Renewable energy and fossil fuel advocates have one thing in common – an unhealthy tendency to fall in love with a particular energy technology, writes Hal Harvey, founder and CEO of think tank Energy Innovation. Policymakers for their part often fall in love with particular policies. But according to Harvey, what matters is setting ambitious goals, adopting policies that reward performance and let the dynamics of the market work out how to get there.
Will nuclear power solve the world’s problems? Are solar and wind the answer to everything? Can natural gas save the day? What about biomass or clean coal?
The proper role for a nuclear advocate is being a genuine problem-solver, rather than a one-note advocate
Each of these technologies has a cadre of vocal advocates, but they are a bit myopic. The problem is that picking winners and losers based on such biases sells the country short. Technologies should be judged based on their ability to power the economy in a clean, safe, reliable, and affordable manner. Choices that ignore one of these core goals fail that basic duty.
No silver bullet
Every technology has advantages and downsides. Nuclear power, for example, offers tremendous energy density, and carbon-free, 24-hour power. But any honest assessment of nuclear power will also show profound problems—cost, siting, waste, and nuclear weapons proliferation.
Nuclear power’s future will only come about if these four issues are dealt with. A number of design ideas can help with each issue but none have been tested, much less deployed, at a reasonable cost. So the proper role for a nuclear advocate is being a genuine problem-solver, rather than a one-note advocate.
Different challenges arise with solar and wind. These clean energy technologies now provide the cheapest electricity ever offered. But they face issues with siting, variability, energy density, transmission, and more. Sound solutions exist to solve all these problems, and each has been demonstrated somewhere, but no one has combined them all into a 100 percent renewable energy grid. Policymakers must listen to solar and wind advocates, but also demand tractable solutions to these challenges.
Natural gas is plentiful and cheap, and in the U.S., remarkably accessible for heating, electricity production, and chemicals. But densely located fracking wells threaten environmental destruction, and if more than 3 percent of gas leaks anywhere in the system—from extraction and compression, to distribution and use—gas is worse than coal for the climate. And even if gas leakage fell to zero, it still creates about half the carbon dioxide emissions of coal—not enough to protect the climate.
Billionaire Philip Anschutz, who owns conservative-leaning newspapers and has donated millions to Republican politicians, is building America’s largest wind farm
Coal is perhaps the most hotly contested energy technology today, benefiting from a centuries-old system that was quite literally built around the energy source. A coal plant can run 24/7, and the capital stock is already mostly in place. Calculations suggest enough coal reserves exist to power the world’s energy systems for many decades to come—but coal generates the most carbon emissions of any generation technology, and is increasingly being beaten in the markets by natural gas and renewables.
Other energy technologies similarly face biases, both in their favor and against. The key is to focus on public amenity: Energy must be reliable, affordable, and clean – then see what stacks up.
In Wyoming for example, home to 42 percent of American coal output, billionaire Philip Anschutz, who owns conservative-leaning newspapers and has donated millions to Republican politicians, is building America’s largest wind farm. This project will sell electricity to California via a new 700-mile transmission line, generate $8 billion in new investment, create hundreds of new construction jobs to replace lost coal mining jobs, and could herald a new economic boom for the state.
But a prejudice against wind almost prevented this economic boom. Wyoming proposed a steep tax on wind power, seeking wind tax hikes from $1 per megawatt-hour to $5 (no other state taxes wind). “We don’t want more wind,” one state legislator reportedly said to a developer. “We want you to burn more coal.” Luckily, both the developer and Wyoming’s Republican governor understand that a good job is a good job, and if it comes from clean, cheap electricity production, so much the better.
Love is blind (on energy policy)
Falling in love with a particular policy can also create blindness: Are tax credits the solution, or should one prefer energy subsidies? Should government support basic research, or applied? Will carbon pricing aid disadvantaged communities, or simply raise their costs of living? Should new technologies access markets, or should they face barriers?
The intelligent way to answer these questions is, again, to test each idea against the same social goals—reliability, affordability, and cleanliness. Affordability requires technology innovation and exploiting the dynamics of the free market. Clean power requires policy that puts a real value on avoiding asthma and climate change. Reliability requires alignment of both market forces and public values.
Of course, tensions exist between the goals: It may be cheap to burn coal in an old power plant, but it is certainly not clean, just as it seemed cheap for years to buy Mideast oil, until the Arab Oil Embargo laid bare our national energy security vulnerabilities. The best policies, though, hit all three goals.
Building a zero-carbon grid gets dramatically easier if policymakers took a results-oriented approach focused on optimizing the power system over prioritizing a specific technology or policy
For example, many states are transforming utility business models to compensate utilities for the services they provide—rather than for the electrons they produce or the plants they build—through performance-based regulation. This replaces capital deployment as the key metric for success, and focuses utility managers on providing core social goals. The utility uses whatever means makes the most sense to achieve that end, selecting from energy efficiency, generation, grid upgrades, purchased power, demand response, and so forth. Utility regulators would not have to make technology choices, nor do line-by-line oversight of utility expenditures.
Similarly, building a zero-carbon grid gets dramatically easier if policymakers took a results-oriented approach focused on optimizing the power system over prioritizing a specific technology or policy. The utility must “dispatch” efficiency resources to meet demand: wheeled power; fast-ramping but short-operating fossil, dispatchable renewables like hydro, biomass, and geothermal; and batteries, all in concert to offset wind and solar variability. Indeed, system optimization becomes the new utility business model in a 21st century power system, and the reward structure must point the entire company in that direction.
The clear lesson in both technology and policy is to set ambitious goals, inscribed in policy that rewards performance, and let the dynamics of the market work toward these ends.
By Hal Harvey
Hal Harvey is the founder and CEO of Energy Innovation, a San Francisco-based energy and environmental policy think tank.