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ECONOMIC ANALYSIS: Why the 10-year alternative-energy goal is absurd

August 25, 2008

B e f o r e w r i t i n g about energy matters, I am going to have to make a confession. I am a closet environmentalist. I support a wide range of environmental policies and think it often makes good business sense to go green.

But sadly, far too many supporters of environmental policy look at the world through green-colored glasses. One result is that it is increasingly difficult to take many environmentalists seriously.

One verdant silliness is the assertion that we can replace our energy demand with alternative fuels in just a decade. Today, the United States derives just 7 percent of our energy from alternative fuels. It is useful to break that down by type to see just how little alternative energy we use.

Of our total alternative fuel usage, 36 percent is hydroelectric. We cannot tap further into that source without damaging ecosystems. The same is true of our 5 percent use of wind energy. The damage to ecosystems through fish and wildlife kills is one of the great paradoxes of alternative energy that environmentalists only speak of when it comes time to finally build the dams and wind turbines in their communities.

Over half of our alternative energy is from biofuels. Such sources as switchgrass and corn-based ethanol offer the hope of renewable energy and independence from non-domestic fuels. But the environmental impact of these sources is worse than petroleum.

Geothermal energy and solar power (through photovoltaic cells) account for a whopping 6 percent of our alternative fuel portfolio, or roughly 42 ten-thousandths of our annual energy needs.

To place this in context, a little math is helpful. A full-home geothermal unit could cost about $15,000. This solar array could almost entirely power a very energyefficient home in a very sunny place. But it won't provide even half the necessary power for most of the nation's housing stock, and it won't do anything for business and government use of energy.

It will cost $2.5 trillion just to get about half of our home-based energy use through alternative energy. That's more than the total outlays for construction of the interstate highway system (in nominal dollars) from 1958 through 1991. Even this won't get us near halfway even if we add huge energy-efficiency gains, and squeeze another percent or two out of geothermal.

The notion that we can achieve an alternative energy future in 10 years is a myth of Homeric proportions. No serious analyst believes otherwise. But that's only half the trouble with the argument.

On the day you read this article, perhaps 40,000 children will die of malaria for want of pennies a day in prophylaxis. The environmental movement in America tells us it is a moral imperative to begin with what would amount to the largest single public-sector investment in history focused on alternative energy. A fact-laden debate on priorities among serious people is sorely needed.



Hicks is director of the Bureau of Business Research at Ball State University. His column appears weekly. He can be reached at bbr@bsu.edu.
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