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Tuesday, December 22, 2015

RENEWABLE ENERGY IS AT A CRUCIAL CROSSROAD: Where are We Today?

From my very first real job in the biomass industry more than half a century ago, to my life-long association with the Hawaii Natural Energy Institute at the University of Hawaii, which continues, sustainable resources have occupied most of my professional life.  This blog site began in clean energy and the environment, but has gone off on tangents into just about anything, mostly because my readers have insisted and my book on SIMPLE SOLUTIONS for Humanity, plus postings in The Huffington Post, have provided a foundation from which I now dabble in peace, entertainment, travel, cuisine, religion, etc.

Yes, that cover above does look like some kind of voracious Pacman, but that symbol was derived from this rainbow version of my family crest or kamon or mon.  This graphic represents a high bridge connecting nations--over an ocean, implying international cooperation--for the English definition of my Japanese name, Takahashi, is high bridge.  The book itself reports on all the potential renewable energy sources, including fusion, for this is a process that is utilized by all the stars in the Universe, including our Sun, to produce energy.  As long as fusion occurs, there could be life.  Our Universe should be around for up to a hundred trillion years longer, depending on how it ends, or forever, if there are multi-verses.

Okay, so now to renewable energy and why we are at a crucial crossroad:


Note how the price of petroleum has affected the world economy:
  • petroleum prices long stabilized at around $2-$3/barrel until 1974, when the First Energy Crisis sparked the initial oil shock
  • also observe that the inflation adjusted price (IAP) from 1946 stood in the range of $20/barrel using 2015 dollars
  • the IAP price jumped to nearly $120/bbl at the end of 1979 because of the Second Energy Crisis
  • then in 1998 the price actually dropped to an IAP of $12.45/bbl, by far the lowest price since 1946 and before (remember, the IAP price before 1974 stood around $20/bbl)
  • oil recently dropped below $35/bbl, and is back up to $36/bbl today
  • interpolated back to 1974 when petroleum sold for $3/bbl, the equivalent 2015 value is $7.29
  • relative to 1998, using IAP. the all time low at $12.45, oil today sells for a range between $18/bbl - $25/bbl, depending on whether CPI or other economic parameters are used
So what has happened to the robustness of renewable energy business relative to the price of oil?
  1. I happened to work in the U.S. Senate from 1979-1982 when oil peaked at $117 (IAP)/bbl and most of the renewable energy legislation swiftly passed through Congress, becoming law.  I personally helped write the original ocean energy and hydrogen bills, and served as the Senate staffer on wind energy.
  2. However, Ronald Reagan was elected president in 1980, and he systematically destroyed most of the renewable energy programs in the Federal government.
  3. Yet, solar, wind and biomass programs showed some growth, and a range of pioneering companies were formed, partly because Congress began to provide funding and tax credits.  Senator Spark Matsunaga, who I worked for, was particularly instrumental in helping introduce these incentives.
  4. However, when oil reached a historic low of $12.45 (IAP)/bbl in 1998, most of the fledgling solar companies went into bankruptcy.
  5. In June 2008 oil skyrocketed to $136.31 (IAP--and in case you forgot, this stands for Inflation Adjusted Price relative to 2015)/bbl.  Many of the solar alternatives began to get competitive and a whole host of companies came into being.
  6. Unfortunately, as happened after 1979 when the previous price shock occurred, later in 2008 the world economy sunk into recession (the banks have been blamed, but the suddenly high price of oil has historically also caused these economic downturns), the price of petroleum plummeted to $30/bbl, and renewable firms again went bankrupt.
  7. Within a couple of years oil recovered and remained in the range of $80/bbl - $100/bbl for five years, until last year, when there was a steep descent to the present price, one-third of where the price stood in 2009.
Tomorrow I provide an analysis of the current state of renewable energy enterprises and what can be expected into the future.  


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