The Big Chunks

In my first posting of the year, I suggested that the new administration faced a big decision about our national energy policy, between making either energy security or our response to climate change its top priority. Whichever they choose, President Obama's team needs a framework for implementing that selection, and I'd like to suggest one that appears to go distinctly against the grain of their current thinking. Rather than focusing mainly on renewable energy, a successful US energy strategy must come at this problem from the perspective of its largest elements--the fuels and technologies that account for more than 90% of our current energy supply--not the smallest current pieces, no matter how rapidly they are growing. Renewables are important and destined to become much more so, but we should assess them in terms of their usefulness in displacing those conventional energy sources that are in most urgent need of substitution, as we proceed to reduce emissions or improve energy security.

Oil is still by far our largest energy source, comprised of two main components, domestic production and oil imports. Together they accounted for 39% of the 101.6 quadrillion BTUs (quads) of energy that the US consumed in 2007, split 28%/11% between imports and US production, respectively, though the latter understates the contribution of domestic oil drilling, which also provides around one quarter of our natural gas output. As shown in the pie chart below, natural gas comes next, followed by coal and nuclear power. These five "big chunks" together make up 93% of the total energy we consume, 91% of our electricity generation, and roughly 99% of the energy used for transportation.





Next consider how large renewable energy is likely to grow over the next two decades. The latest forecast from the US Department of Energy anticipates the contribution of wind, solar, geothermal and biomass, including biofuels and biomass-power, to grow from 3.5% of US energy consumption in 2007 to 7.7% by 2030. This estimate still seems fairly conservative, so let's be generous and assume it could reach 15-20%. I know that won't seem aggressive to the most ardent advocates of renewables, but considering the obstacles that would need to be overcome, including making cellulosic biofuel cost-competitively on an industrial scale and expanding non-dispatchable forms of renewable electricity production such as wind and solar into market segments currently dominated by on-demand power from gas turbines and coal plants, it's plenty ambitious. Thus with hard work, dedication and ample investment in the sector, we just might be able to grow renewable energy large enough in 20 years to replace one of those five big blocks I mentioned earlier. Which one to choose depends on the priority of emissions reductions vs. energy security.

The most popular target today would probably be imported oil, widely regarded as the major source of energy insecurity. While obtaining 20% of our future energy from renewables doesn't quite match up with the current 28% from imported oil, with some help from efficiency improvements it just might do the trick. Of course, that would mean that the energy from wind, solar and other electricity-producing technologies would have to displace petroleum products by means of the mass marketing of plug-in electric vehicles. 21 years is not a tremendously long time for that to happen, given the decade that it has taken non-plug-in hybrids to reach a 2.4% market share, but if we're dreaming, let's dream big. So by 2030 we've displaced foreign oil, captured all that money we used to send overseas, and presumably beggared the Middle East. Unfortunately, we have only made a medium-sized dent in our greenhouse gas emissions in the process. Transportation was the number two source of those, and cutting its contribution roughly in half--which is probably optimistic, given the emissions associated with current biofuels--would reduce our 2006 emissions by 15%.

Another popular alternative would be to go after coal's market share. In theory getting 20% of our energy from renewables ought to be sufficient to cut coal use by about 85%--or perhaps only 70% if we allow that we'd be unlikely to burn liquid biofuels such as ethanol and biodiesel to make electricity. Still, cutting 70% of the emissions from coal would reduce US GHG emissions by nearly 25% (very large file), which would put us well on the way to cutting them by 80% by 2050, as envisioned by the administration and Congress. Unfortunately, the fastest-growing renewable energy technologies, wind and solar power, do not compete very well with coal-fired power plants. The latter can run 24/7, providing baseload and mid-load dispatchable power, electricity that is there whenever someone flips the switch, while wind is intermittent, producing power less than a third of the time--often when demand is low--and solar is cyclical and seasonal, making its best contribution into the afternoon demand peak.

When we take these factors into account, wind and solar turn out to be most interchangeable with our least objectionable fossil fuel, natural gas. In this regard, at least, Mr. Pickens' Plan is built on solid ground. But would we really want to displace a large portion of the 23% of our energy we get from natural gas with renewables, or back out the 32% of US natural gas used for electricity, in order to substitute it for petroleum products in cars or elsewhere? At a glance, the energy security and greenhouse gas benefits of this seem less compelling than the direct substitution of renewables for imported oil noted above. And I haven't even mentioned the possibility of using renewables to displace nuclear power, because that would at best net us zero in terms of either energy security or greenhouse gas benefits.

What this framework does, then, is to translate our competing energy priorities into their resultant choices about how best to employ the limited quantities of renewable energy we are likely to have within the next two decades, relative to the major elements of our current energy supply and demand balance. In addition, our preferences for which big chunk of conventional energy on which to focus our efforts will determine which particular renewable energy technologies look most advantageous and deserving of government help in the form of R&D, investment and deployment incentives. From where I sit, this looks like a much more sensible approach than the status quo one that assumes all renewables are equally beneficial in our complex energy economy and that supports them all, indiscriminately.