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Second Wind: Renewable Energy Down but Not Out

Sunday, 30 Jun 2013 | 1:00 PM ET
Colin Anderson | Getty Images

This week, two events occurred that could point to a new second wind for the battered alternative energy sector—which has been on its heels for much of the last couple years.

First, President Obama unveiled a broad swath of measures to combat carbon emissions, including new funding for clean energy technology and setting a goal to double the amount of electricity generated by wind and solar.

Second, the International Energy Agency (IEA) released a report forecasting that renewable energy—wind, solar, biofuels and the like—will eclipse natural gas and nuclear as a source of electricity by 2016.

(Read more: Clean Energy to Run Past Nuclear, Gas by 2016: IEA)

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Experts say the President's new measures underscore how alternative energy may be carving itself a niche in energy markets as more of a helpmate of electric power, especially with coal—the primary source of domestic electricity and a major pollutant—falling out of favor in some circles.

That differs from the role some observers once thought most likely, one where renewables would eventually challenge or even displace fossil fuels.

"I see coal as sort of having lost the battle here," said Norm Scott, a professor at Cornell University and a specialist in sustainable energy and renewables. As coal cedes ground and becomes subject to more stringent regulation, it helps boost the attractiveness of renewables, he said.

"In every case renewables' cost is coming down at a pretty substantial rate, particularly in solar and wind," he added. "I don't think you're going to have many coal plants developed at this time."

About $267 billion was spent last year on renewables around the world, according to Hal Harvey, a senior fellow for energy and environment at the Paulson Institute, a non-partisan center at the University of Chicago that was founded by former Secretary of the Treasury Hank Paulson. "That's a real number," Harvey said.

Alternative fuels "will displace coal…and it will limit the amount of gas we [must] use," Harvey said. "This is not a niche anymore. This is mainstream."

In recent years, the U.S. shale revolution has drained both political support and tax dollars away from renewables. As a result, alternative energy has been forced to bow to the reality of explosive fossil fuels production. Experts agree that oil isn't going away anytime soon.

(Read more: Nuclear Power Falters, Engulfed by 'Cauldron' of Bad Luck)

Maria van der Hoeven, IEA executive director, said as much in an interview with CNBC's "Street Signs" this week. "Oil is here to stay. Crude is here to stay for many, many decades to come," she said.

Even as she lauded the effect renewables are having on the energy sector and pointed to rising demand from emerging markets, van der Hoeven called the U.S. shale boom a "game changer" for global energy markets.

'Potent Combination'

Still, the White House's new push on climate change may help spotlight alternative energy's virtues. The World Nuclear Association says interest in renewable energy to generate electricity is "unprecedented," given that it doesn't add to carbon dioxide emissions.

Despite the rough patch the sector it's gone through, clean energy advocates point out that renewables quietly have been proving their worth economically.

"A potent combination of government policies, private sector investment and American ingenuity and hard work is building a vibrant solar energy sector in North Carolina, a strong wind energy industry in Kansas, and the most advanced electric vehicle in the world—the Tesla," said Dale Bryk, director of the Air & Energy program at the National Resources Defense Council, on a blog post this week on the NRDC's site.

Still, Cornell's Scott said that alternative energy still faces a long slog ahead.

New climate change policies are "a step in a very right direction, but forces from every side will [make it] very difficult—the fight is going to go on for some time," he said. "It's not going to happen overnight in the best of cases."

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