Assigning blame is no way to meet the nation’s energy needs and address environmental concerns. Proponents of fossil fuels and renewables need not engage in finger-pointing. That only complicates the politics of energy policy.
In practical terms, at least in the short term, there is a place, and a national need, for both conventional and alternative sources of energy. While transitioning to increased reliance on renewables is arguably the best environmental solution long-term, in reality we are not there yet. Far from it.
As we seek ways to reduce federal spending and debt, it is counterproductive for proponents of fossil fuels and renewables to lay blame on the other’s doorstep. One side argues that the fossil fuel industry should not receive tax breaks when their profits are in the billions. The other side argues that the taxpayer should not subsidize the renewable energy industry because it would not survive otherwise.
Both sides are ignoring the economic and strategic advantages of strong conventional and renewable industries. Becoming energy independent, and more of an energy exporter than importer, is arguably the greatest national security and economic issues we face. There is room for both conventional and renewable sources of energy in this discussion.
Much of this boils down, yet again, to cost.
Currently, fossil fuels remain the largest source of energy production in the U.S. and globally. Coal is the world’s largest, providing 40 percent of the world’s energy. In the U.S., coal provides 45 percent of our energy. Coal is not a clean source of energy. It is considered a major contributor to greenhouse gas emissions. There has been great investment and research into clean-coal technologies, but these methods of electricity generation have not been proven economical on a large scale.
Drilling for oil and natural gas has increased dramatically in the U.S. and Canada. Hart Energy refining expert Terry Higgins has observed that the “rapid growth of oil and natural gas production in the United States will have a major impact on the world petroleum marketplace.” He sees the U.S. surpassing Saudi Arabia and becoming the world’s top producer of petroleum liquids. With continued development of newfound shale formations and extraction techniques, it’s possible that domestic production could exceed 11 million barrels per day. Heightened drilling activities have already been a major boon in North Dakota, and dramatic economic advantages are being seen in Ohio and elsewhere in the Midwest.
But the costs of drilling even one oil or natural gas well are substantial. That is also the case for developing renewables. For example, the average cost of a 100 megawatt (MW) wind farm is $200 million.
It is in the nation’s interest to help the private sector meet these costs. We should invest in energy, thereby encouraging the development of a wide range of energy sources.
The private sector must invest as well. And, it is. Development of new technologies is one way to advance cost-effective development of energy sources.
geoAMPS, a technology company located in the Columbus, Ohio, area, offers software products that assist companies in both the conventional and renewable industries increase production in a way that increases efficiency and, thus, saves cost. Deployment of geoAMPS technologies is low-cost and has a measured return on investment with an average of 35 percent in increased efficiency.
geoAMPS offers software products that are designed for exploration and production of fossil fuels (landAMPS) and end-to-end management and ongoing operation of alternative energy projects (altAMPS). The company tailors its software products to meet individual customer needs.
Meanwhile, there is no need for finger-pointing when it comes to tax breaks for the energy industries. Whether it is oil, natural gas, wind, solar or any other conventional or alternative source of energy, all of them receive assistance through the Internal Revenue Service’s tax code.
The Production Tax Credit was recently extended. The PTC reduces the cost of supplying renewables by 1 to 2 cents per kilowatt hour. It defrays $30 of the $90 per kilowatt hour cost of developing a 100 MW wind farm.
The PTC has been in place since 2005, leading to 47 gigawatts of new wind capacity, nearly $70 billion in private investment. Today, there is more than 60,000 MW in cumulative wind capacity, which is enough to power 15 million homes, or the number of homes in Ohio, Colorado, Iowa, Maryland, Michigan and Nevada combined.
With the right policies in place, 20 percent of domestic power from wind is achievable. That would create 500,000 jobs. The U.S. Department of Energy says the biggest obstacle to this is transmission limitations. There are more than 200,000 MW of proposed wind projects, more than enough to meet nearly 15 percent of the nation’s electricity needs, waiting because there is not enough capacity to carry the power those wind farms would produce.
Despite the limitations, there are still more than 400 facilities in 43 states that produce wind, generated 3 percent of the nation’s power needs in 2011.
Fossil fuel proponents need not bemoan the tax credits afforded renewable. Conventional energy also receives its share of publically-financed tax advantages. The Energy Information Administration (EIA) says $557 billion was spent in 2008 to subsidize fossil fuel globally, while $43 billion was spent to subsidize renewables. In 2011, estimated tax expenditure for coal was $561 million in the U.S., down from $3.3 billion in 2007. In 2011, The Associated Press reported, oil received $4.4 billion in tax breaks.
Renewables are becoming competitive in price with conventional energy sources. That is good news for the environment. In 2009, the average cost of wind was $97/MW hour, while conventional coal was $94.8/MW hour and natural gas was $66/MW hour. There remains significant difference in cost for other renewables. For 2011, hydroelectric was at $86.4/MW hour, biomass $112.5/MW hour, geothermal $101.7/MW hours and solar PV $243.2/MW hour, according to the EIA.
These cost differences are proof that there is room, at least in the short term, for all sources of energy in meeting national needs. Development of various sources also has an economic benefit. There are increased jobs and increased tax revenue going to meet public needs.
Dan Liggett is Communications and Public Relations Manager for geoAMPS, a technology company located in the Columbus, Ohio, area that specializes in software solutions to manage land rights and infrastructure assets. For more information, call 614-389-4871 or visit www.geoamps.com.
The information and views expressed in this blog post are solely those of the author and not necessarily those of RenewableEnergyWorld.com or the companies that advertise on this Web site and other publications. This blog was posted directly by the author and was not reviewed for accuracy, spelling or grammar.