Wednesday, July 10, 2013

Not Just a Boondoggle, but a Pricey One At That

Europe’s biggest oil companies, Shell and BP, are floundering in the green energy department. Both companies have decided to stop funding their advanced biofuel programs, which produced fuel from woody plants and waste, due to their high production costs. These biofuels require intense capital investment, but haven’t begun yielding much profit, and the oil companies are opting to cut their losses. The industry had ambitious hopes of weaning Europe off of crude oil and cutting emissions, but millions of dollars in investment hasn’t produced any cost-effective solutions. As Bloomberg reports:
“The decisions helped cut global investment in biofuel production to $57 million in the first quarter, the lowest since 2006, from its peak of $7.6 billion in the last quarter of 2007, according to data compiled by Bloomberg.
Both BP and Shell had trouble making technology that works in the lab economical at a commercial scale.”
In order for biofuels to be successful, companies need to develop new and innovative ways to make them cheap enough to invest in. We’re all for zero-carbon renewable energy if it can compete with fossil fuels on its own, but it’s clear we’re not there yet.
The way forward isn’t government subsidies for fledgling, unfinished products. Rather than follow the U.S. path and mandate biofuel production, European governments that want to push green energy forward should contribute to research and development aimed at cost-effective green energy.
Currently, Europe’s tools for meeting its green energy goals are ineffective, to say the least. In just a few years it has already rejected any ambitions of producing shale at home, become a sink for dirty American coal, and has even toyed with a ridiculous plan to meet green standards by burning wood. Despite years of planning, Europe still can’t seem to get green energy right.