Framework for Energy Technologies and Potential Outcomes

By Rod Handeland, January 2009

Following is summary of conclusions from course on Technology Breakthroughs for Energy and Food Crises related to energy prospects and potential outcomes. Since surveyed technologies are in-process rather than proven, much of course focused on background and progress rather than conclusions. However, based on course preparation, combined with other background and experience, many of the following may be important components of what we may see in energy evolution and response to formidable energy challenges.

Electricity in Transportation

The only realistic first step to any of near term energy supply and cost problems is to create and introduce a viable option to petroleum in transportation. The test of whether this is possible is if plug in electric autos are produced and sold in mass volumes soon. Without that, no cost effective progress will be made on either energy or global warming problems.

• Despite pummeling of US auto companies now, it was Bush energy plan to which they all responded when electric vehicle work was dropped and research diverted to hydrogen, which had the potential to avoid carbon dioxide emissions. Unfortunately hydrogen fuel cell viability at cost competitive level is a bit like nuclear fusion in always being a decade or more away. And that’s without considering the extensive and dangerous delivery infrastructure that is non-existent.

• It was Prius and high gasoline prices that shifted attention back to electricity, something that Edison and Ford were working to introduce in 1911. An explosion in Edison battery labs as well as Spindletop and other giant oil finds guaranteeing gasoline availability at low prices doomed that earlier electric vehicle effort.

• It has been encouraging to follow progress of Chevy Volt, but with introduction not until end of 2010, they may lose that great race if the Chinese announcement of plug in availability in mass now proves true and viable. It may be an example of commercialization of technology likely to originate anywhere in world. What is fairly certain is that when proven, it will take world by storm. Both China and India with their rapidly growing auto markets and pollution problems need electricity in autos even more than the industrialized world.

• Battery technology, which the US once led, but yielded production and further enhancements to Asia is critical to electricity in autos and will need to be developed further for greater capacity and competitiveness. Since the days of Edison and Tesla when electricity was adapted in volume, storage has remained the biggest problem.

Coal and Alternate Energy

Without electricity in transport, there is no imperative for vast new supplies of electricity. Alternate energy from solar, wind, wave or geothermal, along with nuclear is only useful in supplying electricity not fueling transportation as it is now configured around petroleum..

• Without electricity in transportation, expanding alternative energy only can displace coal, providing some help in global warming. Currently this would be at a considerably higher cost, but new technologies may reduce that gap.

• The U.S. may pay this higher price for reducing carbon emissions, but since greenhouse gas global warming requires a global solution, the question of what emerging countries like China and India with coal and little else to generate electricity will do. Both have very limited oil and gas supplies, in contrast to the US, although ours are rapidly declining.

• Wind can already be a low cost electricity source and photovoltaic may have even greater potential for cost effectiveness, despite being costliest option for electricity now. Similarities of photovoltaic development and microchip scaling and economics may speed photovoltaic cost declines, particularly if complex and intricate thin film manufacturing can be perfected. In the meantime, more supplies of nearly all electricity fuels are needed including solar thermal which is lower cost now, but without the long term potential competitiveness of photovoltaic.

• Little hope for cleaning coal of carbon emissions through carbon capture and storage (CCS) on any type of cost effective large scale base exists now and little progress is likely in years ahead. This is an enormous problem, since only petroleum contributes more carbon dioxide to atmosphere greenhouse gases than coal.

• More hope for resolving coal emission problems may come from using carbon directly from power plants as in pilot plants to grow biofuels from algae by Green Fuels or converting carbon through catalysts to hydrocarbons for gasoline and natural gas by Carbon Sciences. Other symbiotic approaches could build on the same balance we are familiar with in humans inhaling oxygen and emitting carbon dioxide, just as the plants use the carbon dioxide and give us oxygen.

• The potential to eliminate petroleum carbon dioxide emissions is must less promising due to the problem of nearly 300,000,000 US tailpipes rather than a few hundred coal power plants. Before introduction of catalytic converters in the 1970’s to reduce smog carbon monoxide rather than carbon dioxide was engine emission.

Public Policy and Energy

Conservation supported by sensors, controls and monitors now possible from all telecom and information technology advances will be the primary facilitator of more efficient use of energy in coming years, supplemented by better education and human habits. The buildings we live and work in along with lands that produce food will be as dramatically improved in energy efficiency along with transportation.

• The primary public policy energy concern centers on how to identify and develop technologies for new cost competitive energy sources. This focuses on balance of government tax or other incentives and private sector market, led in technology application by engineers, entrepreneurs and capitalists to identify and commercialize best new options.

• Petroleum is uniquely important to public policy since the major consumers little or rapidly declining reserves. Supplies increasing come from Persian Gulf and African countries or complex and often troubling countries like Russia and Venezuela. Most large oil exporters show little ability or interest in using wealth from oil for creating businesses in other fields or keeping their populaces competitive in skills associated with globalized business, trade and investment.

• Petroleum supplies are also complicated by enormous differences in costs of development and production. Persian Gulf levels of $1-2/ barrel contrast to Alaska, North Sea and Russia Arctic sources that are often over $30/ barrel.

• The US is fortunate to have significant but declining petroleum and gas which can be supplemented by border countries of Canada and to a declining degree Mexico. China and India are less fortunate. The result of power needs to fuel growth is a new coal fired power plant every couple weeks.

• It is surprising that most US public policy energy discussion has focused on carbon taxes or cap and trade variants rather than a petroleum floor price. At a $60-$70 per barrel US floor price, most new energy sources are profitable and would have incentive to invest in lower costs. This could also reduce government need to pick alternate energy technology winners through tax credits, subsidies or incentives with certainty that petroleum roller coaster cycles wouldn’t continually be repeated, choking off investment as prices fall and spurring them when oil prices climb.

• With oil production costs being so low in export countries, a US oil floor price may result in substantial revenues from an import tax other than from NAFTA to keep floor price above international prices. The US oil production corollary of windfall profits taxes has been discussed, but perhaps not in connection with a petroleum floor price.

• Petroleum floor price rather than carbon tax may also provides incentive to use coal carbon emissions as discussed above and take advantage of coal reserves of a couple hundred years both in US and many parts of rapidly growing Asia, like China. With majority of coal used to produce half US electricity coming from very low cost Powder River Basin, almost free of industrial pollutants like sulfur, US has a great incentive to prove carbon dioxide use technologies discussed above and spread them to Asia.

• However, the primary benefit of petroleum floor price would be in promoting faster development of new energy sources from sun, wind, sea, cellulose and earth that technologies will make increasing cost competitive. Then we might substitute newer clean energy sources that are even lower than the non-symbiotic system coal powered plants.

It would have been wonderful to have been able to test and discuss some of these issues and hypotheses in recent class. I recall mentioning a young Columbia grad working at Business International when I was there in 1980’s. I wonder whether he has taken interest in some of these energy potentials since then. As President elect of US, I certainly hope so.