Alternative Energy for Dummies

Let's take a look at some alternative energy technologies.

Advances have recently been made in solar to bring down the cost to a more reasonable level. Costs for photovoltaics have dropped from $27 per installed peak wattage to $4 per installed peak wattage recently. A company called Nanosolar, funded by the founders of Google, has technology to print solar cells at much lower cost. They claim they will be able to profitably sell them at $1 per installed watt quite soon. This technology could be deployed across large parts of the southwestern United States. This new solar technology combined with better storage and power transport technologies could spur a switch to solar energy.

The price of wind generators has also fallen greatly in the last few decades. Major companies like GE and Siemens as well as dedicated wind generation firms like Vestas. Generator technology is mature technology. However, many improvements have been made in blade design and materials, gearing, and computer controls. Billionaire oilman T. Boone Pickens is currently investing in the world's largest wind farm with over 2,000 turbines. In some areas, prices can rival coal or nuclear. With better storage and grid technologies, wind can provide a large amount of useful energy.

For automobile transport, we'll need either better batteries or some sort of manufactured liquid fuel such as hydrogen. Battery technology is improving quickly, and this means acceptable range and fast charging times with falling prices for batteries. Hydrogen fuel cells for cars do not seem practical in the near future. In addition to a workable battery technology, we need plentiful electricity. For the long-term this will need to be based on a renewable resource such as solar or wind. As for air transport, it's not quite as easy. Batteries do not have anywhere near the power density for air travel. Hydrogen could be manufactured for aircraft use provided there is cheap energy and a way to store it.

Biofuels might solve both the transport and the collection problem. While current technology with corn ethanol is expensive and requires huge inputs of energy, it might be better in the future. There are also a number of other technologies on the horizon. Algae can produce bio diesel and bacteria can produce a very high quality of crude oil. This technology is quite promising in that it would not require a shift in technology by users of energy. We could continue to use our regular automobiles and airplanes while using a renewable feedstock.

While there may be pain in the near term with higher energy prices, new technologies are promising. We must not be tempted to reduce the pain by price controls or subsidies that will only prolong difficulties. High prices more than anything else will make us switch.

Whack-A-Mole for Economic Fallacies

Alternatives including solar and wind will be adopted soon in large part due to market forces. However many politicians, look at alternative energy as a way to create "green collar" jobs. In their world, there are no costs involved only benefits. All we need to do is provide subsidies or launch a government program for alternative energy, and we will give plenty of jobs to people. This is only a thinly veiled rephrasing of the classic broken window fallacy. The story goes like this: A boy breaks shopkeeper’s window. The townspeople say that this accident makes work for the glazier who will buy bread, and who will in turn buy shoes. They conclude that the boy benefited the town economically. No matter how many times the fallacy is repeated as truth, it is still fundamentally wrong.

Returning to the idea of "green collar" jobs, we must remember that jobs are a cost. Giving someone a "green collar" job takes away resources in a very real way from another industry. For example, engineers, computer scientists, and construction workers among others are needed to create a wind farm. A mechanical engineer might design aircraft engines instead. A computer scientist could work for Google instead. Construction workers could build a road or a bridge. We are likely in a recession now, so the costs of giving someone a job may be lower. Instead of collecting unemployment they could be at least be doing something useful. A recession is only temporary though, and government programs and subsidies long outlive their usefulness. Government will end up picking winners, and the rest will be left behind paying the costs.