Download PDF Engineering, Energy, and the Future June 1, 2003 Volume 33 Issue 2 The next industrial revolution will transform energy production and consumption New Energy Technologies: Necessities and Opportunities Sunday, June 1, 2003 Author: Timothy E. Wirth The next industrial revolution will transform energy production and consumption. Modern energy services are essential to economic development everywhere in the world. Sustained economic progress depends on secure, reliable, and affordable energy supplies. But the current pattern of global energy development--especially its reliance on fossil fuels--brings substantial harm along with its benefits. Three great challenges have emerged that government energy policies to date, particularly in the United States, have largely failed to address: the danger to political and economic security from the world's dependence on oil the risk to the global environment from climate change the lack of access by the world's poor to the modern energy services they need for economic advancement None of these problems can be solved overnight, but aggressive goals and practical near-term initiatives can accelerate movement toward sounder and more secure energy practices. These steps can also be politically attractive, if they are advanced collaboratively by the constituencies involved, acting in their own self-interest, because the transition to new patterns of energy production and use will create an array of economic opportunities. The world stands at a crossroads between old, familiar energy practices that create economic, environmental, and security risks and new practices that will open up strategic opportunities for those agile and innovative enough to embrace them. The next industrial revolution, already under way but still in low gear, will transform energy production and consumption. Technological breakthroughs will reduce the dependence on oil and launch an era of cleaner, more efficient, and more secure kinds of power for the global economy. The market rewards for those breakthroughs will be immense. Over the next two decades, up to $15 trillion will be invested in new long-term energy projects (Toepfer, 2001; WEC, 2000a). If investment is directed toward the right technologies, society will also reap great benefits. Technologies that result in low net carbon emissions will reduce the risk of global warming. Decreasing dependence on oil, especially in the transportation sector, will lessen the danger of economic disruptions from political unrest in oil-producing regions. Technologies that rely on locally available resources will provide the world's poor with greater access to the electricity and fuels they need for development. Technologies that accomplish all three will make the world a safer, more equitable, more prosperous place. But market forces alone will not accomplish this transformation at the pace or on the scale necessary to shift our reliance away from a single transportation fuel, stabilize the carbon load in the atmosphere, and provide opportunity to the billions of people now consigned to energy poverty. Meeting the energy challenge of this century will require both far-sighted leadership in individual countries and extensive cooperation across the spectrum of international activity--among states and between public investment and private enterprise. Ultimately, success will depend largely on market response, but the choices officials make today will determine when the future of energy will become a reality and how fast, how far, and how copiously the associated benefits will flow. The potential gains are diverse and substantial. Indeed, speeding up the development and adoption of new energy technologies would be attractive even if the world did not face the risk of oil crises and climate change. The shift will spin off dynamic enterprises and new jobs in the industrialized world and tap latent potential for growth in developing nations. Leadership in the new industries will not depend solely on the availability of natural resources, but also on technological know-how, a skilled labor force, openness to innovation, efficient financial structures, and the strategic foresight to prepare and adapt to the new era. Although the transition will create dislocations, the benefits for the world at large and for the United States in particular will be more than enough to compensate for the costs. Some of the new technologies are poised for broad commercial application. Power from wind, solar, geothermal, and biomass is already the lowest cost option in some settings. Constant incremental invention has been improving the energy efficiency of buildings, appliances, lighting, computers, and power-generating equipment. Fuel cells, superconducting wires, high-speed electronic controls for the management of power grids, and other possibilities now only barely imagined are just beyond the horizon. The capture and permanent sequestration of carbon dioxide from fossil-fuel combustion is the subject of increasing attention. These technologies hold the promise of significant reductions in both energy consumption and environmental pollution. The pace of progress, however, will depend on political will, technological advance, skilled labor, sustained incentives for innovation . . . and time. Change will not happen overnight. To sustain the momentum of ongoing discoveries of cost-effective alternatives, it is urgent that we make a beginning. The Energy Future Coalition was established in response to that imperative as an agent of change, dedicated to mobilizing business, civil society, and government to reform the ways energy is created, used, priced, and managed. The coalition's objectives are global, but its immediate focus is the United States, the largest and often most wasteful consumer of energy. America holds many of the keys to the new era--extraordinary wealth, exceptional power, and a singular, proven capacity for innovation. By showing the way to the efficient use and revolutionized production of energy at home, the United States can become a leader of the new energy economy and turn the world away from a dead-end dependence on the fuels of the past. Security The global economy will be at risk as long as it depends exclusively on oil for transportation. The price of oil rises and falls suddenly and unpredictably over time, and most of the world's oil is located in political earthquake zones. At the same time, the oil trade causes a staggering transfer of wealth, often from countries that can ill afford the cost. Growing demand for oil, particularly in China, India, and Brazil, will mean a transfer of more than $1 trillion over the next 20 years to the Persian Gulf, where the great bulk of the world's oil reserves are located (Lugar and Woolsey, 1999). The need for both oil and the money it earns threatens the world's security. Oil provides the riches that trickle down to those who would harm the United States and other nations. The flow of funds to certain oil-producing states has financed widespread corruption, perpetuated repressive regimes, and spawned hatreds that derive from rigid rule and stark contrasts between rich and poor. Terrorism and aggression are by-products of these realities. Iraq may have used its oil wealth to buy the ingredients of mass destruction. In the future, some oil-producing states may try to trade access to oil directly for weapons. Although the problem is clear, change will not be easy. For the past three decades--since October 1973, when Arab nations imposed a six-month embargo on oil exports to the United States--America has vowed to reduce its dependence on foreign oil. Each of the last seven presidents has pledged to steer the nation toward greater energy security, but the problem has only worsened. The United States now imports more than half of its oil, a quarter of it from the Persian Gulf. Other countries are even more import-dependent--Japan, for example, buys 75 percent of its oil from the Gulf (EIA, 2002). Of the one trillion barrels of world reserves, fully two-thirds are in the Persian Gulf, only 4 percent in the United States (EIA, 2003). As a result, a substantial portion of the world economy is vulnerable to disruptions in a highly volatile region. The only effective long-term approach to reducing dependence on oil is to increase efficiency in transportation and to develop alternative fuels. Relying more heavily on domestic oil supplies would have little effect; by any measure, these are inadequate in the United States and in all but a few countries of the world. Even with increased production, substantial vulnerability would remain, because marginal changes in world oil prices reverberate quickly through national economies. The transition away from oil will take decades, but it is inevitable--global production of oil is expected to peak in the first half of this century. The challenge (and the opportunity) for the United States and other oil-dependent countries is to speed up the transition through smart policies and new technologies. In the transportation sector, vehicle efficiency can be significantly increased by shifting more rapidly away from the standard internal-combustion engine--first to hybrid electrics and then to fuel cells. The production of ethanol from sustainably grown biomass would diversify the world's transportation-fuel supply, stimulate economic growth in rural areas, and contribute no net carbon to the atmosphere. Coal, the world's most abundant conventional energy resource, could become a low-cost feedstock for hydrogen if its carbon content can be captured and permanently stored. Electric power systems can be made more reliable and less vulnerable to attack through diversified energy supplies and distributed generation. A decentralized power system is inherently safer than a hub-and-spoke system with large power plants dependent on distant fuel sources. A decentralized system would also be less susceptible to fluctuating voltages, blackouts, and other interruptions that are damaging and disruptive to an increasingly digital global economy. Even in the United States, there could be a place on the grid for power generated by home- and factory-based fuel cells, wind farms, solar panels, and other forms of renewable energy, which would also reduce emissions of greenhouse gases and lessen the risk of global climate change. Environmental Protection What environmentalists say about energy, as John Holdren (Teresa and John Heinz Professor of Environmental Policy at Harvard University) recently observed, is "not that we are running out of energy but that we are running out of environment--that is, running out of the capacity of air, water, soil and biota to absorb, without intolerable consequences for human well-being, the effects of energy extraction, transport, transformation and use" (Holdren, 2002). Some of the harm has been done on the ground and under the sea, where the extraction and transport of fossil fuels have torn apart landscapes (strip mining) and assaulted coastal ecosystems (oil spills). The burden must also be borne by people who have no choice--who breathe air polluted by lignite, lead additives in gasoline, and cooking fuels used in poorly ventilated shacks. The highest cost--the harm that global warming threatens to inflict on a global scale--will be borne by all of us. It is now reasonably evident that we must either hold the level of accumulated carbon in the Earth's atmosphere below 550 parts per million (i.e., double preindustrial levels) or run a high risk of catastrophic shifts in global climate patterns. Without such constraints, the legacy of a century of burning fossil fuels is projected to increase average temperatures by 2.5?F to 10.4?F and raise sea levels by as much as three feet, even with substantial technological advances in the global energy system (IPPC, 2001). Most experts expect atmospheric temperatures to continue rising at least until midcentury, no matter how rapidly the output of greenhouse gases can be checked. If no substantial changes are made in the world's energy systems, levels of carbon dioxide, methane, and other gases will rise steadily and may bring not just gradual warming but extreme temperature and climatic instability. As the National Research Council stated in a recent report (NRC, 2002): Recent scientific evidence shows that major and widespread climate changes have occurred with startling speed. For example, roughly half the north Atlantic warming since the last ice age was achieved in only a decade, and it was accompanied by significant climatic changes across most of the globe ... Abrupt climate changes were especially common when the climate system was being forced to change most rapidly. Thus, greenhouse warming and other human alterations of the earth system may increase the possibility of large, abrupt, and unwelcome regional or global climatic events. Half of all jobs worldwide depend directly on natural resources--fisheries, forests, and agriculture--that are potentially affected by climate change (United Nations Development Programme et al., 2000). For example, 70 million people in Bangladesh live in crowded lowlands near the sea, and very large populations in Indonesia and Malaysia are similarly threatened by sea-level rise. In Africa, we can already see drought-diminished agricultural productivity and increasingly scarce potable water, and intensifying hunger, malnutrition, and human misery. Mass flight from such conditions could destabilize fragile governments and erode investments in poverty reduction. Energy for Development It makes no sense to leave developing countries behind in terms of climate, the modern energy system, or the global economy. We live in an interdependent age in which no nation is a protected refuge. What happens anywhere to the economy, the environment, and security has impacts on everyone everywhere. Our national security compels us to take an enlightened approach to international progress in service of the kind of worldwide stability necessary for peace, trade, and cooperation. If the poor countries of the world use coal and oil as wastefully in their development as the industrialized West did, we will all be dealing with the consequences of a warmer world for hundreds of years. But if we invest in clean energy development at home and help emerging economies adopt it, we will not only protect our climate but also create new markets for our products. For many developing countries, the adoption of a dispersed system of energy production based on indigenous, sustainable resources would enable them to leapfrog most of the conventional, centralized, environmentally harmful systems of the industrialized world. Of the world's six billion people, roughly one-third enjoy the kind of energy services we take for granted--such as electricity at the flick of a switch. Another third have these services intermittently. The final third--two billion people--have no access to modern energy services (WEC, 2000b). Not coincidentally, the two billion energy-deprived people are the world's most impoverished people--living on less than $2 per day. And their ranks will grow; the 50 poorest nations will triple in size over the next 50 years (United Nations Population Fund, 2002). For the poor of the world, especially in rural areas, energy use involves high cost, exposure to pollution, and the time-consuming drudgery of collecting and transporting traditional fuels--often gathered by hand and used at great harm to the local environment. Equally important, the poor lack the benefits of modern energy services--lights to read by, refrigeration to store medicines, transportation to get products to market, let alone telecommunications and information technology--prerequisites all for economic growth and the alleviation of poverty. Rich nations cannot ask the poor to refrain from using the energy essential for growth, even as the rich consume 10 times as much energy per capita (World Summit on Sustainable Development, 2003). They can, however, widen the options available to countries that require large new inputs of energy to modernize their societies and economies, to lift their people out of poverty, and to put themselves on a faster, steadier track to prosperity. As a matter of self-interest alone, the developed nations of the world have every reason to help their needier neighbors generate power efficiently and as much as possible from non-fossil fuels. The G8 Task Force on Renewable Energy concluded in 2001 that "renewable energy resources can now sharply reduce local, regional, and global environmental impacts as well as energy security risks, and they can, in some circumstances, lower costs for consumers" (G8 Renewable Energy Task Force, 2001). An investment of $250 billion over 10 years would provide renewable energy to 1 billion people--200 million in the OECD countries and 800 million in the developing world. Although in the first decade costs would be marginally higher than the costs of continued reliance on conventional energy production--because of higher initial capital costs--in the long term, at realistic real discount rates, the costs would be lower. Effecting Change Any forecast of the energy future must be hazy at best. Clearly, oil and coal will remain important sources of energy for some time, and natural gas and renewable energy sources are likely to capture an increasingly large market share. Beyond this, however, very little can be predicted with assurance. The decisions that will define the way ahead have not yet been made. Nevertheless, the long lifetime and high cost of energy infrastructure require that we take decisive early steps to encourage the development and deployment of alternative technologies. Innovation will not flourish on its own merits alone but will reflect the support it receives and the setting in which it is exploited. In terms of policy, no matter which sectors or countries are involved, leaders must determine a responsible course of short- and medium-term measures that will advance the long-term transition to new energy sources and uses. These steps should begin with putting limits on greenhouse gas emissions. They should also include more rapid adoption of new vehicle technology and alternative fuels; truly clean use of coal by capturing emissions; a digital-age electric power system that facilitates small-scale, networked power generation; and new financial tools to encourage private-sector investment in energy development outside the industrialized West. The Energy Future Coalition and the National Academy of Engineering convened this Symposium on Energy Futures to focus on new pathways for innovation in energy technology and policy. Our discussions confirmed that a broad range of technologies can be brought to bear--from clean energy options that are gaining a growing share of the market today to, possibly, carbon-converting microbes in the future. Mobilizing the economic and political will to make this transition is a formidable challenge. No single nation or banker, no automaker or inventor, can effect such complex, profound, long-standing change. And only America can take the lead--not only because the United States consumes one-fourth of the world's energy or because of its technological primacy, its deep pockets, and its vulnerability to oil shocks and to terrorism. The reality is that where America goes, others will follow. America's example, for good or for ill, will set the tempo and direction of action, far beyond our borders and far into the future. The most important thing is to begin. President Kennedy, whose bold commitment led America to the triumph of the first manned moon landing, often told the story of the aged Marshal Lyautey of France debating with his gardener about the wisdom of planting a certain tree: "It will not bloom," the gardener argued, "for decades." "Then," said the marshal, "plant it this afternoon." References EIA (Energy Information Administration). 2002. Persian Gulf Oil and Gas Exports Fact Sheet, March 2002. Available online at: http://www.eia.doe.gov/emeu/cabs/pgulf.html. EIA. 2003. Oil Market Basics. G8 Renewable Energy Task Force. 2001. Final Report, July 2001. Available online at: http://www.renewabletaskforce.org/pdf/G8_report.pdf. Holdren, J. 2002. Energy: asking the wrong question. Scientific American 286(1): 65-67. IPPC (Intergovernmental Panel on Climate Change). 2001. Working Group I, Summary for Policy Makers, January 2001. Lugar, R.G., and R.J. Woolsey. 1999. The new petroleum. Foreign Affairs 78(1): 88-102. NRC (National Research Council). 2002. Abrupt Climate Change: Inevitable Surprises. Washington, D.C.: National Academy Press. Toepfer, K. 2001. Paper delivered at the Governing Council of the United Nations Environment Programme, Nairobi, Kenya, February 5-9, 2001. United Nations Development Programme, United Nations Environment Programme, World Bank, and World Resources Institute. 2000. World Resources 2000-2001: People and Ecosystems: The Fraying Web of Life. United Nations Population Fund. 2002. State of World Population 2002. Available online at: http://www.unfpa.org/swp/2002/presskit/english/summary. htm. WEC (World Energy Council). 2000a. The 1993 report--energy demand analysis. Chapter 2 of World Energy Council Statement 2000. Available online at: http://www.worldenergy.org/wec-geis/publications/reports/ etwan/energy_demand_analysis/chap_2_finance.asp. WEC. 2000b. WEC's Energy Goals for 2020. Chapter 4 of World Energy Council Statement 2000. Available online at: http://www.worldenergy.org/wec-geis/publications/reports/ etwan/energy_goals/chap_4_conclusion.asp. World Summit on Sustainable Development. 2003. Facts about Energy. About the Author:Timothy E. Wirth, a former United States senator from Colorado, is president of the United Nations Foundation.