By Leonid Bershidsky, Bloomberg View
Conventional wisdom states that renewable energy cannot cover 100% of the world’s needs: It’s too expensive and too scarce, and switching would be inefficient while hydrocarbon resources are still plentiful. A group of 28 U.S. scientists and engineers has attempted to make the opposite case.
The group focuses on California, arguing that the state could move its industry, transportation and housing entirely to wind, water and sunlight energy by 2050—and gain from it economically. By U.S. standards, the state is relatively energy-efficient to begin with: It consumed 201 million British thermal units per capita in 2012, the third-lowest after New York and Rhode Island. It’s energy-hungry, though, compared with the global average consumption of about 75 million British thermal units per capita.
The group of engineers and scientists, mainly from Stanford University, concluded that there is nothing in the entire state that couldn’t run on electricity even if only today’s technology were used. By 2050, according to their 55-page report, California could run all its transportation on batteries and hydrogen fuel cells, heating and cooling on heat pumps, and high-temperature industrial processes on combusted electrolytic hydrogen. Installing the necessary capacity would require 0.9% of California’s land area, mostly for solar plants that can be more useful here than in most other U.S. states. Roofs of buildings and parking lot canopies would also need to be used, and wind farms would be built offshore. The plan doesn’t provide for the construction of new hydroelectric plants, just a reasonable expansion of the existing ones’ capacity. Tidal and wave energy can cover up to 1% of the state’s needs in 2050.
The experts argue that one of the biggest problems with renewable energy—the fact that it is not produced continuously, with wind turbines running only a third of the time on average—can be solved by combining power sources and installing storage. They project that the state has more wind, solar, hydro and geothermal energy resources than it will need in 2050. The energy shift would result in a loss of 413,000 nuclear-related and fossil-fuel jobs—California now produces 9.5% of U.S. oil. But it would create 632,800 jobs in construction and the new energy industry, resulting in a net gain of $24.6 billion a year in 2010 dollars for the state’s economy.
So far, so good, but what about cost—the killer argument against all major renewable projects? Switching from natural gas, which California uses to generate more than half its electricity, would require major infrastructural changes. In all, the experts estimate that installing the necessary renewable-energy capacity by 2050 would require an investment of $1.1 trillion.
Their justification for that cost is not entirely satisfactory. They claim the move will eliminate $103 billion a year in “mortality costs” of air pollution, at about $8.2 million per human life, and $48 billion in “global warming costs.” The health-cost savings alone, they argue, will make the investment pay off in just seven years. These are the kind of squishy numbers that turn most people off clean energy plans: The global warming calculations are highly abstract and the attribution of deaths to air quality is shaky. There are lots of other ways to make people’s lives better, and pollution is too far from the top of the list of Americans’ worries to justify spending a trillion dollars on alternative energy in California.
A better argument might be that as the use of renewable energy becomes more widespread, its direct cost will fall below that of hydrocarbon energy. Wind turbines cost 20% less in 2011 than they did in 2008, both because of technological advances and economies of scale. Solar energy, too, is getting cheaper to generate as panels become commoditized. The study’s authors project that by 2030, the weighted-average cost of sustainable energy will be 6.2 cents per kilowatt-hour, or about half the current level. Current wholesale prices for hydrocarbon energy start from less than 4 cents per kilowatt-hour, but it will only increase in price as fuel gets more scarce and harder to extract.
This might not yet be a convincing case for investing $1.1 trillion or even subsidizing private firms that might want to do it. It’s no longer an impossibility, however. Countries making tens of billions of dollars in energy revenues—such as Norway, which consumes almost twice as much energy per capita as California—should start looking into major renewable projects to ensure their future once fossil fuels run out.