The “peak oil” scare has long been used as an excuse for alternative-energy providers to demand government subsidies. We are told that oil production will reach a zenith and the wells will run dry any day now, so failure to provide billions in handouts to the providers of other fuels would be irresponsible. Forget peak oil - the world may be on the verge of peak renewables.
The much-hyped intermittent energy sources such as solar and wind have proved so expensive to maintain that other developed nations are trimming subsidies. The push-back appeared in United Nations climate-change talks that began last week in Bonn, jeopardizing the green dream of an annual $100 billion slush fund for global alternative-energy projects.
Rifts between rich and poor nations grew as some countries balked at the idea of renewing the Kyoto Protocol, the 1997 agreement that calls for reducing carbon-dioxide emissions by transitioning away from fossil fuels toward energy without CO2, the harmless, odorless gas essential to life on this planet. Delegates from Russia, Japan and Canada say they will not approve another accord unless emerging nations participate, contending new limits on emissions will have little effect without the cooperation of newly industrialized countries. China, India and Brazil so far have refused, saying strict controls on carbon-dioxide exhalation would cripple their burgeoning economies. The United States refused to sign the original Kyoto pact and has favored voluntary emissions caps.
Christiana Figueres, the U.N. convention’s executive secretary, warned of a “regulatory gap” if a new deal is not enacted before the existing treaty expires at the end of 2012. With regulation comes taxation, and treaty backers fear that no deal will mean no green fund for developing nations.
The International Energy Agency recently reported record levels of CO2 emissions in 2010, but climate scientists say global temperatures have not risen in a decade, casting doubt on the assertion of a direct link between so-called greenhouse gases and supposed global warming. Consequently, wealthy countries struggling with a global economic slowdown are starting to view renewable energy as a financial black hole, raising the prospect that the endless well of subsidies required to prop up inefficient technologies will run dry long before nature’s supply of black gold.
Spain has sharply reduced subsidies to utilities for solar energy, prompting lawsuits from the companies dependent on billions in government dollars for a healthy credit rating. Great Britain is following suit by cutting subsidies for large-scale solar projects, and the move has drawn fire from environmentalists, who charge the reductions threaten green jobs. Canada’s Ontario province has suspended offshore wind farms indefinitely as it faces fallout from a 42 percent increase in utility customer bills over the next four years.
At the same time, estimates of conventional energy reserves - particularly in America - continue to grow. U.S. oil-deposit estimates have been raised recently by a factor of five to 135 billion barrels, and new methods of natural-gas extraction have put a 100 year’s supply within reach. Predicting peaks in energy resources and wagering public funds on renewables is a game of chance. Better to trust the instincts of the free market, which has a solid record of picking winners and providing the best products at the lowest prices.