Apollo for Energy
In his Sunday New York Times column, Tom Friedman made a strong case for an Apollo Program for energy, to make the US independent of foreign oil suppliers. Aside from the geopolitical benefits that would accrue, such an effort would presumably create lots of jobs in this country, and perhaps whole new industries. Is this feasible and practical, or is it an unattainable dream?

Just to set a baseline, the cost of the Apollo Program, adjusted for inflation, was roughly $170 billion, including all R&D and procurement. By comparison, Canada will spend about C$25 million to add one million barrels per day of synthetic oil production over the next decade (see my blog of September 23). The US today imports ten times that much oil. This suggests that Apollo is probably the right cost ballpark, though it does not tell us which path to pursue.

There are two broad, distinct strategies for getting there, each with very different paths and implications, and requiring different combinations of research, infrastructure, demonstration facilities, and incentives. The first would involve the production of substitute fuels that are compatible with our existing transportation energy system. That might include biofuels, such as alcohol or biodiesel, or synthetic oil from other hydrocarbon sources, such as coal, oil shale, or natural gas. This option would be mostly a matter of improving current processes, then embarking on a massive construction spree.

The other major alternative entails creating an entirely new energy system, along the lines envisioned for a hydrogen-based economy. This would require much more upfront R&D, construction of new, parallel infrastructure and, in the case of hydrogen or a similar energy carrier, a major increase in primary energy production. That could take the form of a vast expansion of renewable energy, new nuclear plants, or even new coal-fired power plants.

Without delving any further, the cost of the latter approach would clearly be much larger, and the transition period longer than for a synthetic hydrocarbon fuels program, because it would require so much new hardware. The timing and total cost are also much more uncertain, because they hinge on breakthroughs or major technology improvements that haven't yet occurred.

Choosing between these different strategies also takes us beyond the realm of energy security and into global environmental and industrial policy. For example, how important is it that the result be "carbon neutral", to avoid contributing to further greenhouse gas emissions? Are we just trying to back out oil imports, or do we want to transform the whole US energy economy? The more ambitious our goal, the longer it will take and the riskier the path will be.

The good news is that in either case the cost of oil imports should start to come down long before the final result was in place. The market would begin to discount the price of oil as soon as the tangible proof of our commitment--people and investment dollars--was in place. And oil producers with long-lived reserves, such as the Saudis, would likely react by bringing lots of production on quickly and flooding the market, to try to make our alternatives uneconomical. That alone would go a long way toward achieving Mr. Friedman's goals.

Unfortunately, although I think it's truly possible to mount an Apollo-like effort for energy, I just don't see the will to do it. If an election held against the backdrop of $50 oil wasn't sufficient to focus our attention on this issue, what would be? I also question whether such an approach would produce the best answer, since it would require making some irreversible choices early on. A less ambitious but still significant increase in energy R&D--both public and private--plus some X-Prize-like incentives for key technology milestones might not give us energy independence in ten years, but it could provide a range of great new options in surprising areas and lay the groundwork for a viable, sustainable energy future.