Energy in 2013: What's next for oil, gas, renewables?

Last year saw a shift from a reliance on oil and coal to an exploration of untapped natural gas resources and renewable energy. Few will bet against this topsy-turvy, transitional energy state persisting through 2013 and beyond. For the coming year, fossil fuels will continue to dominate the energy market, but renewables will continue their slow and steady gains, experts say.

"Alternative" no more

Clean energy will continue its creep into the mainstream. Wind-powered generation grew by 27 percent in 2011 and is projected to grow 15 percent in 2013, according to the US Energy Information Administration. Solar energy will continue robust growth, according to the EIA, with a projected 28 percent jump in consumption in 2013.

At this rate, alternative energy may even lose its distinguishing adjective.

"The word 'alternative', with its connotations of hand-wringing greenery and a need for taxpayer subsidy, has to go," writes Geoffrey Carr in The Economist. "And in 2013 it will. 'Renewable' power will start to be seen as normal." 

But despite strong growth, renewables still generate only about 13 percent of the nation's electricity. While a dramatic drop in photovoltaic prices will likely continue to buoy the solar industry, wind power faces a less certain future. Time is running out to extend the federal production tax credit, which the American Wind Energy Association (AWEA) says has supported a 90 percent drop in wind's cost since 1980 and enough energy to power over 12 million American homes. 

"It's down to the wire on wind, and Congress has a choice," Rob Gramlich, AWEA's senior vice president for public policy, said in a statement. "If they do nothing, the wind industry will fall over its own fiscal cliff and America will lose most of its wind installations next year."

Still all about fossil fuels

Fossil fuels will continue to dominate American energy in 2013 and beyond as the International Energy Administration projects the US will lead the world in oil production by 2020. 

Natural gas was the darling of 2012, with new drilling techniques tapping vast, previously impenetrable sources of energy. The US Department of Energy is now exploring the potential of exporting natural gas to capitalize on the country's newfound glut. 

The fate of oil and coal rest largely in the hands of reelected President Obama, as he continues to weigh how much traditional fuels factor into his "all-of-the-above" approach to energy policy. 

Coal, currently the largest generator of US electricity, faces the specter of tighter regulations from the Obama administration. Earlier this month, the US Environmental Protection Agency tightened soot standards. Some say its the first of many regulations to come, now that the election has passed and superstorm Sandy has cast new attention on climate change.

A decision on the Keystone XL pipeline is likely to emerge in early 2013. The nearly 2,000-mile-long proposed pipeline, which would connect Canada’s oil sands to American refineries, faces strong opposition from environmental groups that say the project will emit unprecedented levels of greenhouse gasses into the atmosphere. Supporters emphasize the pipeline's employment bump and a decreased dependence on turbulent Middle East oil supplies.

"It's a $7 billion infrastructure crossing five states that will mean 20,000 new jobs, including work in the building and construction trades, which are suffering from 12% unemployment," Cindy Schild, API's downstream operations manager for refining and oil sands, told reporters prior to a public hearing on Keystone earlier this month. "Longer term, it will provide a major ongoing stimulus to the US economy since 90% of the dollars we spend in Canada are returned to the US."

Either way, Keystone may very well serve as Mr. Obama's energy and environment crucible. It "will do much to define his environmental legacy," writes Andrew Restuccia in POLITICO.