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Monday, May 6, 2013

Tom Still: Hedging our bets: Oil-and-gas boom doesn’t end need for new energy solutions


By Tom Still
By now, or so the experts predicted, we were all supposed to be driving electric cars and lighting our homes from energy produced on massive algae farms.

That was before the "energy revolution" took an unexpected turn – toward innovation surrounding some old-school technologies.

The United States is well on its way to becoming virtually energy independent within a decade, in no small part because hydraulic fracturing and other drilling technologies are unlocking supplies of oil and natural gas within our borders.

Oil imports have fallen to a 17-year low in the United States, despite competing demands created by emerging world economies that are using more fossil fuels. Remember "peak" oil and natural gas? What once seemed imminent has become a moving target, thanks to technologies that have tapped reserves deep inside rock formations in Texas, North Dakota, Africa, Australia and well beyond.

That's good news for the economy, but unnerving for those who worry about the environmental effects of prolonged reliance on hydrocarbons – not to mention what happens to states that fail to engage in the emerging "cleantech" economy at home and around the world.

Striking a balance between the immediate benefits of the nation's oil-and-gas bonanza and adopting new conservation and generation technologies is the crux of a new report by Gary Radloff, director of Midwest Energy Policy Analysis for the Wisconsin Energy Institute. A public presentation on the report is set for Monday at the Fluno Center on the UW-Madison campus.

"How to keep Wisconsin and the U.S. competitive in a changing energy world" may strike some readers as a bit fanciful, given the realities of the oil-and-gas boom. Why invest in alternative energy technologies if hydrocarbons are suddenly more available, affordable and secure from foreign disruption?

In some alternative energy sectors, the economic outlook is grim. In other sectors, there's hope. The average price of a solar power system has fallen by 31 percent in two years, the Associated Press reported last week, and solar power now generates six times more electricity in the United States than it did 10 years ago. Wind power produces 14 times more electricity than a decade ago.

However, as prices for solar, wind and other alternatives have stabilized or dropped, so have costs for generating energy from hydrocarbons. What worries many climate scientists is whether the indirect costs of continued reliance on oil, gas and coal will lead to economic disruption in other forms.

Radloff's report suggests Wisconsin should set clear goals that hedge the state's energy bets while allowing homegrown industries to take part in an emerging "cleantech" economy.

"We are living in the great energy transition," Radloff said. "Most people don't yet see the change in their day-to-day lives, but they will eventually. That is because it is an incremental change today. It is becoming an evolutionary change."

Consider changes already underway in the coal industry: Two years ago, there were 522 coal-burning electricity plants in the United States. Today, fewer than 400 remain open or unscheduled for retirement. They're being replaced by cleaner-burning natural gas and newer technologies. Wisconsin ranks high among the list of states facing coal-plant closures.

The report notes Wisconsin is well-positioned to become an exporter of clean energy technology and know-how, thanks in large part to research and industry sectors already in place.

Those include companies engaged in water technologies, next-generation biofuels, energy storage, energy conservation, power controls and distribution, advanced manufacturing and a range of engineered products. Academic resources include the Wisconsin Energy Institute, which recently opened its new facility, and organizations that help link industry with research, such as the Wisconsin Energy Research Consortium.

Investments in technology and innovation within the oil and gas industry, in some cases beginning decades ago, prompted the current boom. Radloff said Wisconsin and the nation should continue similar investments in alternative energy solutions so there are commercial options when the next downturn occurs.

"There's great wisdom in portfolio diversification," he said. "Oil and gas are globally traded commodities, and subject to the ups and downs of the market. With that in mind, I believe people are going to start blending energy sources."

As the economy heats up and world population grows, so will demand for energy – in all forms. Today's oil-and-gas boom is buying valuable time, but investing in the energy future still makes sense.

-- Still is president of the Wisconsin Technology Council. He is the former associate editor of the Wisconsin State Journal in Madison.

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