Oil rose to predominance without subsidies

In a post celebrating modern oil's 150th birthday (yes, I've meant to blog this for a while), Geoff Styles shows how the astounding growth of oil demand and supply far outstrips renewables deployment today, based on its overpowering economic advantage versus competing technologies. Notably, this was driven entirely by the private sector without substantial government assistance, as far as I'm aware.

As impressive as the growth rates for wind and solar power have been over the last few years, they still fall short of the early growth of car ownership. Between 1901 and 1916, annual US car registrations grew from a few thousand units to over one million, a sustained compound average growth of around 40% per year. Over the same interval, oil production more than quadrupled, led by the combination of soaring demand for gasoline, which was produced by simple distillation of petroleum in "tea kettle" refineries, and the discovery of numerous large oil fields. This remarkable growth wasn't spurred by government incentives or economics that made oil and its products merely a little better than their closest competition. It was the result of a quantum leap in personal mobility facilitated by oil's extraordinary inherent advantages in convenience.

He believes this experience holds relevant lessons for today's aspiring renewable energies of the future.

Subsidies and regulations seem anemic substitutes for the inherent advantages of cost and convenience that can sweep away incumbent technologies within a decade or two.

I completely agree - government subsidies for renewable energy cannot go on forever - and Morgan Downey makes a similar point when commenting on a David Mackay article that I mentioned and anticipated.

The repayment time horizon for wind, solar, geothermal, nuclear and other sources of power tends to be much longer than that of fossil fuels.

There are many financial solutions to this timing disadvantage. One solution being used is for the government to step in on behalf of taxpayers and quicken the pace which investors get their money back. Such government spending is unsustainable.

Wind and other renewables have to compete without subsidies if they are to be scaled to the size David MacKay mentions.

Downey believes it will take shortage-driven high fossil fuel prices to make the economics work for renewables at scale.

A shift to renewables on a MacKay scale may have to wait until fossil fuels production declines. Only then will high energy prices provide a sufficiently quick [payback] pace for renewable investors.

A more optimistic view is that large-scale deployment will quickly bring down the cost of renewable technologies like wind (the so-called experience curve or learning curve argument). That's what I want to believe... but if I'm totally honest with myself, I'm not sure I do.