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Renewable Energy Challenge for Oil Industry

The evolution of modern society can be compared with the story of permanently growing energy demands and new sources of renewable energy. Conventional energy sources, based on oil, gas and coal, have proven to be very efficient, but unreliable drivers of progress. On the contrary, the potential of renewable sources of energy is uncommonly large as they easily satisfy the world’s energy demands. Renewable sources will definitely bring well-being and prosperity to humanity in the nearest future. The extensive use of renewables, including wind and solar energy, biomass, hydropower and geothermal sources, will result in benefits not only in energy sphere, but also in the fields of ecosystem protection, economic development and energy security.

Rethinking Energy Future

Energy is essential to every major opportunity and challenge the world faces nowadays. Furthermore, energy ensures social development, starting with primary human needs and ending with advanced industries. Oil and gas industry is a basis or a “heart” of overall energy production and, correspondingly, consumption. Petroleum industry requires extremely large amounts of energy sources to be extracted from the ground, processed and transported to the users (Bentley, 2002). Despite the fact that extraction of fossil fuels will continue to dominate in the nearest future, the development of renewable fuels is constantly increasing. At present, the reliance on oil and gas meets numerous challenges: increase in greenhouse emissions, decrease in energy security, environmental pollution, health diseases, lack of access to energy services (Bentley, 2002). Modern world constantly needs more energy, but less carbon dioxide because of numerous challenges and hazards. Despite severe reliance on fossil fuels, many countries around the globe have a direct access to the most innovative renewable sources. New forms of renewable energy and modern technologies to harness that energy are permanently evolving and expanding the “menu” of energy sources (Bentley, 2002).

In order to estimate if renewable energy will be the most significant challenge for petroleum industry, it is important to define the notion of “renewable sources”. Renewable energy consists of sources that are permanently replenished by nature: sun, water, wind, plants and the Earth’s heat (Gets & Mhlanga, 2013).

The world feels the need for a shift from current energy sources to more environmentally friendly energy supplies. In recent years, the use of sources of renewable energy has drastically increased. In 2005, renewables constituted 16 % of overall energy sources (Martinot, Dienst, Weiliang, & Qimin, 2007).

The leading idea is that the interest in renewables is dependent on the awareness of hazards of fossil fuels’ usage. The period of time from the middle of 1970s is known as “energy crisis”. At that time the world realized the inevitability of oil and gas resources depletion. Consequently, numerous energy conservation programs were implemented in order to avoid absolute exhaustion (Herzog, Lipman, & Kammen, 2001).

In 1980s, the hazard connected with environmental pollution caused by extraction, processing and transportation of oil and gas products, led to adoption of certain measures, aimed to decrease contamination of water, air and soil. Not long ago, hazards connected with emissions of CO2 in the atmosphere and pressing issue of global warming resulted in enormous interest in renewable sources (Turner, 1999).

The major renewable energy sources that will decrease the dependence of mankind on petroleum industry include biomass and hydropower. New renewable energy sources, consisting of solar energy, wind energy, geothermal and bio-energy, contribute to less than 2%. As a result, if the right policies are applied, renewable energy sources will definitely constitute more than 50% in the next 35 – 50 years (European Commission, 1997).

Biomass as a Challenge for Oil Industry

As one of energy resources, biomass drastically differs from resources that do not include carbon. It produces energy that is similar to that obtained with help of fossil fuels. It has been estimated that nowadays biomass satisfies between 10 – 14 % of overall energy needs in the world, making it at once the fourth biggest source of energy except oil (33%) and natural gas (19%) (2012). It is rather difficult to estimate the exact amount as biomass is used in many countries around the globe non- commercially. Biomass constitutes only 3 –4 % in developing countries. On the contrary, in Australia and Finland the percentage is equal to 12% and 23%. In many industrialized countries, biomass is widely used instead of petroleum with the purpose of district heating. Moreover, biomass energy has a huge potential to supplant petroleum as it is more commercially viable and effective (Herzog, Lipman, & Kammen, 2001).

Biomass is considered to be a widespread source as it includes not only biomass from wood, but also from energy crops. Moreover, energy, obtained from biomass is extremely multi-purposed because heat and electricity can be produced from it. Furthermore, it has less impact on bio-diversity than production of petroleum products (2012). However, in the “biomass project”, the words “renewable sources” and “no greenhouse gas emissions” are not absolute synonyms. In case of insufficient transportation and processing technologies, the biomass chain will be characterized by carbon negative balance (decrease of CO2 in the atmosphere) as well as by carbon positive balance (increase of CO2 in the atmosphere). In general, the productivity and economic gain of biomass depend on the costs of harvesting, logistics and transportation. It has been estimated that providing that agriculture is improved to definite standards in most regions around the globe, many billions hectares can be accessible for production of biomass energy in the next 30 – 40 years (Riva et al., 2006). If biomass is produced appropriately, it becomes carbon-neutral and, consequently, it will not pollute the atmosphere. Despite the fact that biomass energy positively influences the issues of climate change and environmental threat, it may be characterized by a number of negative consequences: exhaustion of soil nutrients because of removal of residues; loss of biodiversity connected with conversion of land to energy crops; conversion of land from food to the production of energy; erosion; mass disposal of fertilizers and pesticides to grow crops. Technical advancement, optimized processing and modernized techniques will provide an opportunity to biomass to supplant the production of fossil fuels (Riva et al., 2006).

Hydropower as a Challenge for Oil Industry

Hydropower has been competitive with oil and gas production and exploitation for many years. Nowadays, it is considered to be one of the largest renewables that produces energy, and can change oil and gas products (Gets & Mhlanga, 2013). At present, more than 150 countries around the globe rely on the use of hydropower. Moreover, such well-developed countries as Norway, Paraguay and a few countries in Africa widely employ hydropower for commercial purposes. The potential of hydropower on the territories of Asia, America, Africa and Europe is enormous. It is rather important to note, that Norway is almost entirely dependent on hydropower because of electricity needs. Up-to-date hydro turbines are of vital importance, because with their help almost 90% of available energy can be turned into electricity. On the contrary, the efficiency of modernized fossil fuel plants does not exceed 50 %. The USA produces hydropower for 0,7 cents/kWh. To counterbalance it, the production of fossil fuels as well as nuclear energy exceeds that price from 3 to 6 times (U.S. Department of Energy, Energy Efficiency & Renewable Energy, 2010). One more benefit in favor of hydro power is that these resources, in comparison with oil and gas, are so widespread around the globe that can ensure absolute “energy independence” for many countries. However, in spite of the fact that electricity provided by hydro power is more eco-friendly than petroleum products, it is not deprived of emissions of greenhouse gas into the atmosphere (European Commission, 1997). The other negative consequences are as follows: decrease of biodiversity, reduction of fish species, worsening of water quality and spread of numerous diseases. Correspondingly, technological advancements, considerable investments and responsibility of people are required to lessen all the hazards and increase production and distribution of hydropower around the globe instead of oil and gas (Gets & Mhlanga, 2013).

Geothermal Energy as a Challenge for Oil Industry

The natural heat or, in other words, thermal energy, has been widely used for thousands of years for different purposes. Nowadays, improvements in the sphere of technologies provide humanity with a unique opportunity to drill not only petroleum reservoirs, but hydrothermal as well (2012). The produced heat can be used directly or to be transformed into electricity. At present, scientists presuppose that only one percent of geothermal heat exceeds the energy obtained from petroleum in five hundred times. It has been estimated that in 1997 more than 80 nationalities around the world widely applied geothermal energy with different aims (Ferry & Monoian, 2012). However, geothermal heat, as well as all other types of renewable types of energy, is characterized by negative factors. First of all, it contains different gases, including carbon dioxide, mercury, radon and ammonia that can be easily released into the atmosphere. Nevertheless, up-to-date technology has the power to control the rapid development of geothermal energy. As a result, this type of renewable energy has big potential to substitute oil and gas supplies (Ferry & Monoian, 2012).

Wind Energy as a Challenge for Oil Industry

As a highly efficient source of energy, the potential of wind is inexhaustible. The advantage of wind energy, comparing with the other renewables, lies in the fact that wind exerts no pollution to the atmosphere (2010). The history repeats, as wind energy was extensively used in ancient Persia and India more than 2000 years ago. The “oil crises” that occurred in 1970s forced people to fall to thinking about wind energy as alternative source. In case technology is improved and expenses are lessened, wind energy will certainly become the most environmentally friendly, economical and cost-efficient renewable energy source. However, emission of noise, decrease of bird population, negative influence on landscape and electromagnetic interference are the factors that have to be addressed, analyzed and resolved (Riva et al., 2006).


As a result, energy is irreplaceable for the development of humanity. At the time of Industrial Revolution, reliance on renewable energy sources was replaced by fossil fuels. In 2005, the world was provided with energy for 78 % using oil and gas energy sources. In the course of time, environmental pollution and inevitability of depletion of petroleum products have forced humanity to search for new sources of power. Nowadays, renewable sources of energy, including the power of wind, geothermal energy, biomass and hydropower provide 10 – 20 % of overall energy supply. The potential of renewable resources is enormous. Consequently, renewable energy will be the most considerable challenge for oil and gas industry.

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