Clear Energy Goals

The President's comments about oil addiction have stirred up every commentator with any interest in oil, from every political, geopolitical, environmental, and economic perspective. Nicholas Kristof's column in the Sunday New York Times (Times Select subscription required) is a good example, seizing on the potential of plug-in hybrid cars to reduce oil dependency by delivering 100 miles per gallon or more, using nearly off-the-shelf technology. But not only does this exemplify the appeal of technology as a solution to our energy problems (see Friday's posting,) but it also reflects the current muddle of unclear and conflicting energy visions. Are we trying to save oil, emissions or energy in general?

Plug-in hybrids are a fascinating technology with great potential. But while offering one answer to our concerns about rising oil consumption, they raise a host of unanswered questions about our enormous energy economy and systems. Shifting the burden of powering cars from petroleum products to electricity only makes sense, if we believe that we can generate and deliver electricity at a lower cost than the energy equivalent of gasoline, with lower overall emissions--including not just local pollutants but also greenhouse gases--and without imposing unmanageable stresses on our already-strained electricity grids.

When you delve further into those issues, you run into all sorts of other problems, including tight domestic supplies of natural gas, with most gas import options, such as LNG and trans-continental pipelines, facing financial and NIMBY obstacles; Clean Coal power plant technology that is available, but can't be easily retrofitted to existing plants; nuclear power, with all its pros and cons; and chronic underinvestment in electric infrastructure. Considering these complexities, it's essential to state our energy goals clearly. It's fine to push for reducing our oil imports, as the President suggested, but we need to understand that this will not resolve our larger energy problems, without a more comprehensive plan.

For example, Geo-green advocates see the potential for using plug-in hybrids as a reverse oil weapon against Islamic extremism. That's a worthy goal, but I wonder if they appreciate what a slow-motion weapon this would be. Annual US car sales of 17 million units only represent 7% of the country's car and light truck fleet. If 10% of all new cars sold were plug-in hybrids--a sales goal it would take years to reach, once the technology is ready--it would still be another decade before they displaced 10% of the current fleet. So even if they got 1000 miles per gallon, they would only improve our fleet fuel economy by 10%, or about 2.5 mpg over 20 years. That's not trivial, but it won't reverse our oil import trends without broader changes in how we use the vehicles we already have.

The economics of all this begins to look shaky, too, when you consider that the more economical you make a car, the less benefit the next tranche of fuel economy provides. Consider a basic hybrid car costing $3,000 more than a conventional model and improving fuel economy from 20 mpg to 40 mpg. That saves the average driver $900 per year at $3/gallon but requires almost four years to pay for itself, ignoring tax credits that only shift who pays. Now let's say a plug-in option is available to take it from 40 mpg to 100 mpg. The additional annual fuel savings, however, only amount to $540, and that ignores the cost of off-peak electricity that, though cheaper than gasoline--partly because it isn't taxed--most definitely isn't free. So unless the plug-in upgrade is cheaper than the basic hybrid option, the payout for this extra level of fuel savings will be much longer.

We face huge, complex problems across the entire energy spectrum, and although they will yield to patient solutions, there are no quick or cheap fixes. Oil isn't a bad place to start, but this can't be done in a vacuum, without understanding and accounting for all the knock-on effects. Otherwise, we risk making the broader picture worse, particularly in the area of greenhouse gas emissions. Whether our long-term personal transportation will be based on plug-in hybrids or hydrogen fuel cells, we require a comprehensive strategy for the natural gas, renewables, coal and nuclear power that will generate the electricity and hydrogen upon which they would depend.