Alternative Energy Faces New Hurdles

Biofuels, solar, wind, geothermal — everyone knows about these alternative energy sources because presidential candidates list them off in debates and speeches like they’re naming their children.

But with the credit crisis squeezing capital, and oil and natural-gas prices plummeting, the outlook for alternative energy development suddenly looks less gung-ho. What does this mean for drivers? That the development of workable biofuels will slow, and that alternative energy sources like wind and solar — which would make electric vehicles so clean — face long delays.

This summer, Americans saw clearly why the switch to renewable non-fossil fuel energy is so important. The question is, will falling gas prices let them forget? In the 1980s, a newly born market for renewable energy collapsed and the U.S. entered a period of unrestrained use of fossil fuels.

State mandates for alternative energy sources will keep the market alive this time, but worldwide financing for new construction of alternative energy projects has already fallen drastically, in just one quarter — from $23.2 billion in the second quarter to $17.8 billion in the third.

Ethanol and biodiesel projects are having trouble raising capital. Tesla Motors has delayed production of its all-electric Model S sedan. Wind turbine companies have delayed projects, and solar power plants look more expensive than ever. Natural gas prices fell from a high of $13.58 per thousand cubic feet in July to $6.79 currently.

The next president was already going to be facing the massive challenge of switching the U.S. to a renewable energy economy, but with the economic challenges ahead, that task just became much harder.

Alternative Energy Suddenly Faces Headwinds (New York Times)