This is the fourth entry in a series on Rebuilding America; what candidates ought address leading up to the 2008 election. The series includes: An Overview on Rebuilding America, an article on Core Values, and an article on how to Conclude the War in Iraq. Candidates, feel free to “steal” this platform…you could do worse than Rebuild America as the top level slogan and the initiatives proposed in this series as the mechanism to accomplish the goal.

Establish Energy Security

Let’s not be abstract about this subject, energy makes the world go around. And that is particularly true in America. Set aside industry and the military for a moment, let’s make this personal. If you live in America, you drive. If you drive, you’ll notice that gasoline now costs, on average, over $3 per gallon. Yes, the price ebbs and flows, but if one observes the trend, the price is moving ever higher over time. What about your utility bill? Have you noticed any change in natural gas and/or electricity prices? The same factors are at work in this area, prices ebb and flow, but over time they are moving inexorably higher.

Why do prices go up? There is a permanent increasing demand for energy and a limited supply on a global basis. As long as more people appear on the earth and those people rely on fossil fuel as the base source for energy, the problem will continue to build hitting you in the pocket book. A more important question to ask is: Why is the energy issue core and important? Aside from the obvious economic impact of our energy demand, consumption, and supplies, is that our present situation drives a counter-productive foreign policy to ensure that America has access to these fossil fuel resources. This means that foreign governments effectively are calling the shots for America, and thus ultimately, for you.

Consider this sobering fact: America’s dependence on foreign oil has increased from 47% in 1977 to 66% in 2007. That’s a 19% increase in foreign dependence on oil over 30 years. Our foreign policy, particularly with regard to the Middle East becomes crystal clear when this situation is considered.

In proposing an energy policy that realizes the national interest of energy independence and national security, one needs to segment the problem into Time (what do we do now, 10 years, 20 years) and what do we do across these segments: Transportation, Electricity Generation, and Conservation. Ultimately though, any energy policy needs to deliver these two outcomes:

• Domestic energy supply secure from foreign influence and control
• Energy available at prices that consistent with continued economic growth

Regardless of where one stands on the climate change issue, it would be a good thing to reduce the volume of CO², NOx, and particulate matter emitted into the atmosphere. One only needs to travel to Los Angeles on a hot summer’s day to see the negative impact of these emissions at scale on overall quality of life for Americans. Reducing the emissions footprint can and should be a synergistic effect of an effective energy policy.

How do we achieve these goals when the DoE has been funded to the tune of $350B over 30 years and has failed? It’s simple really, establish focus on the solution, provide incentives for the right behavior, and redirect resources toward the desired outcomes. If you don’t like handing over an increasing percentage of your hard earned wages to support OPEC countries hellbent on the destruction of America through our addiction to oil, it behooves you to get behind a focused energy policy like the one outlined below.

Transportation

American’s drive cars. American’s love to drive cars. American’s will drive cars until they can’t afford to drive cars any more – and still, American’s will find ways to drive cars. Are you getting the point? That means that we have to find a way to channel that love for cars (mobility and independence) into the solution. Things we should do now include:

• Determine electric powered vehicles are the future. Period. Invest in R&D on propulsion, storage, and charging technologies. Provide incentives for private industry to engage in this segment at large commercial scale.
• Direct no less than 10% of the Department of Energy budget toward near-term transportation impacts working toward a goal of 50% greater fuel efficiency and 50% of new vehicles sold are electric propulsion within 10 years.
• Mandate that fuel distributors to offer bio-fuel in at least one pump at each station nation-wide – E85 and Biodiesel. Not the long term answer, but benefits can be had in the near-term because of the large infrastructure investment and build-out in the segment.
• Waive sales tax on transactions for purchase/sale/resale of vehicles with greater fuel efficiency than 35 mpg, hybrid, and/or all electric propulsion.
• Provide substantial fee relief for fleet operators who convert to electric or hybrid vehicles, and/or increase aggregate fleet fuel efficiency to levels greater than 35 mpg.

In 10 years time, American’s will still drive cars but the vehicle’s efficiency and propulsion will be different than present day vehicles. These actions should serve to catalyze two actions: spur auto manufacturers to create products that allow consumers to win from a fuel perspective and provide incentives for consumers to choose products that, in aggregate, reduce fossil fuel demand over the next 10 years. These actions should also mobilize the biofuel industry in existence today and provide market demand that enables these manufacturers to move beyond corn for feedstock to sustain profitable production. Over this 10 year time period, the investment in R&D in electric propulsion vehicles should lay the foundation for a changeover from fossil/bio-fuels to a dominant electric vehicle transportation segment over a 20 year horizon.

By 2018, it will be time to adjust the policy to ensure that the transportation segment transitions from a primarily combustion propulsion industry to an electric propulsion industry:

• Direct no less than 10% of the Department of Energy budget toward greater range and performance of all electric vehicles.
• Mandate that parking facilities offer standard charging interfaces for electric vehicles.
• Waive sales tax on transactions for purchase/sale/resale of all electric propulsion vehicles.
• Provide substantial fee relief for fleet operators who operate all electric propulsion vehicles.
• Provide sunset incentives for retirement of combustion and combustion/hybrid vehicles to individuals and fleet operators.

If we commit ourselves to these activities, by 2028, the US ground transportation segment will be primarily electric and those combustion vehicles still in operation will have substantially higher fuel efficiency. It’s not unreasonable to believe that fossil fuel consumption will be curtailed sufficiently to turn America into a net exporter of oil at that time. You may note that the maritime and aviation industries are not mentioned in these actions, true. These policies and goals are directed toward the bulk of the problem and opportunity. There are clearly policies that would catalyze change in those segments as well, but the payoff is far less than the ground transportation segment overall. Americans will still drive cars, these cars will be substantially different than the ones driven in 2007 though.

Fine you say, but now all you’ve done is shift the demand from fossil fuel to electricity. You know where electricity comes from don’t you? In 2007, 50% is generated from coal fired plants, another 20% from natural gas and petroleum by-products, 20% from nuclear plants, 6% from gravity hydro, and 4% from the varied renewable energy sources. How do you solve that problem now having shifted the energy demand from fossil fuel to electricity? Are you going to build “clean coal” plants?

Electricity Generation

In order to have any kind of discussion about electricity generation and distribution, it’s necessary to understand the relative merits and risks of the various energy sources (they tend to be heat or kinetic in nature.) The present state-of-the-art involves using hydrocarbons (mostly coal, but some natural gas and petroleum products) to produce heat through combustion. The heat is then transferred to a working fluid (generally water) which vaporizes the fluid which in turn increases pressure which is used to spin turbines which are attached to generators. In a variation on theme, nuclear plants use a controlled fission reaction of nuclear material as the heat source in place of fossil fuel, other than the heat source, the harvest method is still a turbine. Solar thermal and geothermal plants use the heat of the sun and earth respectively to power their turbine connected generators.

Direct kinetic energy harvest is most mature in gravity hydro projects where the power of falling water is used to spin turbines connected to generators. Presently, the largest power plants on earth are gravity hydro in nature. Using a similar principal, wind mills use the kinetic energy of the winds to spin a prop (turbine) connected to a generator. Ocean mechanical harvest uses the power of the waves or tides to spin turbines by either trapping water behind barriers or using wave action energy converters.

Solar photovoltaic harvest uses sunlight to excite electrons in a special receptor (silicon or thin film chemical mixture) which are channeled to circuits, ganged together, and then either used as direct current on site or converted to alternating current and used on-site or shipped off to the grid. There are other experimental types of power generation under review now, but the options enumerated above are mature enough and sufficiently well known to help address the current 4 petawatt hours of electricity consumed each year in the US growing to over 9 petawatt hours of consumption by 2028.

In evaluating potential power sources it’s important to understand the relative merits, risks, and costs of each electricity source. Here are the highlights for each source enumerated below:

• Coal – Positives: Cheap and abundant fuel source. Mature and well developed harvest technology. Relatively easy and cheap to build plants. Negatives: CO², NOx, and particulate emissions. Transport of coal hindered by railway congestion. NIMBY issues. “Clean coal” plants untested and expensive. Cost to build: Regular Coal plant $0.75M per megawatt. Clean Coal plant estimated to be at least $3M per megawatt. Fuel cost: $1.76 per million British Thermal Units (MBTU) Capacity Factor: 85% (the amount of time a plant produces per year on average.)
• Natural Gas – Positives: Relatively clean fuel source. Mature and well developed harvest technology. Relatively easy and cheap to build plants. Negatives: Fuel costs have doubled in the past 3 years. Many natural gas plants unprofitable to operate now due to fuel cost. CO² emissions and NIMBY issues. Cost to build: $1M per megawatt. Fuel cost: $6.82 per MBTU Capacity Factor: 85%.
• Nuclear – Positives: Clean and abundant fuel source. Mature and well developed harvest technology. Central control and collection of waste by-products possible. Negatives: Significant NIMBY issues due to fear of catastrophic plant failure ala Chernobyl and Three Mile Island. Spent nuclear fuel remains a problem for 10’s of thousands of years with no present solution. Cost to build: $3M per megawatt. Fuel cost: Unknown, the US DoE spends about $10B a year on nuclear programs to produce weapons material as well as power plant fuel – it’s in the range of a fraction of a penny per MBTU. Capacity Factor: 90%
• Wind – Positives: Clean and abundant fuel source. Relatively easy and fast to construct wind farms. Negatives: Intermittent generation. Wind resource tends not to be proximate to transmission/distribution. Increasing cost to develop resources. Some NIMBY issues revolving around avian mortality and visual pollution. Cost to build: $2M per megawatt (note: up 100% in the past 2 years.) Fuel cost: $0. Capacity Factor: up to 40% – US average presently 31% and climbing.
• Gravity Hydro – Positives: Clean fuel source. Well known performance characteristics and harvest technologies. Negatives: Tend to be very large, very expensive projects that displace people, animals, and vegetation over large areas. Subject to drought causing intermittent and/or reduced generation. Cost to build: $1.5M per megawatt. Fuel cost: $0. Capacity Factor: up to 99% – US average presently 42% and climbing.
• Solar Thermal – Positives: Clean fuel source. Utility scale projects in operation for over 20 years. Relatively fast and easy to construct. Large development investments being made in this area now with many new, large projects in process. Negatives: Low capacity factor and intermittent generation due to sunlight limitations. Technology emerging and evolving, particularly thermal storage area. Operations cost, mirror maintenance as a major human expense. Cost to build: $2.5M per megawatt. Fuel cost: $0. Capacity Factor: 24% in the continental US, increasing to 36% at the equator.
• Solar Photovoltaic – Positives: Clean fuel source. Best technology for distributed generation at small scale. Relatively fast and easy to construct. Large development investments being made in this technology. Negatives: Low capacity factor and intermittent generation due to sunlight limitations. Technology emerging and evolving. Material costs escalating as scale of industry increases. Conversion of power from direct to alternating current degrades overall performance. Degradation of photo-receptors limits production lifetime to 20 years. Cost to build: $8M per megawatt. Fuel cost: $0. Capacity Factor: 24% in the continental US, increasing to 36% at the equator.
• Geothermal – Positives: Clean fuel source. Utility scale projects in operation for over 100 years. Mature and readily available harvest technology. Baseload generation on par with coal and natural gas power plants. Negatives: Risk in development similar to petro-chemical exploration. Must closely manage decline curve of field to avoid over-production. Maintenance of wells expensive and risky. Cost to build: $3M per megawatt. Fuel cost: $0. Capacity Factor: 90%.
• Other These include ocean kinetic, biomass, waste heat, oil/natural gas co-production, and other emerging technologies are not yet mature, but could significantly factor in the equation over the next 20 years.

With this background now in hand, let’s get to the policy we should pursue now, in 10 years, and in 20 years. By 2018, we should strive to change our electricity generation from it’s present state to a future state of 10% renewable generation, 60% nuclear generation, 10% hydro generation, 10% natural gas generation, and 10% coal generation to produce the 6 petawatt hours of annual electricity production that will be required. Furthermore, we should work to increase the aggregate capacity factor of existing generation resources from the present 46% to 60% by 2018. Here are the aspects of the policy that should be put in force immediately and monitored through the US Department of Energy and Federal Energy Regulatory Commission:

• Charter no new coal or natural gas plants. Stop fossil power plant development now.
• Stop all government support for petro-chemical exploration/drilling.
• Stop all government support for “clean coal” and other fossil fuel related R&D.
• Direct 50% of the DoE’s budget toward the following activities.
• Put in place a program to build 100 new, 4 GW nuclear plants at present coal plant locations by 2018.
• Put in place a production tax credit and development tax credit for renewable electricity generation for wind, solar, geothermal, hydro, and other zero emission/zero fuel electricity generation projects.
• Establish a well funded, coordinated geothermal exploration and development program focused on discovery of “blind” hydrothermal systems.
• Expedite renewable electricity generation projects by reducing government barriers, increasing access to government controlled lands (especially military facilities) exclude national parks from development.
• Provide loan guarantees for project developers and for large-scale transmission/distribution projects from renewable energy production zones to the grid for consumers.
• Increase investment for R&D and implementation of safe handling and management of nuclear waste technologies.
• Decommission large portions of US and other nations nuclear weapons arsenal and transform into reactor fuel.

The actions outlined above will catalyze the electric industry toward the right behaviors and will properly use government regulation and oversight as incentives and levers. A serendipitous outcome from this activity will be a balance of energy consumption by 2018 and reduced negative environmental impact to 1990 emissions levels (or below) while maintaining a standard of living, mobility, price, and comfort that the American public demands. Around 2018, the policy should be tweaked to change the portfolio to 50% nuclear, 30% renewable, 10% hydro, and no more than 10% fossil fuels for electricity generation of the over 9 petawatt hours that will be consumed in 2028.

• Provide sunset incentives for coal plant decommissioning.
• Increase R&D to renewable electricity generation harvest methods.
• Increase project support financing to renewable energy implementation projects.
• Give preference to projects that use multi-dimensional harvest of resources over single assets (i.e., solar thermal, geothermal, and wind from the same land area.)
• Increase funding to find solution for nuclear waste issue (as the amount of nuclear waste has increased dramatically over the past 20 years.)
• Increase funding for electricity storage mechanisms at scale.

By this time, the US will be in a position to be a net exporter of fossil fuels and a leader in renewable and nuclear power projects. Coupled with the transportation changes, our emissions levels will be at levels not seen since the beginning of the industrial revolution and our energy needs will be met by resources within our control obviating the need to involve the country in the Middle East to protect fossil fuel reserves. The economy will be significantly stimulated due to job creation in the transportation and electricity generation segments and by the currency’s tendency to stay in the US now that oil imports have ceased.

The increase in consumption from 4 to 9 petawatts is modeled on a 4% annual increase in consumption across that time period. In order to achieve that, certain conservation actions will need to be enacted to contain the growth in consumption to those rates.

Conservation

Similar to the observation that American’s like to drive espoused in the Transportation segment, American’s don’t like to conserve. They’re allergic to the very notion because it means they’re giving something up that they value. Ultimately, the one place American’s understand is the pocketbook. People will drive 10 miles to save $0.03/gallon on gasoline. It’s this part of the psyche that must be tapped to conserve electricity. Over the next 20 years, a few simple things will help tap into that reserve and take the edge off of electricity consumption, they are:

• Energy Efficient Lighting – Provide a 100% tax break for the purchase and installation of compact fluorescent or LED lighting. That’s no sales tax and a 100% state and federal tax deduction for the purchase price.
• Solar Water Heaters – Provide a 100% tax break for the purchase and installation of solar water heaters. That’s no sales tax and a 100% state and federal tax deduction for the purchase price.
• Geothermal heating/cooling – Provide a 100% tax break for the purchase and installation of geothermal HVAC systems. That’s no sales tax and a 100% state and federal tax deduction for the purchase price.
• Vampire load appliance law – Mandate that appliances with a transformer draw zero power when not in use.
• Energy Efficient Construction – Mandate that new construction incorporate sufficient technology to draw no more than 80% of the energy requirement per square foot of the standard home constructed in 2005. Any combination of techniques/technologies to achieve this savings qualify.

These actions will, over 20 years and across 300 million Americans take the edge off electricity consumption even as reliance on electricity increases due to the shift from fossil fuels to electricity as the fuel for transportation.

Big Finish

This is an enormously long entry, and if you’ve actually read this far, congratulations. It’s clear that these areas, transportation, electricity generation, and conservation are connected. It’s equally clear that our current policies are failing miserably in this area (question: how did we spend $350B of our money over 30 years for the Department of Energy and increase your fossil fuel dependence by 20%?) But, if we were to get behind them, even with the problems they would cause, we would have a situation where:

• The world would be a safer place (fewer resource conflicts, fewer nuclear weapons)
• The general consumer would pony up less money for utility and transportation costs
• Whole new industries technologies would grow up around the new transport, electric generation, and conservation segments resulting in more jobs
• The world would be a cleaner place, the smog of LA would be viewed like the “pea soupers” of industrial age England

You may not agree with the specific actions proposed, but I hope that you can see there are specific and targeted actions we can take now that will shape our collective future. One thing I think is universally true and understood is that the current course and speed does not lead us to where we need to be. Contribute your $0.02 in the comments section of you’d like.