Manhattan Institute senior fellow Peter Huber, energy maven par exellence, has just published a short study, Kill Oil With Natural Gas and Electricity: A Carbon Strategy the World Can Afford (Sept. 2009--the full .pdf file is on the right side). In ten elegantly written pages it presents the kind of win-win carbon footprint reduction strategy that, unlike the "renewables" fantasy of militant Greens, actually can work without imposing economic ruin.
Why the Green Way Won't Work. The Green program--embraced, alas, by Team Obama--is to rapidly migrate to "renewable" energy--a/k/a alternative energy--sources, to replace petroleum and coal; the latter is to be heavily taxed under "cap & trade" rules, to sharply reduce carbon emissions, and thus ameliorate man-made contributions to global warming. This Green Way is doomed to fail, for two main reasons: (1) renewable sources of energy--hydroelectric, wind, solar, biomass (ethanol, methanol, cellulosic, wood)--lack the energy density (power provided per unit of physical space & weight), reliability and economic efficiency to replace oil; (2) China, India and poorer nations seeking to promote economic development will refuse to follow carbon reduction strategies that heavily penalize the use of coal, because coal is deemed essential to enable these nations to grow economically. For rich nations, accepting a heavy carbon tax would be an economic penalty that would seriously retard growth but not mire them in poverty; for poor nations, penalizing coal is literally a life-and-death proposition. Greens, for their part, regard carbon emissions reduction as life-or-death, to avoid deleterious global climate warming; poor nations, however, simply are not buying this. As Huber puts it:
Chasing carbon, we’re often told, will get us over oil, too. Most of the rest of the world doesn’t believe it. About 80 percent of the world’s people live in poor countries that are as eager to get over oil as we are—they, too, want to escape the economic clutches of autocrats who rule 10 percent of the people but control 80 percent of the easily accessible oil. The poor, however, have made clear that they won’t be spending what money they have curbing carbon, though collectively they emit more greenhouse gas than we do and their emissions are rising much faster. The people who can least afford to be wrong have accepted the inconvenient economic truth: coal, gas, and uranium are the only practical, affordable substitutes for oil and will remain so for a very long time to come.
Earth to the carbon police: kill oil first. Do that, and you’ll kill some carbon too. Chase carbon willy-nilly instead, and the poor will ignore you, oil will thrive, the oil nasties will celebrate, and carbon emissions will rise, not fall.
What Will Work: A Win-Win Strategy. Huber starts by pointing out that 80 percent of the easily accessible oil is in lands populated by 10 percent of the world's people, but controlled by tyrants Huber puckishly terms "the oil nasties." Everyone agrees that the West would be far better off sending fewer trillions to them; Huber argues that if we promptly take the right steps, we will send $10 trillion later rather than $60 trillion sooner to the oil nasties.
Alas, since the October 1973 Arab oil embargo, American administrations followed perverse strategies that delayed for a generation opportunities to replace oil with natural gas, shut down nuclear power plant construction and subsidized synthetic fuels such as gasified coal. The Greenest energy state in America is California, whose energy costs are the highest, and whose economy is collapsing. Oil was 46.0% of US energy consumption in 1973, and rose to a peak of 47.4% in 1977. Price decontrol of oil & natural gas in 1981 helped, but fickle regulation driven by Green fantasies & a focus on keeping electric rates low delayed realizing the full benefits of decontrol. Still, by 2008 oil provided only 37.4% of US energy needs. (For the globe, oil provided 46.1% of energy in 1973, and fell to 34.4% in 2006.)
Oil has been replaced in the US & overseas, since 1973, not by renewables--their use has grown but their fractional share of total usage has not--but by coal, natural gas & uranium. For decades, Huber writes, these will remain the only viable energy replacements for oil. Since 1973 the US & the rest of the world have been replacing oil these ways. Oil provided 16.9% of US electric power in 1973, but only 1.1 percent in 2008; for the world, oil provided 24.7% of electric usage in 1973 but only 5.8% in 2006.
Instead, Huber proposes that we "kill oil" as an energy source for transport and electricity (oil still will be needed for petrochemical products, such as plastics). The primary weapon: natural gas, a fossil fuel (like coal & oil) that burns cleanly, but unlike oil is hard to transport. Natural gas has one other problem: Its energy density is half that of oil, so that a tank of gasoline that gives 300 miles of driving, if filled with natural gas instead, would give only 150 miles. Yet the average distance between gasoline stations is only 15 miles, so the incremental inconvenience is minimal.
The internal combustion engine designed to run on oil was for decades matchless in efficiency and cost. Today, with minimal modification at affordable cost, gas and diesel oil (a higher end gasoline product used in heavy vehicles) can be replaced by natural gas. Natural gas already powers 10 million vehicles, mostly buses and trucks, around the globe. With tax incentives for conversion to jump start the process, within a decade from natural gas being made widely available for transport we can wean ourselves off gasoline as a transport fuel.
Our current wheels inventory is 5 cars & 2 trucks/buses per 10 residents. We use 4 billion barrels of oil annually to power transport. Replacing oil with natural gas would save us $100B of highway costs; replacing an equivalent usage on the electric grid would cost $100 billion, making the net combined oil replacement migration an economic wash. Given opposition to nuclear plants, coal is the best bet for powering the grid; California's Green-driven energy costs twice as much for electric power as Indiana's coal-powered grid. (Nuclear energy is far better environmentally, if nuclear waste is fed back into the reactors, though more expensive.)
Nuclear plants will be going up all over the world outside America; by 2020 a nuclear plant will be coming online every 5 or 6 days. Since 1973 uranium has provided the only significant global reduction (5 percent) in carbon emissions. Apropos of the benefit of natural gas powering vehicles outside America, were the rest of the world to match our wheel count, the world would see 2 billion more cars & 800 million more trucks, with attendant vast increase in carbon emissions if oil remains the transport fuel of choice.
Oil's share of US energy production peaked in 1954, and fell behind natural gas in 1970. We are, Huber writes, on the cusp of the biggest shift in energy markets since oil was discovered in 1859. Shale rock contains enough extractable natural gas to completely cover oil consumption for 50 years or coal consumption for a century.
Given some $2 trillion embedded investment in our current petroleum infrastructure, Huber proposes that Washington provide a set of incentives to rapidly convert from oil to gas:
To kick off competition this late in the day, Washington will have to take some affirmative steps to restart the clock. By doing that, we might in fact help the rest of the world get over oil—and some carbon too. Promote private and public investment in new links to connect our vast supplies of stranded gas to our trucks and heavy-duty vehicles. Facilitate diesel-to-gas and gasoline-to-gas vehicle conversions. Accelerate the replacement of old fleets with new gas-powered vehicles. Continue developing the know-how that squeezes gas out of the earth—we already lead the world here, and by improving what we already do so well, we can help kick oil out of hundreds of millions of furnaces and engines worldwide. At home and abroad, the less affluent will be delighted to join the rich in swatting down oil with cheaper gas.
An Alternate Serious View. Former CIA Director R. James Woolsey favors electric/hybrid solutions for the highway, in a solid interview all should read.
Bottom Line. If Team Obama continues to be driven by Green Way fantasies, we will once again have squandered a grand opportunity. Sadly, energy policy is an area where perversity prevails nearly all the time. And the Green militancy of this administration knows few bounds. White House energy & climate change czar Carol Browner is a Green super-hawk; the now-discharged WH Green jobs czar was Van Jones, an avowed Communist, and a 9/11 "truther" (i.e., wedunit, not al-Qaeda). The petrodollar bonanza reaped by Saudi Arabia since 1973 financed, among other things, terrorism and Islamist fanaticism around the world. We will send trillions more under any energy scenario, but will send many fewer trillions if we adopt a natural gas-centric energy policy.
We need not total energy independence, but maximum energy security. We can import uranium from Australia, because we will be sending money to friendlies who are allies in wars against jihadism and WMD catastrophe. For the same reason we can import natural gas from Canada if economically efficient; Sarah Palin closed the largest natural gas deal ever with Canada before she left office.
Because Green Way faith in renewables is both economically and environmentally damaging--it cannot supply reliable enough power for base load continuity, and it will spur deforestation-- it should be jettisoned in favor of the far more rational natural gas-centric strategy. If the Senate holds on cap & trade one ruinous bill will fall by the wayside. But for a rational energy policy to be adopted probably awaits an administration not driven by Green militancy. Mark 2013 as the earliest date for launching a better policy, and 2017 as the second earliest date.
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