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Al Gore's Energy/Climate Policy - Another Take
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Gore’s Proposal: “Enlarging the Policy Space,” or Polluting It?
by Dan Kirshner, July 28, 2008
I agree with Mr. Gore that we need to get a serious start on cutting back the emissions that are the cause of global warming. But Mr. Gore’s plan – an Apollo-moon-shot-like-effort to achieve a carbon-free electric system in ten years – is more than a stretch, more than ambitious, more than very, very tough. It is wrong. Even if we settle for the achievable – call it 90%, or 70% – it will waste money that we can’t, shouldn’t, and won’t waste. In a moment I’ll detail why this is so.
Must a challenge to the American public – “I can do it in ten years,” analogous to Kennedy’s man-on-the-moon challenge – take a damn-the-cost approach? That is what Mr. Gore is doing. His goal is “to enlarge the policy space” as he told Tom Brokaw on “Meet the Press.” Perhaps the carbon-free-in-ten-years goal is a case of “bait and switch”? Apparently not. Mr. Gore continues to argue – as he did to Tom Brokow – that the goal “is achievable, and I think it’s important that I achieve it.”  Evidently Mr. Gore wants us to take his proposal seriously.
Here’s why it’s difficult to take seriously Mr. Gore’s goal of a carbon-free electric system in ten years.
First, let’s get some details on the goal, and our starting point. While Mr. Gore did not mention nuclear in his speech, let’s assume nuclear’s approximately 20% share of electricity production holds fairly steady – it’s pretty hard to see a significant expansion of nuclear’s contribution within 10 years. It’s possible, if everyone were in agreement. But we’re not in agreement. Existing hydroelectric accounts for another 7% of the total. The fossil sources – coal (49%, natural gas (20%) and a bit of oil (2%) – total 71%. Nuclear, hydroelectric, and fossil – that’s approximately 98%. The remaining 2% (2.4% to be more precise) is the current contribution from wind, geothermal, and solar – the renewables Mr. Gore highlights – plus smaller contributions from a few others (biomass, garbage, etc.)
What about sequestration? That means burning coal, but also capturing and storing the CO2. Unfortunately, while both I and Mr. Gore favor pursuing this option, it can at best make only a minor contribution within a ten-year time frame.
Mr. Gore didn’t mention the sequestration option in his speech, but spoke about it on Meet the Press:
I also think that the coal and oil industries can play a big role in this if they will make good on the promise that carbon capture and sequestration will be real. Right now, there's no demonstration project, there's nothing real about it. The, the phrase clean coal is a contradiction in terms. There's no such thing as clean coal now. But the industry knows that with an all-out push toward capturing the CO2 and burying it safely, that can be done.
I agree with Mr. Gore that it can be done, and I am hopeful that demonstration projects will finally get underway and prove the technology. The single U.S. demonstration project, however, was canceled last year, ostensibly because of ballooning costs. (See Chapter 12 of Carbonomics) Time is running out on this large-scale endeavor.
The job for renewables
With sequestration playing a minor role, the job for renewables under Mr. Gore’s proposal is this: go from 2% to 73% in 10 years. (Again, the remaining 27% is nuclear plus hydroelectric.) The doubts come immediately – think of the environmental impact statements for all those windmills and solar facilities, and especially for the needed transmission lines, which I’ll come back to. But first it’s really a matter of whether we want to achieve that goal, and whether we should want to. In each of these cases, it’s a question of cost. As others have pointed out, the public’s support for environmental goals is broad but thin – the support tends to evaporate as soon as costs are mentioned. (See Nordhaus and Shellenberger’s book, Break Through.) And as emphasized elsewhere, when our goal is reducing greenhouse gas emissions, it is not sensible to spend a lot in one area (in this case, electricity generation); it’s better to let every sector of the economy work on squeezing out carbon emissions. Broad carbon pricing accomplishes just that (see Chapter 8 of Carbonomics), and is a policy that Mr. Gore supports; but he’s not emphasizing it at the moment.
Costs
While it’s common to throw out various total costs – Mr. Gore’s own figures are from $1.5 to $3 trillion, according to Brokaw – it’s hard to make these meaningful. After all, the Iraq war has a pretty good start on these numbers – direct costs already past half a trillion dollars (that is, $500 billion), with total costs, including long-term medical care for veterans, in a similar range as Mr. Gore’s totals – and we’ve managed to borrow all that money so far. Which is to say, the costs have been effectively hidden or deferred. I don’t imagine or recommend repeating this procedure, even for a worthy cause.
Instead, I will make the costs meaningful by asking what they will do to our electric bills, which is where those costs will likely land. Let me leave the details as an appendix. Here’s the bottom line: the most optimistic scenario I can tolerate means basically a doubling of electric bills. (Unfortunately, tripling and even quadrupling is also possible – see the details. But let’s stick with doubling.)
Doubling Electric Bills
Doubling electric bills is expensive, but not intolerably so; but not pleasantly so, either. Gasoline price rises greater than that haven’t ended the world, but then again, it’s hard to believe we would have collectively chosen that pain, no matter the benefit. Mostly, the ten-year goal appears to be unachievable. (Again, see the details.) “We can do it.” Frankly it doesn’t look like we can. Most fundamentally, we don’t have to. Here’s what Mr. Gore argues:
To those who say 10 years is not enough time, I respectfully ask them to consider what the world's scientists are telling us about the risks we face if we don't act in 10 years. The leading experts predict that we have less than 10 years to make dramatic changes in our global warming pollution lest we lose our ability to ever recover from this environmental crisis. When the use of oil and coal goes up, pollution goes up. When the use of solar, wind and geothermal increases, pollution comes down.
I don’t believe that’s what scientists are telling us. Rather, they are telling us that we must begin to act, seriously, within ten years, and we must continue, seriously, for the long term. For global warming is a long-term problem. Mr. Gore’s ten-year goal, even if met, will not solve global warming. There’s plenty of carbon emissions left to go.
I have to conclude that a ten-year goal is a selling point. I can concede that ten years is the outer limit of what the collective conscious is able to focus on. And having put forward a ten-year goal, I can understand that Mr. Gore is in no mood to concede that it’s unfeasible.
I’ll also concede that Mr. Gore is sincere in believing his goal achievable – bait and switch would be a poor strategy.
That leaves me disappointed – disappointed that he did not pick a better goal – one that would do more with regard to the long-term effort needed to reduce greenhouse gas emissions.
Finally, I admit that realistic, achievable goals are difficult to make sound “sexy.” But obviously, that’s the first place to put our energy.
My goal is within the next five years to implement carbon pricing across all sectors of the economy in an incremental, and assured manner, such that those making long-term investments in carbon reduction – whatever the means – are assured of a long-term return on those investments. No, it doesn’t sound sexy. But it is practical, and powerful. Initial carbon prices do not have to be high; but it has to be known that there is only one direction those prices are going: up. As our scientists and business entrepreneurs respond to that signal, we’ll discover that the pain is less than most dire forecasts, and the future will begin to change.
Can my plan and Mr. Gore’s be squared? I can only hope that smart minds will try.
Appendix: What will Gore’s Plan Cost – The Details
Before we begin looking at the costs of non-carbon electricity in Mr. Gore’s plan, one point to note: when we stop burning coal and natural gas, we can stop paying for the coal and the natural gas. Not so for the coal and natural gas power plants. Somebody will have to pay for the “undepreciated” portion of these investments. Perhaps we should stick those costs to their owners; after all, they were the ones with the poor judgment to make such poor investments in the first place. This will not, however, make those owners allies in Mr. Gore’s endeavor.
So let’s take a look at costs, and at the holy grail: cost reductions as we increase production.
Solar. There at least three different technologies to consider for the lowest costs: thin-film photovoltaics; concentrating photovoltaics, and thermal. Thin-film photovoltaics have shown recent progress and venture-capital interest, exemplified by Nanosolar. . Nevertheless, even solar advocates put the current cost in the 14 to 23 cents/kWh range. This will be a replacement for fossil-fueled electricity from existing plants, which averaged just under 3 cents/kWh in 2006 – not including the costs of the power plants, just the costs of fuel and operation and maintenance. Again, these fossil power plants are built; we’re going to have to pay for them in any case. Thin-film photovoltaics are an advance – the California Energy Commission estimated the costs of conventional photovoltaics at 60 cents/kWh in 2007 – after net taxes of negative 11 cents/kWh (that is, without tax credits for solar, photovoltaics would be at least 71 cents/kWh).
(While I am focusing on costs, it doesn’t hurt to be reminded of the scale of the endeavor implied by the ten-year goal. Here is an announcement of solar progress:
On October 25, 2006, the Australian federal government and the Victorian state government together with photovoltaic technology company Solar Systems announced a project using this technology, Solar power station in Victoria, planned to come online in 2008 and be completed by 2013. This plant, at 154 MW, would be ten times larger than the largest current (2006) photovoltaic plant in the world.
Note that the 2013 completion date leaves only only five years till Mr. Gore’s ten-year goal, which would require more than 1000 such power plants just to provide 10% of the needed non-fossil electricity.)
Thermal solar power has also shown progress and venture-capital interest; Ausra is one of the major players. Current electricity costs by this method are in the 14 to 24 cents/kWh range. The California Energy Commission estimated costs in 2007 at 29 cents/kWh.
Wind. By the California Energy Commission’s figures, wind is cost-competitive with natural gas-fired plants at 9.9 cents/kWh – if one ignores the reliability issue. To some extent the issue can be ignored: if wind is installed at diverse locations, chances are the wind will be blowing somewhere, so not all if it will be “down,” and if wind is less than about 20% of the total, the remaining electric system will be sufficiently reliable. (Solar also has reliability issues, though its daytime availability – coinciding roughly with daytime peak air-conditioning, office, and manufacturing loads – is fairly predictable, and the prospect is there for energy storage in the solar thermal systems – although this has not yet been demonstrated at scale.)
Geothermal. As with sequestration, I have to largely count this one out for a ten-year goal. Existing geothermal has relied on accidents of geology to provide accessible steam or hot water – virtually all existing U.S. geothermal is at a single Northern California location. The prospect is to “create our own” steam or hot water by circulating water through hot dry rock. This hasn’t even been demonstrated at anything close to utility scale, and a recent U.S. Department of Energy review said that such sources might provide up to 20% of our electricity by 2050.
Of course, at some point even existing power plants must be replaced, so the 3 cents/kWh cost of generating electricity at existing fossil-fuel power plants is not the long-term basis of comparison (though it is pretty appropriate for a ten-year time frame). I mentioned that new natural gas plants will cost 10 cents/kWh – or more, with increasing natural gas costs. The Massachusetts Institute of Technology, however, calculates the full-in cost of new coal at 5 cents/kWh, or 8-9 cents/kWh with sequestration. Again, wind is at least close, but current solar costs are at least twice even the high end of these estimates. Or at least seven times greater than current costs. Seven is a big number. By my count, the real price of gasoline is still less than “only” three times greater than it’s 30-year low in 1999.
Transmission. Analysts at Ausra (thermal solar) have pointed out that there are, in fact, ample solar resources – including the necessary land – in California and Texas alone to replace all U.S. power plants, and power the entire U.S. vehicle fleet if it were replaced with plug-in hybrids or the like. They assume that thermal storage will work as promised. There is a final bullet point of note: “Solution needs HVDC” – high voltage direct-current transmission. It’s available. It works. But the necessary scale... it’s beyond anything that’s ever been done. While using just California and Texas to serve the U.S. was just an example – solar can be sited elsewhere – much of the cloudier east is quite unsuitable. Either way, the costs add on – less-efficient solar closer to loads, or the cost of new transmission. It’s really not a pretty picture; and obtaining transmission rights-of-way over thousands of miles – frankly, in the 10-year time frame I have to count this out, too. (Underground the lines? More expensive still – beyond the pale, actually.)
Cost reductions. We are all in awe of what’s been accomplished in electronics – from the PC to DVDs to cellular phones – but in fact the experience in power generation has been less reassuring (and there are many good reasons to distrust the analogy). I am not old enough to personally recall the promise that nuclear “would be too cheap to meter;” I am, however, old enough to have taken seriously the 1970s-era Department of Energy goal to achieve cost-competitiveness for solar photovoltaics by 1986. I am encouraged by venture capitalists’ interest in solar technologies, but just a few years ago venture capitalists seemed to be equally bullish on fuel-cell vehicles, which now appear to be out of the running.
In short, it’s a big bet to count on cost reductions.
Let’s compare cases. We’re going to replace electricity that costs 3 cents/kWh with electricity that costs – currently – from 10 cents/kWh to something like 23 cents/kWh. What does this do to your electric bill? Your electric bill pays for more than just electricity – it includes the cost of distribution. This is not trivial. Average residential rates are around 10 cents/kWh. (Of course, these rates also include the costs of existing power plants; but, as I mentioned, I assume we’re going to have to pay for those in any case.) Net increase: 7 to 20 cents/kWh. At least a 70% increase; a tripling at the high end.
But consider this problem: average industrial rates are lower – about 6 cents/kWh (it’s cheaper when you buy in bulk; put another way, distribution costs are lower for big users). The cost of the electricity itself is a larger proportion of their bills. Thus, the 7 to 20 cents/kWh represents an increase of at least double and, at the high end, more than quadruple for industrial customers (whose allegiance to an environmental goal is rather lower than the general public’s, I suspect).
Sure, one can be more optimistic; but how optimistic? We can’t just go with the cheapest – we can’t go all-wind. But advocates see solar prices dropping by 75% with increased production. So instead of 15 to 25 cents/kWh, costs would be 4 to 7 cents. I can’t manage that much optimism. And I see little reason, at this point, to expect large cost decreases for wind. The 10 cents/kWh low-end estimate above is as optimistic as I can be. Roughly a doubling in electric bills.
—Dan Kirshner
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http://zfacts.com/p/1035.html | 01/18/12 07:19 GMT
Modified: Sun, 01 Feb 2009 22:31:48 GMT
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