HEC PARIS
ENERGY & FINANCE CERTIFICATE
TERM PAPER
CONVENTIONAL VERSUS RENEWABLE ENERGY SOURCES
SUSTAINABLE ENERGY MYTHS, OR WHY THE FUTURE CONTINUES TO BELONG
TO CONVENTIONAL ENERGY SOURCES
SUBMITTED BY
VERA KUEHNE
ENERGY & FINANCE CERTIFICATE
ENERGY IN A CARBON-CONCERNED Ec0N0MY
PROF. JEAN-MICHEL GAUTHIER
JUNE
4TH
2014
HE( Paris
Energy & Finance Certificate
I
INTRODUCTION
in several classes ofthe Energy & Finance CertUicate, we addressed the topic ofenergy transition. As the professors showed, the energy mix is on the verge ofundergo
ing a process of substantial change in the course of the next two ta three decades, away from dirty and towards cleaner energy. But, while up to a certain degree we do
observe a shift in the energy mix towards more sustainable energy sources (particularly renewables), it is also a fact that conventional fossil energy (i.e. oil, gas, coal),
will continue ta play a dominant role in the foreseeable future. For example, the role of coal in the future energy mix will be substantial, or as Professor Jean-Michel
Gauthier put it: “Coal is the fuel of the 2 I ‘ century”. Similarly, Vaclav SmiI, a respected expert in the field of sustainable energy, argues that the potential of renewable
energies ta replace conventional energies will be limited in the near future. For example, he once stated about wind energy: “Except for relatively small regions, wind
cannot becorne the single largest source, even less su the dominant mode ofgeneration” (Smil, 2010, p. 132). In contrast to this, Lester Brown, another respected sustain
able energy expert, once stated: “Wind and wind-generated hydrogen will shape not only the energy sector ofthe global economy but the global economy itself’ (Brown,
2003 ). So, apparently, it seems that even though there is wide consensus on what realistic scenarios for the development of the future energy mix are (e.g. IEA energy
model), some people have a much more optimistic view than others on the potential ofrenewables to replace conventional energies. There are several questions that arise
from this contrast: Why do these statements diverge so strongly? How can leading energy experts have such differing views on the potentials of renewable versus conventional energy? Which view is truc. which a rnyth? Or can they both be true? The goal ofthis paper is tu examine myths and realities ofsustainable energy. A myth is
“a false beliefheld by a large number ofpeople (Shadiya et al., 2013. p. 79). Many such false beliefs swirl around in the field ofenergy, particularly sustainable energy
(Shadiya et al.. 2013, p. 79 f.). As became clear to me during the classes ofthe Energs’ & Finance Ce,i/icate, it is the duty ofany class on energy-related tapies to ad
dress and correct such false beliefs.
1. VHAT IS SUSTAINABLE ENERGY?
The term sustainable energi’ can be defined in numerous ways. Many definitions are based on the belief that sustainable energy sources are renewable and efficient. But
Shadiya et al. (20 1 3. p. 80) argue that an appropriate definition of the term has to permit the “continued use of conventional energy sources”, as these energies are the
“current pillars of the world’s econornies and [. . .1 will continue so for the foreseeable future”. So, they define the term as follows: “Sustainable energy represents the
ability of the world’s societies ta evolve and grow the mix of resources needed to meet the world’s energy needs for present and future generations while also enhancing
the environment, the economic viability ofthe world’s nations, and the equitable treatment ofpeople” (Shadiya et al., 2013, p. 80).
2.
SISTAINABLE ENERGY MYTIIS AND REAIJTIES
Several books have been written about false beliefs in sustainable energy. I would like to call your attention tu two prominent ones. From a survey of I ‘000 consumera.
Drew Thornley identified I O sustainable energy inyths in bis book Energv & the Environnient: Myths & Facts (Thomley, 2009). Some of these ideas overlap with the
myths identified by Vaclav Smil in the book Energs’ Mvths and Realities (Smil, 20 10). We discussed several ofthese myths during the lectures ofthe Energt’ & Finance
Certficate, and what stroke me the most was the fact that even in today’s society many people still hold on to some ideas about sustainable energy that have long been
pmven inconsistent with current scientitic knowledge and actual events.
For example, many people believe that peak oil is here. Yet, among energy experts, there is strong contradiction tu this commun view. One of these pundits is Smil
(2010, p. 77) who states that oil’s “declining share ofthe global commercial primary energy supply speils no imminent end ofthe oil on; given the very large remaining
conventional and nonconventional resources, oil will continue as a major contribuior ta the world market during the tirai half of the twenty-first century”. Sirnilarly,
Gauthier (2014) states that “we are not going ta mn out ofoil yet... but we are to meet a more and more complex geology (OECD) and higher geopolitical risks (Non
OECD)”.
Additionally, it isa widespread beliefihat soft energy (i.e. various types ofrenewable energy sources) can meet future energy needs (Shadiya et al., 2013, p. 82). While
SmiI (2010, p. 54) admits that “the overall energy supply draws a bit more on renewable flows”, he also stresses the importance of size (i.e. scale effect) in soft energy
production; that is, he argues that the overall energy supply can hardly draw on “the small, decentralized units ofthe soft vision; [.. .1 soft and small has not worked as
predicted” (Smil, 2010, p. 54). Connected to this issue is a very common misbelief about the potentials and the speed of energy transition. Many people think that energy
transition is possible within the next decade, and that the expansion of the emphasis on renewable energy is the route to energy independence (Shadiya et al., 2013, p.
84). The reality is, however, that transition ta a world based on soft energy will unfold across decades, flot years (Smil, 2010), or as Shadiya et al. (2013, p. 84) put ii,
“expanding the emphasis on renewable energy [...J so that it replaces the oil [.. .1 is simply not feasible within a 25-year time frame”. One of the reasons for this outlook
is that the world’s energy demand will continue to increase as long as population and standard of living continue to increase (Shadiya et al., 2013, p. 88).
Another sustainable energy myth pointed out by Shadiya et al. (2013, p. 82) is that rnany people believe that the future belongs ta electric cars. This topic is a highly
controversial one. While some are still uncertain about what the future holds for electric cars e.g. SmiI (2010, p. 30) who argues that “it will be decades, rather than
years, before we can judge to what extent electric cars offer a real substitute for vehicles powered by internaI combustion engines” others praise electric vehicles as the
“chic harbinger of an environmentally benign future” (Lomborg, 2013). What many peuple overlook, however, is the fact that “producing and charging electric cars
means heavy carbon-dioxide ernissions” (Lomborg, 2013). Besides electric cars, many people put a lot of hope into biofuels as a solution to the CC
2 emissions problem
caused by vehicles powered by internaI combustion engines (Shadiya et al., 2013, p. 82). Indeed, the topic of finding clean ways of generating energy for transportation
bas typically received a lot of attention from the public. But will biofuels replace refined oil products in transportation, as some believe? Critics sucli as SrniI (2010, p.
115) contend that liquid biofuels are flot only unable ta displace refined oil products in transportation (e.g. due to the extensive land requirernents for biofuel production),
but they also should not (e.g. for environmental and social reasons, such as deforestation and food price increases). Moreover, the production of biofuel is currently
alrnost twice as expensive as the production of gasoline, and the energy output from biofuel is much less than the energy input to create the fuel (net energy loss; Wright,
2007; Shadiya et al., 2013, p. 85; Pirnentel & Patzek, 2005; Msangi & Schmieding, 2008).
—
—,
Besides the discussions on how to reduce CC
. SO
2
2 and NQ emissions, there have also been repeated advances ta discuss sequestration ofthese gases (particularly C0
)
2
as a solution to reduce their content in the atmosphere. However, according ta such critics as Smil (2010, p. 96), gas sequestration is flot sustainable, because the proce
dure “cannat provide enough storage in tirne to avoid further substantial increase in ernissions; it will be a major consumer of energy, erasing half a century of efficiency
gains in electricity generation; there will always be concerna regarding the safety of long-term starage and the possibilities of leaks; it will be an expensive undertaking;
and it will carry significant liability risks”.
3. CONCLUSION
There are many more sustainable energy myths I could cite here; the ones I discussed are only examples. Yet they show that the role of sustainable energies in the energy
transition is indeed a topic that continuously causes public dispute. While people are aware of the problems conventional energy sources cause, they often are unaware of
the fact that renewable energies are nol without problems either. So what should we do? As becomes clear from the myths discussed above, il is hard ta find truly clean
and sustainable energy sources that have the ability ta ineet the energy demands for this and future generations. Many renewable energy sources are flot competitive
today, as they have major economic drawbacks compared ta conventional energies; or they even have hidden dirty secrets resulting in a bad CC
2 emissions balance.
Simply capturing and storing of CC
2 (or other climate-affecting gases) does flot seem to be a sustainable or feasible solution either. So, what should we do? Are we in an
impasse? Doomed? Not quite. Various efforts have been undertaken ta reduce the environmental impact ofconventional energies (particularly ou and coal). For exainple,
zero emissian fossil fuel technologies and carbon capture technologies are being developed ta reduce the introduction of CC
2 into the atmosphere (Shadiya et al., 2013, p.
88). Also, there are efforts ta convert conventional fossil fuel energy 10 cleaner energy sources (such as hydrogen. dirnethyl ether. and inethanol) as a fuel (Shadiya et al.,
2013, p. 88). Furthennore, alternative energies are not unfeasible per se to rneet our energy needs: rather. they are currentlv not efficient or competitive enough. But that
does not mean that they will not play an important role in Hie future (e.g. under a regime of carbon markets based on clear CC
2 price formation). So, while we have ta
admit that renewables are currently unable to meet our energy needs, 1 personally belief that they are indeed a viable option to complement and eventually gradually
replace conventional energies in the future, (ftheir energy density, costs, efficiency, storage and sustenance are improved and efficient carbon markets/C0
2 pricing are in
place. Overall. I think that it is of utmast importance to make the wide public aware of the realities of sustainable energies and ta dismantle false beliefs, in order ta
create a more informed public debate on energy solutions for current and future generations. With this paper. I hope I was able to contribute 10 this goal.
Vera Kueline
HE Paris
Energy & Finance Certificate
2
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