How Green Is Your Crystal Ball?

The National Academy of Sciences tries to predict America's energy future. Again.

Ronald Bailey | August 4, 2009

The National Academy of Sciences (NAS) recently dusted off its 30-year-old crystal ball and gazed into the future of American energy use. Its findings were released last week in report titled America's Energy Future: Technology and Transformation. The experts on the panel are slightly stoic and guardedly optimistic. In 10 to 25 years—"with a sustained national commitment"—they say, the U.S. will be able to achieve "energy-efficiency improvements, new sources of energy, and reductions in greenhouse gas emissions through the accelerated deployment of existing and emerging energy-supply and end-use technologies." 

This particular mode of divination harks back to a similar effort back in 1980, when the NAS issued a similarly ballyhooed report, Energy in Transition, 1985 to 2010. That report took four years to assemble and involved 350 of America's smartest energy researchers, engineers, and economists. Before we take the new findings too seriously, let's see how 1980's experts have fared three decades on.

The 1980 report heavily emphasized conservation, and noted that coal and nuclear fission were the "only readily available large-scale domestic energy sources that could even in principle reverse the decline in domestic energy production over the next three decades." The report was extremely pessimistic about petroleum, stating that "world supplies of petroleum will be severely strained beginning in the 1980s." Government-funded research on synthetic coal-based fuels was trumpeted as a great source of hope.

The 1980 report offered six scenarios for calculating the hypothetical total primary energy use for a country with a population of 280 million in 2010. The scenarios ranged from "very aggressive" federal policies aimed at reducing energy demand paired with quadrupled energy prices and 2 percent annual growth; to moderate with doubled energy prices and 2 or 3 percent economic growth; to essentially unchanged 1975 policies, stable or decreasing energy prices, and 2 percent growth.

So how well did the NAS foresee America's energy future back in 1980? Well, for starters, energy prices did not quadruple or even double over the past 30 years.

• According to the Energy Information Administration (EIA), the real price of electricity in 1975 was 9.2 cents per kilowatt hour (in 2000 dollars) and it was 9.28 cents per kilowatt hour in 2008.
• In real dollars a barrel of oil cost $48 in 1975. In 2009, the price has so far averaged $43 per barrel.
• In real dollars, a gallon of regular gasoline averaged $2.21 in 1975 and in August 2009, the EIA reported that regular gas was going for an average of $2.51 per gallon.

And the good news is that the U.S. economy grew at slightly more than 3 percent per year on average since 1985—not the pessimistic 2 percent rate envisioned in five of the six scenarios considered in 1980.

The NAS scenario in which energy prices remained essentially unchanged while the economy grew at a 2 percent rate projected that the U.S. would be using 130 quads of primary energy by 2010. (A quad is a quadrillion British Thermal Units (BTUs) which is equal to the amount of energy in 45 million tons of coal, or 1 trillion cubic feet of natural gas, or 170 million barrels of crude oil.) The 1980 NAS scenario in which the economy grew at 3 percent per year while energy prices were double their 1975 rates projected slightly less than 130 quads of energy consumption by 2010.

As we now know 30 years later, energy prices remained essentially flat and the economy grew at 3 percent. The 1980 report noted that "more rapid economic growth...implies higher energy consumption." Had the assumptions behind the 1980 NAS scenarios been accurate, Americans should be using far more than 130 quads of primary energy by now.

What actually happened? According to the EIA, the U.S. uses just 98 quads of energy today up from around 80 quads in 1980.

Were various energy conservation measures adopted by federal and state governments over the past three decades responsible for substantially lowering the amount of energy Americans use? Nope. In 2004, Resources for the Future, a think-tank based in Washington, D.C., performed "a comprehensive review of energy efficiency programs in the United States, with a focus on the adoption of energy-efficient equipment and building practices." They found that energy efficiency programs reduced annual primary energy consumption by 4 quads below what it would otherwise have been. So most energy efficiency improvements in the U.S. over the past 30 years were adopted without government mandates.

The 1980 report also confidently predicted that "technical efficiency measures alone could reduce the ratio of energy consumption to gross national product...to as little as half its present value over the next 30-40 years." According to the new NAS report, energy use per dollar of GDP has already fallen by 44 percent since 1980, dramatically exceeding expectations without dramatic government intervention.

And what about the mix of energy we would be using? The middle of the road scenario in the 1980 report was called "enhanced supply." In that scenario policies are enacted to facilitate the fast permitting of energy facilities like synfuels and solar power plants, mines, and offshore oil wells. Not all sources would be maxed out over the next 30 years, but the scenario gives us some insight into what leading energy experts were thinking back then. According to the study, Americans might be using as much as 16 quads of crude oil, 14 quads of natural gas, 8 quads of synthetic liquid fuels from coal, 5 quads of synthetic gas from coal, a total of 50 quads of energy from coal, 41 quads from nuclear, 5 quads from hydropower, and nearly 11 quads from solar energy.  

The 1980 guesses were way off the mark. Next year, Americans will use 27 quads of crude oil, 22 quads of natural gas, 22 quads of coal, 8 quads of nuclear, 2.5 quads of hydropower, 10 quads of other liquid fuels such as natural gas condensates and ethanol, 3 quads of biomass, and 1.5 quads of renewable fuels like wind and solar.

The prospects of various nuclear technologies—including fast breeder and thorium reactors—filled many pages in the 1980 report. However, no nuclear reactors have been ordered in the United States since 1978, and no exotic new kinds of reactors have been built at all. Achieving President Jimmy Carter's announced goal of 20 percent solar energy by 2000 would cost a predicted $3 trillion (or $7.7 trillion in 2008 dollars). For comparison, keep in mind that the total capitalization of all shareholder-owned electric utilities in 2008 was $652 billion. America's Energy Future reports that solar power supplies just 0.08 percent of U.S. energy needs today.

Comments

|8.4.09 @ 4:50PM|#

That guy in the cartoon looks like Bill O'Reilly.

|8.4.09 @ 5:02PM|#

Now that I've read this, I'd be interested to know how the predictive algorithms used to make these projections have evolved since the last worthless report. Otherwise, why would anyone expect this report to be any more accurate?

Tholan|8.4.09 @ 6:39PM|#

Does the report take into account the recent break throughs in Solar Panel production, or the vast number of factories being built in India and China to produce them? The report predicts a decline in domestic consumption, but does that take into account the "green" movement and the impact of advances in building techniques?

My gut tells me that the efficeincy gains of the next 30 years will dwarf those of the past 30 years because the Market demands it. It is a safe bet that as the price of financing PV, wind, and geothermal systems approach the current cost of electricity saved, the demand will continue to explode. The laws of supply/demand will act to drive down costs over the longer term. One thing Washington probably hasn't figured is that once you can go off grid with renewables they can not tax your consumption so easily. Attempts to fund anything through a tax on power consumption (or distribution) will meet short falls leaving the dotgovs to seek other pockets to pick. But that won't really matter as the market will acheive all of the governments goals inspite of the governments failed attempts to help it along. In fact, I will say the only thing that will limit the success of "green" market forces are the governments who overzealously push for thier success.

SKR|8.4.09 @ 8:03PM|#

Whatever, those were Republican scientists in 1980. Of course they were wrong, they were obviously schills for the nuclear industry. Now we have the right kind of scientists making predictions. The current scientists aren't motivated by profit. They just want to help humanity survive a climate catastrophe. I can't wait until they start commanding the energy industry. Then they will be able to create just the right mix of technologies.

|8.4.09 @ 8:22PM|#

As environmentalists Miriam Horn and Fred Krupp wrote in their 2008 book Earth: The Sequel: "Mandates presume that the government already knows the best way to proceed on energy. But the government doesn't know any better than anyone else."

What an incredibly charitable characterization. The best government-sponsored prediction is likely to be less useful that the worst prediction produced by someone with his livelihood on the line.

Tholan|8.4.09 @ 8:30PM|#

You know what I find most amazing is the urge to "DO SOMETHING NOW". Technology is so much more advanced now then 30 years ago and it will be beyond our ability to envision 30 years from now. There is little doubt that government doing nothing about it now is the best course of action. Bjorn and the consensus have done a great job of proving that. Bjorn is proof to me that if there is a God, God has no problem with Homosexuality.

|8.4.09 @ 8:45PM|#

SKR

:-)

BTW, one of the prominent scientists working on the 1980 report was John Holdren, the guy who is now President Obama's science advisor. Just saying.

Chad|8.4.09 @ 9:41PM|#

I agree, Ron. Let's put a price on carbon.

Now would you please get the other 99% of libertarians around here to agree to this very simple proposition?

And by the way, pointing out someone was wrong in the past doesn't imply someone else making somewhat similar predictions is wrong today.

It is particularly dangerous to assume that oil isn't going to become a problem in the near future. I can't believe how many otherwise intelligent people I talk to who seem to believe that because someone got it wrong in the 70s, oil supply will never be an issue.

Just as yourself a simple question. Why didn't oil supply move significantly last summer, when prices went through the roof?

The answer is obvious: They couldn't pump faster.

Peak oil probably happened last July. It is all downhill from here.

|8.4.09 @ 10:20PM|#

"Let's put a price on carbon."

Ummm, the market does that on a daily basis.
You can buy a bag of it for your grill at your local grocery store; if you don't like their price you go somewhere else. Or you switch to propane. Or you use wood.

|8.4.09 @ 11:10PM|#

Chad: May I direct your attention to my articles on Peak Oil Panic and Political Peak Oil?

Sizzlechest|8.4.09 @ 11:23PM|#

"The synfuels would be economical if the price of oil exceeds $70 per barrel."

Okay, so what's the problem there? That's a pretty likely possibility at some point in the near future.

OperationCounterstrike|8.5.09 @ 1:26AM|#

Two questions:

1. You don't say WHY the 1980 predictions were so wrong. (People laugh at Paul Erlich's wrong predictions, but the reason they didn't come true is we improved agriculture, food production technology.) So what was wrong with the reasoning which lead to the wrong predictions in 1980?

2. You say that the purpose is to guide policy-makers. Was ANYTHING in the 1980 report effective in this regard?

Regards, --OC

|8.5.09 @ 9:33AM|#

Sizzlechest: The point is that if synfuels are economic there is then NO need for federal RD&D.

Operation: Two responses: The report was wrong because (1) Trying to predict any technological pathway 30 years in advance is crazy, e.g., who knew that personal computers would become ubiquitous back and that there would be this thing called the Web back in 1980, and (2) the report's projections of actual energy resources and the ability of markets to encourage conservation without government mandates were way, way off. Again because they underestimated the ability of tech breakthroughs to enhance energy production and the normal incentives businesses and consumers have to conserve energy. Generally, the report suffered from a gigantic failure to understand markets.

As to your 2nd question - precious little that I could find, but there was one section that dealt with government regulation of nuclear power that worried that it would slow the deployment of that energy technology.

skr|8.5.09 @ 11:00AM|#

@ Ron

Arrgh someone from a republican administration now working for a democratic administration, my illusions are shattered. oh noes!!! (where is the sarcasm tag when I need it)

On another note, I keep hearing about peak oil (I live in L.A.), and people keep saying that the oil companies are exaggerating the amount of oil left in the ground. I know that peak oil enviro types don't necessarily make sense, but this really doesn't make a whole lot of sense to me. Wouldn't they want to underestimate the amount of oil left in order to artificially inflate the price of oil due to perceived scarcity? Just wondering.

Michael Ejercito|8.5.09 @ 2:29PM|#

On another note, I keep hearing about peak oil (I live in L.A.), and people keep saying that the oil companies are exaggerating the amount of oil left in the ground. I know that peak oil enviro types don't necessarily make sense, but this really doesn't make a whole lot of sense to me. Wouldn't they want to underestimate the amount of oil left in order to artificially inflate the price of oil due to perceived scarcity? Just wondering.

Read here

It isn't folks on the right who are complaining that we aren't switching

to alternative energy sources while simultaneously insisting that the

sorts of prices for energy that are needed to motivate those changes

must not happen. There is simply a manifold disconnect on the left

between their reality and their rhetoric.

Chad|8.5.09 @ 6:03PM|#

Ron Bailey | August 4, 2009, 11:10pm | #
Chad: May I direct your attention to my articles on Peak Oil Panic and Political Peak Oil?

Ron, there has been nothing but bad news since you wrote those articles. "Proven" reserves are declining, depletion rates are accelerating, and more and more doubt is being cast on the numbers given by the Saudis. Even if you assume some fairly robust numbers, we have one generation, (paraphrasing your article), before things get really bad. And you said that three years ago.

This is a massive problem which requires massive solutions - ones that cannot be started easily after the fact.

Chad|8.5.09 @ 6:50PM|#

Ron, you might start worrying when you can type "good news oil supplies" into Google and get

http://www.independent.co.uk/news/science/warning-oil-supplies-are-running-out-fast-1766585.html

as the first link. It is an article about an interview with the chief economist at the IEA.

Btw, after looking through a couple of pages, I concluded that my search was a failure.

|8.6.09 @ 9:17AM|#

Carbon capture is a huge waste of energy. 20-40% of the electricty produced will go to compressing and pumping the co2 underground. All for a non existant problem. There is no global warming! The oceans are not rising, hurricanes are not ravaging the country, polar bears are not starving. Where are the droughts and famines? The only crop problem we have is a late harvest due to the cold summer. The experts leading us are idiots.

William Furr|8.6.09 @ 3:36PM|#

All those fancy nuclear technologies in the 1980 report are still a good idea. The Navy is looking into an economical fusion reactor called a Polywell reactor that has a lot of potential, too.

We ought to have a thorium plant in every downtown area in New England, providing local power and district heating via steam tunnels. Yay for snow-free streets!

Existing and decomissioned nuclear plants can be refitted with a integral fast reactor type to consume the on-site nuclear waste from the old-style reactors. Tons more power and no disposal issue.

Combine this with aggressive vehicle fleet electrification and energy efficiency enhancements, and liquid fuels can largely disappear.

|8.6.09 @ 5:00PM|#

I, for one, believe we need more carbon in the atmosphere, not less; to stop this awful global cooling which is occurring.