The Future of U. S. Energy: More like Texas or Germany?

 

In an article in the August issue of National Review, Mario Loyola warns of a looming energy crisis in the U. S. that would be largely self-inflicted.  Stated simply, it's a case of increasing demand and decreasing supply of reliable power.

 

First, the increasing demand.  For many years, it looked like the future of electric power in the U. S. was one of slow growth, mainly because the increased efficiency of traditional power-hungry industries such as manufacturing was combining with the overall transition to a service economy to create a situation in which we were doing more every year with only slight increases in power consumption. 

 

That is no longer the case.  And one of the big reasons is a new type of industry:  server farms.  The explosion in demand for computing power for novel applications such as artificial intelligence and cryptocurrency mining is now one of the biggest growth sectors for electric power.  Loyola says electricity demand will grow by at least 15% by 2032, only eight years from now. 

 

How are we going to meet that demand?  Right now, nobody knows.  From an economic point of view, building new power plants is a long-term process.  Investors want to be sure that the billions they put into new plants are going to pay off profitably during the lifetime of the equipment.  That requires, among other things, a stable regulatory environment.  But electric power is one of the most heavily regulated and perversely subsidized industries around.

 

The perverse subsidies right now are all in favor of renewable energy such as solar and wind power.  The reason for this is not economic as much as it is ideological.  A substantial and powerful political sector would like nothing better than to see all fossil-fuel facilities tossed into the ocean (except for the pollution that would cause) or otherwise banished from the planet.  We won't go into the well-known reasons for the hatred of fossil fuels here, but the fact of the matter is that if all fossil-fuel facilities vanished tomorrow, most of us in the U. S. would die in a matter of weeks. 

 

The result of all these incentives is that the "interconnection queue," which is kind of a waiting list that the Federal Energy Regulatory Commission keeps for prospective generating facilities, is currently 95% solar power, and hardly anyone seems to be planning new natural-gas or nuclear plants. 

 

No matter what politicians say, you get no power from solar or wind on a windless night, of which there are many during the year.  And it is still largely true that we can't store large amounts of energy in batteries, although about 4 GW of battery capacity is now on the grid.  For comparison, the total generating capacity available in the U. S. in 2022 was over 1,600 GW.  That's 0.25% of our total capacity.  To get it up to even 10% would require 40 times as much storage as we have now, and we won't get there for years, even if we could afford it.

 

For the foreseeable future (which feels like it's shorter all the time), a reliable, dispatchable power grid will need to have at least a majority of its power coming from sources you can turn on and off whenever you want.  Right now that means nuclear, gas, and (pardon the expression) coal-fired plants.  But for various mainly ideological reasons, coal-fired plants are getting as scarce as DVD rental stores, and nuclear is under both a political cloud and subject to extremely encumbering regulations, as are most types of power infrastructure, even renewable-energy ones. 

 

In a separate article in the same issue, author Dominic Pino points out that the only U. S. industry largely free of any kind of regulation is the tech sector, meaning software-websites-social-media stuff.  Any activity that needs large numbers of people working for it, large amounts of stuff on land, or large amounts of imports runs into a forest of regulatory trees that requires years of bushwhacking to get through—except for tech.  And what industry is doing famously well compared to all the others?  Don't ask.

 

Even tech needs power, though, and if we keep going the way we're going, we will end up like Germany, which made the politically favored but empirically stupid decision a few years ago to shutter all its perfectly good nuclear plants.  So now Germany depends for its energy largely on natural-gas plants running off Russian gas, which is like chickens buying chicken feed from the fox.  Experts at the Harvard International Review attribute Germany's lackluster economic performance the last few years to its extremely high energy prices, which in turn result from slow growth even in the renewables sector and bureaucratic barnacles on the ship of state.

 

On the other hand, Texas, with its famously independent electrical grid, is going ahead with plans to add a lot of dispatchable power in the forms of natural gas and possibly even nuclear energy.  Texas A&M (still fondly known as Aggies despite the fact that the agricultural school is dwarfed by high-tech engineering these days) is planning to build not one, but several small nuclear power plants right on their campus in West Bryan.  Governor Abbott likes to do news releases every time a generating firm announces plans to build new power plants, whether it's natural gas, nuclear, or something else.  Just one recent announcement from his office stated that 42 new gigawatts of power was being planned by one firm, which goes a long way toward getting us to the 150 GW or so that Loyola says Texas will need by 2030.

 

And while I chilled out along with everyone else during the February 2021 Texas cold-weather grid failure, which might not have been as bad if Texas's grid wasn't independent of the rest of the country, that same independence makes it easier to plan new capacity in Texas than anywhere else in the country, where the Environmental Protection Agency and other bureaucratic blockades slow the process. 

 

So which shall it be?  A stagnant, energy-starved, but green economy?  Or energy enough to power all those electric cars that people allegedly want to drive, and the AI server farms, and maybe even some old-fashioned hands-on factories that we've almost forgotten how to build?  The choice is pretty clear, although energy policy doesn't rank very high on this year's political agenda.  But it's something that affects the lives of everyone in these United States, which makes it inevitably political.  And I only hope that the political process can handle it in a way that at least doesn't do a lot of harm.

 

Sources:  Mario Loyola's article "Our Coming Energy Famine" appeared on pp. 23-25 of the August 2024 issue of National Review.  I also referred to the websites https://www.utilitydive.com/news/entergy-proposes-gas-fired-power-plants-1200-MW/718036/, https://hir.harvard.edu/germanys-energy-crisis-europes-leading-economy-is-falling-behind/, https://www.eia.gov/energyexplained/electricity/electricity-in-the-us-generation-capacity-and-sales.php, and https://wtaw.com/small-nuclear-power-plants-to-be-built-on-the-rellis-campus/.

Get Real with Vaclav Smil

 

The headline doesn't really rhyme, because Professor Smil's last name is pronounced "smill" to rhyme with "will."  But getting real is what Vaclav Smil does in his latest book, How the World Really Works.  And the reality that he presents, with incontrovertible evidence in the form of wide-ranging statistics and little-known but vital processes and connections among global economic flows, show that the highly-touted future of a fossil-fuel-less economy in ten or even thirty years is a pipe dream.  Not that it shouldn't happen—Smil tries to avoid the familiar political grandstanding beloved by both sides of the climate-change issue, with fairly good success.  What he excels in is showing in great but fascinating detail how essential but little-known industries such as ammonia synthesis play critical roles in sustaining the eight billion or so people on the planet, and that realizing a global zero-carbon economy any time soon would cause mass starvation.

 

Who is Vaclav Smil?  In reading his columns in the professional journal IEEE Spectrum, I wondered that myself while admiring his unorthodox but always fact-based take on various technical issues of the day.  He recently retired from a distinguished professorship in the Faculty of Environment at the University of Manitoba.  He is the only academic I have come across recently who can lay some claim to being a Renaissance man, having published in areas as disparate as population demographics and energy policy.  In whatever field he chooses to write about, however, he likes to start from the facts.

 

For example, if you were asked what are the four material pillars of modern civilization, what would you say?  Silicon, because it's used in virtually all computers and information technology?  Glass, because it forms the material backbone of the Internet?  Smil would disagree.

 

His choices for the four pillars are steel, concrete, plastics, and—the oddest member—ammonia.  Why ammonia?  Because ammonia synthesized from nitrogen in the air and natural gas is the source of the vast majority of chemical fertilizers used throughout the world.  German chemist Fritz Haber figured out how to do that by 1911, and the Haber process still provides most of the world's supply of nitrogen fertilizer, without which you get things like the recent collapse of Sri Lanka, which was caused largely by an out-of-touch government ordering all the nation's farms to switch immediately to non-chemical-fertilizer farming.  But the Haber process needs hydrogen, which comes from natural gas.

 

Plastics, the second pillar of modern society, are made mostly from petrochemicals or sometimes what used to be called "coal-tar derivatives."  Either way, they come from fossil fuels.

 

Concrete, without which we couldn't build most of the large-scale built infrastructure we have, is made with Portland cement, which in turn has to be manufactured with large amounts of coal, or sometimes natural gas.  Anyway, you need fossil fuels to make cement.

 

And steel is made in blast furnaces fired with coke, which is derived from coal.

 

Besides these four pillars, which have to remain in place if the six billion or so people who live less-than-average-income lives hope to improve their lot, all airplanes and nearly all ships burn fossil fuels.  Battery-powered planes or ships to carry even a small fraction of the vital international trade on which modern society depends will not be available for many decades, if ever.  So for the foreseeable future, we are stuck with using fossil fuels for a wide variety of essential processes and products without which most of us would have to crawl away somewhere and die of starvation. 

 

So what do we do, just give up on fighting climate change and get used to wearing bathing suits in the winter?  No, Smil says there are some practical things we can do.  Conservation is a big one.  A surprisingly large fraction, on the order of 40%, of food worldwide is simply wasted—spoiled somewhere along the transportation chain, or simply not used before it goes bad.  And there are tons of opportunities to conserve energy around the world, starting with displacing coal-fired plants (which China is still building like there's no tomorrow) with natural-gas-fired ones, going to smaller cars rather than SUVs and electrics where possible, and building more solar and wind-generation facilities.  But here is Smil reacting to claims that we could decarbonize at least 80 percent of the global energy supply by 2030:  "Alas, a close reading reveals that these magic prescriptions give no explanation for how the four material pillars of modern civilization . . . will be produced solely with renewable electricity, nor do they convincingly explain how flying, shipping, and trucking (to which we owe our modern economic globalization) could become 80 percent carbon-free by 2030; they merely assert that it could be so."

 

Smil's book is full of cold-shower moments like that, but he is also refreshingly free of the tendentious us-versus-them tone that dominates most public pronouncements on these matters by politicians and other leaders.

 

He does not deny that global warming, or climate change, is happening.  In fact, he shows how the essentials of the connection between carbon dioxide content in the atmosphere and global temperature were worked out over a century ago, long before it became a contentious political issue.  When he sees global leaders convening an endless series of summits and proclaiming unrealistic and unreachable goals while letting things just go on as usual, he gets irritated that no one is working toward a more systematic and engineering-driven approach to the problem. 

 

What is needed, and what is so often lacking, is the wisdom to choose the right path, or combination of paths, and the courage to put the decisions into action.  That is the real problem Smil portrays in his book:  the fact that a truly global issue—climate change—will have to have a truly global solution.  And we haven't figured out how to do that yet.

 

Sources:  Vaclav Smil's How the World Really Works was published in 2022 by Viking.

Being Green Takes Green: Europe Rethinks Renewable Energy Standards

For the past decade or more, as Al Gore and the majority of climate-change scientists have insisted that the world is speeding headlong toward an environmental catastrophe of epic proportions, European countries have adhered to stringent emission controls in order to lessen their dependence on fossil fuels and replace them with renewable energy sources such as wind and solar power.  And the strictures have been in place long enough to have a significant effect;  Germany, for example, now routinely gets a quarter of its electricity from renewable sources.  But as economist Stephen Moore points out in a recent article in National Review, treading so lightly on one's carbon footprint has a price:  higher energy costs.  A kilowatt-hour in Europe currently costs up to twice as much as it does in the U. S., and European manufacturers who use lots of electricity are starting to take notice.  Companies such as the chemical giant BASF are planning new operations in the U. S. rather than Europe.  As a result, the European Union recently announced that it was dropping its mandatory emissions standards for its member nations, letting them burn more coal and oil, if they can find it.  And one of the places they are most likely to start looking is—you guessed it—the U. S.  New exploration technologies, primarily fracking (hydraulic fracturing), have put the U. S. on track to be a net exporter of energy in the near future, and it looks like Europe will now be a prime customer, their disdain for old-fashioned carbon-based fuels notwithstanding.

Engineers made it possible for Germany to achieve the impressive feat of running a quarter of a modern economy on renewable energy alone.  Engineers also have made it possible for the U. S. to increase its oil and gas production in recent years beyond the wildest dreams of everyone but a few farsighted oil-exploration entrepreneurs.  In the absence of government controls or restrictions, customers for energy will buy the cheapest convenient fuel available.  Everyone agrees that except for a few isolated localities, there are no strictly economic reasons to build lots of renewable-energy sources into a large-scale power grid.  A fossil-fuel power plant is much cheaper to build, its output is more reliable, and the continuing cost of the fuel is often more than offset by the construction, maintenance, and other costs associated with the relative unreliability of wind and solar energy. 

But such a strictly economic analysis ignores a cultural and political factor:  the perceived virtue of using renewable energy as opposed to the use of fossil fuels.  In the moral universe in which many government and science leaders live, burning fossil fuels is as close as you can get to a mortal sin against future generations, and against those living now who may be harmed by the consequences of anthropogenic global warming.  The desire to avoid this sin is so great that, at least in Europe, it led to the European Union's mandatory emissions standards which effectively imposed renewable-energy quotas on its member nations.  But even the bureaucrats of the EU can recognize impending economic disaster when they see it, and as the costs of living with a renewable-energy grid began to pile up, they and their constituents saw the consequences of idealism in their power bills.  And it got to be too much.

This is not the place to debate the truth, falsity, or somewhere-in-betweenness of the connection between carbon dioxide emissions and global warming.  What is of more immediate concern is the public's perception of the issue, and how that perception (or rather, spectrum of perceptions) influences governmental policies and laws.  For whatever reason, the EU, with its relatively opaque governing structure and increasingly centralized power over its member nations, responded promptly and vigorously to the perceived threat of global warming with practical measures that had significant negative economic effects.  The fact that the same leaders are now backing off on these measures in the face of rising energy costs says volumes about their real priorities, which turn out to be similar to those of politicians in other parts of the globe.  The slogan "The economy, stupid" was part of Bill Clinton's successful 1992 presidential campaign that brought down George H. W. Bush's presidency, and while Brussels bureaucrats do not face the same sorts of political pressures that U. S. presidential contenders do, they appear to have more sense than they sometimes get credit for. 

In a free society, individual members can try to live off the grid entirely, or buy three Hummers and take cross-continental trips in them, or anything in between.  But things like national power grids are, by necessity, creatures of politics, policies, and law.  And any society which wants to pay the price for eschewing fossil fuels may do so. 

The problems come when an elite leadership that is persuaded of the evils of fossil fuels tries to implement its expensive energy tastes, however virtuous, on the backs of a populace that has to pay for it.  That experiment has been tried in Europe, and we are witnessing its failure, to a great extent, although Europe will probably continue to rely on renewables to a greater degree than the U. S. does for some time to come. 

It may come as a surprise to some of my readers that in good old "ahl-bidness" Texas, where much of the technology of hydraulic fracturing was developed, and where petroleum is regarded roughly in the same light as mother's milk, we lead the nation in wind-power generation.  In fact, on a particularly windy day in 2013, for a short time Texas surpassed Germany in renewables use,  because for a short time more than a fourth of the total electricity being consumed was supplied by wind power.  As in other parts of the world, the growth of renewables didn't happen without a substantial government incentive, namely a guaranteed purchase price for wind-generated electricity that encouraged the construction of huge wind farms in West Texas.  But this shift to wind was achieved without the penalty-laden restrictions on the construction of conventional fossil-fuel plants that the EU emissions standards imposed.

Decades, if not centuries, will elapse before the whole story of fossil fuels, global warming, and all that can be written.  In the meantime, billions of people on this planet want and need, the advantages that cheap, reliable electric power can provide.  Other things being equal, most of them would probably want to save the planet rather than cook it for breakfast, but things are not equal—not economically, not politically, and not culturally.  And in this inequality lies the complexity of the ethics of energy policy today.

Sources:  Stephen Moore's article "Europe's Green Collapse" appeared in the Feb. 24, 2014 issue of National Review.  The record 28% of electric power generated by wind in Texas occurred at 7:08 PM, Feb. 9, 2013, and was reported in the Abilene Reporter News at http://www.reporternews.com/news/2013/mar/01/texas-wind-energy-sets-record-grid-expansion-in/.  The report that Texas leads the nation in installed wind-power generation capacity is taken from the website of the American Council on Renewable Energy at http://www.acore.org/files/pdfs/states/Texas.pdf.