Biofuels and alternative energy are, broadly speaking, one of my professional interests as well as a political hobbyhorse. I don’t claim to be an expert by any means, but I try to keep up with the news, and at times I’ve made my living working on the biology side of some research projects. What I’m saying here is, don’t take me too seriously. This is just my opinion, as Some Guy on the Internet.
And now on to that opinion. I’m going to put on my Unprovable Prediction hat, and spin out some thoughts that started in a recent conversation with a friend.
I think worldwide, and in the US especially, there will eventually be a market boom-and-bust centering around renewable energy sources. Let me explain.
First, demand will only keep growing, for any number of reasons. I know environmentalists have been going on about peak oil since the 70′s, but it is bound to happen sooner or later. Note that doesn’t mean we’ll wake up one day to find the wells all dry. Just that we’ve drilled the most convenient wells first, and the price of oil will go up as the petroleum industry has to move on to lower grade wells, in less convenient places (ahem, Gulf of Mexico, ahem), at greater cost. As that happens, technologies (say, biodiesel, solar electricity or biojet (jet fuel)) which were a little too expensive before to be competitive will find themselves in a much more appealing place.
Moreover, many of those technologies are expensive for ‘fixable’ reasons–there’s room for more R&D to make them cheaper or more efficient (e.g. solar panels have recently taken a sudden leap forward), they haven’t had the chance to get good economies-of-scale going (look at the price on electric cars). Oil and coal companies have benefited disproportionately from having the living shit subsidized out of them, but that could change. Not that I expect the US will stop kissing oil company ass any time soon, but if Monsanto or the Iowa Corn Growers Association decide they want to be move into the energy market, they may get the way paved for them.
And there is demand. Huge demand, for anything cheaper, anything ‘greener,’ anything that could give America a new economic edge. Maybe not the biggest force in the economy, but not something I’d dismiss lightly. A couple years ago, I toured a biodiesel manufacturing plant in rural Georgia. Every day, they turned thousands of gallons of sub-food-grade chicken fat into diesel fuel and glycerine. I asked if there was much of a market out there, where they sold their product. The VP showing us around just chuckled his gool ol’ boy chuckle and said they didn’t even have a sales staff, they had so much demand each batch was sold in advance. They had just started working on a bigger facility to increase their production many times over, in the hopes of keeping up.
So where does the bust come in? Well, frankly, hopes are too high, and there’s no way of knowing what will work out. If we leave the market to sort it out, the market will do the same thing it did with the internet during the dot-com bubble–realize that a relatively new, smallish industry is growing much faster than the rest of the economy, decide it’s the Wave of the Future, and shit itself with glee. The problem with the dot-com bubble wasn’t that the internet wasn’t going anywhere (you’re reading this now, aren’t you?) it was that is was incredibly hard to guess in advance how the internet would fit in to people’s lives, and investors sort of knew that. But rather than sit back and try to figure it out, they looked at the huge returns from a handful of successful start-ups and decided it was a good idea to deliver dump trucks full of cash to every comp-sci dropout with a witty-sounding web address, on the assumption that a few good bets would balance out their losses.
Renewable energy technologies have a similar problem. We don’t know yet how much better any given scheme can get. And expectations are often too high; when I talk to non-scientists, including some really smart people about this issue, I hear a lot of variations on ‘Ok, so which one will it be? When the oil runs out, will we switch to ethanol? Will everything be solar powered? Who’s gonna win?’
The answer is, no one technology will replace the oil industry, ever. There’s no magic bullet. If oil and coal go way up in price, if consumers even ever start having to pay the full price of the mess they make, we’re not just going to swap one energy source for another and go on like nothing happened. It’ll take a piecemeal approach, using solar where it’s sunny, wind where it’s windy, finding myriad different ways to turn whatever spare biomass a region has on hand into power. Some ideas will fail–if it doesn’t get better soon, it may be time to disappoint the corn industry and shove non-cellulosic ethanol production off the roster, never mind that it’s supposed to be one of the Biggest New Things.
And, in the event of any real attempt to slow climate change, stop using oil or build a ‘sustainable’ economy, we’re going to have to make some cutbacks. Switching to smaller homes, biking more than driving, and buying less shit would all go much farther than everyone rushing out to get a new hybrid. But contemporary capitalism is predicated on endless, ever expanding consumer spending. And when it becomes obvious that there’s no way to solve our energy problems just by buying more or different stuff, the US stock market is going to have a very, very bad day.
