What Are the Main Substitutes for Oil and Gas Energy?

The main alternatives to oil and gas energy include nuclear power, solar power, ethanol, and wind power. Fossil fuels still dwarf these alternatives in global and domestic energy markets, but there is considerable public momentum to increase their utilization as industries shift towards sustainability and more green business practices.

Development of Alternate Energy Sources

Fossil fuels are comprised primarily of energy sources from coal, oil, propane, and natural gas. They accounted for approximately 79% of total energy consumption in the United States in 2022.

Historically, alternative forms of energy have proven to be uneconomic substitutes. They have been less efficient and more expensive (or, in the case of nuclear power, restricted from expanding) than fossil fuels. As a result, the government currently provides subsidies (often in the form of tax incentives) for consumers who choose cleaner forms of renewable energy either for their houses or for their vehicles. Between 2016 and 2022, 46% of federal energy subsidies went toward forms of renewable energy.

With more research occurring in this space, however, and pressure coming from consumers who are interested in non-fossil fuel sources, both businesses and governments are investing in renewable energy infrastructure and development. As the alternatives to fossil fuels grow and become more economically viable, the laws of supply and demand are expected to push down prices to be competitive with traditional fossil fuels.

Nuclear Power

The number of nuclear power reactors in the United States peaked at 112 before beginning to decline in 1998. However, due to improvements that increased the capacity of each reactor, the lower number of reactors continued to produce between 19% and 20% U.S. domestic electrical output through 2021. By August 2023, the U.S. had 93 operating nuclear power reactors.

Many other countries have larger concentrations of nuclear energy. France, for example, is one of the world’s foremost users of nuclear power and generates almost 70% of its electricity through it.

Nuclear power can run much more cheaply than other clean energy forms, such as solar, wind, or hydropower. Nevertheless, in the U.S. (and many other countries), governments have put a stop to nuclear expansion for decades. This has been partly out of fears for public safety and partly for political reasons. Events like the Chernobyl accident in 1986 are still scarring examples of nuclear power gone wrong in many people’s minds, making the prospect of nuclear as an oil alternative psychologically hard to embrace.

However, as research around safe nuclear energy develops, clean nuclear power may eventually power entire cities. Bill Gates, for example, has already started a company called TerraPower that is investigating ways to harness the power of nuclear power for the long term.

Solar and Wind Power

Solar and wind power are also two popular renewable energy sources. Proponents argue that these substitutes offer a clean break from fossil fuels and rely on power from natural sources.

Solar energy is the fastest-growing source of new electricity in the United States, with millions of solar unit installations across the United States. In 2021, there were record shipments of solar panels across the United States, while at the same time, the cost of solar installations has continued to decrease. In 2010, the average value (which is a proxy for price) was $1.96 per peak kW. By 2021, that number had declined to $0.34.

The number of solar installations rose by 34% across the United States in 2023. The U.S. Energy Information Administration predicts that the U.S. electric capacity additions from solar installations will grow to 62% in 2024, up from 45% in 2022.

Wind costs 1-2 cents per kilowatt-hour (after factoring in tax credits), making it one of the lowest-priced energy solutions available. In 2022, wind turbines generated more than 10% of energy in the United States, and that amount is expected to grow. The United States is currently investing over $10 billion each year into new wind projects.

Both types of energy do have their downsides, including cost. Installing the equipment that generates and distributes both solar and wind energies requires a large capital outlay. Solar energy still faces market barriers and grid integration challenges that hinder deployment. In addition, non-hardware costs including permitting and financing pose cost challenges.

Meanwhile, wind power is often best located on remote lands, far from cities where electricity is needed. This can require substantial infrastructure to store and transport the energy once it is generated. Wind power may not be the most economical use of the land and may cause noise, aesthetic pollution, or negatively impact local wildlife.

The Bottom Line

The major alternatives to energy from fossil fuels are solar, wind, and nuclear power. Currently, oil, coal, and natural gas still dominate the global market.

Nuclear power has been embraced strongly in Europe but less in the United States, though it is less expensive than alternatives like solar power or hydropower. Solar and wind power continue to expand in the United States, though they have traditionally been expensive to implement due to the massive capital costs of installations.

However, as governments and businesses invest in research and development of clean energy alternatives, renewable energy is becoming more common and economical for consumers.