Good afternoon, thank you for inviting me to speak to you today.
I always like to start with a bit of background. I'm a biologist and environmental scientist by training, a policy analyst by occupation, and an economist by avocation, as well as contamination from working in economic policy institutions for 15 years.
I've long had an interest in renewable fuels. In fact, I wanted to distill my own in 1975, using surplus oranges and a solar still, but the BATF wouldn't license a 14 year old to distill his own hooch.
Let me start by saying that I'm not averse to alternative and renewable energy in its proper place. Where water is plentiful, hydro makes sense. For distant applications, solar can make sense. In extremely rare circumstances, even wind power can make sense (mostly offshore and on islands with no other source of fuel for electrical production, i.e. Hawaii). Some biofuels might make sense, as I'll discuss, but none of the current ones do.
So right now, renewables are niche fuels, and I think they're likely to stay that way. Non-hydro renewables (wind, solar, geothermal), provide about 4% of America’s energy today, and they're the only ones likely to grow. Projections with regard to renewable potential in the future are all over the map, not that anyone should place faith in predictions, as the recent recession should have shown us.
The Electric Power Research Institute predicts that 25% of our energy in 2050 will be generated by renewables. The US Department of Energy estimated that wind power could provide 20% of our electrical needs by 2030. The Energy Information Administration, predicted in 2007 that wind power would provide only 0.4% of our electrical supply by 2030. In 2009, they revised that based on the "stimulus" to suggest that wind will provide 5% of our electrical supply by 2030, with all renewables contributing 12% of our energy supply.
My guess is that EIA was more likely correct in 2007, and that the higher estimates are mostly wishful thinking.
I've come up with an acronym that sums up the main problems with alternatives and renewables - that acronym is DRIP, standing for Diffuse, Remote, Intermittent, and Pricey. Though it's pretty self-evident what they mean, I'll elaborate.
Diffuse refers to the fact that it takes a lot of space to capture significant amounts of non-hydro renewable power. You need vast tracts of windmills, and vast solar arrays because the energy you're trying to catch, wind and sunlight, are quite diffuse compared to say, coal or oil, which are extremely energy-dense.
Remote refers to the fact that generally speaking, people don't live in places where you'd be most able to produce electricity by wind and solar power. That leads to problems with massive power line production, line-losses, and so on.
Intermittent refers to the fact that the sun doesn't always shine, nor does the wind always blow. In fact, the wind tends to die down when it's hot, which is exactly when you need more power for air conditioning and other refrigeration. Neither wind power nor solar power can be stored in a cost-effective way, so if you have surplus wind power at night, it's just wasted.
Another major obstacle is green hypocrisy: while claiming they want renewables at the federal level, environmentalists block the projects at state and local levels, setting us up for future energy shortages as they also stave off conventional power.
Now, I was asked to comment on whether there are developments in the near term that could thrust renewables into a position of greater stability, and I have to say that I don't see that as likely. In fact, what we're seeing unfold today is the collapse of parts of the renewable energy sector, as they simply can not compete with coal, natural gas, or nuclear power on price. In addition, they're being held up by legal and permitting challenges, and the recession has made venture capital scarce. Furthermore, data is coming in on the economic impacts of renewables from countries like Spain, and it's not pretty - the more renewables you deploy the higher your electricity costs are, and the more unemployment you create when you harm your economy and export your industry. Take a look at the effect that California's high electricity rates have had on their industrial base.
There is one technology that I'm somewhat optimistic about, but it's not about electricity, it is liquid fuel made from algae. I'm optimistic about algae fuels because they have some really good attributes other renewables can't match, the challenges are mostly engineering at this point, or relatively simple science, and importantly, there’s a lot of private money flowing in, from companies with a good track record for commercializing technology.
So why am I bullish on algae fuels?
First, algae fuels are less diffuse: the National Renewable Energy Laboratory estimates that algae can produce 10,000 times more oil per acre than other biofuel crops, such as soybeans. That means, we can produce a significant amount of liquid fuel in a relatively small area. The Carbon Trust estimates that algae biofuels could displace 12% of annual global fuel consumption by 2030, if aggressively developed.
Second, they're less remote: you grow algae in long, oval race-track-like ponds or in enclosed growth systems, which can be sited just about anywhere there is a combination of flat land (non-arable land is fine) warmth, sunlight and surplus carbon dioxide.
Third, while algae don't grow without sunlight, making them somewhat intermittent, they result in a liquid fuel that's easily stored, and there's no issue of base load vs. peak load as there is with electricity, making algae fuels unlike other renewables.
Finally, algae fuels are estimated to be less pricey, estimated prices for algae fuels compare to oil at $40-70 per barrel.
Additional benefits are numerous. Unlike ethanol (either corn or cellulosic), algae don’t need to consume fresh water. They can grow on salty water, or even waste water, which they clean up as they grow. That’s important when you consider that some estimates suggest that it takes 140 gallons of fresh water to produce a gallon of corn ethanol.
The stuff left over after you squeeze all the oil out of algae is a mixture of protein and sugars that can be used in many different ways including animal feed, bio-plastics, and pharmaceuticals, or you can just chuck it into a furnace and generate electricity from steam.
Since algae-fuels are more akin to gasoline than to alcohols, there’s no need to change the existing infrastructure that transports liquid fuels to our many millions of vehicles, nor is there a need to change the vehicles themselves. A jet has already flown using algae-based jet fuel.
Finally, there’s the greenhouse gas connection. Algae fed on the carbon dioxide in regular air are carbon-neutral. They pull carbon dioxide out of the air when they grow, and it’s released back into the air when they’re used as a fuel. Even better, if they’re fed on carbon dioxide from coal power plants, or other combustion sources, and they displace the use of a given volume of oil-based fuel, they’re carbon negative, that is, they reduce the flow of greenhouse gases that would otherwise have been emitted.
Of course, there are plenty of challenges to be overcome before algae biofuels reach the pump. The best strains have to be identified for different growing conditions, and optimized for growth rate and fat content. Genetic engineering is out, as the algae-fuel industry feels it would just complicate the process of getting public and regulatory approvals. Algae grown in open ponds are susceptible to the weather, predation, and disease. If freshwater is used, evaporation becomes a significant problem, increasing freshwater use significantly. Algae grown in bio-reactors are more stable, but that technology is still considerably more expensive than open-pond systems. Harvesting and drying the algae prior to processing are energy intensive, unless you’re in the desert where the problem is too much evaporation. Co-locating algae farms with greenhouse emitters may be challenging, and the oil extraction and chemical conversion processes have to be made more efficient.
The US military has already shown strong interest in algae fuels, and could contribute significantly to its development. Right now, The US military uses 130 million barrels of oil each year, which is about how much the entire country of Sweden uses. You can imagine how much energy the military could save if they could set up their own algae biofuel systems on US bases, foreign bases, and even in the field.
Finally, I was asked to comment on how the passage of a climate bill would affect the US commitment to alternative fuels, and what it would mean for energy security /independence.
Should Waxman-Markey, or a similar bill pass into law, America's dependence on renewables would likely increase. Between subsidies to renewables, price-hikes on conventional fuels, and energy mandates, an expansion of renewable capacity would be pretty likely. What would mean for energy security and independence? Well, it wouldn't do much of anything for independence, unless we're discussing biofuels, since we're already independent when it comes to electricity production, or could be with a bit of extra drilling for domestic oil and gas. All wind and solar power do is displace other domestic fuel sources such as coal and natural gas. As for what it will mean for energy security, my suspicion is that it will reduce energy security, as it will make our electricity more dependent, not less dependent on what is fundamentally a chaotic climate system. Raising electricity rates will also reduce US security simply because it will continue to weaken our economy, which is the engine of prosperity and resources consumed in our national defense.
Kenneth P. Green is a resident scholar at AEI.