Natural Gas vs. Renewables

The Economist Debates: Natural Gas or Renewables?

Anyone interested to know about the future of energy and climate change mitigation must follow the elements of this debate hosted by The Economist. Likewise, the fight to eliminate poverty hinges on the energy security of every nation, more specifically the resultant impact of energy prices on third-world countries.

The big question that everyone wants answered: What comes after oil? There is immense pressure on giant economies from China, who invested a massive US$51.1bn in renewables last year, to pick up pace on their own investments and R&D. The possibility of implementing a global carbon tax, as well as the general urgency for positive climate change, has pushed governments and energy corporations to diversify their energy sources.

The debate however, is flawed. There is no argument that renewables surely produce less carbon emissions than natural gas, but basic economics of scale will ensure that natural gas will take over as the top energy resource over the next two to three decades. Even with government subsidies and incentives, it would take huge technological breakthrough to overcome the cost-effectiveness of using gas.

Despite being cited countless times as a positive example, China is very much an outlying case for two strong reasons: Firstly, as an ascending world power, China would want to develop energy self-reliance. Given its resources and manpower it has the potential to do so, and once achieved, will allow the superpower to throw its weight around the region. Secondly, by leading in terms of renewable energy infrastructure manufacturing and investment, it provides jobs for its population, pulling millions of Chinese people out of poverty and eventually monopolizing the sector.

For most other countries however, there are insurmountable barriers to direct investment into renewables. Politicians from developing countries have but one goal, and that is to ensure that energy production matches the growth of their economies. When compared to the cost of coal, gas is more competitive than oil and will be a better choice, especially since it fills the nation's coffers and provide bandwidth to provide other basic needs such as education and clean water. In addition, many developed countries such as Singapore have little resources to seriously utilize any form of renewable energy.


Renewables may eventually reach the necessary cost-efficiency to compete at a level with fossil fuels, but as market forces will have it, the day will not come anytime soon. The defense strategy of most countries presently includes a diversification of energy sources, and security requires decoupling from intermittent, unpredictable sources such as wind and sunlight, or niche resources such as biofuels. Besides investing in nuclear plants, hoarding fossil fuels is still the only way to provide such security.


With regards to this particular debate however, both sides will probably pick sure-to-win stances that are not direct opposites, with the defending side insisting on the economies of scale behind gas and the challenger side insisting that renewables produce less carbon emissions than gas. It is in such a flawed debate that should lead one to question the importance of the politico-geographical context and the military defense strategy behind energy diversification.

Renewable Energy Must Think Outside the "Sector" Constraint

The convenience store in the center of Kiptusuri acquired a solar lighting system and can now stay open at night. Photo courtesy of The New York Times.

The New York Times: African Huts Far From The Grid Glow With Renewable Power

Increasing demand for home-sized renewable energy infrastructures in cost-inefficient, off-grid areas is offering another challenge to business innovation and social advancement. The market exists and is growing, but how should businesses make full use of this opportunity to penetrate and establish its presence so as to reap early-entry advantages?

Drawing inspiration from Muhammad Yunus and the Grameen Bank's efforts in Bangladesh, a far-sighted enterprise should not be daunted by the energy needs of these areas, but should try to leverage on this gap and allow profit-driven innovations to improve the lives of villagers in these various areas. One conceptual obstacle that has impeded progress in this area is the inability to "think out of the sector".

Theoretical constraints, although useful as a hypothesizing platform, should never restrict the creative element required to innovate. In this particular case, there is immense potential for solar energy companies to start-up food and/or technology businesses that will utilize their panels. Centralization of services such as refrigeration, mobile-charging, and education premises as well as agricultural or mining-related technologies such as grain husking and ore sieving not only creates a stable demand for energy infrastructure but also introduces technological innovation that help villagers reap economies of scale.

Early branding is also very important, and it will not be difficult for energy companies to find willing partners in other industries to invest in small joint ventures like that. The positive effects of branding cannot be measured by accountants, and yet can bring immense value that outweighs the initially small profits of early market penetration.

Energy companies can learn a thing or two from the fast-consumables market: Look beyond supplying direct demand and create or support indirect demand. And why not, when in doing so one provides a service to mankind and move forward a step in eliminating poverty?

Wind Beneath Our Wings

With renewable power, Tocco da Casauria, in central Italy, produces more electricity than it uses, making money off the surplus.

New York Times: Ancient Italian Town Has Wind at Its Back

Elisabeth Rosenthal wrote an article for the New York Times which is truly an inspiration for ideas linking the use of renewable energy and rural poverty eradication. There is little evidence against increasing urbanization, and as the forces of necessity push people to migrate towards cities, multiple dimensions of social imbalance is produced.

Demand for energy security in cities and inevitable transition to renewable sources of energy mean that an economically feasible solution is required in the near future.Tocca da Casauria is a shinning example of how countries with the potential to produce power from wind energy in rural areas can actually solve multiple problems at once.

Firstly, the generation of power means employment for people living in the villages and other rural areas nearby. Statistics from the International Energy Agency (IEA) and Asian Development Bank (ADB) have shown positive results in terms of economic well-being for rural villages nearby power generators, provided they have no ill effects on the health of the people there.

Secondly, the generation of power from renewable sources means that experts will have to relocate with their families to the area. Given a few years, demand for education and other commodities will increase, creating a base for entrepreneurship and upward social mobility. There is also a possibility that it might stem the rural exodus a little more.

Thirdly, the town of Tocca da Casauria has proven that it is possible to generate more electricity to push back into the electric grid and actually earn an income from it. Most urban areas do not possess the land and space to generate power from renewable sources like wind and solar, but consume more than what fossil fuel plants can provide. Their dependence on excess production from rural areas will bring in money that can be used to build up basic infrastructure like clean water, educational facilities and transportation grids.

Lastly, spreading out renewable energy generation facilities around the country provides energy security from a military and safety perspective. Renewable sources such as wind and geothermal mean that generators have to be spread out in many rural areas, as compared to nuclear and fossil fuel plants which are usually concentrated to prevent widespread pollution and/or damage.

It is therefore highly possible that the complex answer for eradicating poverty could incorporate the use of renewable energy generation. Of course, many political and socioeconomic obstacles stand in the way, but it's all about the ideas first!