New study: What is the non-use of renewable energies costing us?
This World Future Council study concludes that, estimated conservatively, the future usage loss resulting from our current oil, gas and coal consumption is US $3.2 to 3.4 trillion per year.
The sun and the wind are free. The costs of renewable energy are thus almost exclusively fixed extraction costs, whilst the use of fossil fuels incurs significant variable costs (reflecting the value of the fuels burnt). The difference between renewables and fossil fuels is not only the zero cost of renewables but also that they will never be exhausted. How can the value of a commodity whose usage is free and inexhaustible be measured?
This can only be done indirectly through calculating the costs incurred when the use of a free and never-ending commodity is supplanted by the use of a finite commodity, which is destroyed, and thus unusable in the future, through its one-time use as energy. In contrast, the wind which blows and sun which shines but are not used today are lost forever. The renewable energy not used today thus cannot replace fossil fuel raw materials that, having been burnt as energy, are gone. This means that the use these raw materials could have had in the future is gone and additional costs will be incurred to replace them. To calculate the loss incurred, the alternative use value of the burnt fossil fuels must be estimated.
It is increasingly clear that, by remodelling our energy-systems, fossil fuels can be substituted by renewables. Every entity of fossil raw material that can be replaced by renewable energy retains its value as a raw material to be used in the future for non-energetic uses. For the energetic use of fossil raw material there is the alternative of using renewable energies, whose current usage, unlike that of e.g. oil, does not exclude further usage.
The lost value of under- or unutilised renewable energy therefore consists of the future lost value of burnt fossil fuel raw material, which is no longer available for non-energetic uses. The aim of this introductory study is not to make a full cost comparison between current renewable energies and fossil fuels in which all external benefits of renewable energies are internalised. Our aim is only to estimate the future lost usage value of burnt fossil raw materials in order to be able to establish the costs of the current under-usage of available renewable energy potential.
Wednesday, January 30th, 2013