Contributed by Robert Lyman © 2020. Lyman’s bio can be read here.
Those who believe that human greenhouse gas emissions are causing catastrophic global warming see the eventual recovery from the current pandemic-related economic recession as an opportunity. They are lobbying governments to pour large amounts of taxpayers’ dollars into renewable energy, so that this industry allegedly can offer a resilient recovery for the Canadian economy and replace the jobs lost in the hydrocarbons industries. In the first of a multi-part series, I here describe what actually is happening in global oil and gas and renewables markets.
The British Petroleum Statistical Review of World Energy 2019 is an authoritative source of data on global energy supply, demand and emissions trends. According to that report, with one brief pause in 2008-2009, global demand for all energy sources rose steadily from 1993 to 2018. In 2018, fossils fuels (oil, natural gas and coal) still constituted 84% of global energy demand, while renewable energy (mainly solar and wind energy plus biofuels) provided 4%. While renewable energy use is growing rapidly from a small base, in 2018 the market for oil and gas worldwide was 14 times larger than the market for renewables. Further, the growth in oil and gas usage from 2017 to 2018 was ten times larger than the growth in renewables use. The growth in oil and gas use that year was higher than the total use of renewables in 2018.
The factors that drive oil and gas markets and renewables markets are quite different. People who produce, refine and market oil and gas have made money because billions of consumers freely decide that the benefits of the energy services these fuels provide are worth it. Renewable energy sources in most cases cost more than their alternatives, whether used for electricity generation or as transport fuels. Consequently, their use is driven mainly by government mandates, regulations and subsidies. Here, I identify 24 generic ways in which governments provide advantages to wind, solar and biomass industries that are not available to competing conventional energy suppliers.
Globally, according to the REN21 Renewables Global Status Report published by the United Nations Environment Program, from 2006 to 2017 nearly U.S. $2.5 trillion was funneled into government mandated renewable energy investments. Yet, despite that monumental expense, global emissions increased by almost 20%.
As the global economy emerges from the current pandemic, logic would suggest that oil and gas, which now constitute 60% of global energy use, will grow far faster than renewables which hold only a 4% share. Further, in emerging from a period of depressed income, companies and people would probably prefer energy sources that are less expensive and more reliable; that consideration strongly favours oil and gas. However, government mandates, so common in many countries, may require people to continue using less economic renewable energy where free choices would dictate otherwise.