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Energy industry views

May 4, 2009
“Despite the increased focus on domestic energy sources, energy infrastructure, and alternative energy sources, a realistic assessment of technology and investment … suggests energy independence is not realistic for at least two decades.” –Bill Kimble, ...

Despite the increased focus on domestic energy sources, energy infrastructure, and alternative energy sources, a realistic assessment of technology and investment … suggests energy independence [for the U.S.] is not realistic for at least two decades.” –Bill Kimble, executive director of the KPMG Global Energy Institute

Can the U.S. become a completely “energy independent” nation? Are alternative energy courses, such as wind, solar power, and biofuels a viable substitute for coal and petroleum? Not for at least another 20 years, according to a recent survey conducted by the KPMG Global Energy Institute.

Before diving into the findings of this study, let’s add a huge dollop of salt to the mix: KPMG polled 382 financial executives from oil and gas companies in this survey, conducted back in April. Obviously, if there are going to be alternative energy “naysayers,” these folks are most likely going to be the front and center of the group since their livelihood revolves around the extraction and refining of coal and petroleum into usable energy sources.

That being said, though, these are the very same folks that provide the lion’s share of the energy we use as a nation: they know what it takes to fuel the country on a daily, monthly, and yearly basis; they understand the challenges providing such supply on a consistent basis entails.

So it’s interesting, at the very least, to get a glimpse of their thinking on alternative energy and how likely we are to obtain independence from suppliers such as the Middle East – and let me tell you, we need to find ways to sever our over-reliance on that part of the world, chock full of nations and peoples that are diametrically opposed to us.

KMPG’s survey found that 63 percent of respondents believe energy independence will not be attainable until after 2030, with 16 percent saying it can happen by 2030, while only 9 percent deem it possible before 2020.

Despite the emphasis on alternative energy sources in current and proposed government energy policies, some 52 percent of the surveyed executives said “mass production” of any alternative energy sources won’t be possible by 2015, compared to 54 percent last year and 60 percent two years ago.

Although executives did not think alternative energy sources were immediately viable, KPMG reports they have clear opinions on which ones would benefit most from President Obama’s energy policy, with 35 percent believing wind energy would be the biggest winner, followed by 18 percent for natural gas and 17 percent for biofuels. Conversely, 42 percent of executives see coal as the biggest loser while 36 percent say oil.

“These results clearly show the momentum wind energy has gained as a clean energy solution,” noted Bill Kimble, executive director of the KPMG Global Energy Institute, in the report. “But 93 percent of our respondents see wind generation growing to only six percent of our energy generation by 2015 and only 17 percent say wind energy is viable for mass production by that year.”

KPMG’s polling also revealed a marked shift among energy executives on the subject of global warming, with more than half acknowledging a “human impact” to it.

However, though the Environmental Protection Agency recently pointed to CO2 emissions from burning fossil fuels as the main cause of global warming, nearly half of those same executives (47 percent) believe that global warming is a natural weather cycle, although this number is down from 62 percent in 2008.

“Our data shows a noted swing in executive perceptions on the issue of greenhouse gases and global warming,” said Kimble, “but there is clear reluctance to support proposed actions and regulations to stem CO2 emissions.”

When asked which areas in the Obama administration's energy policy would receive the most focus after alternative energy, most of the energy executives cited greenhouse gas emissions and cap-and-trade. Yet, when asked if they would support a cap-and-trade or carbon tax to reduce CO2 emissions, KPMG found that 59 percent do not support either, 23 percent would support carbon tax, and 18 percent would support a cap-and-trade system.

An interesting mix of perspectives, to say the least.

[For a good explanation of how a “cap-and-trade” system works, check out the video below. Jeremy Symons, the National Wildlife Federation's Senior Vice President of conservation and education, provides a good, simple overview of how such a system might function.]

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