“Artificial reliance on unconventional energies is problematic outside niche applications. Politically favored renewable energies for generating electricity are expensive and supply constrained and introduce their own environmental issues. Alternative vehicular technologies are, at best, decades away from mass commercialization. Meanwhile, natural gas and reformulated gasoline are setting a torrid competitive pace in the electricity and transportation markets, respectively.” (1999)
Advocates of energy reality and a consumer-driven, taxpayer-neutral energy industry have reason to be discouraged. Arguments against government intervention in energy market from decades ago are still valid if not more true today.
Peak oil … Energy security … Pollution reductions… Global lukewarming. Game, set, match fossil fuels. Game over for government subsidized wind power, solar power, ethanol, and electric vehicles.
But the advocates of forced (government) eco-energy transformation march on.
A theme at MasterResource, now in its eighth year, has been the false arguments and predictions of the energy interventionists, and the still-true, come-true arguments of the freedom school. As an example of both, I reproduce the executive summary and the Conclusion of a April 1999 study I wrote for the Cato Institute, “The Increasing Sustainability of Conventional Energy.”
Environmentalists support a major phasedown of fossil fuels (with the near-term exception of natural gas) and substitution of “nonpolluting” energies to conserve depletable resources and protect the environment. Yet energy megatrends contradict those concerns. Fossil-fuel resources are becoming more abundant, not scarcer, and promise to continue expanding as technology improves, world markets liberalize, and investment capital expands. The conversion of fossil fuels to energy is becoming increasingly efficient and environmentally sustainable in market settings around the world. Fossil fuels, in fact, are poised to increase their market share if environmentalists succeed in politically constraining hydropower and nuclear power.
Artificial reliance on unconventional energies is problematic outside niche applications. Politically favored renewable energies for generating electricity are expensive and supply constrained and introduce their own environmental issues. Alternative vehicular technologies are, at best, decades away from mass commercialization. Meanwhile, natural gas and reformulated gasoline are setting a torrid competitive pace in the electricity and transportation markets, respectively.
The greatest threat to sustainable energy for the 21st century is the global warming scare. Climate-related pressure to artificially constrain use of fossil fuels is likely to subside in the short run as a result of political constraints and lose its “scientific” urging over the longer term. Yet an entrenched energy intelligentsia, career bureaucrats, revenue-seeking politicians, and some Kyoto-aligned corporations support an interventionist national energy strategy based on incorrect assumptions. A “reality check” of the increasing sustainability of conventional energies, and a better appreciation of the circumscribed role of backstop technologies, can reestablish the market momentum in energy policy and propel energy entrepreneurship for the new millennium.
The following conclusions and hypotheses can be drawn from this essay:
The Petroleum Economist’s headline for 1998 projects, “Ever Greater Use of New Technology (1997),” will also characterize future years, decades, centuries, and millennia under market conditions. If the “ultimate resource” of human ingenuity is allowed free rein, energy in its many and changing forms will be more plentiful and affordable for future generations than it is now, although never “too cheap to meter” as was once forecast for nuclear power.
For the nearer and more foreseeable term, all signs point toward conventional energies’ continuing to ride the technological wave, increasing the prospects that when energy substitutions occur, the winning technologies will be different from what is imagined (and subsidized by government) today. Such discontinuities will occur not because conventional energies failed but because their substitutes blossomed.