While exhortations to energy transition continue at all levels, especially to close nuclear power plants in Europe, the so-called alternative energy sources are losing the aura they had a few years ago.

There are three predominant factors for this disenchantment:

• Their success depends on subsidies;
• The products they provide are in no way improved, neither in quantity or quality, nor in their costs;
• They contribute only slowly and partially to replacing fossil fuels.

Subsidies.

Subsidies may be justified to make economically viable an activity that provides access to a necessary common good, or to temporarily give a boost to a new sector until it proves its value on the market. Thus the state will allocate funds e.g. for welfare programs or to prevent diseases, or will invest in scientific and technological research.

But if an already mature industry such as wind, hydro and photovoltaic is supported by subsidies by which energy purchase price will be guaranteed to cover actual production costs, or direct payments will be made to enable capital investment, then it’s obvious that this cannot last for long. If the “business plan” does not indicate any future economic return, free from dependence on subsidies or on monopolistic position, then a private investor will have very good reasons to be discouraged.

One way forward is then to establish a state owned company that will provide the goods and services that are necessary to support the general economy of the country. Public lighting, railways, some general hospitals are examples of such activities. This company may be wholly owned and managed by the state (state schools) or mandated as a public service to an independent company (mail, railways) according to strict rules and conditions. In many cases the services provided are not charged to the users at their full cost and the resulting deficit as well as reinvestment expenses for equipment and infrastructure will be covered by the state with fund proceeding from taxation and various excises and duties.

Energy generation and supply has the distinction of being divided between the private sector (gas, oil and derivatives) and the public or semi-public sector (electricity). But so far these services have been provided in a profitable way by companies that pay royalties for the use of natural resources (water), are able to finance themselves for the long-term, and also pay dividends to their shareholders, many of them being public institutions (municipalities, cantons). The energy sector, which is an excellent semi-state business, should not change direction and become a systemically unprofitable industry, despite of the wishes of politicians and equipment suppliers.

The situation changes with alternative energies, especially for electricity supply: their investment costs are very high, they are not centralized as nuclear plants or hydroelectric dams, and they require additional investment – for storage capacity or spare production capacities, and smart grid systems – to compensate for intermittency of wind and solar production. This results in generation costs that are not competitive with electricity generated by coal, gas, nuclear or conventional hydraulic. As this fact is related to stable structural differences, no change can be expected unless a breakthrough is realized (e.g. more than doubling of the efficiency of photovoltaic cells, installation of solar units in the Sahara with not yet mature storage and transport technologies).

After having happily established a system of subsidies for those energies, broke states with high budget deficit and colossal debt are now suffering from a persistent hangover. They can no more guarantee prices, they can no longer contribute sunk investment. So they abandon these assistance programs, such as in Spain, and companies that had taken advantage of an earlier windfall are now struggling, including investors who believed getting a renewable jackpot.

Economic reality surpasses wishful dreams.

No product improvement

A kWh is a kWh, available as 101 milliliters of gasoline or 169 cm³ of alcohol, or taken at the wall socket under 110V 60 Hz: energy products do not change, nor their uses.

Politicians, seeking the favor of the voter had to make use of words that they barely understand such as negative externalities, sustainable development, and risk reduction of all kinds, to make acceptable energy transition programs. Note for Switzerland and its direct democracy: these projects were not submitted to the people by referendum as it had been the case for the railway network. The controversy is still open if it is not wiser to develop further nuclear energy (safer 4^th generation, thorium process producing almost no waste) rather than multiplying facilities that, in addition to being too expensive, offer nothing better. As we are doing nothing in this area the Chinese will take the technology relay and the economic governance; we just tend our cheek before receiving a first slap.

The beneficial effects of alternatives energies have been merely alleged, never proven. Nobody can calculate the cost to the environment of a dam obstructing a valley, or the benefit of reducing by one ton the quantity of carbon dioxide emitted into the atmosphere, either in monetary or social terms. The “footprint” models, ecological balances, life cycle analysis are interesting playgrounds for a green accounting that is more “fun” than the financial one. But they have no great significance because nobody knows how to pass these hypothetical costs or benefits on those who might be their cause or their beneficiary.

How then to convince that a product similar to others is better if no tangible comparative advantage is presentable. In the postmodern world this is now driven by perceptions and sentiments, science and reason have been silenced.

Without better arguments and with pious intentions, incentive mechanisms have been created for penalizing the use of fossil fuels, carbon tax or carbon allowance certificates. This did not make greener the so-called green energy, because it is as absurd as pissing in a violins to make music. But in the short term that allows some to get rich and to win votes.

Oil substitution

There are good and spurious reasons to seek substitutes for fossil fuels, coal, oil, and gas.

The good reason is that the reserves of the Earth, even huge, will one day be exhausted. It is therefore better to keep them as long as possible and to make a higher value use than just burning them; and it is safer to reduce the supply dependence from politically unstable regions or hostile regimes, in particular in the Near and Middle East.

The wrong reason is to believe that the world is going to a rapid and total disaster if we do not stop CO₂ emissions now. I will not dwell on this topic that became dogma and taboo, I treated it elsewhere.

For electricity in countries where nuclear and hydro are predominant, substitution has no purpose. Wind and solar power generation being intermittent, there is irony that spare power plant capacity must be provided that burn gas, heavy oil or coal to overcome the dips in production. Also, beyond a proportion of 25-30 % of intermittent energy within the mix, distribution becomes a puzzle that will require long time and large investments to be resolved, linked with even higher costs for the end-user.

As a possible substitution there remain products of biological origin, biofuels and biogas. Promising developments can be expected in this area as long as the acreage used for this purpose does not compete with the production of food, fodder and natural fibers that in my opinion should have priority. Bioethanol and biodiesel are easily stored as liquids in the tanks of vehicles and can be used without major changes to combustion engines. This is a clear advantage over electricity that requires expensive batteries of limited capacity, additional electricity production plants, and a network of recharging stations.

In the current state of the technology bioethanol from sugar fermentation is profitable with intensive crops dedicated to this, especially sugar cane and beet, and maize to a lesser extent (also dependent on subsidies in the USA…). Biodiesel produced from rapeseed or palm oil remains a supplement, limited to mixing with diesel fuel in warm areas or during hot seasons. But these routes compete for land with food production.

The process of digestion and fermentation of the ligno-cellulosic part of biomass will use forestry and agricultural by-products without competing with food production. So-called second generation or algal cultures are developing technologies; but their energy efficiency has yet to be high enough to overcome an economic threshold. However, it is not too adventurous to think that breakthroughs in this area are likely. Profitable biogas installations, decentralized and of small sizes, already exist for the combined production of electricity and heating, but the logistics of raw materials supply and waste management make it unlikely that large power plants will be constructed.

Only new biotechnology may one day help replace fossil fuels when they are used in liquid form. Research and development in this field is financed in part by public funds. There is nothing to object to this (nuclear energy has also benefited from public, and military, R&D) as long as no lame duck (e.g. hydrogen based technology) will be promoted with inadequate investments and subsidies, and if free competition is left open between innovative minds.

Alternative energies are too expensive, offer nothing more or better than what we already have and, apart from a still developing biotechnology, they will not replace oil. China bets on coal and nuclear, the U.S. on gas and oil shale, and Europe sacrifices without reason its framework for competitiveness just to solve fake problems.

Windy and sunny fiesta is coming to an end.

Merci de compartir cet article