Just-in-Time Energy Revolution

We are standing at the threshold of a revolution in the world energy economy. Or, so we might hope after reading this week’s Economist.

The tell-tale signs of that revolution are documented in a 14-page special section on “The Future of Energy.”

The Economist, a magazine that calls itself a newspaper, began publishing in 1843 to “take part in a severe contest between intelligence, which presses forward, and an unworthy, timid ignorance obstructing our progress.”

Its special energy section (June 21-27 edition) delivers a bit of both. But it contains plenty of information that ought to be circulated far beyond the periodical’s regular readership.

The feature’s bottom line (liberally paraphrased) is this:

We are at the beginning of a Third Industrial Revolution in which renewable energy technologies — driven by factors such as peak oil, climate change and the old-fashioned profit motive — will permanently transform the global economy and its impact on the environment.

“A fundamental change is coming sooner than you might think,” the newspaper says.

“Everyone loves a booming market, and most booms happen on the back of technological change,” the Economist writes. “The world’s venture capitalists, having fed on the computing boom of the 1980s, the internet boom of the 1990s and the biotech and nanotech boomlets of the early 2000s, are now looking around for the next one. They think they have found it: energy.”

The Economist‘s analysis of emerging renewable energy technologies — including wind, solar, geothermal and biofuels — is too detailed to summarize here. It’s worth taking the trouble to read it in its entirety. Here are some highlights:

  • Things have changed since the renewable energy surge of the 1970s. This time, renewable energy will take root. Global warming is a permanent driver for change, and while the surge of the ’70s was driven by an artificial factor — the Arab oil embargoes — the increase in the price of oil today is driven by market demand.
  • By one estimate, the world energy market is now $6 trillion annually and climbing. That’s about a tenth of the world’s total economic output. There’s a lot of money to be made in clean energy technologies.
  • Some renewable energy technologies already have reached “grid parity” — the point at which they are competitive with fossil and nuclear energy. Parity for several others is within sight. For example, wind power is competitive with electricity generated with natural gas and solar electricity is not far behind. “As these alternatives start to roll out in earnest, their rise, optimists hope, will become inexorable,” the Economist notes. “Economies of scale will develop and armies of engineers will tweak them to make them better and cheaper still.”
  • Unfortunately, the Economist gets a few facts wrong and perpetuates some misunderstandings about our energy choices.

    Nuclear power: “The time is right for a rethink” of nuclear power, the Economist writes. Why? Because nuclear power will be cheaper than coal once a price is put on carbon, and because memories are fading about the accidents at Chernobyl and Three Mile Island. Let’s hope that forgetting the past — in this case, the fallibility that the “human factor” injects into nuclear energy — is not a rationale for charting the future. Let’s also be careful about defining price. Nuclear power has been heavily subsidized by the government since its inception more than a half-century ago, and it remains dependent upon corporate welfare today. When subsidies, decommissioning, waste disposal and other costs are counted, nuclear power is no bargain. As the Nuclear Information and Resource Service notes, “Nuclear power one of the least effective and most expensive ways in which to tackle climate change.” More importantly, the Economist brushes off the problems of waste storage and nuclear proliferation as though they are inconsequential and easily solved. They are not.

    Coal power: The Economist buys into the specious but common argument that because coal is cheap, abundant and widely available, it is “unlikely to go away” even in “the most alternative-friendly future imaginable”. There are two problems with that conclusion.

    First, if price, supply and availability are our criteria, then we should shift all of our public subsidies and research from coal to solar energy and its derivatives. Solar energy is free and omnipresent, it produces no emissions, we have a 5-7 billion year supply and the power is delivered to us in eight minutes. The sun remains the best power plant ever devised.

    If we got serious about using solar energy and its derivatives, we could achieve true carbon sequestration by leaving the coal in the ground. Intermittency — the most often-cited weakness in a solar future — can be solved with smarter electric grids and emerging methods of storing wind and solar power — a goal even more important in my book than storing carbon.

    Second, speaking of sequestration: While a kilowatt of coal-fired electricity may be cheap today, that will change with carbon pricing and with carbon capture and storage (if storage proves feasible). It’s possible, perhaps even likely, that if carbon capture and storage become ready for widespread use — which even bullish advocates say isn’t likely to happen before 2020 — several forms of renewable power generation will be cheaper. As the Economist notes, seemingly in contradiction to its statement that coal power is cheap: “Carbon storage will be expensive at best. At worst, it may not work.”

    Energy efficiency: In another surprising lapse of intelligence for a world-class publication, the Economist confuses energy efficiency with energy conservation, and ignores the importance of both. Energy efficiency, it says, will “just happen in the background as part of most businesses’ continuous search for cost savings.”

    Poppycock. Energy efficiency is Job No. 1 in achieving the new economy the Economist suggests is being born. It is the quickest, cheapest and most reliable way to cut carbon emissions and energy costs. A number of public policies, subsidies and market barriers stand in the way of full utilization of even cost-effective efficiency opportunities. That’s why so much efficiency potential remains unused today, like hundred-dollar bills laying unclaimed on the sidewalk. Some barriers will be removed by carbon pricing; others, such as the regulatory policies in most states that give utilities more incentive to sell power than to save it, need to be removed proactively.

    Despite these flaws in its reporting, the Economist makes the important case that “a failure of imagination has been at the heart of the debate about climate change”, but now a boom has begun for green technologies. A key question, the newspaper notes, is whether the boom will happen quickly enough to stop atmospheric CO2 concentrations from reaching dangerous levels.

    That urgency is why the Third Industrial Revolution needs to be not just an evolution, but a revolution. As Sam Walton put it, “Incrementalism is innovation’s worst enemy. We don’t want continuous improvement, we want radical change.”

    — Bill Becker

    12 Responses to Just-in-Time Energy Revolution

    1. David B. Benson says:

      They obviously didn’t bothr to check the current spot prices of coal.

    2. hapa says:

      just gonna hazard a guess here that, efficiency being cheaper than new supply, there may be a feeling at the economist that the higher gross margins of meeting inefficient demand are something to be carefully thunk upon.

    3. hapa says:

      we all want to be efficient of course but not to the point of frugality.

    4. Ronald says:

      I saw an advertisement in a magazine for energy efficiency and the writing was all about energy eff. but the picture it had with it was wind turbines. Which somewhat explains the problem with promoting energy efficiency; how do you ‘show’ or picture it. There is no universal symbol for energy efficiency.

      It might be a good project for somebody or some art group if somebody could come up with symbol or picture that can be immediately reconized.

      Any graphic artists out there?

    5. Peter Foley says:

      The heart of the error of the efficiency model is it’s similarity to the idea of a static level of energy usage–any rational path to the future demands ever greater levels of energy supply and usage.
      As technology increases, waste fractions will diminish–our grid has never been more efficient then now and will continue to improve barring imposition of neo-Luddite memes. Imposing a zero-sum game paradigm on a resource that is limited only by one’s ability to innovate is anti-social at best, I would say it is criminal.

      It is extremely unlikely direct solar power will replace vehicle power supply in our lifetimes– only a few Horse Power of energy impacts the surface of a car at high noon in the tropics, none at all over 50% of the time.

      Bill Becker, have you had a chance to peruse the latest tree ring data out of Finland? Yet another refutation of alleged carbon-forced AGW.

      We have been storing nuclear waste since the 1940s– it is a totally political problem. Yet another irrational tenant of the eco-church.

      If you actually want a revolution, start with the man in the mirror, and leave my wallet alone.

      Has Homeland security contacted you regarding the threat you’ve made yet?

    6. Brewster says:

      I hate to point out the obvious Peter, but if we don’t do something soon, nobody will be concerned about touching your wallet. It won’t be worth anything…

    7. Earl Killian says:

      Bill Becker is right about efficiency (and Peter Foley is wrong). The 40 least efficient U.S. states are gorging electricity at 13,947 kWh per capita, while the 10 most efficient U.S. states are sipping it at 7,774 kWh per capita. The efficient states have higher GDP per capita than the others as well. Getting the 40 to be as efficient as the 10 would make a big difference in U.S. GHG emissions.

      Peter Foley’s direct solar power comment was inane. What sort of silly strawman is that? No one real suggests power cars from sunlight on their roofs.

    8. Dwight says:


      Do you know the source of their quote of just over $0.06/kWh for nuclear power? I seem to recall you estimate it closer to $0.15/kWh.

    9. Joe says:

      That is probably the operating cost after most of the capital cost is paid off.

    10. JMG says:

      Graphic for energy efficiency: graph (dollars vs. months) showing declining cost curves in red with ascending profits curve in green, next to a dummy newspaper headline “Leading businesses lower their vulnerability to energy price shocks,” and a dummy financial magazine cover showing “Market rewards most efficient businesses” etc. etc.

    11. Peter Foley says:

      Brewster, Doing something incredibly stupid would impact my standard of living =”revolution” Don’t stick your mental fingers into a running machine you don’t understand (global climate or economic basics), you’ll harm your manual dexterity and possibly gum up the works with body parts.
      Becker has solar as “parity is within sight” of natural gas power. Yes he did have solar as a near term replacement.
      Earl Killam, when we reach 100% efficiency- an economically destructive goal- similar to that mid 20th fascist(who can’t be named) who kept looking for the uber-weapon as the ten crappy tanks with fuel shot the snot out of the better tank with out shells or fuel. A true tree-hugger will seek cheap and clean energy
      Spending a dollar to save a dime’s worth of energy is eco-destructive.
      Exchanging a cheap efficient source of energy for an unnecessary one is beyond dumb.

    12. Earl Killian says:

      Peter Foley, your smear tactics are digusting. I never talked about 100% efficiency; that’s a strawman you erected to tilt at. Nor have I ever advocated spending a dollar to save a dime. Efficiency is usually the cheapest energy (e.g. many electrical efficiency items cost only 1-2 cents per kWh). Once efficiency becomes much more expensive, it is usually time to look elsewhere. Stop trying to falsely attribute things to others.