Why Green Energy Will Struggle Against a 790,000 Year Habit.
Once politicians and vested interest stick their noses in somewhere, it’s darn hard to get them to buzz off. In the July issue of Australian Small-Cap Investigator, we wrote that the best thing to happen to the green energy sector was the 2008 global financial meltdown.
With governments strapped for cash, they’ve cut subsidies to green energy. This is great news because it removes the impact of government meddling.
It means green energy companies can stop planning for the short-term government handouts. Instead, they can innovate and plan for the future.
When technology can take years to develop, the last thing a company needs is for the government to throw short-term cash at it.
That’s because it forces green energy companies to put long-term projects on hold. After all, if they don’t grab the short-term subsidies, other firms will.
However, despite the funding cuts, lobbyists are still pounding away at the drum. And the desperation is showing…
Last week, former US Vice President, Al Gore, told a Sydney conference that ‘Australia is the canary in the coal mine’ when it comes to climate change.
The self-appointed fear-monger-in-chief must have wowed the crowd when he said – by video link – that Australia would be the first to suffer from climate change. And that whatever happened here – fires, floods, storms – would be an early indicator for the rest of the world.
Naturally, it’s not good enough to put the fear of God into people. You’ve got to butter them up too. So despite Australia’s potential for an‘unimaginable catastrophe’ (Al Gore’s words, not ours), he says there is hope:
‘So policy actions like Australia’s historic achievement are beginning to unlock innovative approaches to the climate crisis that will provide new sources of sustainable economic growth and good jobs while simultaneously solving the climate crisis. We’re not there yet, but fortunately we are gaining momentum and we can solve this problem.’
And how do we solve this problem? Everyone doing their own little bit perhaps…no, don’t be silly. Al Gore explains:
‘The climate crisis of course, is not the struggle of an individual nation or government, it is a global challenge. And therefore in order to solve it we have to act together. Toward that end I salute Australia’s strong commitment to solving the climate crisis. And I know it’s going to continue to be a crucial player in building a global solution to this global problem.’
That’s right, just leave it to the central planners. They know how to spend your tax dollars better than you.
Just remember, these central planners first met to ‘solve’ the so-called ‘climate crisis’ in 1979. 33 years later and they’re still meeting (in exotic places) to solve it. And if the latest Climate Commission report is right, they should have it figured out by…2020.
No rush…even if we’re staring at an ‘unimaginable catastrophe’.
[You can watch Al Gore's brief presentation to the Climate Commissionhere.]
But Al Gore isn’t the only one with madcap central planning ideas. Last week, the Sydney Morning Herald quoted Australian Greens leader, Christine Milne. Ms Milne says, ‘What we now need is a big push toward 100 per cent renewable energy as quickly as possible.’
That’s an interesting idea. But it’s also a barmy idea.
We’ve told Australian Small-Cap Investigator subscribers about the info we’ve received from energy industry insiders. That is, based on current know-how and green energy efficiency, no country can rely on renewable energy for any more than 20% of its electricity generation.
So for Ms Milne to say we can get to 100% is silly. Even Denmark, which has an advanced renewable energy system, uses fossil fuels to generate three-quarters of its electricity.
But there is one renewable energy source that seems capable of going over the 20% threshold, and that’s hydroelectricity.
But that’s a problem for the green energy lobby. To build a hydro scheme you have to flood thousands of acres of land and uproot people from their homes. You have to divert surging rivers, and destroy and change natural habitats forever.
Not to mention the millions of tonnes of concrete, steel, copper, rare earths, and other natural resources. Each of which needs digging from the ground. That uses more energy and could harm other natural environments (as the green lobby is always so keen to point out).
So we’re not sure that hydro fits in with Green philosophy.
And besides, for all the time and money spent on Australia’s famous Snowy Hydro Scheme, it still only generates 1% of Australia’s electricity supply. Although it does provide more than this to meet demand surges.
But as the Australian Bureau of Statistics notes:
‘The [Snowy Hydro] Scheme was designed to produce peak electricity, and good flexibility exists on a short-term basis although it is not able to replace base load generation for prolonged periods.’
We know it’s blasphemy in Australia to criticize the Snowy Scheme. But we do it anyway, because it was a huge waste of manpower and resources for such a small contribution to the electricity network.
So we’ll expect a few ‘Letters to the Editor’, telling us we’re nuts (you can send comments to email@example.com).
But the numbers speak for themselves. Even the best green energy systems have trouble competing directly with the best energy source of all – fossil fuels.
Look, renewable energy is a great idea. And it’s nice to have some goals. But let’s be honest, as far as we can tell, it has been a long time since civilised and pre-civilised humans have used 100% renewable energy.
Even when Stone Age man needed fuel to keep warm, he burned wood. That isn’t a whole lot different to an electricity plant burning wood in its fossil-fuel form today – otherwise known as coal.
But if you listen to the green movement, they want you to go back in time to before man discovered fire. That’s about 790,000 years ago. And it was the last time humans relied on 100% renewable energy.
In short, forget the crazy idea of cutting out fossil fuels. It won’t happen. There’s too much of it around, and in the case of coal and natural gas, it’s cheap too.
Over time, these energy sources could compete with fossil fuels. But they need innovation and advances in technology. That’s something that can only happen in a free market.
But even then they won’t completely replace fossil fuels.
But however this plays out, one thing is certain: the green energy industry and companies don’t need more government intervention. And they don’t need fear-mongering from lobbyists like Al Gore, and the impossible dreams of the Australian Greens.
What green energy needs is less meddling and more free markets.
PS. In the July issue of Australian Small-Cap Investigator we surprised readers by tipping a small-cap green energy stock. Some people think we’ve flip-flopped on the issue…and our publisher even thought the idea was crazy. But we think we’re onto a winner. For more details, click here…
This article is contributed by Money Morning. Click Here to Subscribe to their free newsletter.