Dornadula Chandrasekharam
Former Chair Professor I I T Bombay, India

Drop in oil price: consequences

While CoP is debating on issues related to the reduction in CO2 emissions, a parallel debate is on whether a fall in oil prices over the last five years is derailing this movement of carbon-free energy sources. The answer is yes and no. Cheap oil prices can reduce the competitiveness of biofuels which pitched against gasoline. When gasoline is cheap consumer’s mentality is to go far time tested gasoline-driven vehicles rather than biofuels based vehicles…..gasoline-based vehicles are any day less expensive compared to vehicles driven by biofuels. When oil prices are at low, all the rigs were deployed to gas fields…. to meet the gas demand. This is putting on an alternate switch. When the fields produce both oil and gas these issues will not arise.

Today the worth of the oil industry is US$ 1.7 trillion while the renewable energy market is worth US$ 928 billion and is expected to grow to 1512 billion in 2025. The oil growth will bounce back to the 2015 level concerning demand and cost. The world’s oil production capacity is expected to rise by 5.9 Mb/d by 2025, which more than covers growth in demand. This demand mostly is from the aviation industry with an estimated 7.3 billion passengers who will be using this mode of transport. Renewable energy cannot run the aviation industry. According to projections US$ 60 may be the new US $ 90, but for a short period. The prices will go up and stabilizes at US$90 again. Oil may not compete directly with renewables since oil is not used for generating power, but it can affect the growth of renewables like solar PV with its low gas price. Low oil prices will affect renewable industries in several ways. One way is the transportation sector will be happy to oil rather than biofuel which is costlier than oil today. People will prefer to adopt to time tested oil-driven transportation relative to battery-driven cars. This already happening in the world. The oil industry can arm-twist renewable industries buy acquiring all the solar establishments and slowdown the market…… killing the solar PV market. In front of the oil industry, solar PV will be a Lilliput. This could be a market strategy to escalate the oil price to the old normal of US $ 99. In such a case both the aviation, transportation, and electricity sectors will be ruled by oil and gas. Solar PV and batteries cannot sustain for a long period like oil and gas. Soon the industry will run out of Li to manufacture batteries and going into the sea for Li will be an expensive affair and non-sustainable. Even though biofuels and the electric vehicle may be less costly than the traditionally supported vehicles, the margin of profit will be negligible.

The question is development………oil is existing for decades and biofuels to reach this stage will take several decades. In fact, in the US the gasoline price is low and does not justify the use of an electric vehicle. Although electric vehicles may be low cost, it may not attract the public due to issues like charging time, charging stations, and range. If the oil has to compete with renewables in the electricity generation sector, then cost should fall to a level of US$ 15/barrel. The oil industry may not push the price to that level.  So there is always a threat to renewables from oil. As I already said, it is easy for oil giants to slowdown the renewables market to escalate the prices. Today renewables like solar enjoy heavy subsidies, unlike oil. The only renewable energy source that can coexist with oil is EGS (Enhanced Geothermal System)……sometimes complementing each other since drilling is a common component and rigs can be shared. CO2 emissions do not make any sense here as solar PV cells during its manufacturing cycle emits a considerable amount of CO2 and it is not green energy.

Ever since the Kyoto protocol was signed, countries vigorously made attempts to find out an alternate source that can supply energy at the same time reduce (anthropogenic) carbon dioxide emissions “to a level that would prevent dangerous anthropogenic interference with the climate system” and control global temperature rise. Few countries had the problem of reducing emissions due to economic reasons. Quite logical. If a country wants to reduce emissions then it has to reduce power production supported by coal and oil. This stunts economic growth.

Thus the onus of emissions reduction was put on developed countries because these countries are historically responsible for the current levels of greenhouse gases in the atmosphere. Here the concept of carbon credit emerged. Even though the 36 developed countries reduced their emissions, global emissions increased by 32% from 1990 to 2010. There are many good reasons to promote sustainable development and reduce greenhouse gas emissions and other combustion emissions. The air quality in many urban environments is causing premature deaths because of asthma, cardiovascular disease, chronic obstructive pulmonary disease, lung cancer, and dementia associated with combustion emissions. The global social cost of air pollution is at least $3 trillion/year.

Between 2001, which was the first year Clean Development Mechanism (CDM) projects could be registered, and 2012, the end of the first Kyoto commitment period, the CDM is expected to reduce 1.5 billion tons of carbon dioxide emissions through renewable energy commercialization, energy efficiency, and fuel switching.  This could have been possible if no emissions exist during the manufacturing of solar PV cells! We will see how.

This is the peak period for solar PV development. Governments offered heavy subsidies on tariff, lands were offered at concessional rate to spread the solar panels, ambassadors emerged from reputed institutes to promote solar, solar has become a catchword in many countries. Countries thought solar PV cells convert solar energy to electricity without releasing carbon dioxide. It is right but what people did not realize is solar PV cells have to be manufactured and not available directly from nature. Industries cashed on this public and government’s ignorance. There was a huge investment in solar PV industries in Europe and America that slowly crept into China in early 2000. The basic ingredient to manufacture solar PV cells is quartz.  The mining industry flourished and continue to be so. Other microelectronic components are required to bring the cell to a stage of converting the Sun’s energy into electricity. These industries flourished in Europe. Huge land is required to spread the solar panels to capture the Sun’s energy. The real estate business flourished. Prime land was converted to solar farms. Today China holds greater than 60% of the market share for solar photovoltaic cells but remains a thermal power country!

To convert Sun’s energy to electricity solar panels are needed with all the supporting microelectronic components. Once energy is converted, it has to be stored in batteries. Charge controller and battery management system. Inverters are required for converting DC to AC current. Solar mounting panels are needed to fix the solar panels to the ground are any surface.

All these supporting industries are thriving due to the promotion of solar PV energy that is supposed to reduce carbon dioxide emissions. However, in reality, the energy spent to process the raw material and to bring the final product in the form of a cell is enormous and the source of energy is either coal or oil/gas!!

You need 10 tonnes of quartz to manufacture solar cells that can generate 1 megawatt of electricity from the Sun. 1 MWe of electricity can support about 20,000 people annually. Imagine how many tonnes of quartz have to be mined to support millions of people in the countries!! Besides energy spent on mining such large quantities of quartz, the manufacture of a PV cell involves two important stages: i) producing metallurgical grade silicon (MGS) and ii) producing electronic-grade silicon (EGS) from quartz. In the first stage, an amount of 1756 million kg of CO2 is released, and a similar amount of CO2 is released during the conversion of EGS to ingots. The total CO2 emissions during the lifecycle of a solar PV cell are about 3312 million kg. This is far higher than a geothermal energy source, which emits about 450 g/ kWh. According to the recently published report by International Energy Agency (IEA), under the sustainable development policy, proposed for adoption to mitigate CO2 emissions (The year 2040), nearly 54 billion cells are required to meet the generation target of 14,139 TWh. This amounts to releasing huge amounts of carbon dioxide into the atmosphere instead of conserving carbon dioxide and controlling global temperature rise. Manufacturing Li storage batteries and disposing of waste is another entirely different issue altogether that adds fuel to the fire.

We talk about the deterioration of air quality and deaths due to respiratory and cardiovascular issues as a result of impure air we breathe due to emissions. As said above the global social cost of air pollution is at least $3 trillion/year. In the name of green and clean energy, we are continuously emitting CO2 during the manufacturing of solar cells. Thus promoting commercial photovoltaic based energy production, in an attempt to reach the goal of CO2 emission reduction, is a futile exercise. Companies doing solar PV business will never agree and countries that are promoting solar PV will ignore these facts because the Solar PV industry supports several ancillary industries that employ thousands of people in Europe. Any issue related to solar PV industries will result in the collapse of these ancillary industries leaving millions jobless. Whether in 2040, 2050, or a century CO2 emissions related issues will remain and we will be seeing several CoP (Conference of Parties) meetings related to global warming and climate change. All your mitigation strategies to control global temperature rise and climate change will end up with few meetings. Those made hay while the sun shined have no concerns since they have plowed enough profits. But some of the nascent finance companies have trouble in realizing (investments) the facts. One such company wrote on LinkedIn “Thanks for the lecture Professor. Whilst you and your views are very much in the minority, I sincerely hope you’re right. Fortunately, many will not rely on academics to set them straight but will pitch in, on the ground so to speak, to ensure that climate change does not engulf us all. Whether your prediction is correct or not what a wonderful opportunity to clean up our environment”. Very obvious….such companies don’t like to get drained. People forget that science only discovered photovoltaic technology and supporting such financial ventures!!

If solar PV is such a lucrative venture then why Arab countries, with a vast stretch of lands with 360 days of sunshine, are not able to jump on to this business and increase foreign export of oil saved from domestic consumption? They are water-starved countries.

So solar PV cannot be considered as a zero-emission source! The morel of the story…….oil will stay as long as the resources last.

The above are the excerpts taken from a recently published paper titled “ Carbon dioxide emissions from renewable: Solar PV, hydrothermal and EGS” appeared in an international journal published by the author together with a Professor from Monash University, Clayton Campus,  Australia, and  Report published by Geoffrey Heal and Karoline Hallmeyer of Columbia University in New York City.

About the Author
I am a Retired chair professor from Indian Institute of Technology Bombay and currently teach at IIT Hyderabad. I have 200 publications in the above fields and have supervised 25 Ph D students.
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