The sudden rise of shale gas and other new fossil fuel energy sources in North America has many wondering about the future of renewable energy.
Shale gas, natural gas found trapped in shale formations, is widely abundant, relatively inexpensive and is the cleanest burning hydrocarbon. It’s already helping force many coal-fired power plants in the United States into early retirement as operators replace them with cheaper, cleaner and more flexible gas-fired units.
Clean energy proponents concerned
Will shale gas and oil temper the rapid growth of renewable energy?
Some experts are predicting as much, and this has clean energy proponents concerned, including the European environmental movement which is opposing all shale gas development in that continent. (Wind and solar energy has thrived in Europe, thanks to generous state subsidies and guaranteed feed-in tariffs for electricity sold into national power grids.)
Renewables growth to continue
In North America, we think renewables and fossil fuels recovered from shale formations can both thrive as energy sources. In fact, an authoritative IHS report prepared for Suncor suggests growth in renewables will continue across the continent for at least another decade.
Already strong policies supporting renewable energy have led to more than US$200 billion of investment in renewable power capacity in North America since 2000. Wind and solar electricity capacity has grown from 4 gigawatts (GW) in 2000 to over 75 GW at year-end 2012, while North American ethanol and biodiesel usage averaged a combined nearly 15 billion gallons in 2012, up from less than 2 billion in 2000.
According to IHS, the cost of wind and solar power has already declined significantly, and is expected to continue declining in the years ahead. This is due to greater competition from more manufacturers and the scaling advantages of larger production volumes. Renewables, which accounted for 4 per cent of North America power supply by the end of 2012, are expected to deliver over 7 per cent by 2020.
For further growth, however, policy support at all levels of government is crucial. In Canada, this means new provincial legislation providing incentives and investment certainty backed by reasonable feed-in-tariffs. In the U.S., continued subsidies and use of carbon pricing will help spur growth beyond utilities meeting local renewable energy targets, which now exist in 36 states.
Energy system transition
Suncor is a major renewable energy player in Canada and remains committed to renewable energy. We already have investments in six wind farms and are looking to add two more. We also operate Canada’s largest ethanol plant.
Renewable energy is clearly driving a new transition in energy systems, equivalent to the switch from candles to gas lighting or from gas lighting to electric lighting. As we’ve noted before, energy system transitions are challenging and historically take one to two generations.
Renewables have proved to be an important energy source in less than two decades and have boomed in the last few years. According to the World Energy Association, all wind turbines installed by the end of 2012 worldwide can provide 580 terawatts annually, more than 3 per cent of the global electricity demand. Meanwhile, cumulative installed solar photovoltaic energy capacity worldwide reached about 65 GW at the end of 2011, up from 1.5 GW in 2000, the International Energy Agency notes.
We have no doubt that renewables will be an increasingly important part of the energy mix going forward.
The Walrus Talks Energy
Tune in to the OSQAR blog on Tuesday, October 1 at 4 p.m. MT/ 6 p.m. ET to watch our online broadcast of The Walrus Talks Energy speaker series.
