"We don't need to worry about oil, gas or electric - but if the price of hay goes up we're stuffed!"


The hidden cost of renewable energy

The green revolution is now in full flow, from electric cars to photovoltaic-powered signs, the economy building around ‘environmentally-friendly’ technology is truly astounding. As counter-intuitive as it may seem, the Trump administration’s withdrawal from the Paris Climate Change agreement in deference to its big oil backers is further confirmation of this.


Time was the big oil and fossil fuel lobby were quite happy for the ‘lefty greens’ to have their committees and international accords, as it kept the politicians happy and gave them something to pacify the electorate with. The reason that Trump pulled out of the Paris Accord is because his backers are, for the first time, scared it will have an impact on their ability to turn natural resources into dollars.

This goes hand in hand with the green technology boom, as these systems are competitors who of course are actively using initiatives such as the Paris Accord to market their products and draw in consumers. Further evidence of their success is that for the first time in decades the sales of fossil fuel driven vehicles have shrunk, while at the same time the sales of electric and hybrid vehicles only continue to grow month-on-month.

Indeed, the REN21 Global Status Report 2017 cited that 19.3 percent of the globe’s energy consumption is now generated by non-nuclear renewables.

Now this all may seem like a bright picture for the world’s green-lobby, who are seemingly achieving their dream of a world with drastically lowered carbon emissions and a stabilisation of global warming levels. But there is a catch.

What do you think still fuels the clear majority of the manufacturing and production of renewable energy technologies such as electric cars? You guessed it, fossil fuels. So, while big oil is threatened by renewable energy sources themselves and the legislation that supports them, they are quite happy to take some extra cake back of the table in this respect. Just think of all the wiring, paints, fabrication materials, and circuit boards in a single electric car. Then think of all the robots and manufacturing systems used to put them together. They all use fossil fuels at one point or another.

The reason this is an important issue to analyse for our own industry is that it is very likely that within the next ten years, the materials you use, the machines you process them with, and the energy that keeps your business running are going to get significantly more expensive. Why? Well the answer connects the two different parts of my argument above.

This is simply because as the demand for fossil fuels drops and is steadily replaced by renewable sources, the companies supplying this resource are going to increase their prices to keep their profit levels up. They are also going to focus their efforts on making more money out of manufacturing processes that must use fossil fuels in the production of oil-based materials such as plastic. Finally, it is because renewables need more investment to produce each kilowatt of power than fossil fuels.

At the moment renewable energy and technology companies are taking something of a profit hit in order to increase adoption. But most analysts believe that once a tipping point of momentum has been reached away from fossil fuels and toward renewables, then the market will start to assert the profit incentive much more strongly.
The battle between big-oil and the green sector is not a clear cut one, there are double agents on both sides of the field, but the reality is that this war will have an impact on your bottom line. Oh, and I do hope it will help save the ice caps too.

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