at best, policies that mandate renewables and stymie other energy sources complicate the task of figuring out just what energy sources and technologies would truly be the most efficient. At worst, built upon the idea that a renewable panacea is just around the corner, such policies will generate more problems than energy and seriously threaten a secure future for all Americans.

 

Mr. Gordon is Senior Advisor for Strategic Outreach at The Heritage Foundation.


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