ILibrary

Scrappy green-tech start-ups aren't the only ones who make big bets on technology.

A spate of articles this week points to the fact that new technologies in the fossil fuel industry are making it harder for alternative clean energy technologies to get a larger foothold.

A New York Times article this week says new techniques allow drillers to tap oil and gas from a variety of "unconventional sources" that were once considered too difficult, a shift that changes the global picture on energy supply.

The most dramatic example in the U.S. is freeing natural gas from shale rock, largely in Pennsylvania and Texas, using a method known as hydraulic fracturing, or "fracking." In just a few short years, the supply of shale gas has slashed the costs of natural gas--and brought the ire of people concerned about the impact on water supply.

Related stories
• How to save green tech from crashing
• While Washington bickers, green tech goes local
• In green tech, a debate over singles versus home runs

A Houston Chronicle columnist also argues that innovation in fossil fuels, particularly hydraulic fracturing, has done as much to harm the prospects of clean tech as the failure of solar company Solyndra and the subsequent political fall-out.

Without a doubt, low fossil fuel prices certainly aren't helping alternatives get off the ground. Cheaper power generation from natural gas means that solar and wind have had a harder time competing on price, a dynamic which reverberates through other areas such as energy efficiency. Tempered oil prices, meanwhile, make it harder to make an economic argument for buying plug-in electric vehicles or biofuels.

Fossil fuel technology doesn't stop at "fracking." Aided by powerful supercomputers, the oil and gas "majors" are able to find new deposits in more and more locations, notably offshore. Once considered uneconomic, the tar sands in Canada are now a major source of oil. Hydraulic fracturing can even be used to release oil from rock in some locations.

Adapting 
The environmental cost of tapping unconventional fossil fuels can be significant. Many techniques, such as drawing oil from tar sands, produce far more carbon emissions than conventional drilling and damage to water supplies and local ecosystems. And as the Macondo deepwater oil spill in the Gulf of Mexico showed last year, oil drillers are pushing the limits of technology and taking on greater risks and they move into new terrain.

But if measured only in dollars, fossil fuels still look cheaper than alternatives. Both solar and wind continue to come down in costs, but solar in particular needs to fall further in price before it can be a more meaningful portion of electricity generation, according to utility industry executives at the Solar Power International conference last week.

"At the end of the day it comes down to costs because of economic pressures. We have to make decisions in regards to allocation of capital," said Randy Mehrberg, president and chief operating officer of PSEG Energy Holdings, according to an article in EnergyBiz. "We just spent $1 billion on the back-end of our coal plants to make them some of the cleanest in the country, and we have to compete with those expenditures when we do solar."

Green-tech investors and entrepreneurs are adapting to a regime of low fossil fuel prices and the inability of Washington to pass major new energy or climate change laws, in what some people call green tech 2.0.

Solar and biofuels used to garner the bulk of venture capital money, but investors and entrepreneurs have shifted their focus to either less capital-intensive industries, such as efficient lighting, or toward creating products for the fossil-fuel business. Companies that once wanted to make biofuels have turned their attention, at least initially, to higher-margin chemicals.

There remain a few venture investor funds seeking out early-stage ideas for disruptive technologies in material science, such as better batteries or more efficient solar cells. But much of the venture capital crowd has chosen to focus on using mobile and software technology to improve efficiency and better use natural resources.

Many of these companies leverage social media to appeal to green-minded consumers and the innovations in IT. Peer-to-peer car-sharing site RelayRides, for example, was singled out in aNew York Times article this week as an example of a new breed of clean-tech companies better suited to Silicon Valley style entrepreneurship.

Newer green-tech companies are targeting more narrow niches than those founded last decade in order to survive through the downturn in private investment and eroding policy support in Washington.

But ultimately, concerns over how quickly the world is using fossil fuels or the effect they have on the environment and climate are not going away. It's slow moving compared to IT, but in energy there's yet another technology race--this one between the fossil fuel giants and entrepreneurs and consumers who want cool, greener products.