By Claudia Cattaneo, Financial Post
AltaCorp Capital Inc.’s John Mawdsley, managing director of institutional research, looks at the advantages and disadvantages of different energy sources in an 82-page report titled: Renewables vs. Hydrocarbons, The Energy Reality. Some of his findings and observations:
Natural gas has the advantage When different energy sources are measured on an apples-to-apples basis, nonconventional natural gas is the big cost winner, while renewables require oil prices well above $100 a barrel to produce the same amount of energy.
The chart measures the cost of developing 11 different types of energy projects to receive the same amount of energy as a barrel of light oil, or $/boeenergy. The cost includes CO 2 emissions, which are priced at $50/tonne. For example, offshore wind becomes viable at about $342/boe-energy and solar voltaic becomes viable at about $429/boe-energy.
As the lowest-cost source of energy and the most environmentally friendly of the hydrocarbons, abundant natural gas is well placed to become the largest source of energy on the planet.
What they don’t tell you about renewables Solar power is generated only when the sun shines, wind energy is generated only when the wind blows and there is no practical way to store the electrical energy they generate to balance a broad-based electrical grid.
To replace the current global oil production of 84.4 million barrels per day with corn ethanol production, it would take a corn field the combined size of the United States, China and India -an area that is greater than the currently used arable land in the world.
To replace the coal-fired electricity in the United States, it would take solar panels that would cost $4.4-trillion. The limiting factor is the inability to store the power generated during sunny periods for use throughout darkness and times of cloud cover. There is no current technology to store this amount of electricity.
Some 149 million people per year could be fed with the feedstocks now being used for ethanol production in the United States.
An oil-sands plant with a capacity of 100,000 barrels a day could offset ethanol production that could feed 34 million people a year if the same land were used to produce food.
Biodiesel crops use 500 times the water used by an oil-sands plant to produce the same amount of energy.
Many electric cars claim to be emissions free. The claim does not take into account where the electricity comes from in the first place. In the United States, many of them will be powered by electricity produced from coal, the most emissions-intensive hydrocarbon.
Why we cannot abandon hydrocarbons Society uses hydrocarbons because they contain a lot of energy that can be readily accessed through simple combustion. They are also conveniently transported and cost less than other sources. They enjoy existing infrastructure and are preferred in developing countries that are expanding their economies.
Hydrocarbons account for 84% of global energy consumptions. Hydroelectricity, the most significant renewable energy source, satisfies 6% of energy needs. Solar, wind, ethanol, biomass, biodiesel and geothermal make up 4%.
If global energy demand were to increase by only 1.2% a year, total consumption would grow by almost 60% over current levels by 2050, representing approximately three times the total energy use of the United States.
All forms of energy include inputs from hydrocarbons in the form of heavy equipment, machinery, electrical power and materials from petrochemicals.
It will always be the consumer who pays for higher energy prices -even if the government offers subsidies -through taxes, utility costs, vehicle prices or prices at the pump. Most consumers will continue to select the lowestcost options.