Forget about peak oil. Think peak renewables


Stephen Murgatroyd / Guest Columnist


The idea of “peak oil,” which has been around for some time, is a simple idea. The argument goes that, at some point, we will start to deplete oil reserves faster than new reserves can become available and, when this occurs, the peak of available oil has been reached and it’s all downhill from there.

There are several problems with this idea, however. The first is the fact that technology changes and, as it does, our ability to make the oil we have go further or to extract more from known deposits increases. So the “peak” keeps moving. For example, horizontal drilling and “fracking” open new opportunities to increase supply from previously inaccessible reserves or to pursue enhanced recovery from known reserves. Similarly, carbon capture and storage is a technology being pursued in part because it enables enhanced oil recovery.

Given that most drilling and production leaves 60 per cent of the oil in the ground, new technologies could essentially double the value of reserves by securing a further 40 per cent.

New reserves keep getting found

The second problem with trying to pin a date on peak oil (not necessarily with the construct itself) is that we keep finding new reserves of unconventional oil as well as conventional oil. For example, the reserves of oil sands in the Peace River area of Alberta are substantial but not yet fully accounted for in the analysis of reserves.

The third problem is that demand is also a function of other factors. For example, the price of natural gas is helping households switch from oil-based heating to natural gas and oil consumption for transportation demand is affected by substantial improvements in fuel efficiency for motor vehicles.

Given all of these factors, current predictions on the timing of peak oil include the possibility that it has recently occurred, that it will occur shortly, or that a plateau of oil production will sustain supply for up to 100 years. None of these predictions dispute the peaking of oil production, but disagree only on when it will occur. How helpful is that?

But we can also apply the idea of “peaking” to the renewable energy industry — wind, solar, biomass, hydro.

Two arguments for switching to renewable energy — the depletion of fossil fuels and national security — now seem to be less than plausible.

The United States, Canada and Mexico are sitting on substantial quantities of recoverable natural gas. Shale gas is combined with recoverable oil in the Bakken “play” along the American-Canadian border and the Eagle Ford play in Texas. The shale gas reserves in China are turning out to be enormous, too. Other countries with now-accessible natural gas reserves, according to the U.S. government, include Australia, South Africa, Argentina, Chile, France, Poland and India.

So now the only major reason for supporting a transition to renewables rests on their potential mitigation catastrophic global warming.

But as governments around the world attempt to better manage their limited fiscal resources, the “rules” of the game are changing with respect to subsidy of renewable energy. For example, Ontario has suspended all offshore wind projects indefinitely — throwing the policy for renewables into doubt. The leader of the Ontario Conservative Party, Tim Hudak, currently favoured to be the next premier, has connected the dots between subsidies for renewables and their likely impact on energy bills (a 42-per-cent rise over the next four years is predicted by the Government of Ontario), and believes they will become a key issue in this fall’s provincial election. He is receiving widespread support.

The UK, with more than 2,560 wind turbines installed, is attempting to secure 40 per cent of its energy from renewable sources, primarily wind. A total of 7,000 turbines, on and offshore, are either currently under construction, approved for building or seeking planning permission in the UK. But wind power currently provides only 2.3 per cent of the UK’s energy needs, leading most experts to dismiss the government’s target of 40 per cent as unrealistic. To achieve its target, two new substantial turbines would need to be erected every day for the next 12 years.

Minimal reduction in CO2

Furthermore, wind power’s contribution to CO2 reduction in the UK is minimal. In fact, a House of Lords study shows that wind power is at least 50 per cent more expensive per unit generated than the other main non-CO2 option, nuclear. That is, it offers less CO2 reduction for the dollar than other means of CO2 mitigation, including solar.

Solar is another renewable technology widely seen as part of the “solution” to the CO2 challenge. Yet Britain has just cut its solar subsidies for at or- above 50kW solar systems 70 per cent on the grounds of a lack of affordability and to encourage “other technologies”. The cuts will have a significant impact on the solar panel industry.

The situation, when it comes to solar, is especially dire in Spain. The solar industry received subsidies of C$3.66 billion in 2010, a sum neither the country — nor the utilities — can afford. The three Spanish energy utilities have paid out over C$32 billion to subsidize solar and wind projects since 2005, and are still waiting for the government to pay them back. Credit rating agencies threatened to downgrade the companies if something was not done to address the “tariff deficit”.

The Spanish government has now cut the solar subsidy program dramatically. The former subsidies were so generous that Spain has 10 times the amount of solar capacity the government had planned for by 2010 — and a much bigger bill than it had envisioned. Given its overall economic situation, cuts were needed. Similar developments are taking place in Portugal, Ireland and Greece.

All energy sources have potentially harmful side effects. The genuine problems caused by fracking and possible large-scale future drilling of methane hydrates should be carefully monitored and dealt with by government regulation. But the environmental movement since the 1970s has been fixated religiously on a few “soft energy” panaceas — wind, solar, and biofuels — and these too have side effects. Wind turbines and the high-voltage power lines that accompany them slaughter eagles and other birds. Environmental non-governmental organization’s support for blanketing desert areas with solar panels, at the cost of exterminating much of the local wildlife and vegetation, is also another “side effect.” Wilderness preservation, the original goal of environmentalism, is been sacrificed to the ideological whims of a few.

Public turning away from “green”

But more significantly, there is a public counter-reaction to “green” energy. Anti-wind-farm and solar movements, springing up across the developed world, are angry about energy price hikes and the impact on the environment that these technologies have. They are also skeptical about the impact these technologies are actually having on CO2 reduction — especially given recent reports that CO2 continues to increase, despite a recession and a massive investment in these technologies.

As these industries begin to experience “subsidy-sunset” — they are driven by subsidy, not market, conditions — then the “peak” of renewable energy from wind and solar may have been reached. The fact that significant and vocal sections of the public are also speaking up and campaigning may also be another sign that the commitment to renewable energy has peaked. We shall see.

With low-cost gas, significant new access to oil, and an ongoing investment in clean coal we may not need to worry. We are a long way from peak energy.

—Stephen Murgatroyd is a consultant in innovative business and education practices with a PhD in psychology.

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