Environment

1 Alternative Energy
The turning point when alternatives to fossil fuels finally hit the mainstream...

21 World's Largest Marine Preserve Created
The Northwestern Hawaiian Islands National Monument, larger than all U.S. national parks combined...

26 Orangutans Face Genetic Doom
The endangered primate had a steep population decline...

30 Engineered Cotton An Environmental Bust
Farmers are using just as much pesticide as they did before...

62 Biodiversity Aids Productivity
Biological diversity helps make ecosystems stable and productive...

69 Weed's Weapon Revealed
Garlic mustard's weapon is a chemical that kills soil fungi...

The unnervingly high price of oil—along with the increasingly intensive drilling to get it—has suddenly pushed renewable power squarely into the mainstream

In September Chevron announced the discovery of a field containing up to 15 billion barrels of oil beneath the Gulf of Mexico, touting it as "a platform for growth for years to come." Read the fine print, though, and you get a different story. To recover the first samples of oil there in 2004, engineers floating 175 miles off the Louisiana coast had to send drill gear into 7,000-foot-deep water and penetrate four miles of rock. The company spent tens of millions of dollars on computer modeling, cutting-edge seismological tools, and exploratory drilling; just renting the drill rig cost Chevron and its partners more than $200,000 a day. The results suggest that oil from the new reservoir, called Jack 2, could cost three to four times as much to extract as oil from traditional locations, including rigs on land.

You don't need to look as far off as Jack 2 for signs that the end of cheap oil is nigh. In 2006 oil prices hit a record high, $77 a barrel in the summer. Analysts blamed the price hikes on damage from the 2005 hurricanes, continued turmoil in the Middle East, and jitters over tightening supplies from Venezuela to Iran. Prices have eased since then, but the relief is probably temporary: Oil consumption is growing rapidly in China and India as their middle classes awaken to the taste for consumer spending that Americans have long enjoyed. These two oil-poor economic giants are buying up oil interests in places like Nigeria; early this year China spent $2.7 billion for an offshore field there.

Courtesy of Transocean, Inc.

The upside of stratospheric oil prices is reflected in what is happening on the other side of the balance sheet. The past year looks like the turning point when alternatives to fossil fuels—everything from solar energy, wind turbines, ethanol, and the hybrid car—finally hit the mainstream. ">Ceres. "We'll look back and say this is the year where people rallied together to start down the irreversible path of becoming less dependent on oil," says Samir Kaul, a partner in venture capital firm Khosla Ventures in Menlo Park, California, which invests in energy and other tech startups.

Hamilton and Kaul are cheerleaders for the renewable energy industry, but even hardened policy types see the need for new sources of energy. Security hawks have stepped up their rhetoric during this election year to push for more hybrid cars and biofuels, and for billions in new research to reduce the country's dangerous dependence on foreign petroleum. "We are fighting a war against terror and paying for both sides of the war," says James Woolsey, a member of the Set America Free Coalition.

Meanwhile, the markets are voting with their dollars. By the summer, the stock market value of all renewable energy firms larger than $40 million doubled, to total $50 billion. Venture capitalists, big banks, and even old-school bond peddlers jumped in. This past year, 39 French and German wind farms bought nearly $600 million in bonds in May from Italian Bank UniCredit's HVB Group—a deal that would have been unheard of even two years ago, says Eric Martinot of the Worldwatch Institute. "For a long time renewables were seen as almost an eccentric source of energy," says energy industry reporter Caroline Gentry of Argus Media Group. "That's changing."

Around the globe, policy makers too, have been seeking greener sources of energy. In 2005 China tied with Germany for the most new investment in renewable energy, pouring $7 billion into millions of rooftop solar heating units, small hydropower stations, and photovoltaics. According to Martinot, the onslaught continued in 2006 as China stalked its goal of doubling the fraction of its energy that comes from renewables to 16 percent by 2020. "They'll reach that goal and probably surpass it," he says. The Bush administration's goals in this area include powering 2 million homes by 2015 with solar energy and obtaining three-quarters of the country's automobile fuel from ethanol and other non-Middle Eastern sources by 2025.

Excluding hydropower, renewables make up only 3 percent of U.S. energy sources, but the sector was easily the fastest growing in 2006. Leading the way was ethanol. In 2005 Congress mandated that 7.5 billion gallons of it be blended into America's gasoline by 2012, and a total of 48 new ethanol plants in the United States are under construction. China, too, has developed a taste for biofuel, with officials in nine provinces requiring that automobile fuel contain 10 percent ethanol.

Across the United States and Europe, wind farms sprouted up like weeds. By the summer of 2006, the amount of energy produced by windmills in the United States exceeded 10,000 megawatts (enough to power 2.5 million homes), as windmill developers from Texas to Minnesota gobbled up tax credits. Worldwide, 2006 wind spending was expected to top $15 billion, with the United States, Germany, and Spain in the lead. "Everybody's going as fast as they can," says Martinot. Businesses like steady costs, and Christian Kjaer of the European Wind Energy Association points to the predictability of a windmill's energy output over many years as "a hedge against the uncertainty of fuel prices."

In Colorado more than 1,000 people sat on a waiting list for a program offering wind power to utility customers. The first requests were from individuals committed to green power, says a spokesperson for the local utility, Xcel Energy. But in November and December 2005, wind power in Colorado cost less than electricity from fossil fuel, and the average household that switched to wind saved $4 a month on its electric bill. "The interest in renewables is here to stay," says Jim Owen, a spokesperson with Edison Electric Institute, an electric utility trade association in Washington, D.C.

Another stalwart renewable source—solar power—is finally gaining traction as prices of solar panels and water heaters have decreased and environmental concerns have grown. In 2006 California installed enough new photovoltaic capacity to power roughly 20,000 homes. The sun craze has spread nationwide too. For decades, 56-year-old builder Daryl Bergquist of Royal, Alabama, installed the occasional solar panel as a side job. Now he is consulting with green-minded homeowners and supervising solar installation crews full time. "The past year and a half has been the first where this is my main source of income," he says. Driving demand, he says, are high energy costs and individuals "realizing that global warming is real."

While a federal tax incentive expiring in 2007 has helped spur wind and solar energy, local players have shown their own interest in establishing renewable energy sources. Twenty states have set targets for how much of their energy should come from renewable sources, with many as aggressive as the European Union's target of 12 percent of energy consumption from renewables by 2010. In California, governor Arnold Schwarzenegger aims to put solar panels on a million roofs. Although California voters rejected in November a proposition that would have raised funds for alternative energy research with a tax on fuel, Washington State voters passed a renewable requirement for their utilities, joining Colorado as the second state whose citizens directly voted for green energy.