OIL MAVEN SAYS NEW ENERGY IS A BIG DEAL

Oil scholar, oil industry consultant, businessman and TV Talking Head Daniel Yergin continues to cite his company’s new study predicting great things for New Energy. The Cambridge Energy Research Associates (CERA) study finds New Energy could supply 7% to 16% of world electricity and be worth $7 trillion by 2030.

Yergin: "We are going through a period of what I call the 'great bubbling,' a high degree of innovation all across the energy spectrum. This is boosting the competitiveness of renewables and efficiency and is also evident in terms of conventional energy."

Like others in the oil industry, Yergin is especially interested in the role governments are beginning to play in picking winners and losers in the world’s energy future. Like other Big Oil and Big Coal representatives, Yergin warns the emerging state energy players of costs still to be incurred: "As governments move forward to further encourage renewables development, they do need to pay attention to key considerations about costs, scale, reliability, timing, and unintended consequences. Another key issue is the additional investment needed to support and tie renewables into existing energy systems."

Yergin and CERA predict Asian economic expansion will expand its portion of global energy demand from its present 30% to 40%, making it a key driver of New Energy growth.

They say wind will grow most in the next quarter century, followed by solar and biomass. There will be short-term bottlenecks in turbine and silicon supplies.

They also expect nuclear, hydro and “clean” coal to play major roles through 2030.

Political policy, especially CO2 policy, is central to what Yergin sees coming: "The challenge in the years ahead is to provide subsidies in a way that ensures that these technologies get off the drawing board and are able to wean themselves from support—allowing for a phase-out rather than an increase in subsidies—as they become commercially viable on their own. It is also important that mandates be set at achievable levels and with care so as not to create unexpected pressures from higher prices…"

Footnote: Yergin also notes one of the more curious reasons oil has become so expensive: Money is migrating to oil futures to escape other crashing investments.

Yergin could be on to something. (click to enlarge)

Yergin: Renewables becoming competitive in energy markets
March 10, 2008 (Oil & Gas Journal)

WHO
Daniel Yergin, chairman, Cambridge Energy Research Associates (CERA)/executive vice-president, IHS Inc./Pultizer-prize winning author, The Prize; The Epic Quest for Oil, Money and Power

click to enlarge

WHAT
Yergin continues to recognize the growing economic force that is New Energy as found by Crossing the Divide: The Future of Clean Energy, the newest CERA study of energy in the upcoming quarter century.

WHEN
- Yergin spoke March 5 at the Washington International Renewable Energy Conference (WIREC), an event hosted by the US government and attended by cabinet-level officials from 70+ countries.
- Yergin focused on the future of world energy through 2030.

From a 2007 presentation to Houston oil execs by CERA partner Joseph Stanislaw. (click to enlarge)

WHERE
- WIREC was in Washington, DC, where the nation’s political leaders could have taken the opportunity to have some sense talked into them, had they so desired.
- The "Big 3" — the US, the European Union, and China — will impact New Energy growth most. Japan, India, and Brazil are expected to also play key roles.

WHY
- Yergin summarized the challenges facing New Energy as problems of economics, technology, and scale. He listed the drivers of New Energy growth as (1) high energy prices, (2) global climate change, (3) energy security and (4) public opinion.
The CERA study considers biofuels, renewable power, carbon capture and storage, nuclear, and hydropower.
- Key players: Traditional technology/engineering firms, electric power companies, oil and gas companies, innovators, entrepreneurs, venture capital firms, high-tech companies and governments.

More of the Stanislaw presentation. (click to enlarge)

QUOTES
- Yergin: "Renewables are already a significant business in terms of tens of billions of dollars in investment per year…But the scale of the existing energy business is enormous, and we'll only start to see the real impact in terms of market share in the next 5-10 years."
- Yergin: "[Drivers like high energy prices, global climate change, energy security and public opinion are] supported by the growing conviction that new carbon policies will reshape the competitive landscape of the global energy business…"
- Yergin: "There is a broad range of opportunities and benefits, as well as risks and pitfalls as the modern energy industry increasingly moves to adopt clean technologies that will be part of the alternative, low-carbon pathway to the energy future…"