The Energy Dilemma
Oct 31, 2012Posted by David Bernell
Since this is my first posting with CNP, I'll use it to discuss my approach to understanding energy and its use in the United States, which is driven by developments in technology, markets and government policies. In the coming years and decades, without some significant changes to current practices, the domestic and global impacts of US energy production and use - security, economic and environmental - are expected to become worse. Growing US and global energy demands need be met, and the anticipated impacts of global warming must be avoided, all at an affordable price.
The least expensive and most effective way to cut energy use, costs and emissions is to achieve greater energy efficiency. Simply using less - through efficiency improvements and conservation measures - entails the least disruption to individuals, businesses and governments, and could provide the greatest financial payoff in the shortest time. The cheapest energy is the energy you don't use.
There are also a number of alternatives to our heavy reliance on fossil fuels that are designed to produce energy - specifically electricity - with fewer emissions than current technologies and practices. Nuclear energy often tops the list, in spite of its significant environmental and security threats. In addition, there are less well-known options, such as "combined heat and power" (CHP) systems - often powered by natural gas - that are located at sites where the power is used and can supply electricity with great efficiency. Both of these alternatives are believed to offer great potential in meeting rising US electricity demands.
However, the potential solutions that have captured the greatest attention in the United States - far more so than others - are renewable energy technologies. The economic, security and environmental benefits that they offer are both significant and enticing. This includes especially solar and wind power, but also geothermal, hydropower, biofuels, and fuel cells.
The growth of the solar and wind industries, along with the rise in investment capital into emerging technologies, has been sizable in recent years. Many of these technologies hold great promise for the future, and the investments they are attracting are warranted - for their environmental, financial and social benefits. Clean energy technologies can:
- Diminish the rising level of global demand for fossil fuels brought about by the growth of China, India and other developing countries
- Provide investment and jobs in the United States geared toward the manufacture, installation, service and sale of renewable energy products and services
- In the case of onsite generation systems (distributed generation), provide reliable electricity sources for critical infrastructure such as hospitals, food supplies and gas station in the event of power failures, whether from natural disasters, utility/grid failures, or terrorism.
- Reduce the level of greenhouse gas emissions
- And potentially reduce the need for energy supplies that come from the Middle East, where political instability and military conflict create volatility in oil supplies and prices.
Currently, however, the reach of renewable energy is limited. In spite of the many efforts to promote renewable sources, they contribute relatively little in terms of actual energy production in the US, and of course, they cannot serve as a substitute for oil, only for fuel used in generating electricity. Even relatively mature technologies, such as solar photovoltaics (PV) and large wind turbines, produce a tiny fraction of the total US and worldwide energy supply. Wind turbines supply about 2% of total US generation, and solar is well under 1%.
Moreover, the reach of renewable energy technologies is likely to remain limited for a long time. First, expected growth in electricity demand high, with the the US Department of Energy projecting a rise in US electricity generation from a level of 4 billion gigawatt-hours (GWh) in 2011 to 5 billion GWh in 2035. Fossil fuels will supply a large proportion of this growth. Second, the output of renewable technologies is relatively small per unit compared to fossil fuels and nuclear power (in other words, you need hundreds of wind turbines to match the output of one nuclear plant). And third, the costs of renewable technologies are still often relatively expensive compared to fossil fuels, even with federal and state incentives. This is the case with regard to upfront capital costs, cost per unit of energy produced, and cost per ton of carbon emissions avoided.
Renewables are, admittedly, at a disadvantage to fossil fuels, which receive sizable and continuing subsidies. In addition, many of the costs of fossil fuels are externalized - in the form of pollution, global warming, health impacts, and responses to national and energy security threats (e.g., two wars involving Iraq since 1991). Nonetheless, since these costs are likely to remain externalized, renewable technologies could have a difficult time becoming cost-competitive.
In other words, the growth in energy demand, along with capacity and cost considerations, point to a situation in which renewable technologies are unlikely to represent a significant proportion of the US energy mix for some time. Absent some significant breakthroughs involving technological development, market innovations, or the policies that govern the use and costs of renewable energy, it is unlikely that renewable energy will be a major source of power in the United States for many years or decades. The United States seems set to remain on a course where it is dependent upon fossil fuels, dependent for energy supplies upon regimes that are political and militarily unstable, and dependent upon hoping for the best in a world where rising global demand seems likely to increase the level of competition over the world's finite energy supplies. The future of US energy security, and by extension, national security, looks fraught with looming threats.
The views expressed in this blog are those of the authors and do not necessarily represent the views of the Center for National Policy.
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