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US Energy Policy

US Energy Policy

Energy Policy

The incandescent lightbulb is now outlawed.[1]  This fact is a perfect metaphor for “energy policy.”  Should it be illegal in the United States to manufacture, sell, buy, and use a traditional incandescent light bulb?  Your informed answer to that question will provide deep insight into your views on hundreds of other energy policy questions.   (BTW, my answer is no, but I bet you guessed that.)

Energy is the lifeblood of our economy; it touches your life in a hundred ways each day.  Yet energy policy--the set of government rules and regulations that prescribe how energy is produced, delivered, and consumed--is a complex and even a chaotic subject.

Energy was an uninteresting subject for the average person prior to the OPEC Oil Embargo in 1973.  Oil prices had been stable at about $20 a barrel in real terms for nearly a century and electricity prices had declined from about 22 cents per kilowatt to about 13 cents from 1960 to 1973, even as consumption of electricity quadrupled from 1950 to 1973, as more and more homes and appliances used electricity and utilities became better at building large coal and nuclear plants.

But the OPEC Embargo changed everything about energy and energy policy.  Four points will illustrate this importance. 

  • President Jimmy Carter’s presidency (1976 to 1980) was dominated by energy issues which he characterized as the “moral equivalent of war.” 
  • A little more than two decades later a California governor was recalled because he botched an electricity crisis in California and Arnold Schwarzenegger was elected Governor. 
  • There is a widespread perception that the US has gone to war in the Middle East over oil issues.
  • The Pope of all people has recently declared war on climate change, most of which is laid at the feet of fossil energy.

Part of the complication in energy policy is that it must be addressed on many fronts; international, national, State, and local governments all have a role in stirring the pot. 

Many books and articles are written on very specific aspects of energy policy but most are written for other experts.  Surprisingly, few are written that cover the broad landscape of energy policy.  Even fewer of these writings take a strong market-oriented perspective; the vast majority take an interventionist approach largely for environmental and oil import reasons.  And none that I have found are addressed to the pro-market political activist who has a real job during the day and then tries to save the country in his or her spare time.  This discussion is for that heroic citizen, The Forgotten Man.

So what’s the bottom line on energy policy? 

  • First, we make energy policy much more difficult than it has to be.  Energy is a commodity just like wheat or cars or hamburgers.  Mostly, we rely on competitive markets in each of these other commodity industries to make sure that we have an adequate supply to meet the consumers’ needs at reasonable prices.  But we treat energy differently.  I venture to guess that there are only a few industries more affected by government intervention than energy.  Why is that?  Does that mean we benefit from that intervention?  Is there a better way?  The article explores these questions.
  • Second, right now energy policy is being driven by climate change.  Even if one is sympathetic to some of the claims made about climate change, many stupid actions are being taken in its name that has profoundly negative effects on energy markets. 
  • Third, oil issues get the most attention but we do not face any real danger in oil markets.  Oil trades in global markets and while there may be price fluctuations (as I write, oil is about $35 a barrel, having been over $100 in the recent past), we will never face a situation where we run out of oil.  Most countries with plentiful oil have built their economies on oil revenue and the recent drop in oil prices has created serious political problems for these countries.  They simply can’t afford not to produce oil.  But problems in oil markets can result in unnecessarily higher prices and thus we need to pay some attention to them in order to promote prosperity. 
  • Fourth and most important, electricity faces real problems that could result in catastrophic failure of the system, thus threatening not only prosperity but human life.  The major framework for electric policy was set in 1935.  That framework worked fine up to the OPEC Embargo.  Electricity can compete against oil and natural gas in many applications.  Thus adjustments were necessary to the historical framework after the Embargo.  But policymakers have only nibbled at the edges of electricity policy and have not fundamentally changed the 1935 framework.  Yet little more than additional tinkering is being done to promote an electricity industry for the 21st Century.  Many special interests are pushing and pulling on the antiquated framework for personal gain but few are fundamentally committed to a complete rethinking of the role of the electric system of the future, especially given the increasing digitalization of our economy.  And as noted above, unsound policies on climate change make electric issues even more difficult.


[1] This is a good place to make a point.  Some pointy headed academics will disagree with even this first sentence.  Technically, Congress did not “ban” incandescent bulbs in the Energy Independence and Security Act of 2007.  Rather, they set a standard that most, if not all, traditional incandescent bulbs could not achieve and established a schedule for light bulbs of different wattages to meet this standard.  So it is fair to say that Congress outlawed incandescent bulbs.  But since the accompanying Article is a synthesis of the broad topic of “energy policy” it would needlessly clutter and complicate the text to be “technically” accurate in every instance.  The size of the document would need to double and the reader would understand less of the essence of energy policy if I did not make some broad generalizations.  Nonetheless, I am sure I will receive some criticism that many of my statements are not “technically correct.”  I hope that making this point early in the article will allow for a better understanding of the content of the Article.

 

Highlighted Article: Net-Zero Carbon Dioxide Emissions By 2050 Requires A New Nuclear Power Plant Every Day

  • 10/10/19 at 11:20 AM

From: Forbes

By: Roger Pielke

Date: September 30, 2019

 

Net-Zero Carbon Dioxide Emissions By 2050 Requires A New Nuclear Power Plant Every Day

 

"More than a decade ago, Gwyn Prins and Steve Rayner characterized climate policy as an “auction of promises” in which politicians “vied to outbid each other with proposed emissions targets that were simply not achievable.” For instance, among Democrats competing for the presidency in 2020, several, including Joe Biden, have committed to achieving net-zero carbon dioxide emissions by 2050. Candidate Andrew Yang bid 2049, and Cory Booker topped that by offering 2045. Bernie Sanders has offered a 71% reduction by 2030.

One reason that we see this “auction of promises” is that the targets and timetables for emissions reductions are easy to state but difficult to comprehend. Here I’ll present what net-zero carbon dioxide emissions for 2050 actually means in terms of the rate of deployment of carbon-free energy and the coincident decommissioning of fossil fuel infrastructure." ...

 

Net-Zero Carbon Dioxide Emissions By 2050 Requires A New Nuclear Power Plant Every Day

 

Tags: Highlighted Article

USA Climate Priorities 2

The previous commentary on USA Climate Priorities discussed priorities regarding climate science, specifically regarding: accurate temperature measurement; establishment of specific values for climate sensitivity and feedbacks; and, verifying a climate model. Addressing these priorities is essential to understanding the potential future challenges which might be presented by climate change.

This commentary focuses on priorities regarding energy production. The extent to which US and global energy production must move toward zero CO2 emissions is a function of the results of the climate science research discussed above and in the previous commentary. Results confirming low sensitivity and minimal or negative feedbacks would suggest a modest progression toward increased renewable energy production. Results which confirmed high sensitivity and positive feedbacks would suggest a more aggressive progression toward zero emissions technologies for energy production.

There is growing recognition that a sole focus on wind, solar and battery storage to replace the current global energy infrastructure would represent a high cost, low reliability approach which would ultimately prove unacceptable or unachievable, absent some major scientific breakthroughs.

There are three reliable and dispatchable zero emissions technologies employed in the current global energy economy: nuclear, hydroelectric and geothermal steam. There are three additional potentially reliable and dispatchable technologies which have been identified but remain to be developed and implemented: wave energy, ocean thermal energy conversion and dry hot rock geothermal.

Several US thought leaders, including Bill Gates and James Hansen, are convinced that the dramatic reductions in global CO2 emissions envisioned by environmental and climate activists are unachievable without a significant increase in nuclear energy production. Nuclear technology is proven and is capable of significant expansion to meet current and future needs, as are hydroelectric and geothermal generation, though to a lesser extent.

Research priorities for nuclear generation include: inherently safe reactors; modular reactors; reactors capable of using a higher percentage of the energy available from the nuclear materials; and, reactors capable of being fueled with the spent fuel currently stored at nuclear generating facilities. Some research has already been conducted in each of these areas, but these efforts could easily be expanded and accelerated.

Hydroelectric development is currently underway in several countries, including China and India. Attempts to expand  US hydroelectric capacity have met with fierce resistance from environmental activists, many of whom argue for removal of existing hydro facilities. Some environmental organizations do not even include hydro in their lists of renewable technologies.

Geothermal steam generation is currently limited to areas where there are currently steam vents. Dry hot rock geothermal could be far more widely available, since dry hot rock could be accessed globally. However, limited experiments in Europe have triggered earthquakes, resulting in suspension of the research efforts.

Wave energy and ocean thermal energy conversion are also in their infancy but have very significant generation potential if successfully developed and deployed.

Major energy technology research efforts to advance these technologies could result in lower cost, reliable energy supplies; and, in major new industries to build, manage and maintain them. These research efforts could offer the potential to provide reliable electricity to developing and not-yet-developing countries as an alternative to expanded fossil fuel generation.

 

Tags: Renewable Energy, Nuclear Power

Highlighted Article: The "New Energy Economy": An Exercise in Magical Thinking

  • 4/18/19 at 06:00 AM

 

From: Manhattan Institute

By: Mark P. Mills

 

THE “NEW ENERGY ECONOMY”:AN EXERCISE IN MAGICAL THINKING

 

"A movement has been growing for decades to replace hydrocarbons, which collectively supply 84% of the world’s energy. It began with the fear that we were running out of oil. That fear has since migrated to the belief that, because of climate change and other environmental concerns, society can no longer tolerate burning oil, natural gas, and coal—all of which have turned out to be abundant.


“So far, wind, solar, and batteries—the favored alternatives to hydrocarbons—provide about 2% of the world’s energy and 3% of America’s. Nonetheless, a bold new claim has gained popularity: that we’re on the cusp of a tech-driven energy revolution that not only can, but inevitably will, rapidly replace all hydrocarbons..."

 

THE “NEW ENERGY ECONOMY”:AN EXERCISE IN MAGICAL THINKING

 

Tags: Highlighted Article

Future World – How Many Windmills Would We Need?

The US currently consumes approximately 97 quadrillion British Thermal Units (BTU) of energy in all forms each year (97 Quads). Since this quantity of energy and the forms of energy which constitute it vary over time, this analysis will use rounded numbers to avoid the impression of unjustified accuracy or precision.

Current US energy consumption, by fuel source, is approximately:

  Natural Gas 29 Quads
  Coal 14 Quads
  Oil 36 Quads
  Renewables 10 Quads
  Nuclear 8 Quads

 

Current US electricity consumption is approximately 12 quads.

 

 

The objective of the climate change movement is to eliminate fossil fuel consumption by the end of the century, if not before. The climate change movement is also not supportive of nuclear power generation or additional hydroelectric generation. Achieving their goal would require replacing the useful energy services provided by approximately 87 quads of current US energy consumption with renewable sources of energy. As shown above, current US energy consumption produces only approximately 31 quads of useful energy services. The balance of the energy consumed is rejected as the result of process inefficiencies. Therefore, approximately 21 quads of additional renewable energy would be required to replace the useful energy services currently provided by fossil fuels and nuclear, assuming 100% utilization efficiency. At a more realistic utilization efficiency level of 60%, approximately an additional 35 quads of renewable energy would be required.

One scenario would provide the entire 35 quads of additional renewable energy with wind generation. If we assume a mix of onshore and offshore wind generation, an average wind turbine capacity of 3 MW and an average wind turbine capacity factor of 35%, the incremental generating capacity required would be approximately:

35,000,000,000,000,000 BTU/yr

3MW/WT * 0.35 * 1,000,000 W/MW * 3.413 BTU/Whr * 8766 hours/yr. = 35,000,000,000,000,000 BTU/yr

31,000,000,000 BTU/yr = 1,200,000 wind turbines

Normal electric industry practice would provide a capacity reserve margin of approximately 20%, to allow for weather extremes and equipment outage for maintenance and repair. This would increase the number of additional wind turbines required to approximately 1,450,000.

Hourly variations in electricity demand can average approximately 60%, which would require either additional generation capacity or storage capacity equal to approximately 30% of peak demand. Seasonal demand is also higher in summer and winter than in spring and fall, requiring additional, longer term, storage.

Current US electric generating capacity is approximately 1,000 Gigawatts (GW), of which 70 GW is wind generators and 80 GW is hydroelectric generators. Replacing the remaining 850 GW with 3 MW wind turbines at a 35% capacity factor would require approximately 800,000 wind turbines.

Therefore, it would require approximately 2.3 million wind turbines to replace existing fossil and nuclear generated electricity and the current direct uses of coal, oil and natural gas. That is approximately 30 times the current installed wind generation capacity. Other scenarios might rely on a combination of wind and solar initially, with later additions of Ocean Thermal Energy Conversion and Wave Energy. Regardless, this would be a monumental task.

 

Tags: Renewable Energy, Wind Energy
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