Renewable Energy - 25 years down the line
Here was a rude wake up call for all those who would like to believe that a future sans fossil fuels is just round the corner.
Coming on the back of the recent news that BP was going green and profitable, Exxon comes along with these two points:
1. Renewables like solar and wind are profitable in the US (and implicitly elsewhere too) only with government subsidies
2. 25 years from now, renewables will only have a one per cent share in energy usage world-wide, up from the 0.5 per cent today. Oil and gas will still meet 60% of the requirement.
Exxon Mobil is the largest publicly traded energy (and second overall) company in the world and the business acumen of such a group cannot be dismissed lightly. So what does they mean this time?
Maybe renewables enthusiasts tend to get carried away by symbolic gestures. Australia for example is going to build the largest solar plant in the world to generate 200 MW of power. That is still 0.014 per cent of all the electricity generated in the world in 2004. When it will be ready in 2009 it will represent an even smaller percentage. We would need a hundred of these technological marvels to make one percent. But solar power is not the leading light of the renewables movement. Wind power is, and the largest planned wind farm is in Scotland which when ready would produce 10,000 MW of power. At 0.7% that is close to one percent of all the electricity generated in 2004. So where do renewables stand in the larger scheme of things?
Europe is going in for renewables in a big way. Much before 2030, at least 20% of all electricity in Europe will come from renewable sources - Iceland is already close to 100% and Scotland could be at 40% then. By then all diesel in India will be B-20 (20% bio-diesel). Brazil will at least match that and might even replace petrol altogether with ethanol. The US should also see something similar, because despite the lack of a Europe-style push a lot of the big innovations and adoptions are coming in from there. China could match Indian bio-diesel commitments, and Japan should match Europe overall. So we are looking at the US, Europe and Japan getting between 10-25% of their electricity from renewables. We are looking at these countries along with India, China and Brazil using renewables to meet at least 10% of their automobile fuel requirements. And these are pretty conservative estimates. If we get the right technological breaks over the next few years, then by 2030 we would be treating oil like any other raw material - as a material rather than a fuel.
Exxon might be adopting a typical big company approach here. Wait for the crucial breakthroughs that will make renewables really competitive and then move in with force. Still I am not optimistic about this approach. I believe renewables are the future that will become the present in a decade or two.
