Energy in Three Dimensions
The rationale for energy policy must be about more than climate change and green energy.
The United States has been unable to develop any coherent energy program that can last past changes in the control of our federal executive or Congress. The latest failure was the Waxman-Markey cap-and-trade bill that would have driven an enormous change in the country’s energy supply system in the name of controlling global warming. It barely passed the House and went nowhere in the Senate, where what had started as a nonpartisan and more moderate effort by Senators Graham, Kerry, and Lieberman died in the polarized atmosphere that developed in the campaign season leading up to the 2010 congressional elections.
I wonder if a big part of our current problem is an overemphasis on “greenness,” leading to a too-narrow focus on climate change as the sole driver for action. The public debate on energy is dominated by climate change and its deniers and its exaggerators. The deniers say global warming is a fraud or that it has nothing to do with human activities so we can’t do anything about it anyway. The exaggerators say that unless we move within a decade to obtain 30% of our electricity from a narrowly defined group of renewable energy sources the world will descend into chaos by the end of the century. Between these two extremes are many members of Congress who see a need for government action on energy but do not believe that the country needs to move immediately to run the country on wind generators and solar cells. This group includes many Democrats who did not support the Waxman-Markey bill in the House.
Making major changes in the country’s energy systems has a major impact economically as well as technically. There are potential benefits from making changes to energy sources that go beyond the climate issue, as important as that issue is. For example, the cost of the oil we import is about equal to our balance-of-trade deficit. If all cars, SUVs, pickups, and minivans traveled 50 miles per gallon of gas, our oil imports could be cut in half, reducing our balance-of-trade deficit by about $200 billion and decreasing emissions as well. The Energy Future: Think Efficiency study that I led for the American Physical Society concluded that 50–mile-per-gallon single-fuel vehicles can easily be produced in the 2020s.
National security must also be an essential consideration in energy policy. Delivering a single gallon of fuel to the front in Afghanistan requires a supply chain that consumes hundreds of gallons of fuel. Improvements in the efficiency of military vehicles would result in enormous savings in addition to reducing the exposure to danger of military personnel throughout the supply chain. Small solar or wind systems to provide power to forward bases would be treasured. Reducing U.S. dependence on oil would also make an important difference in foreign policy, making it possible to be more assertive in relations with oil-supplying nations in the Middle East and perhaps even with President Chavez of Venezuela.
Too much of the energy debate in recent years has suffered from a one-dimensional focus on climate change. But the systems that need to be changed to do something about global warming affect all dimensions of society: the economy, national security, and a variety of environmental concerns. Energy policy is too important to be entirely subsumed under a debate about climate science. Federal action on energy will occur only after we confront a number of realities that are creating unnecessary barriers to progress:
- The exclusive focus on climate change as a justification for action on energy has excluded potential allies.
- The emphasis on ultra-green technologies that are not yet ready for the big time has let the desire for the perfect drive out the available good.
- Pushing policies that are as narrowly targeted as renewable portfolio standards has prevented many larger and less costly emissions reductions to be made in the nearer term than have been made with the renewables.
The one-dimensional focus of the energy debate on climate change has led to stalemate, and the way to break out of it is to broaden the base of support by working in all three dimensions where we may find allies ready for action, though their reasons may be different from those driven by concern about climate change. This need not be difficult. In fact, across the country there are signs that some federal agencies, state governments, and private companies are already putting this strategy into practice. Motivated by a variety of concerns, they are taking actions that are moving the nation’s energy system in the right direction:
- The Excelon Corporation plans to spend $5 billion in the next six years on efficiency and on increasing the output of its nuclear power plants.
- No new coal plants have been started this year because natural gas prices are so low.
- NASA has let two contracts (Lockheed-Martin and Northrop-Grumman) for airplane concepts that might cut fuel consumption in half.
- California soundly defeated the ballot proposition that would have suspended its greenhouse gas reduction program. Most of the counties that voted Republican in the California senatorial campaign voted against the proposition.
The states are coming together to do regionally what Washington is unwilling to do nationally. There are now three regional compacts on reducing greenhouse gas emissions:
- The Regional Greenhouse Gas Initiative includes 10 Northeastern and mid-Atlantic states and has a cap-and-trade system.
- The Midwest Greenhouse Gas Reduction Accord includes six states and one Canadian province.
- The Western Climate Initiative includes seven states and four Canadian provinces.
Economic realities and enlightened self-interest can spur private companies to make the investments that will benefit the nation as well as their stockholders. There are many in government who may not accept a global warming argument, but who can be persuaded by an economic or security argument. Voters in the states are providing evidence that there is broad support for sensible action on energy. National policymakers need to hear the message that there is not just one rationale for setting policies that will transform the nation’s energy system. Although the reasons for action may differ, there is agreement on the general direction of the change that is needed.
It is easy to forget how long it takes a new energy technology to mature and become cost-effective at scale and how much longer it takes to make a major penetration into the national infrastructure. A November 2010 report from the President’s Council of Advisors on Science and Technology (PCAST) concluded that we have to plan for a 50-year period to transform the nation’s energy infrastructure.
A shortcoming of much of the proposed legislation in Washington and the states is that we are pushing too hard on what is not ready and not hard enough on what is ready. For example, the National Renewable Energy Laboratory’s Western Wind and Solar Integration Study on integrating 35% of electricity delivery by wind and solar over the entire Great Plains and the West concluded that it could be done, but the system could not be made stable without having available backup for 100% of wind and solar capacity. Why? Because sometimes there are periods of days when the wind does not blow or the Sun does not shine, and we cannot afford blackouts of long duration.
When advocates of renewable power calculate the cost of wind and solar systems, they rarely mention the very high cost of building, maintaining, and operating a large backup system. Likewise, they are likely to ignore the cost of building long-range high-power transmission lines to deliver power from the remote locations where renewable systems are often built to the urban and suburban areas where the electricity is needed, nor do they factor in the very long and difficult regulatory path that must be followed before the lines can be built. It can take longer to win approval for a transmission line than for a nuclear power plant.
When large-scale energy storage systems become available, and when part of the environmental movement stops suing to block the transmission lines that other parts of the environmental movement want to build to distribute renewable electricity, perhaps wind and solar can reach the scale being promoted. Meanwhile, up to 10 or 15% of demand is all that can be reasonably expected from renewable sources.
We cannot seem to stop doing things that make no sense at all. Hydrogen for transportation is an example. The program should be abandoned or sent back to the laboratory for the development of better catalysts and more efficient end-to-end systems that can make it deployable and affordable at scale. It makes no sense to use energy to produce hydrogen, distribute the hydrogen by an entirely new system, and put it into cars to be used by a fuel cell to produce electricity, when we can much more efficiently distribute the electricity and put it into batteries.
Many of the renewable energy systems being promoted may eventually reach full scale, but they are not ready for that now. On the other hand, natural gas has become cheap with the new ability to exploit shale gas. A modern gas plant emits one-third of the greenhouse gases of an average coal plant. Changing all the coal-fired power plants in the country to modern natural gas plants would eliminate 1.4 billion tons of carbon dioxide emission annually, a quarter of total emissions.
California’s Million Solar Roofs project is to install 2 to 3 gigawatts of photovoltaic (PV) capacity at a cost of $10 billion to $20 billion. For 15% of the cost, one could eliminate twice as much greenhouse gas by converting the Four Corners 2-gigawatt coal-fired power plant to natural gas. Even if PV were down to $1 per watt from today’s typical $4 to $5 per watt, the coal-to-gas conversion would still eliminate more greenhouse gases for the same cost. Alternatively, one could build two nuclear power plants for today’s PV cost and eliminate five times the emissions.
If the goal is to do everything possible to reduce greenhouse gas emissions, is there any sound reason not to provide incentives for energy efficiency, natural gas, and nuclear power, all of which are relatively inexpensive, effective, and scalable now? What is the rationale for emphasizing renewable portfolio standards that target only solar, wind, geothermal, and small hydroelectric technologies? Is the goal to promote the Chinese PV and wind-turbine industries, or is to reduce emissions?
In looking for ways to free energy policy from its narrow focus and to end the political stalemate, we can find some helpful, and not so helpful, suggestions in four recent reports:
- The National Academy of Sciences has issued a sequel to its Rising Above the Gathering Storm report first issued in 2005. It emphasizes education and innovation and recommends spending more money on energy research. But it said this before. It did not happen then and is unlikely to happen now.
- The PCAST report cited earlier says spend more money and base what you spend on a quadrennial energy review like the Department of Defense’s (DOD’s) quadrennial defense review. If you are thrilled at the weapons and policies coming from the DOD reviews, you might like this.
The next two are more interesting.
- The American Energy Innovation Council, whose board includes well-known current CEOs and retired CEOs such as Jeff Immelt of General Electric, Bill Gates of Microsoft, and Norm Augustine of Lockheed-Martin, among others, may have more impact. Its report A Business Plan for America’s Energy Future discusses the multidimensional energy challenge we face and recommends a new national strategy board made up of nongovernmental people, a $16 billion–per–year innovation fund, and a better-defined role for the federal government. It won’t happen soon because of the money, but the CEOs of the Innovation Council should be influential, and it has some interesting ideas.
- The most unusual is the tripartite report Post-Partisan Power, from the American Enterprise Institute, Brookings Institution, and a new West Coast player, the Breakthrough Institute. It says invest in education, overhaul the energy innovation system, reform subsidies, and add a few small fees so that it can be done without adding to the deficit. Any time the names of Brookings and the American Enterprise Institute are on the cover of one report, it should earn attention.
Those who are waiting for a national cap-and-trade bill or a carbon tax will have to wait at least until we see the results of the 2012 election, and maybe longer. But significant progress is possible without these measures. The heavy lifting will have to be done by industry, and the key to industry success is to establish policies that specify what the nation wants to achieve, not how industry should do it.
Politically, it will be essential to support all proposals in as many dimensions as are appropriate. A further increase in the automobile mileage standard can be justified on economic and national security grounds as well as on environmental ones. The technology already exists with hybrids, diesels, and direct-injection gasoline engines.
Reject renewable portfolio standards, and opt instead for emission reduction standards. Because natural gas is cheaper and better than coal today, it should be encouraged. Government, and forgive me for saying so, environmentalists, are better off focusing on the goals, and not on how to reach them.
Tell the electric power industry to reduce emissions by some percentage by some date and then get out of the way. Competitive companies will determine what mix of efficiency management, natural gas, renewable sources, and other measures is quickest and cheapest. We will need solar and wind eventually, so they need some support, but not at the expense of limiting cost-effective action today.
Don’t be too clever by half, as the Brits say. One too-clever regulation is California’s low carbon fuel standard. It requires that one count all the carbon in a megajoule of each fuel, including the energy and emissions that go with making the fuel, and then reduce that amount by 10% by 2020. There are smart people who love this. It was adopted by California in April 2009, and more states are considering following California’s lead. The theory is that it forces emissions included in fuel production to be counted, so, for example, if one uses more oil from Canadian tar sands to make gasoline, the carbon score goes up. But emissions depend on both fuel and efficiency. Larger and less costly reductions in emissions can be made by focusing on the efficiency side: A diesel will reduce emissions by about 20% as compared to a gasoline engine; a hybrid will reduce it by 50%. So why waste effort and money on the fuel side? Once again, set the goals and get out of the way.
The fundamental question is, can environmental, scientific, business, and policy organizations put together a coherent message that brings in as many allies as possible, starts large-scale action with things that are scalable and affordable today, and encourages the innovation we will need for tomorrow?
It will not be easy, but it is the only way we will turn things around.