The energy debate: Renewable energy cannot replace fossil fuels – DevelopmentEducation.ie

Disagree:

Fossil Fuel energy costs do not factor in all the ‘hidden’ costs

“Investing in clean energy is not only good for the economic growth, it is good for people. The unfortunate reality is that those in the poorest countries are often the most vulnerable to climate change — whether from rising seas that threaten homes and water supplies or droughts that drive up food prices. This is the human cost of fossil fuels that often goes unmentioned in balance sheets and gross domestic product statistics.” 

If the full cost of fossil fuel generation (including climate impact) were included then the costs would be comparable.

“Typically, the ones who claim that wind and solar will bring trouble to the grid are the old players, who failed to take renewable energy seriously and over-invested in fossil fuel capacities instead. Renewable energy is now eating their profits and making their old business models out-of-date” (Greenpeace.de)

“Those who argue that wind is expensive and unnecessary are quite simply wrong.  Because Ireland has such a good wind energy resource, we can get cheap clean electricity from it. Making comparisons with other countries about wind effectiveness is not always valid.  Ireland has a uniquely strong resource.  We have one of the lowest support regimes and wind is not raising electricity prices.”(Sustainable Energy Authority of Ireland 2014)

Ireland is highly dependent on imported fossil fuels – for 89 per cent of its energy, spending €6.5 billion per year on imports – just over half of this on transport. In the past five years renewable energy has saved over €1 billion in fossil fuel imports; has reduced CO2 emissions by 12 million tonnes and has not added to consumers’ bills. The potential for wind and other provides the opportunity for greater energy independence, reducing carbon footprint, national competiveness leading to greater control over energy prices.

Growing our use of renewable energy is also vital for our national competitiveness, giving us greater control over our energy prices.

“Less reliance on fossil fuels gives us greater certainty on our energy prices, rather than leaving us at the mercy of international commodity price rises. It also helps attract foreign investment, as more global companies seek access to clean energy as part of their location decisions.” (SEAI 2014)

The costs of some renewable energy inputs such as Photovoltaic solar panels have halved in price since 2008 and the capital cost of a solar-power plant—of which panels account for slightly under half—fell by 22 percent between 2010 and 2013. In a few sunny places, solar power is providing electricity to the grid as cheaply as conventional coal- or gas-fired power plants.

As the large utilities’ fossil and nuclear plants become more expensive and alternatives become cheaper, savvy consumers are looking to decrease their dependence on the utilities’ power supply. To cope, the utilities are trying to decouple their increasing costs from the amount of electricity they sell, further increasing the cost advantages of renewables and other alternatives. Renewables, with zero-marginal-costs, helped push down wholesale prices to 8-year lows in 2013.

Most sources of electricity, including coal, natural gas, and nuclear are and have historically been subsidized with both implicit and explicit subsidies, including the same types of tax credits afforded to wind and solar. For example:

Explicit subsidies: Nuclear receives a Production Tax Credit, similar to Wind. Natural Gas gets access to the Oil and Gas Exploration & Development Expensing subsidy.

Implicit subsidies through the tax payer for example in the US, subsidises cover the costs of catastrophic insurance for nuclear plants, because there is no way their owners could afford to clean up after a Fukushima-style disaster. And, of course, the ultimate implicit subsidy – the cost of environmental damage due to pollution and CO2 production, for which we all pay and will continue to pay for generations.

Also hidden costs such as bonus payouts to CEOs of the top 5 oil companies estimated at US$1tn (£650bn or €888bn) for fossil fuel exploration and extraction over nine years, reflecting the confidence of top oil companies that demand will remain high for decades to come.

The combined 2014 upstream (Upstream operations deal primarily with the exploration stages of the oil and gas industry, with upstream firms taking the first steps to first locate, test and drill for oil and gas. Later, once reserves are proven, upstream firms will extract any oil and gas from the reserve) capital spending bill for the big five is three and a half times the sum devoted to research and development by the world’s five biggest-spending drug firms. It is also equivalent to more than 14% of the combined stock market value of Exxon Mobil, Shell, Chevron, Total and BP.

Currently, renewables are more expensive than fossil fuels. BUT, this is changing rapidly. There are various types of renewables – onshore wind is the most cost competitive and offshore wind is heading that way but will likely remain more expensive; the large scale solar power costs are rapidly reducing, hydro power – marine, tidal stream, dams, run-of-river – are currently more expensive but some large-scale projects such as the Severn Barrage in the UK are competitive.

Given the interest in the private sector for renewable energy – it must be big business, with giants like Wal-Mart, Google and General Electric that have been increasing in clean energy investments. Billionaire Warrant Buffett recently spent US$5.6 billion for a renewable energy company in Nevada and a US$2.4 billion investment in a wind farm in California. Many oil companies are involved in the development of more reliable renewable energy technologies. Already for example, BP has become one of the world’s leading providers of solar energy through its BP Solar division. Dong Energy and EDP have built up balanced energy portfolios which include higher shares of renewables. Their renewable assets are making more profits than their thermal ones.

Fossil fuel companies are benefitting from global subsidies of US$5.3tn (£3.4tn) a year, equivalent to US$10m a minute every day. This subsidy estimated for 2015 is greater than the total health spending of all the world’s governments and 6.5% of global GDP.  The vast sum is largely due to polluters not paying the costs imposed on governments by the burning of coal, oil and gas. These include the harm caused to local populations by air pollution as well as to people across the globe affected by the floods, droughts and storms being driven by climate change.

“This very important analysis shatters the myth that fossil fuels are cheap by showing just how huge their real costs are. There is no justification for these enormous subsidies for fossil fuels, which distort markets and damages economies, particularly in poorer countries… A more complete estimate of the costs due to climate change would show the implicit subsidies for fossil fuels are much bigger even than this report suggests.” (IMF 2015)

The need for subsidies for renewable energy –$120bn a year – would disappear if fossil fuel prices reflected the full cost of their impacts.