After the introduction and an explanation of "The Coming Oil Crisis" and "Abandoning the Solution," the next part of "MidEast Oil Forever?" (subs. req'd) is a discussion of the "The Renewables Revolution."
One of the great energy tragedies of the 1980s is that President Reagan gutted the renewable energy R&D budget (and the entire clean energy budget) -- a stunning 90% cut in key technologies -- just as America was assuming technological and marketplace leadership in core areas like wind and solar power.
One of the great energy tragedies of the 1990s is that the Gingrich Congress blocked the Clinton administration's efforts to significantly ramp up renewable and clean energy funding, which could have restored U.S. leadership in technologies that even then were obviously going to be the foundation of major job-creating industries in the coming century.
Here is what we wrote on renewables:
The Renewables Revolution
Predicting our energy future beyond 2010 is chancy, but here we have an opportunity to rely on perhaps the most successful predictor in the energy business: Royal Dutch/Shell Group. According to The Economist, "The only oil company to anticipate both 1973's oil-price boom and 1986's bust was Royal Dutch/Shell." Anticipating the oil shocks of the 1970s helped Shell to move from being the weakest of the seven largest oil companies in 1970 to being one of the two strongest only ten years later. Anticipating the oil bust was apparently even more lucrative. According to Fortune's ranking of the 500 largest corporations, Royal Dutch/Shell is now not only the most profitable oil company in the world but the most profitable corporation of any kind.
When such a company envisions a fundamental transition in power generation from fossil fuels to renewable energy beginning in two decades, a transition that will have a significant impact on every aspect of our lives, the prediction is worth examining in some detail. Chris Fay, the chairman and CEO of Shell UK Ltd., said in a speech in Scotland last year, "There is clearly a limit to fossil fuel. ... Shell analysis suggests that resources and supplies are likely to peak around 2030 before declining slowly. ... But what about the growing gap between demand and fossil fuel supplies? Some will obviously be filled by hydro-electric and nuclear power. Far more important will be the contribution of alternative renewable energy supplies."
Fay presented a detailed analysis of future trends in energy supply and demand, noting that the fossil-fuel peak in 2030 would occur at a usage level half again as high as today's. Shell's analysis does not rely exclusively on supply limits -- after all, for decades people have been worried about such limits, and the supply has continued to expand -- but also incorporates a recognition of the tremendous advances that have been made in renewable-energy technologies over the past two decades and that are expected to be made over the next two decades.
Although these advances in renewables have received very little media attention, they have persuaded Shell planners that renewables may make up a third of the supply of new electricity within three decades even if electricity from fossil fuels continues to decline in cost. An "Energy in Transition" scenario that they have prepared does not assume price increases in fossil fuels -- also, as we have seen, a plausible hypothesis. Nor does Shell assume any attempt by governments to incorporate environmental costs into the price of energy, even though every single independent analysis has found that fossil-fuel generation has much higher environmental costs than non-fossil-fuel generation has. According to Shell's strategic-planning group, "The Energy in Transition future can claim to be a genuine ‘Business as Usual' scenario, since its energy demand is a continuation of a long historical trend, and the energy is supplied in a way which continues the pattern."
Indeed, in the past fifteen years the Department of Energy, working with the private sector, has reduced the costs of electricity from biomass (such as crops and crop waste) and wind, bringing them into the current range of wholesale costs for coal and other traditional sources of electricity: three to five cents per kilowatt-hour.
A quiet revolution has already brought the United States almost eight gigawatts of biomass electrical capacity. Gasifying biomass and using advanced turbines could bring biomass power to 4.5 cents per kilowatt-hour within a decade, according to the DOE's National Renewable Energy Laboratory. Shell projects that by 2010 commercial energy from biomass could provide five percent of the world's power; using Shell's projections, we estimate that the value of that power generation could exceed $20 billion.
Over the past fifteen years electricity from wind power has declined in cost by 10 percent a year. The problems of the windmills that were rushed to market in the 1970s, such as noise and TV interference, have largely been solved. With the DOE's help the old wind-turbine blades, borrowed almost directly from aircraft-propeller design, have been replaced with sophisticated blades designed to capture wind energy efficiently over a broad range of wind speeds and direction. Utilities are already receiving long-term bids for electricity from wind at 4.5 cents per kilowatt-hour in the best wind sites in the country. With a continued public-private partnership in technology advancement, wind could hit three cents per kilowatt-hour by 2020, and soon after that wind-power plants' annual sales could reach $50 billion.
Photovoltaic (PV) cells, which convert sunlight into electricity, now cost one tenth what they did in 1975. The DOE has invested heavily in new thin-film PV panels, which take advantage of U.S. expertise in semiconductor fabrication. Shell expects that PVs, along with fuel cells and small gas-fired power plants, will permit the growth of distributed-power systems. In developing nations distributed sources can obviate the need for huge power lines and other costly elements of an enormous electric-power grid (much as personal computers replace large mainframe computers). PV modules sold worldwide totaled less than four megawatts in 1980 and now exceed 80 megawatts a year; sales continue to grow. The Energy in Transition scenario predicts that photovoltaics and other direct conversions of sunlight will be the most rapidly growing form of commercial energy after 2030. Sales could quickly exceed $100 billion. Shell itself has bought two photovoltaics companies.
This scenario, a highly credible one given Shell's reputation, is tantalizing, because it holds out the possibility that the world could within a few decades begin to realize the dream of nearly pollution-free energy. Consider also that the United States, which is now the leader in most areas of renewables technology, could simultaneously reduce its dependence on foreign energy supplies, reverse the trend toward an ever-increasing energy trade deficit, and capture a large share of what promises to be perhaps the largest new job-creating sector of the international economy.
This is only a scenario; our actions today can have an impact, either positive or negative. According to Chris Fay, of Shell, "New technologies cannot leap from laboratory to mass market overnight. They must first be tested in niche markets, where some succeed but many fail. Costs fall as they progress down the ‘learning curve' with increasing application." The long-term nature of research, and the real potential for failure, are why many options must be pursued at once and why many private-sector companies have been reluctant to invest. Fay observes, "Renewables will have to progress very quickly if they are to supply a major proportion of the world's energy in the first half of the next century. . . . They can only emerge through the process of widespread commercial experimentation and competitive optimization."
Federal investments clearly make a difference in technology development and global market share. Consider the case of photovoltaics. In 1955 Bell Laboratories invented the first practical PV cell. Through the 1960s and 1970s investments and purchases by NASA, the Pentagon, and the National Science Foundation helped to sustain the PV industry and gave America leadership in world sales. In 1982 federal support for renewable energy was cut deeply, and within three years Japan became the world leader in PV sales. The Bush Administration began to increase funding for solar energy and, in 1990, collaborated with the American PV industry in efforts to improve manufacturing technology; three years later the United States regained the lead in sales in this rapidly growing industry. The Clinton Administration has accelerated funding for PVs.
Sadly, however, the cuts of the 1980s have taken their toll: in the past decade German and Japanese companies snapped up several major American PV companies, which accounted for 63 percent of the PVs manufactured in the United States. Such purchases represent huge savings for our foreign competitors. They don't have to spend hundreds of millions of dollars to determine which technologies succeed. They need only let the United States do the basic research, and then spend a few tens of millions of dollars plucking the winners when the federal government abandons funding for applied research.
Although many members of Congress argue that the cuts in federal R&D will be made up for by the private sector, historically this hasn't happened. When the government pulls out of an area of technology, it sends a signal to the industrial and financial communities that the area has no long-term promise and that the federal government is not a reliable partner. The situation is especially bad today, because recent studies make clear that private-sector R&D has been fairly flat since 1991, and because U.S. companies have been shifting away from basic and applied research toward incremental product and process improvement -- a shift that has been exacerbated by increased international competition and the downsizing of corporate laboratories.
In addition, whereas the federal government only recently, and temporarily, increased funding for renewable energy, reversing the deep cuts of the 1980s, our foreign competitors have been steadily increasing such funding for a decade and a half. Whereas we once spent several times as much as the rest of the world combined, the rest of the world now significantly outspends us. Moreover, countries such as Germany, Japan, Denmark, and the Netherlands have far greater financial incentives for renewable energy. And their prices for electricity are typically much higher: in 1991 electricity cost Germany's industrial sector 8.8 cents per kilowatt-hour, whereas in the United States it cost 4.9 cents per kilowatt-hour. That means renewable energy will be cost-effective in foreign countries before it is in America.
The primary competitive advantage the United States has had in renewables is technological leadership driven by long-term federal spending prior to the early 1980s and then the spending in the early 1990s. Recently Congress cut renewable-energy funding by 30 percent, and its multi-year budget plan calls for overall cuts of 60 percent or more by the year 2002. The cuts will have two effects.
First, the transition to renewables that Shell envisions will probably be slowed somewhat, since America remains the leader in many relevant renewables technologies and U.S. government funding remains a sizable fraction of R&D funding worldwide. The transition, however, even if slowed, seems inevitable at some point in the middle of the next century.
Second, when the transition occurs, the United States will miss what may well be the single largest new source of jobs in the next century. Mature areas like automobile manufacturing and aerospace haven't been significant net job producers for the country in two decades. The most highly promoted new area -- the information revolution -- is unlikely to provide as many jobs as manufacturing can, because making duplicate pieces of information generates many fewer new jobs than manufacturing duplicate pieces of hardware. Yet according to Shell's numbers, annual sales in renewable-energy technologies may hit $50 billion in 2020 and almost $400 billion in 2040. In the later year such an industry would support several million jobs.
Moreover, as said above, the United States will be importing $100 billion worth of oil annually ten years from now. With prudent federal investment today, that might be the peak, and we might then see a gradual decline as U.S. technology and domestic fuels, including homegrown biomass, replace imported oil. With Congress's cuts, however, we may be only augmenting our debilitating trade deficit in oil with an equally debilitating trade deficit in oil-replacing technologies.
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Comments
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odograph Posted 7:44 am
04 Nov 2007
If I were going to make a defense of those cuts though, I might do along the lines of The Mythical Man Month and diminishing returns.
If the tech was just not ripe for (say) solar energy, what makes anyone think an extra billion would necessarily make it right? (The disproof seems to be that we've spent those billions later, and still have not got that magic solar tech that beats fossil fuels on price.)
I think the tricky thing to argue is where R&D spending is "non-optimum" and why.
Spending more just cuz we want it sooner is the response of a pointy-haired boss, or a non-technical voter.
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Colin Wright Posted 8:13 am
04 Nov 2007
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odograph Posted 8:19 am
04 Nov 2007
FWIW, my recollection is that each budget as submitted by Reagan to the Congress was smaller than each real budget passed.
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odograph Posted 8:23 am
04 Nov 2007
That was his perspective, and I believe he was honestly trying.
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David Roberts Posted 11:52 am
04 Nov 2007
Don't confuse being hostile to social democracy with being fiscally responsible. They are two separate things. Reagan was the former; Clinton was the latter. Under Reagan the deficit ballooned; under Clinton it turned into a surplus.
grist.org
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Steven T Posted 12:04 pm
04 Nov 2007
Budget director David Stockman was a genuinely radical budget cutter who wanted to roll back the clock 50 years by all but destroying "big gov'mnt" . . . at least when it came to non-military programs. But the simple fact of the matter is that Stockman's proposed cuts were so draconian that they were dead on arrival. Even a goodly share of Republicans wouldn't buy into his philosophy.
All this said, the main focus of the Reagan administration was a massive build-up of the military and HUGE tax cuts. There were varying motivations within the administration for continuing to push this two-pronged agenda even when the evidence clearly showed that this was resulting in budget deficits so large that they vastly overshadowed those of recent Democratic presidents. Some administration leaders were tax cut true believers who were shocked that the rollback did not result in a vast increase in economic productivity that generated new-found tax revenue). Others didn't really care about the deficit, either because they were primarily interested in getting their tax breaks and/or military contracts . . . or thought that the best way to put the Democrats in a political box was to create a huge deficit that would make it impossible to add new domestic programs once they retook the White House.
The Reagan quote you offer may, in fact, reflect the man's personal viewpoint. However, it also represents standard Reagan administration propaganda that papers over the simple fact that its budget policy was truly reckless. The numbers never added up without embracing "magic" assumptions. Indeed, what we are seeing now with Bush II is merely an extension of the Reagan administration's basic approach.
Why do I discuss this at such tedious length? Because the Reagan administration's budget policies are largely built upon the Big Lie that you can have it all: a balanced budget, huge tax cuts, a military big enough to invade Mars, and -- let's not forget -- a few slabs of pork for all of our friends.
Reagan SOUNDED sincere so many people didn't hold him accountable for this Big Lie. Let me say this another way: Reagan perfected the art of budgetary double speak, where you say one thing to cover your tracks to doing the opposite.
The Bush II has taken double speak to a whole new level. Fortunately, the American public hasn't been fooled to quite the degree that it was by Reagan. Perhaps the biggest factor is that Reagan was a much better actor than Bush II.
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odograph Posted 11:09 pm
04 Nov 2007
I should note that wasn't a "party man" at the time. There were a lot of things I thought were dumb, like the MX Missle, or unproductive (like chemically correct statements about trees and smog). I was glad a mixed government was there to stop those.
I would, especially in retrospect, liked to have seen military spending restrained.
Clinton presided over another mixed government, and I was pretty happy with it.
It might be interesting to note that we ended up with far more severe social cuts since Reagain. We got more than Reagan was able to manage. Clinton was able to vow the "end welfare as we know it."
So I don't know ... if the Reagan congress had vowed to end welfare as we know it (and do dirty tricks with the inflation numbers) ...
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odograph Posted 11:14 pm
04 Nov 2007
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amazingdrx Posted 11:37 pm
04 Nov 2007
That company has to make a profit also. That puts the real cost of wind well below 4.5 cents.
If power companies invested in wind directly they could pass that lower price on to consumers, while reaping their allowed profit determined by the public service commision.
Good news from the most profitable corporation in the world on renwewable distributed power. W#hat about the internet enabled grid and storage and conservation now Shell? Google is already on it.
You better catch up.
http://amazngdrx.blogharbor.com/blog
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odograph Posted 11:38 pm
04 Nov 2007
I would guess that post-Reagan we were underspending (but then the whole society was responding to cheap oil).
Right now I'd guess that we are actually overspending, beyond diminishing returns, in the desperate hope that something will work.
Sadly, I think right now far more goes to production subsidies (corn ethanol) and pointless demonstrations (hydrogen filling stations) than to real, actual, research.
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trock Posted 11:41 pm
04 Nov 2007
It's the easiest thing to send up a bill to Congress that they then have to add to. Send a bill to congress that had money for the national parks, but nothing for park rangers. Then congress would add in money for the park rangers and the white house would say, see, see that, those big spenders.
Being fair to David Stockman, I remember from his book, subtitle `the defeat of politics' or something like that, he wanted to be Secretary of Defense so he could cut much of the wasteful spending there. It the 1980's, at the same time that they were cutting 100 million for symphonies they adding more than that for military bands.
Reagan claimed to be making reductions in spending, but around 1986 when the farm community was falling apart he increased government spending on it. Farm land values were dropping like crazy, they were inflated from the 1970's (buy land, they ain't making any more of it) to the 1980's (why make land, we got so much of it.) His Republican Senators were telling him they will lose the farm vote if there aren't big bale outs and the government put money into the industry to keep it from a bigger melt down.
Compassionate Conservative means compassion to conservatives.
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amazingdrx Posted 11:41 pm
04 Nov 2007
http://amazngdrx.blogharbor.com/blog
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Biodiversivist Posted 11:45 pm
04 Nov 2007
Slept through numerous cabinet meetings.
Was in the early stages of Alzheimers for two of his eight years.
As an actor he was a major player in the McCarthy purges of the entertainment industry.
Under his leadership the country was racked by multiple deep recessions while he threw hundreds of billions away with his McCarthy era paranoia and military spending, which included things like the worthless B-1 bomber and research for a phantasmagorical star wars shield.
And when his evil empire suddenly, peacefully, shifted from communism, it took him by complete surprise. Next came the warping of history by his spin doctors. They claimed that his military spending had actually caused the shift. Never mind that nobody anticipated it or that forcing such a shift was even in the game plan. In reality, the collapse of the iron curtain was proof that Reagan's policies had been a complete and tragic waste of financial resources.
He was an actor reading a script. A man who's mind was stuck in the good old days of 1945 when life was a simple struggle of good against evil.
In the end, it all comes down to biodiversity. Poison Darts--Protecting the biodiversity of our world
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odograph Posted 11:59 pm
04 Nov 2007
You know, I used to listen to KPFK out here in California (part of Pacifica Radio for those who know their politics).
It used to surprise me how much people could personalize their anger, really at the country's direction, and put it on Reagan.
But that wasn't the MOST surprising part.
The most surprising part was that I could tune into KPFK years later and find the same anger, from the far left, directed at Clinton. He had "abandoned the left."
Now of course Clinton is raised (praised) for the Reaganish things he did.
This is really the bizarre nature of American politics. You always need "someone opposite" to do something that needs to be done. You need a Nixon to go to China. You need a Clinton to rethink welfare.
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Biodiversivist Posted 12:16 am
05 Nov 2007
In the end, it all comes down to biodiversity. Poison Darts--Protecting the biodiversity of our world
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odograph Posted 12:27 am
05 Nov 2007
"Although I agree with you that Clinton has been a major enabler of corporate goals in the past, ..."
That's the thing, isn't it? In one thread "Clinton" budgets can be compared "Reagan" budgets. At the same time, in another thread Clinton can be "a major enabler of corporate goals."
I'm a solid moderate by today's measure, and so came away pretty happy from the Clinton years. On a political, practical, level they worked out to be pretty moderate.
I'm mainly happy with the Reagan years (and friendly enough with the man) because he got through some things I liked, and was blocked by the Democratic congress from some things I didn't like.
A Reagan paired with a Newt would have been a nightmare for me too.
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Nucbuddy Posted 8:14 am
05 Nov 2007
Meanwhile, electricity prices in Denmark average around 30 cents per kWh.
cphpost.dk/get/103869.html
`During the course of a day, energy prices can swing by as much as 50 percent,' said Ebbe Seligmann, Syd Energi's managing director. `When the currents are cheapest a kilowatt costs around DKK 1.20, while it costs around DKK 1.80 at its most expensive.'
DKK 1.20/kWh = USD $0.23/kWh
DKK 1.80/kWh = USD $0.35/kWh
x-rates.com/calculator.html
It is expected that if more wind were installed in Denmark, electricity prices would rise even further.
cphpost.dk/get/100287.html
The government's plan to increase the nation's reliance on green power could expand a black hole that already sucks two billion kroner out of consumers' pockets annually.
To promote construction of wind turbines, the state has agreed to purchase the electricity they generate at a minimum price. The guaranteed has had the desired effect: 5300 wind turbines dot the Danish countryside, producing 18.5 percent of all electricity generated.
The practice has its downside, however. The guarantee prices for wind power results in an overproduction that costs the state DKK 21.6 billion between 2001 and 2005, according to figures from the National Audit Agency.
Uncertainty over whether the wind will blow means Energinet.dk, the organisation responsible for ensuring that the country can meet its electricity demand, has to keep a reserve of conventionally produced electricity. That cost is typically passed on to consumers in the form of higher electric bills.
Maintaining that safety net results in a near constant overproduction of electricity, reducing wind power's share of the total amount used to power Danish homes and factories to 8.3 percent. The unneeded electricity is exported, at a lower price than that paid to windmill owners.
In 2005, the loss amounted to DKK 1.7 billion, according to the National Energy Authority.
By 2025, the government expects to increase renewables' share of the power supply to 30 percent. By then wind turbines are projected to contribute three times as much energy as they do now, accounting for 60 percent of all power generated in Denmark.
Relying more on renewables will help the nation meet its CO2 emission obligations, but the green ambitions could prove costly, with some calculations putting the economic costs of the package at DKK 5.2 billion annually.
During the presentation of the plan earlier this month Energy Minister Flemming Hansen said the price was one the government was willing to pay: `We don't know how much this is going to add up to, but we are willing to pay it, no matter the cost.'
Energinet.dk expects to invest DKK 3.4 billion to connect new wind turbines to the power grid, with consumers again likely to foot the bill.
`Right now it's difficult to put a price tag on this, but it will be something electricity users will notice,' said Energinet.dk chief executive Peder Ø Andreasen.
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amazingdrx Posted 2:01 pm
05 Nov 2007
Did you ever see a bucket mouse trap? It's just a plastic bucket with a few inches of water and some sunflower seeds floating on the water. With a ramp so the mice can get in.
Now imagine really big bucket traps, but instead of sunflower seeds, some other attractant. Stuff ray gun/bush fans would find alluring. Hehehey.
http://amazngdrx.blogharbor.com/blog
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odograph Posted 5:06 pm
05 Nov 2007
Of course it's true on the other side too. There are those who think Ronnie should have gotten every idea he wanted through congress ... and that they were eeeevil for not going along. Such is the polarization of American politics.
Why be pragmatic when you can make an effigy?
(I'm up chatting with Russia about work, that's my excuse.)
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trock Posted 10:27 pm
05 Nov 2007
I find nothing surprising nor alarming about what was in your post about the rising costs of the electrical system in Denmark. It is expected. The same thing would happen if they were using nuclear.
Let's say that in the United States we had decided to build 300 nuclear power plants to reduce how much carbon dioxide is released into the atmosphere from coal power plants. Those people who sell coal will be pointing out how all these coal plants are now sitting idle, that's a big economic drain, because they aren't bringing in money to pay off those coal plants.
If this country does want to seriously reduce how much carbon dioxide it releases into the atmosphere, there will be economic costs to somebody no matter what the method, whether it is wind, nuclear or whatever.
One way of looking at it is like the military; not everybody in the military has shot at the enemy, even for their entire military careers. But they were there in case they were needed. That's how many coal plants will have to be looked at, they won't be producing at their economic maximum, but they will still be there if needed.
Or another way of looking at it is, like a passively heated house. Put in insulation, mass for heat storage, large windows to the south, but most houses can't be heated 100 percent of the time that way. That doesn't mean it was a waste of money to put it in, heating with fossil fuel exclusively is too polluting and maybe costly even though my cost per time to run the furnace goes up because I run it less. I still need the furnace and it's still good that I have the passive heating for my house. Maybe this analogy doesn't completely work, but you get the idea I'm trying to explain.
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