Clean Energy: More Than a Personal Virtue

By JIM DIPESO, REP’s policy director

AN HISTORICAL DOCUMENT: Jim delivered this speech at REP’s annual conference in San Diego, California, on September 13, 2003.


You all have seen TV or stage productions of Charles Dickens’ A Christmas Carol. In the story, three ghosts visit Mr. Scrooge — the ghosts of Christmas past, Christmas present, and the ghost of Christmas future.

During the big blackout that hit the Northeast and Midwest last month, three energy ghosts visited our nation — the ghost of energy past, the ghost of energy present, and the ghost of energy future.

First, the ghost of energy past. Electricity and fuels make our modern world go around. The lights in this room, the air conditioning that keeps out the Southern California heat, are usable only because a grid is delivering electrons to our door — perhaps from a power plant near San Diego, perhaps from as far away as Grand Coulee Dam in Washington state.

We all take energy for granted until the lights go out and the conveniences of modern civilization suddenly stop. Blackouts give us a small taste of the hardships that were routine aspects of life before Thomas Edison started fiddling with light bulb filaments and before Colonel Drake struck oil in northwestern Pennsylvania.

The ghost of energy present — New Mexico Governor Bill Richardson, a former energy secretary — says that the U.S. is a First World nation with a Third World electricity transmission system. An exaggeration. But the problems are real. Our electric grid is like freeways in California: they’re handling far more traffic than they were designed for.

Unfortunately, there is more than one ghost of energy present. Let’s skip around the world and visit with a few that made headlines recently.

In April, EPA reported that average motor vehicle fuel economy was at a 20-year low. Department of Energy stats tell us that oil imports are at an all-time high.

In June, Alan Greenspan warned Congress about tight natural gas supplies and price spikes.

In mid-July, there was a short-lived coup in Sao Tome & Principe, a tiny, very poor West African country that I’ll bet a lot of Americans haven’t heard of. You may hear a lot more about Sao Tome & Principe in the years ahead. The two-island nation could be sitting on 4 billion barrels of oil reserves.

In August, a geophysical research journal published the results of a British study indicating that the last 23 years have been the hottest in the Northern Hemisphere in the past 2,000 years. That was after Europe was struck with a heat wave and temperatures in Paris exceeded 105 degrees.

What do all these events have in common?

They point to the ghosts of energy future.

  • Rising demand for electricity coupled with failure to invest in modernizing the grid will leave us vulnerable to more blackouts. Growing dependence on gas-fired electricity may produce more natural gas price volatility that disrupts our economy. We also see more pressure to drill for gas in some of our nation’s most pristine wildlands and in ways that endanger water supplies in arid regions.
  • Declining fuel economy and rising fuel demand will make us ever more dependent on foreign oil – delivered from unstable places such as Saudi Arabia, Venezuela, and Sao Tome & Principe.
  • Increasing use of fossil energy will mean more greenhouse gas emissions and more pressure on the global life support system that provides a hospitable climate, food, water, medicine, and wild places to recharge our spirits.

It doesn’t have to be that way. Like Mr. Scrooge, we can learn from what the energy ghosts are telling us and choose a better energy future that will better serve our nation’s needs. The good news is that the right mix of technology and policy choices can bring us clean, reliable, affordable, and secure energy for our homes, businesses, and communities.

So where do we go from here? Well the first questions to ask are, what are the problems that we’re trying to solve, what does the desired future look like, and how do we get from here to there?

Let’s start with security and focus first on oil. Today, we use about 20 million barrels of oil per day, around two-thirds of it for transportation. DOE projects that use will increase to nearly 30 million barrels per day by 2025. The geological truth, however, is that U.S. production has been falling since the 1970s as domestic oil fields have been depleted.

Today, we import 58 percent of the oil consumed in this country. That figure will surely rise past 60 percent in the next five years. Even opening the Arctic National Wildlife Refuge to full-scale production wouldn’t help much. DOE estimates that foreign oil’s share of our consumption would fall only 2 percentage points if the Arctic refuge were in full production by 2020.

The problem with importing oil is that the biggest reserves are in all the wrong places. Two-thirds of the world’s proven oil reserves are beneath five nations around the Persian Gulf.

Yes, we can buy more oil from West Africa and Central Asia — but those places aren’t paragons of stability either. There is a dark side to oil wealth in underdeveloped countries with immature economies. Oil is a crutch that delays economic diversification and is a pot of gold that spawns corruption, coup plotting, and terrorism. Our appetite for foreign oil forces us into entanglements with unsavory characters in very rough neighborhoods.

But there’s more to the story. Even shifting all of our foreign purchases to friendlier territory – Canada, Mexico, perhaps Russia – does not solve the strategic problem. Oil is a global commodity. The last barrel sold determines the price. We are vulnerable to a price shock if markets are roiled by surprises — say, a revolution in Saudi Arabia.

There’s only one way to get off the oil treadmill and that’s to reduce our dependence on oil period.

Speaking of dependence, consider electric power grids, an amazing engineering feat. Because electricity is not easily stored, the demand for electricity must be precisely matched by supply from moment to moment. It’s like a tug-of-war where both teams must place exactly the same pressure on the rope or everyone falls down.

But transmission lines can carry only so much power. Rising demand for electricity, plus more long-distance transmission of bulk power, is stressing the power grid, an aging colossus that is managed with 50-year-old technology. Investment in modernization has lagged. As markets restructure, no one knows who will be in charge of transmission. Uncertainty is the enemy of investment.

The system has little margin for error, or for outright manipulation, as we saw in California a few years ago.

Imagine an elevator car held up by four cables. If one cable breaks, the remaining three have to bear the full load. Add some more weight to the car, and the remaining cables may fail in short order, resulting in disaster. That seems to be what happened in last month’s blackout. A system failure in Ohio spread rapidly, disrupting people’s lives and costing businesses a great deal in lost production and sales.

Rising demand for electricity is leading to construction of more power plants fueled by natural gas — and therein lies yet another problem, as Alan Greenspan told us three months ago — unpredictable price volatility.

It’s economics 101. Demand for gas is up. While exploration is up, rising production in costly new fields is offset by declining production in cheap old fields.

Also, gas development raises issues about land and water impacts. The Interior Department has given marching orders to speed gas development in the Mountain West. For example, up to 40,000 coalbed methane wells may be drilled in Montana in the next 10 years. A typical well extracts 16,000 gallons of highly saline water from coal seams per day. Most of this salty water is discharged in riverbeds and surface impoundments – which has ranchers and other landowners very worried.

Gas has become a fuel of choice for power generation partly because it’s much cleaner to use than coal. Yet coal is still the main player in the electric power game. Half our power comes from coal-fired power plants.

Coal is an environmental problem child. Coal burning is a factor in acid rain that harms the ecology of Northeastern lakes, ozone smog that pollutes the air in cities and damages forests, and mercury pollution that can render fish unsafe to eat.

Greenhouse gas emissions from burning coal and other fossil fuels are continuing to rise. Since 1990, U.S. greenhouse gas emissions have risen 14 percent.

The problem with emitting CO2 is that it unbalances the global carbon cycle. Think of a bathtub. When the water entering from the faucet is the same amount as the water going down the drain, the bathtub water level neither rises nor falls. When the water entering from the faucet is greater than the amount going down the drain, the bathtub water level starts to rise.

Our CO2 emissions are outrunning the absorption capacity of the oceans, forests and soils, so CO2 is piling up in the atmosphere. That has set off a chain of events. More CO2 means a stronger greenhouse effect. A stronger greenhouse effect adds more heat energy to the atmosphere. More heat energy guns the machinery of global weather systems, which could have all sorts of unpleasant side effects.

Greater heat energy could amplify weather patterns. Hotter hot spells. Drier droughts. Wetter rainstorms. Stronger hurricanes.

Then, there is the specter of abrupt climate change. Rising heat energy could push us past a dangerous tipping point where all sorts of truly nasty problems could arise.

In short, we are conducting a giant, uncontrolled science experiment on the only atmosphere we have.

OK, so I’ve listed the problems. What do we want from energy?

We don’t want oil or coal for their own sake. We want the services that they deliver. We want indoor comfort. We want good lighting. We want healthy food. We want labor-saving conveniences. We want the ability to travel so we can all give up weekends and spend Saturdays indoors listening to people like me.

We want our energy to be reliable and secure, without having to worry about blackouts, coups or cartels. We want affordable energy services and consumer choices. And, we want a clean environment – a stable climate, breathable air, clean water, and public lands to enjoy for their beauty and quiet.

Can we have all that? Yes we can.

Here is what we need to do. Many of these ideas were raised in the energy summit that REP held two years ago in DC.

First, you start with energy efficiency — always. Efficiency must be the foundation of our nation’s energy policy, not an afterthought.

When you think of energy as a service rather than a barrel of oil or lump of coal, it’s easier to build efficiency into the system.

Efficiency is a proven, cost-effective source of energy, just like power plants and oil fields. Motor vehicle fuel efficiency standards save an estimated 3 million barrels of oil per day. That’s twice as much as our average daily imports from Saudi Arabia.

Efficiency is a money-saver. Thanks to efficiency measures implemented since 1973, the U.S. economy last year saved half a trillion dollars that otherwise would have been spent on wasted energy.

Efficiency takes pressure off transmission lines and dampens natural gas price spikes

Efficiency is essential for making hydrogen energy practical and economical.

Finally, efficiency is a clean resource. The cleanest energy in the world is the energy you don’t have to produce in the first place.

We have made a lot of progress with efficiency, but there are many opportunities waiting to be tapped. Three years ago, five national laboratories estimated we could reduce our net energy use 20 percent by 2020, at a profit, by investing in more efficient buildings, motors and appliances.

As for cars, the National Academy of Sciences has reported that fuel efficiency could be improved significantly with technologies available today or in the very near future, without reducing the weight of cars one ounce.

Another efficiency opportunity is combined heat and power. Power plants produce a lot of heat, much of which is simply discarded. Combined heat-and-power plants put waste heat to work for industrial uses, such as food processing. We have just begun to scratch the surface of combined heat-and-power’s potential to generate power and reduce emissions.

Modern microprocessor controls and information systems could make our electric grid far more efficient and reduce vulnerability to system failures.

For example, in such a “smart network,” software agents embedded in appliances and meters could sell demand reduction services to transmission line operators when peak loads are anticipated, such as summer afternoons. Appliances would automatically throttle back for a short time in the late afternoon, the transmission system would ride out the peak safely, and customers would get a small credit on their bills without any reduction in service.

This is actually being tested in Washington State. A transmission bottleneck on the Olympic Peninsula could cause problems during peak winter loads. This winter, Bonneville Power Administration, a federal power marketing agency, will have a web-based system to take bids for load reductions.

Another good way to strengthen the grid is “distributed power” — many small power plants as opposed to a few big ones.

The BPA will pilot a network to coordinate the output of small-scale generators on the Olympic Peninsula. The idea is to reduce “needle peaks” — the few hours of the year when load spikes far above normal

Such alternatives can be more economical than building more wires in the air. It costs $100 per year to transmit and distribute one kilowatt-hour of electricity. It can be very expensive to build transmission and distribution wires to serve needle peaks.

Distributed power will come through diversifying our energy portfolio. Today, we get 86 percent of our primary energy from fossil fuels, produced in big chunky infrastructure such as power plants and refineries. For the security, economic, and environmental reasons we’ve discussed already, too many eggs are in the fossil energy basket.

Diversifying our energy portfolio will have other benefits – including less pollution, fewer greenhouse gas emissions, development of new industries, and rural revitalization. The stage is set. Markets for clean energy technologies are expected to total $180 billion per year for the next 20 years, worldwide. We need to accelerate the growth and make sure American companies are in the game.

Wind power is coming in to its own.

Nationwide, more than 4,700 megawatts of wind capacity are up and running. Wind power on agricultural land can pay farmers $1,000 to $2,000 per wind turbine per year in royalties. That’s steady money, much more reliable than crop prices. In Washington state, for example, a good farmer can produce 60 bushels of winter wheat per acre. At $4 per bushel, that’s $240 per acre. One wind turbine, taking up a quarter-acre of land, paying $1,000 per year returns $4,000 per acre.

Ethanol and biogas are other opportunities down on the farm.

Today, ethanol is a niche product made from the starchy parts of corn and other feed grains. Advances in bio-sciences may soon enable us to produce ethanol from all sorts of plant material – stems, stalks, grasses and wood chips. Ethanol is a good mid-term alternative for replacing gasoline and a long-term source of hydrogen for fuel cells.

Biogas is another possibility. Did you know that one dairy cow can produce 3 kilowatt-hours of electricity per day – enough to run 30 100-watt light bulbs for one hour? Lactating dairy cows produce a lot of, shall we say, by-products – 100 pounds of manure per day.

Digesting the stuff produces combustible methane. Plus, digesting cow poop helps farmers deal with very difficult dairy waste management issues.

Solar energy is a little further away and is still only a very small share of power generation.

However, demand is rising as prices fall. Worldwide production of solar photovoltaic cells has more than doubled since 1999.

The Holy Grail of energy, of course, is the hydrogen fuel cell.

Everyone, from President Bush to the automakers to the oil companies is on the hydrogen bandwagon. Hydrogen has great potential — clean energy in vast quantities, available from many sources here at home, and usable to fuel motor vehicles and power plants.

There are a number of steps to building the hydrogen economy – building reformers to extract hydrogen from natural gas, redesigning cars to ensure that the hydrogen is used as efficiently as possible.

Which leads me to what we need to do to make these energy dreams come true.

First, we need to set some goals backed up by standards. Here are four examples.

Reducing carbon dioxide emissions – by one-third in 25 years, by two-thirds in 75 years.
Reducing oil consumption – by one-third in 25 years, starting with tougher fuel economy standards.
Improving energy efficiency – by 20 percent by 2020, starting with tougher appliance efficiency standards.
Increasing renewable energy production – to 20 percent by 2020, through a federal “renewable portfolio standard.”

Second, we need more R&D to accelerate the transition to cleaner energy technologies. President Bush’s hydrogen initiatives are a good start, but we also need robustly funded technology research — efficiency, energy system controls, fuel cells, renewables, sequestration, the works. We need to drive the cost of solar energy down to where it’s competitive for bulk power generation. We need to get fuel cell cars in showrooms by 2010, not wait until 2020 or 2030.

Third, we need to harness the power of markets to propel the energy transition forward. Senator McCain’s cap-and-trade legislation for reducing CO2 emissions is the right idea because it would reward efficiency and zero-carbon energy technologies. The federal government needs to help build markets directly – by buying hybrid-electric vehicles for fleets, and cleaner energy at federal facilities. The military has taken a strong interest, for example, in solar energy and biodiesel.

Fourth, we need to dangle lollipops out there to reward households and businesses that choose efficiency and cleaner energy. We need bigger tax breaks for buying hybrid-electric and fuel cell cars. We need more incentives to buy motors, appliances and buildings that beat current energy codes. We need to renew the production tax payment for wind energy and expand that to power plants that use solar, biomass, geothermal, and ocean energy. We need to fully fund the energy incentives authorized in the 2002 farm bill.

Fifth, we need to make sure policy is in step with goals. We need to remove barriers that hinder grid connection of rooftop solar and small combined heat-and-power plants. We need to clarify who is responsible for modernizing the grid.

How much will all this cost? Depends on who you ask. An article in Wired magazine, for example, suggested a 10-year, $100 billion package on fuel cells, hydrogen storage, production, and marketing. That’s a lot of money, but undoubtedly, we can find $10 billion worth of fossil fuel subsidies, pork and lard in today’s $2.2 trillion federal budget to pay for the work without further burdening taxpayers.

Throughout human history, our energy technologies have slowly progressed, from high-carbon, low-hydrogen resources, to low-carbon, high-hydrogen resources. We’ve gone from wood to coal to oil to gas. It’s now time to complete the transition to an efficient economy based on hydrogen produced from clean energy. Nothing we do would be more important for the future of our nation and the future of the human experiment.