From next-generation nuclear power to ethanol to hydrogen to solar, the quest for energy that makes economic and environmental sense.
No one questions the need to develop new energy technologies. Government can play a critical role by increasing funding and reorganizing its programs. The United States must confront the reality of its energy circumstances. Consumers and industry are facing the prospect of a continued rise in the real price of oil and natural gas as conventional reserves are depleted. The increased reliance of the United States and its partners on imported oil—a large proportion of which comes from the hostile and politically fragile Persian Gulf—is constraining the nation’s pursuit of important foreign policy objectives. At the same time, greenhouse gas emissions, especially carbon dioxide emissions from coal-fired electricity-generation plants, are contributing to dangerous global climate change. In the absence of an aggressive U.S. carbon-emission control policy, there in no possibility of an international agreement on greenhouse gas emissions that includes both developed countries and rapidly emerging ones such as China and India.
Government policy is stoking unsustainable growth of the corn-based fuel. A more sober, diversified approach is needed. The new vogue in energy policy is plant-derived alternative fuels. Corn-based ethanol, and to a lesser extent oilseed-based biodiesel, have emerged from the margins to take center stage. However, although ethanol and biodiesel will surely play a role in our energy future, the rush to embrace them has overlooked numerous obstacles and untoward implications that merit careful assessment. The current policy bias toward corn-based ethanol has driven a run-up in the prices of staple foods in the United States and around the world, with particularly hurtful consequences for poor consumers in developing countries. U.S. ethanol policies rig the market against alternatives based on the conversion of cellulosic inputs such as switchgrass and wood fibers. Moreover, the environmental consequences of corn-based ethanol are far from benign, and indeed are negative in a number of important respects. Given the tremendous growth in the corn-based ethanol market, it should no longer be considered an infant industry deserving of tax breaks, tariff protection, and mandates.
To encourage utilities to emit less carbon dioxide, the government should implement—soon—a carbon portfolio standard with predictable requirements and guarantee loans for building advanced generating facilities. The electric power industry is the single largest emitter of carbon dioxide in the United States, accounting for 40% of CO2 emissions in 2006, up from 36% in 1990 and 25% in 1970. The electricity sector is therefore a natural target as federal and state governments begin to get serious about managing CO2 emissions. Moreover, because the marginal cost of reducing emissions in the electricity sector appears to be lower than in other sectors such as transportation, the electricity sector may deliver the largest proportional carbon reductions under an economically efficient climate policy.
Federal policymakers have long agreed on energy technology goals; now they must come together behind the policies that can succeed. The public policy goal for energy technology can be expressed simply: to induce technological innovations in the private sector that serve national energy policy. Stated thus, this goal embodies three fundamental principles about how the innovation process works that are grounded in long experience with federal energy R&D. Because these principles differ in some important respects from conventional wisdom, understanding them is the place to begin a discussion of how to achieve the goal.
The United States has long been “addicted” to foreign oil. But we now risk becoming dependent on foreign natural gas as well. The day after President Bush’s State of the Union address on January 31, 2006, the headline in many U.S. newspapers and in the electronic media was: “America Addicted to Oil.” Indeed, a major newsworthy section of the speech was the president’s proposals to break that addiction, especially from suppliers in unstable countries that can affect U.S. national security. He set a goal of replacing more than 75% of oil imports from the Middle East by 2025, largely through technological means.
Regulation of nuclear hazards must be consistent with rules governing other hazardous materials and must balance its risks against those linked to other energy sources. Although most of the radioactive material generated by nuclear energy decays away over short times ranging from minutes to several decades, a small fraction remains radioactive for far longer time periods. Policymakers, responding to public concern about the potential long-term hazards of these materials, have established unique requirements for managing nuclear materials risks that differ greatly from those for chemical hazards. Although it is difficult to argue against any effort to protect public safety, risk management will be most effective when each risk is evaluated in the context of other risks and balanced against the benefits produced by the regulated activity. Applying extremely stringent standards to one type of risk while other risks are regulated at a lower standard does not improve overall public safety. Similarly, foregoing a socially and economically valuable activity in order to limit relatively small future risk is not a sensible tradeoff. Therefore, developing an effective risk policy for nuclear power and radioactive waste requires looking at how the government regulates all hazardous waste and at the relative health and environmental effects of nuclear power as compared with those of other energy sources.
The Bush administration’s plan to use fuel reprocessing as the spark to revive nuclear power will not succeed. Only centralized interim waste storage can make a difference in the near term. For the first time in decades, nuclear power is back on this country’s list of possible energy sources. New nuclear power plants are on the drawing board. Public opinion is shifting in favor of nuclear energy. Even some veteran antinuclear campaigners have begun talking up its environmental benefits. The Bush administration has been actively promoting the nuclear industry. But its latest policy initiative threatens to set back the nuclear revival.
Increasing oil imports do not pose a threat to long-term U.S. national security. The current national debate on energy policy is held together by the proposition that increasing reliance on foreign oil is a national security threat that requires urgent action. Only the character of the needed action is in dispute. Some call for the development of renewable energy sources and conservation, whereas others want increased drilling on public lands and in the Alaskan National Wildlife Refuge. That the contending parties agree on the problem might seem a basis for optimism. Unfortunately, they are united only in being mistaken.
U.S. utilities have a lot to learn about avoiding power outages. They can benefit from the experience of foreign utilities, other U.S. industries, and even their own nuclear power plants. The United States ranks toward the bottom among developed nations in terms of the reliability of its electricity service. Catastrophic events, such as the August 14, 2003, blackout that put 50 million people in the dark, are well known, but that is only the most visible evidence of a problem that is pervasive in the U.S. electric system. Frequent small outages are endemic throughout the country. Although these might seem to be relatively minor inconveniences to homeowners, they can create serious problems for businesses. (See sidebar, “The Effects of Power Outages”). Other countries demonstrate that much greater reliability is achievable, and the U.S. nuclear power industry has demonstrated over the past three decades how vast improvements can be made in the United States.
To paraphrase Mark Twain, people talk a lot of reducing U.S. dependence on imported oil, but they don’t do much about it. Rather than continuing to talk the talk, the United States has a unique window of opportunity to walk the walk. The -plus per gallon gasoline prices and our Middle East wars have made the public and Congress acutely aware of the politics of oil and its effects on our national security. With every additional gallon of gasoline and barrel of oil that the nation imports, the situation becomes worse.
Clean, efficient, and reliable small-scale generators are ready for action if we can clear away the regulatory barriers. More than four generations of U.S. residents have come to accept the notion that electricity is best produced at large centralized power plants owned by monopolies. As a result, utilities continue to be protected from market discipline, and few people challenge the wildly inaccurate assumption that the United States has already achieved maximum efficiency in producing electricity.
The technology is advancing rapidly; now the government needs to lead the push for deployment. Human activity spills about 25 billion tons of carbon dioxide (CO2) into the atmosphere every year, building up the levels of greenhouse gases that bring us ever closer to dangerous interference with Earth’s climate system. The world’s forests take up about 2 or 3 billion tons of that output annually, and the ocean absorbs 7 billion tons. Experts estimate that another 5 to 10 billion tons of this greenhouse gas—as much as 40% of human-made CO2—could be removed from the atmosphere and tucked safely away.
By overlooking nuclear power in the quest for clean energy, we are condemning ourselves to a future of increased fossil fuel use. For more than three decades, energy policies in the United States and much of the Western world have been held in the ideological grip of a flawed concept: the notion that we can achieve sustainable energy by relying solely on conservation and renewable resources, such as wind, the sun, the tides, and organic materials like wood and crop waste. Born in the wake of the 1973 oil embargo and arising out of renewed commitments to environmental quality, this idea has an almost religious appeal. An unintended result is that the world has become ever more reliant on fossil fuels and therefore less able to respond to global warming.
Oil production will begin to decline in the near future. Beginning to prepare now will soften the blow to the economy. World demand for oil continues to increase, but Earth’s endowment of oil is finite. Accordingly, geologists know that at some future date, conventional oil supply will no longer be capable of satisfying world demand; conventional oil production will have peaked and begun to decline. No one knows with certainty when peaking will occur, but a number of competent forecasters think it could be soon, which could result in unprecedented worldwide economic problems. Policymakers should be preparing now to ease the passage through this inevitable transition.
Although human error can be the proximate cause of a blackout, the real causes are found much deeper in the power system. About every four months, the United States experiences a blackout large enough to darken half a million homes. As long ago as 1965, a massive blackout in New York captured the nation's attention and started remedial action. But that was almost 40 years ago, and still we have not ended blackouts nor even reduced their frequency significantly. Major advances in system regulation and control often evolve in complex systems only after significant accidents open a policy window. The recent blackouts in this country and abroad have created such an opportunity.
We should not let unjustified fear of radiation create obstacles to continued progress and benefits. In his 1953 "Atoms for Peace" address to the United Nations, President Dwight D. Eisenhower challenged scientists and engineers to harness the atom for humanitarian purposes in medicine, agriculture, and other non-power aspects of direct benefit. Half a century later, nuclear technology has had astounding economic and job impacts in the United States (see Table 1). The totals in terms of dollars and jobs are impressive, but perhaps the biggest revelation is that the atom has a substantially larger impact outside the nuclear power sector than in it.
The potential benefits are enormous if we can continue to make progress on safety, environmental, fuel supply, and proliferation concerns. President Dwight D. Eisenhower electrified the United Nations (UN) General Assembly with his vision that "the fearful trend of atomic military buildup can be reversed, this greatest destructive force can be developed into a great boon for the benefit of all mankind . . . to serve the peaceful pursuits of mankind . . . [in] electrical energy, agriculture, medicine, and other peaceful activities." He further proposed to "allocate fissionable material [for peaceful uses] from a bank under international atomic energy agency control [and] . . . provide special safe conditions under which such a bank of fissionable material can be made essentially immune to surprise seizure." Although the "bank" never eventuated, the Nuclear Non-Proliferation Treaty (NPT) and the International Atomic Energy Agency (IAEA) were instituted to apply the controls associated with a new "bargain": Nations forgoing nuclear weapons development would be given the peaceful benefits of nuclear technology.
We should embrace hydrogen largely because of the absence of a more compelling long-term option. The history of alternative transportation fuels is largely a history of failures. Methanol never progressed beyond its use in test fleets, despite support from President George H. W. Bush. Compressed natural gas remains a niche fuel. And nearly every major automotive company in the world has abandoned battery-electric vehicles. Only ethanol made from corn is gaining market share in the United States, largely because of federal and state subsidies and a federal mandate. Some alternatives have succeeded elsewhere for limited times, but always because of substantial subsidies and/or government protection.
We can't use hydrogen's long-term potential as an excuse to avoid taking action now on reducing greenhouse gas emissions. Hydrogen and fuel cell cars are being hyped today as few technologies have ever been. In his January 2003 State of the Union address, President Bush announced a .2 billion research initiative, "so that the first car driven by a child born today could be powered by hydrogen, and pollution-free." The April 2003 issue of Wired magazine proclaimed, "How Hydrogen Can Save America." In August 2003, General Motors said that the promise of hydrogen cars justified delaying fuel-efficiency regulations.
Most energy-economic models do not provide policymakers with the information they need to make sound decisions. When federal lawmakers pass--or do not pass--legislation related to the production and use of energy, their actions ripple across society. Their decisions affect not only the mix of fuels, the price of power, and the spread of pollution, but also federal deficits, corporate fortunes, and even national security. Thus, policymakers need to have in hand the best possible projections about the future demand, supply, and cost of various energy options. Unfortunately, a growing disconnect exists between politicians and the economists who develop those projections.
A surprising consensus on how to reduce air pollution is being held up by a political dispute. Air quality policy--technically complex and always contentious--has become the focus of bitter controversy. The public debate is about an Environmental Protection Agency (EPA) program called New Source Review (NSR), which regulates emissions from industrial facilities. There's a surprising consensus about how to fix NSR: emissions caps and a trading system. But underlying the debate and preventing compromise is deep disagreement about the future of the powerful coal industry. The administration would protect coal, whereas others give precedence to public health.
Most of what I wrote in "Engineering in an Age of Anxiety" and "Energy Policy in an Age of Uncertainty" I still believe: Inherently safe nuclear energy technologies will continue to evolve; total U.S. energy output will rise more slowly than it has hitherto; and incrementalism will, at least in the short run, dominate our energy supply. However, my perspective has changed in some ways as the result of an emerging development in electricity generation: the remarkable extension of the lifetimes of many generating facilities, particularly nuclear reactors. If this trend continues, it could significantly alter the long-term prospect for nuclear energy.
War and terrorism have changed a lot about how we think about oil markets. But one thing they haven't changed during the past 14 years is the fact that excessive dependence on oil in our domestic energy mix exposes us to potentially serious economic and security risks. And they have not changed the importance of taking action to cut oil consumption in the U.S. economy.
Congress should approve the nuclear waste repository, but it needs to offer more substantial benefits to Nevada. As this is written in the late winter of 2002, the stage is set for a struggle in Congress over whether to override the impending Nevada veto of President Bush's selection of the Yucca Mountain nuclear waste disposal site. The geologic repository that would be built there for spent fuel from nuclear reactors and for highly radioactive defense waste would be the first such facility anywhere in the world. The criticism and doubts raised about the president's decision are cause enough--even for one long convinced that the place for the repository is Nevada--to wonder whether the Yucca Mountain project can be licensed and built.
The answers will be found in improved technologies and incentives to use them, not in the Arctic National Wildlife Refuge. The United States and the world face a daunting array of energy-related challenges. We must work out how to provide, reliably and affordably, the supplies of fuel and electricity needed to sustain and build economic prosperity. We must limit the financial drain, vulnerability to supply-price shocks, and risk of armed conflict that result from overdependence on foreign oil. We must reduce the environmental damage done by technologies of energy supply, ranging from local and regional air pollution to the disruption of global climate. We must minimize the accident and proliferation dangers associated with nuclear energy.
The California crisis shook public faith in restructuring, but that path is still the best route to follow. During the more than 100 years from the inception of the electric utility industry in the latter part of the 19th century through 1995, the inflation-adjusted price of electricity in the United States dropped by about 85 percent, the U.S. power grid enjoyed a reliability record second to none, and the industry achieved the world's highest output per employee. Every year, customers consistently ranked their local utilities among the one or two most respected institutions in their communities. All this was achieved under a system where most utilities owned all their own generators, high-voltage transmission lines, and local distribution systems in one vertically integrated, regulated (or government-owned) company.
Removing the barriers to competition is essential to remaking an outdated system. This nation's electric power industry is undergoing profound change. Just when lawmakers are replacing regulated monopolies with competitive entrepreneurs, a new generation of highly efficient, low-emission, modular power technologies is coming of age. Yet surprisingly little policy discussion, either in the states or in Washington, has focused on how to restructure this giant industry in ways that spur technological innovations and productivity throughout the economy.
To keep pace with the cutting edge of fusion research, the United States must participate in the planned international research reactor. The United States must soon decide whether to participate in construction of the International Thermonuclear Experimental Reactor (ITER). ITER is the product of a years-long collaboration among several countries that is both a major advance in fusion science and a major step toward a safe and inexhaustible energy supply for humanity: practical power from fusion.
It's time for the U.S. program to abandon its dead-end focus and to explore alternative paths to practical fusion power. Major shifts are taking place in the U.S. fusion research program, driven primarily by reductions in federal funding. In the past, the program was dedicated almost completely to developing practical fusion power. Today, the program claims to be devoting roughly two-thirds of its resources to high-temperature plasma physics research and only one-third to fusion power. We believe that a significant shift back to the development of fusion power should be considered. If this shift is to be made, it must be made now, because the United States will soon decide whether or not to participate in the next stage of the International Thermonuclear Experimental Reactor (ITER) project. A commitment to ITER will claim such a large share of U.S. fusion research funds that it will essentially preclude significant exploration of other fusion concepts for at least a decade. To understand what is at stake, it helps to understand the history of the U.S. fusion program.