Nov. 10, 2009 SDF Fossil Fuel Future?

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On November 10, 2009 in Palo Alto at SAP, SDForum held a Clean Tech Breakfast: “Old Resources in a New Climate”. Greg O’Hara of Nixon Peabody moderated panelists Mark Duvall of EPRI, Kyle McCue of Ternion Bio, John Voltz of Jane Capital and Marianne Wu of Mohr Davidow Ventures. Most of the world is still burning fossil fuels. The panel had a spirited discussion about what will happen to this market.

While we need energy that does not emit carbon dioxide, don’t put your coal shovel away just yet. Liquid fuel still has advantages of energy density in aviation. It will take some time to replace all of it, maybe a century. Unless there is some dramatic breakthrough in solar, wind, nuclear or battery technology, we will be burning coal, gas or synthetics. The United States has an old established fleet of coal burning power plants generating a most of its electricity. China is building a new plant every week. Energy security for both countries is now a matter of national security.

What drives switching to alternatives is price and government policy. When oil is $150 per barrel consumers start shifting to smaller cars. Fuel taxes in Europe are high to pay and build alternative energy infrastructure. An American subsidy for hybrids helps offset the $10,000 cost per vehicle of lithium ion batteries. While consumer lifestyle choice seems to be driving the short term purchasing of electric vehicles, the big change will occur when corporate and government fleets are converted. A big market drives down production costs and the process takes on a life of its own.

Weaning an economy away from fossil fuels and the whole supporting infrastructure around it may take generations.  Global demand will drive up the cost of all energy. We just have to calculate the total cost.  Buying a cheap gas powered car and paying three dollars for a gallon of gasoline long term does not make sense compared to paying more up front for an electric car and paying 250 per kilowatt hour over the life of the vehicle. In the end, no matter what sources for electricity we use, it will need a smart grid to be delivered efficiently.

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