Technology Trumps Policy

An energy policy should be the result of inclusive debate and a consensus approach to the means to leverage all of a country’s energy assets, including innovation and technology, to the advantage of its citizens. Current U.S. energy policy fails on all counts.

In this column last month, I used government source materials to dispel the myth that the U.S. has limited reserves of fossil fuels. I concluded that we are not short of fossil fuels but short on policies that will allow responsible development of those fossil fuel resources. In particular, natural gas reserve predictions, admittedly a moving target, are voluminous. The numbers are so large that the current debate is about how many hundred years’ worth of gas is in the ground rather than when gas supplies will be depleted.

New Technology Directions

Some readers wrote saying that these enormous natural gas reserve estimates should be sufficient reason to quickly move toward a natural gas–based economy. T. Boone Pickens agrees with that conclusion, and I certainly lean in that direction. However, writing energy policy in the age of rapid technology advances is much like steering an accelerating car while looking only in the rear view mirror—you can only see where you’ve been and not where you are going. And therein lies the tension between energy policy and technology: The schedule for future technology breakthroughs, such as the drilling technology advances that are producing a bounty of natural gas unimaginable just a decade ago, is not predictable.

There are thousands of ideas germinating in researchers’ laboratories today, and a few will become the next big thing. Perhaps the next game-changing technology will be in the field of solar photovoltaic (PV) cells. Alta Devices, for example, just announced that its tests of a new gallium arsenide–based solar panel reached 23.5% efficiency, the highest achieved to date by any solar cell. Chris Norris, the CEO of Alta Devices, has said that the company’s goal is to “compete with fossil fuels without government subsidies” and get to a levelized cost of energy of $0.06 to $0.07 per kilowatt-hour.

Should Norris reach his cost goal (and when teamed with some form of efficient, small-scale electricity storage technology), then the impact on the electricity industry could be meaningful. Perhaps load migration from grid sources to behind-the-meter PV panels will accelerate, thereby causing all sorts of unanticipated policy problems for utilities and regulators. Like the Alta Devices solar cells, the most promising technologies will be funded by private industry because a free market amply rewards the best ideas.

Playing Favorites

There is little chance of renewed debate on a new national energy policy (ignoring President Obama’s recent “all-of-the-above” strategy rhetoric) because the president doesn’t want to negotiate an energy policy with Congress. I’m convinced that Obama’s de facto strategy is to fracture and marginalize the legislative branch while he moves in the two policy directions of his liking: first, dabbling in the market by dangling tax credits, cash incentives, and loan guarantees to spur development of government-favored, yet market-spurned technologies, and second, letting loose the regulators on out-of-favor, yet low-cost fossil fuel technologies. Today, coal-fired generation is suffering death by a thousand cuts at the hands of the Environmental Protection Agency, and there are at last count a dozen government agencies diligently developing new fracked gas regulations. All the while, Congress remains but a spectator.

The only real energy policy is one in which government policies encourage development of all forms of domestic energy supplies and avoids becoming the arbiter of which technology is a market winner or loser. The best ideas will always find private investors because the potential rewards in a free market are substantial. Until an unfettered market returns in the future, be thankful that the laws of physics and not politics guide technology and innovation.

Dr. Robert Peltier, PE is POWER’s editor-in-chief.