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     Aug 28, 2007
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SPEAKING FREELY
Alternative energy: It's not for everybody
By Michael G Gallagher

Speaking Freely is an Asia Times Online feature that allows guest writers to have their say. Please click here if you are interested in contributing.

Before I go any further, I'd like to say one thing right up front. I think alternative energy is a grand idea. I have fantasies about my country's deserts (I'm American) being covered by massive solar farms, and my nation's long and beautiful coastlines sprouting



windmills by the thousands. I have science-fiction visions of millions of zero-emissions vehicles clogging America's roads in gloriously carbon-free traffic jams.

But the embrace of clean energy by some could mean economic depression for others. After all, what are all the countries whose economies depend on fossil-fuel exports going to do when technological advances and the threat of climate change eventually make their main source of export income obsolete?

And whether alternative energy's big day arrives next year, five years from now, or even 15 years from now, it will arrive. In the US state of Utah, Ford Motor Co engineers recently put through its paces the hydrogen-fuel-cell-powered Fusion 999 sports car. During one recent test run, the concept car hit close to 350 km/h.

The big US industrial firm Dupont has signed a deal worth up to US$100 million with the US government to develop solar cells with a conversion efficiency of 50%. And in Asia, the member countries of the Association of Southeast Asian Nations have agreed to make renewable fuels 10% of their energy mix by 2010.

President Hugo Chavez of Venezuela has big plans for his country's oil reserves: not only does he want to build an extensive social safety net for his nation's 27 million people, he wants to use Venezuela's oil wealth to mount a credible challenge to US influence in Latin America.

But Hugo Chavez's rosy view of his country's prospects could be easily be darkened by any sudden drop in the price of oil. Exports make up 35% of his nation's $109 billion gross domestic product (GDP), with oil sales providing 82% of that total.

Of Iran's 2005 GDP of $193 billion, $56 billion comes from exports. Ninety percent of the export revenue flowing into Tehran's coffers comes from oil. For Iraq, riven by violence since the fall of Saddam Hussein in 2003, oil made up 99.5% of its 2005 export revenues of $24 billion.

Very few oil-exporting countries produce any other products that come even close to filling the gap in their financial ledgers that a big drop off in oil revenues would create. Manufactured goods make up only 1.5% of Nigeria's export mix. Iran's export position is only slightly less marginal; 6.7% of its exports come from manufactures.

Algeria's and Iraq's export positions are even worse, with 1% Algeria's and a truly pathetic 0.2% of Iraq's export cash coming from manufactured goods. All the rest comes from fuel exports.

And the vast majority of oil-producing states don't have the independent scientific and technological base necessary for them to develop the high-value manufactured goods they would need to trade with the developed world for advanced energy technologies. Many oil-producing states could find themselves in a desperate trap: they would be trying to import alternative technology by selling oil that would be declining in value just at the time they would need maximum revenues to make the switch to the new energy technologies.

Iraq before the 1991 Gulf War had developed an extensive research and development (R&D) capability, but the thousands of Iraqi scientists and engineers working for Saddam Hussein's regime were employed in weapons research, not in developing products that could substitute for Iraq's oil revenue.

Present-day Iran is also working hard to develop a large, independent R&D capability, but as with Saddam's Iraq, that capability is devoted to making weapons, and to anything that can reduce Tehran's overwhelming dependence on oil exports. As for Hugo Chavez' Venezuela, there are no high-tech firms springing up along the banks of the Orinoco River waiting to take up the economic slack when the price of oil inevitably drops because of technological advancement.

Russia is another major oil-producing country that could find its finances stressed with the widespread introduction of new energy technologies. With a GDP of nearly $800 billion, Russia is in the middle of an oil-driven economic boom. Eighty percent of Russia's export money comes from oil.

Unlike most other energy exporters, however, Russia does have a big manufacturing sector. In 2005, 23.2% of the country's export revenues came from manufactured goods. Unfortunately, a big slice of that money came from weapons sales. Russia sold $6.5 billion worth of weapons in 2006. But no matter how lucrative

Continued 1 2 


Indonesia risks going green (Aug 27, '07)

Future shock: Asia is running out of gas (Feb 17, '07)



1. New 'surge' report paints grim picture

2. 'Cracks' in credit

3. Bush: In the footsteps of Napoleon

4. The new 'NATO of the East' takes shape

5. 'Confluence of the two seas'  

6. Central bank impotence and market liquidity


7. As US sinks, Asia unable to swim

8. Musharraf down, but far from out

9. France knocks heads over its Iran diplomacy

( Aug 24 - 26, 2007)

 
 


 

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