The Choice: An Energy Strategy for the 21st Century

THE CHOICE:
AN ENERGY STRATEGY FOR THE 21st CENTURY


On May 17, President Bush is expected to unveil a national energy strategy. Worldwatch has been closely following the formulation of the Administration's plan. Worldwatch energy experts, President Christopher Flavin and Research Associate Seth Dunn, will be available for comment on the strategy as it emerges. They have prepared below a set of criteria that can be used to judge the efficacy of the new energy policy.

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The Bush Administration's forthcoming energy policy presents a unique opportunity to provide the nation with a farsighted vision for a 21st century energy system, and to recommend the policies that will help the country achieve this vision. 

It remains to be seen whether an administration led by two former oil industry executives, with personal and political ties to the energy sources of the recent past, will provide an energy agenda that is consistent with the needs and demands of a new century. Increasing reliance today on the energy sources of the 20th century (oil) and 19th century (coal) will be as wrong-headed and backward-looking as a plan for mass production of horse-drawn buggies would have been in 1901. It would also needlessly and expensively despoil the environment, at a time when far cleaner energy sources are available. And we already know that our international allies are bitterly opposed to expanding reliance on fossil fuels because of their commitment to stop global warming.

We are now in the early stages of an energy revolution that is as profound and rapid as the one that ushered in the age of oil a century ago. This new energy system-highly decentralized, efficient, and based increasingly on renewable resources and hydrogen fuel-is already beginning to emerge in other parts of the world. Without visionary leadership, the United States risks falling behind its economic competitors and compromising its political credibility on the international stage.

We believe the forthcoming strategy should be judged by the extent to which it embodies the following principles of a 21st century energy system:

  1. Energy Efficiency: The Cornerstone
    Investments in energy efficiency-obtaining the same services of lighting, cooking, heating, mobility, and industry with lower energy requirement-are the first steps we should be taking, not Vice President Cheney's 'back of the bus' suggestions. It makes more economic and ecological sense to get more out of every kilowatt or barrel than to dig for more coal and drill for more oil. Improvements in the efficiency of energy use in better appliances, buildings, automobiles, and industrial processes, have a proven track record in reducing the amount of energy used for every unit of economic output. 

    Between 1973 and 1999, U.S. energy consumption for every unit of gross domestic product declined by 41 percent. Yet as the Department of Energy's national laboratories have documented, the U.S. could cut its energy/GDP ratio by another 10 percent through policies aimed at improving efficiency. Failure to maintain improvements in electrical efficiency contributed to California's power problems. And failure to upgrade the highly successful Corporate Average Fuel Economy (CAFE) standards led to recent increases in gasoline prices. Will a White House whose chief-of-staff ran the American Automobile Manufacturing Association, (which effectively lobbied to freeze CAFE standards), recommend meaningful standards and incentives to boost auto efficiency? 

  2. Natural Gas: The Bridge to a Hydrogen Economy
    Natural gas is the cleanest and fastest-growing fossil fuel, and despite the recent increase in price, has become the fuel of choice for power generation. But the challenge with natural gas is not to drill for it in ecologically-sensitive areas, as the administration apparently seeks to do, but rather to develop highly-efficient new uses for the fuel. Such uses include cogeneration, or the combined use of heat and power, and "micropower" technologies.

    "Micropower" is the term used to describe the unmistakable global trend in power generation toward decentralized, efficient units, such as fuel cells and microturbines, that operate primarily on natural gas. It is a shift as profound as the move from mainframes to personal computers, creating equally significant new business opportunities. Locking the U.S. power system into the twentieth-century, large-scale, fossil and nuclear-based models will cripple the global competitiveness of the U.S. energy industry while exacerbating health and environmental problems. 

  3. Nuclear Power and Clean Coal: No Time for Nostalgia
    The apparent plans of the Bush Administration to revive industries that have been dying a slow death for over two decades is particularly perplexing. The cost of nuclear generated electricity is roughly double that of other energy sources now in the power market. This expense, combined with public opposition, has brought new construction nearly to a halt around the world. Private investors are unwilling to throw serious money into nuclear power. Further government subsidies to nuclear power would be a colossal waste of public funds.

    Signs that the administration will invest heavily in "clean coal" suggest another imprudent expenditure of taxpayer money. Coal is a 19th century energy source and the dirtiest of the fossil fuels, undermining the health of millions of people each year. It is also a sunset industry, hemorrhaging jobs due to mechanization. With employment levels decreasing 66 percent since 1980, coal miners now account for less than 0.1 percent of the U.S. workforce. Globally, coal consumption is at its lowest point since 1984, with China having reduced its coal use by 27 percent since 1996. 

  4. Renewable Energy: Faster, Cheaper, Cleaner
    Another familiar non sequitur of recent months is that, because renewable energy only accounts for roughly 2 percent of total U.S. energy today, it will only play a minimal role in the future and therefore does not merit substantial support. One might have made the same mistake a century ago about oil, which accounted for 2 percent of energy use in 1900 and then went on to become the dominant fuel in what some historians call the "century of oil." 

    Petroleum emerged first in niche markets, then grew rapidly. Wind and solar power are doing the same, growing at double-digit annual rates globally, but mostly in Europe and Japan-where government support is creating vibrant markets and high-tech jobs and exports (see below).

    Global Trends in Energy Use, 1990-2000

     Source             Average annual growth rate*
    (percent)   _____                   _______________

    Wind power                      25.1
    Solar photovoltaics            20.1
    Natural gas                          1.6
    Oil                                       1.2
    Nuclear power                     0.6
    Coal                                  -1.0
    ____________________________________
    *Based on installed capacity for wind and nuclear power, shipments for solar PV, and consumption for natural gas, oil, and coal.

    Today, wind power is the world's fastest growing energy source at 27 percent per year, and is less expensive than both gas- and coal-fired electricity. Solar energy use is also booming, particularly in Japan and Germany, whose renewable energy policies are far more effective than those in the United States. Ironically, the strongest state-level renewable energy policy is in Texas, where a law passed during Bush's Governorship requires utilities to provide a fixed amount of their power from renewable sources. Can we expect a national renewable energy standard from the former Governor, who talks of bringing his Texas success stories to Washington? 

  5. Hydrogen: "Tomorrow's Petroleum" 
    Will the most abundant element in the universe be a missing element in Bush energy policy? Automotive and energy companies, as well as startups, are pouring hundreds of millions of dollars into the development of hydrogen-based fuel cells to power portable electronics, stationary power systems, and motor vehicles. Hydrogen and fuel cell technology may reorient the global energy system as profoundly as did the discovery of oil and the invention of the internal combustion engine more than a century ago.

    Earlier this year, the President proposed a 48 percent cut in the hydrogen research budget. Meanwhile, as with previous technological races, German and Japanese automakers and energy companies are leading the hydrogen/fuel cell race while Detroit and Houston lag behind. Preserving reliance on petroleum while failing to lay the groundwork for a hydrogen-based electricity and transportation system will seriously weaken national energy security and diversity, and reduce the competitiveness of U.S. companies in the fierce automotive and energy markets.

  6. Decarbonization: Not Recarbonization 
    Since 1850, the world energy system has been steadily moving from fuels with a higher carbon content to one with a lower content. For reasons of efficiency and availability, we have moved from wood to coal, from coal to oil, and now from oil to natural gas. The next shift-to hydrogen-is on the horizon and the risks of climate change demand that we hasten its arrival. 

    Over the past several years, oil and automobile executives have publicly acknowledged this "decarbonization" trend, noting that the age of oil is coming to an end (see below). Yet our political leaders have failed to openly discuss with the American public the urgent need to decarbonize, suggesting instead a "fossil fuels forever" philosophy that lacks the long-term vision its energy policy professes to have.

    Industry Executives vs. Bush

Michael Bowlin, CEO, ARCO (now BP), Houston, TX, February 9, 1999: