Can Renewable Energy Solve Climate Problems?

There are no free lunches in economics because the true cost is hidden. Skeptics are also questioning whether renewable energy can rescue the planet from climate change because it also has hidden costs.

The history of energy use by humans reveals an interesting pattern where the most available sources produce a lower yield of heat or energy.

The History of Energy Use

When early humans used fire to cook meat and other foods, they used fuels that were easily available on the surface such as wood, dry plant stems, or dried animal dung.

Such fuels were widely dispersed and adequate for cooking and staying warm on cold nights, but the energy yield was low and fuel had to be replenished frequently.

Coal proved to be a much more flexible source of energy because the fuel could be brought to any site and produced large amounts of energy that was used to power steam engines capable of running many factory machines.

The Industrial Revolution occurred first in England because it had large deposits of coal and iron ore. Coal was essential both to run the machines and to run furnaces where iron was produced to make the machines.

Its use outside of large industrial plants was limited, however. Although coal-burning steam engines were widely used for rail transportation and steamships, these machines were too heavy and carried too much fuel to be efficient.

In the age of oil and electricity, much lighter vehicles can travel a lot farther using a lot less fuel by weight. The biggest industrial application of coal today is in generating electricity.

Both coal and fossil fuels such as oil and natural gas have made huge contributions to economic growth. An unpleasant side effect of that growth is pollution and climate change. So modern visionaries turn to renewable energy sources as a way of redressing carbon pollution.

Defining Renewable Energy

To reduce carbon pollution, a renewable energy source would have to produce less carbon than if oil or natural gas were used to accomplish the same work. The promise of renewable energies is that they can accomplish that goal in addition to being replenishable.

The problem with oil is that it is being produced by the planet much more slowly than it is consumed, so global reserves will ultimately run out.

On the other hand, the energy of wind, waves, and sun are constantly being produced at much greater rates than humans might use them up.

When “Renewables” Are Not Renewable

Energy sources like wood are difficult to categorize as renewable due to the huge scale of commercial exploitation. Although subsistence people might continue to use wood to warm themselves without any reduction in supply, forest products are not limitless. As a practical matter, overuse of trees produced deforestation all over the globe. Because trees are a carbon sink that saves the climate from carbon pollution, their loss aggravates climate change.

The use of corn to make energy is another ambiguous candidate. Researchers find that the carbon cost of producing a gallon of oil's worth of energy exceeds the gallon of oil. Despite corn farmers wanting to appear green, the use of corn to generate energy is a very bad idea from the climate perspective, not to mention the waste of food in a world where starvation is still a problem.

If the economics of corn are so terrible, why does the industry continue to steam ahead? The answer may be that it is backed by the huge government subsidies (1). This helps agribusiness to balance the books but does nothing for carbon balance.

Economic analysis also throws cold water on several other renewables, including solar, that seem among the greenest.

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Hidden Costs of Renewables

Plants and bacteria have been fueled by solar energy since life began on earth. Once a solar panel is installed, it may continue to produce electricity for many years with little additional cost in terms of carbon.

Yet skeptics have expressed serious doubts about using photovoltaic energy on a large scale to replace coal and gas electricity generation. One researcher concluded that “large-scale expansion of household PV (photovoltaic) may hinder rather than assist deep cuts in the emission intensity of Australia's electricity system” (2). The rationale is that the economic and energy costs of high-penetration PV eat into the environmental benefits. PV does look better considered over a scale of decades rather than years, but this is too slow from a climate change perspective.

Solar carbon costs are not obvious to most people, but there are two key factors. The first is that manufacture and installation require considerable energy expenditure. The other is that the development of solar cells involves a great deal of research, much of it funded by governments (1,2).

Research involves the expenditure of large amounts of energy that is generally difficult to quantify exactly. Economists cut a corner here by assuming the economic costs translate into production of an equivalent amount of carbon.

The same issues surround the use of other renewables. According to other researchers, “Nearly all renewable energy systems have relatively low EROI [energy return on investment] when compared with conventional fossil fuels” (2).

From a business perspective, this means that renewables are not a viable proposition and could not be developed in the absence of government funding (1). If they were, private companies would be plowing huge amounts of money into them to exploit the profit potential. That is clearly not happening.

The Simple Solution to a Complex Problem

The climate problem is caused by burning too much energy. This is itself the outcome of increasing economic production due both to the rising global population and increased GDP per person.

Given that the population can continue to grow substantially in the next century, the focus must be on changing our lifestyle.

While increasing the energy efficiency of cars and homes can help, the impact is likely to be modest. Switching to renewables may also have benefits over a long time horizon.

Logically speaking, the only reliable way to reverse climate problems is to reverse the affluent lifestyle that is causing it. Think smaller homes and smaller, more efficient vehicles. Cut unnecessary travel. Avoid buying goods that are inessential. Avoid all leisure flights.

While this solution would slow or reverse climate change, it would not be politically popular because it shrinks the economy. No politician has ever been elected on a platform of bringing back the Great Depression as a permanent reality. Even so, the time has come to cut consumption or pay the price.