Big Decisions for Your Energy Future

It seems that a day does not pass without some reminder that our use of energy, as we know it, is going to have to change, and change in a big way. Many politicians, scientists; economists, and business- people have become concerned about the potential implications of global warming. The largest source of the emissions thought to contribute to global warming is from coal-fired power plants. Alternative sources of energy have been available for many years, but due to their high cost relative to coal, their use has been limited. However, faced with rapidly growing energy needs and concerns over global warming, communities Nwill soon have to make huge investments in alternative energy sources. The big question is, "What will be the best investments for the future?" To answer this question, decision makers will employ the tools that you learned about in this and other chapters. The stakes are high, which is why it is important to make an informed decision.

Some Facts

* In 1980, wind-power electricity cost 80 cents per kilowatt hour. Using today's highly efficient turbines with rotor diameters of up to 125 meters, the cost can be as low as 3 to 4 cents (about the same as coal), or as much as 20 cents in places with less wind.

* It costs about $77,500 to install a residential solar-power system with a 10 kilowatt-capacity. Without subsidies, the system would take about 50 years to pay itself off; with subsidies, it would pay off in * about 10 years.

* Industrial plants using solar panels have a cost per. kilowatt hour of about 30 cents; with a new approach, called concentrating solar power, the cost tiis between 9 and 12 cents per kilowatt

Homes that use only products with the Environmental Protection Agency's Energy Star designation will use 30% less energy and save
about $400 per year. In 2005 consumers saved $12 billion on utility bills using Energy Stagy products.

*Employing new materials and technologies, homes can now be built 70% more energy-efficient than homes of the past.

* The United States is the largest emitter of greenhouse gases, but projections suggest that it will soon be passed by China and probably India.

About the Numbers

This following drawing illustrates that only 13% of the world's energy is provided by renewable sources. Of that, almost 10% is provided by biomass, the conversion of plant matter to create energy, usually through burning. This often involves the burn- ing of methane gas, a byproduct of decaying plant matter. Since methane is a powerful greenhouse gas, burning it has the additional desirable effect of reducing a greenhouse gas.

Going Green

Renewable energy sources-such as biomass, hydro, solar, wind, tide and geothermal-make up 13.1% of the world's primary energy supplies, according to the International Energy Agency (2004 data, the latest available)

What Do You Think?

Although renewable energy sources, such as solar and wind power, have been available for a long time, they have not been widely adopted because of their high cost relative to coal. Some people have recently suggested that conventional cost comparisons are not adequate, because they do not take environmental costs into account. For example, while coal is a very cheap energy source, it is also a significant contributor of greenhouse gases. Should environmental costs be incorporated into decision formulas when planners evaluate new power plants?

YES: As long as environmental costs are ignored, renewable energy will appear to be too expensive relative to coal.

NO: If one country decides to incorporate environmental costs into its decision process, but other countries do not, the country that does so will be at a competitive disadvantage because its products will cost more to produce.

A Hybrid Dilemma

Have high gas prices got you down? Maybe you should consider a hybrid. These half-gas and half- electric vehicles are generating a lot of interest. They burn less fuel and therefore are easier on the environment. But are they easier on your pocketbook? Is a hybrid car at least a break-even investment, or is it more likely a money-losing proposition?

Some Facts

* Ford plans to sell at least seven different models of hybrid cars, about 250,000 vehicles annually, by the end of the decade.
* Hybrid vehicles typically cost $3,000 to $5,000 more than their conventional counterparts, although for some models the premium is higher.
* Bank of America and Timberland offer $3,000 to employees who purchase hybrids. Google offers $5,000 to employees who purchase cars that get at least 45 miles per gallon.

* The most fuel-efficient hybrids-the Toyota Prius and the Honda Civic-can save about $660 per year in fuel costs relative to a similar conventional car.

However some other hybrids provide only slight fuel savings.

* Each gallon of gasoline that is not consumed reduces carbon dioxide emissions by 19 pounds. Many believe carbon dioxide contributes to global warming.

* The federal government initially provided tax credits of up to $3,400 to buyers of hybrids. These credits are to be phased out as automakers reach sales caps determined by the Internal Revenue Service (IRS).

About the Numbers

Sales of hybrid cars started very strong in 2005, but then tapered off. The following graph shows that sales of the Toyota Prius far exceed other brands.

What Do You Think?

Gas prices aredepleting your wallet so fast that you might even have to give up your old car and resort to walking or riding your bike on occasion. Will making the investment in a hybrid slow the outflow from your wallet and spare your feet?

YES: At 44 miles per gallon, I can drive forever without ever having to fill up.

NO: Because of the premium price charged for hybrids, I will never drive enough miles to break even on my investment.