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What Lies Ahead?
Setbacks Expose a Nation Ill-Prepared for the Future

Once thought to be an antidote to imported oil and gasoline emissions, biofuels have acquired a host of negatives that make their future questionable, even as competition for oil from growing economies in China and India could lead to constricted supplies of oil at any price.

Power generation could benefit from a number of new technologies, but none save nuclear are proven, leaving utility companies to plan for coal-fired plants. But opposition to their construction has risen steadily across the country.

Put these developments alongside the slow emergence of technological remedies and what become apparent are serious shortages just over the horizon in these two energy streams that are the engines of the country.

 The Policy Void

The root cause is that the nation has had no concerted, ongoing technology policy for developing alternatives to fossil fuels. The U.S. government proceeds glacially, with no seeming awareness of what lies ahead. What programs there are operate in fits and starts that frequently come to a stop. But until they are developed and reach scale, the new technologies need consistent governmental support. Instead, the halting approach makes industry wary of committing for fear that the tap will suddenly be turned off.

An example is playing out in the Senate right now. Investment credits for solar and wind are set to expire at year’s end, much as they have been allowed to expire three times in past years. Over in the House, posturing in their new mantle of fiscal conservatism cast off by Republican legislators, Democrats insist on restoring “pay as you go”, whereby any appropriation is somehow paid for by cutbacks or taxes elsewhere.

The House wanted the Senate to pay for the solar and wind outlays by reversing tax credits that were awarded in the 2005 energy bill to five major oil companies. They are now drenched in a Spindletop of profits from $125 oil, but the Senate wants big oil to keep the money anyway. So the $6 billion bite out of those tax credits, meant to pay for crucial advances in solar and wind, could dry up and blow away. As a workaround that would leave big oil untouched, the House Ways & means Committee has just reported out a bill that would extend the solar and wind programs using payfors other than oil. We’ll have to see where this one goes.

As for funding other technologies? Fugedaboudit. Meanwhile the U.S. spends $12 billion a month in Iraq.

 Powering Down

The Bush administration says that, even with conservation, a new power plant will be needed every week to meet an estimated 29% rise in demand by 2020. The Energy Department says that the expected 40% increase rise in electrical demand by 2030 could lead to 151 coal-fired plants if power is not provided by other means.

But the government and the industry report that some 50 plants in 20 states have been downscaled or canceled in the last two years owing not just to environmental groups but also to mounting public activism and investor concern. Ranchers and farmers in western states have become increasingly vocal against plans for coal-fired plants out of their belief that global warming will threaten their water supply. The Sierra Club and collaborating organizations have filed 29 lawsuits and administrative appeals to halt construction of coal-burning plants. In the absence of federal mandates, the states have become battlegrounds, with 18 pursuing caps for industrial carbon dioxide release either separately or in three multi-state alliances.

But what’s to take their place? If there is major forward movement in “clean coal” – converting coal to gas, or to liquid fuel -- we are not hearing about it. These technologies require heavy funding and a concentrated push to make them happen. In a Newsweek interview, the head of GE's Ecomagination division asked, "How do you get the first 10 to 20 plants done? You know they're going to be expensive”. Is government involvement needed? "Absolutely, we have to have loan guarantees, some incentives...the whole issue of liability on the sequestered CO2 has got to be worked out...and yet there's really no policy action on this".

In fact, the Energy Department recently canceled its one direct initiative -- building a prototype plant to convert coal into gas, split off and bury its carbon dioxide content, and then burn the gas to produce electricity (more here) – after four years lost to no progress.

 Driving Emissions Down

Added to the gridlock in building new plants is the chokehold that climate legislation would impose on the industry. The Senate is expected to begin debating the Lieberman-Warner bill in June. The House won’t go near the subject, and President Bush would veto it anyway, but all three candidates for the presidency look favorably on legislation that would limit carbon emissions by power plants, specifically under a cap-and-trade scheme.

Utilities (and other industries) would be limited to emit no more greenhouse gases (GhG) than the number of “allowances” they either receive by government allocation or buy at auction. The total number of industry allowances would decline on a sliding scale from year to year.

Companies could then trade allowances among themselves. A company unable to meet power demands without exceeding its GhG limit could buy in the marketplace additional allowances entitling it to emit more.

But that assumes there will always be other, more efficient, companies willing to sell an unneeded surplus. Instead, it is not difficult to imagine allowance shortages -- too many companies needing their own allowances to satisfy customer needs, and unwilling to sell allowances to others. Legislation will probably provide some escape mechanism, such as permitting a company to borrow against future years. Those future years stipulate still lower caps, however, so a utility that is failing to wind down its GhG emissions will tie itself an ever-tighter Gordian knot.

 lights out?

There’s no question that, as industry bids up the price of allowances, the cost of electricity will rise, the public will begin to conserve, and the companies themselves will seek ways to cut back on emissions to stay within their caps. But the question raised here is, what ways will the utilities have to cut emissions without that concerted energy policy we speak of? Solar and wind alone? Both intermittent and there are areas of the country that have too little of either. And what if conservation isn’t enough to flatten the electricity demand of a rising population -- that 29% by 2020 that the Bush administration forecasts?

Are we therefore facing a protracted gap between the onset of forcing emissions downward and the readiness of clean technology that would make possible the undiminished production of power? Are we looking at a future of power rationing and/or brownouts? The dark side of the eagerly awaited and greatly beneficial lowering of industrial carbon dioxide emissions is seldom mentioned. Without a flat out national crash program to substitute clean power, there may be trouble ahead.

In a subsequent article, the lack of a national technology policy will look at fuel and transportation.

- Stephen Wilson, PlanetWatch Editor,