Energy

Scenes from the Clean Energy Summit

The special interest groups had fun. But that doesn't make them wrong.

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Washington, DC is currently overrun with meetings, conferences, panels, and summits on this or that new federal initiative, program, or plan. The elation—no, make that joy—of policymongers, lobbyists, and activists reaching at long last to grasp and fondle the levers of power is palpable. One such forum was the Clean Energy Summit, held yesterday at the swank facilities of that ultramodern shrine to journalism, the Newseum on Pennsylvania Avenue.

The summit was convened by Senate Majority Leader Harry Reid (D-Nev.) and John Podesta, President Bill Clinton's White House chief of staff, co-chair of President Barack Obama's transition team, and president of the Center for American Progress Action Fund. Moderated by former Sen. Tim Wirth (D-Colo.), the panel featured 28 notables including Clinton, Speaker of the House Nancy Pelosi (D.-Calif.), Nobelist and Secretary of Energy Steven Chu, Nobelist and former Vice President Al Gore, and oilman T. Boone Pickens.

The stated goal of the summit was to discuss the policies needed to construct a national smart grid to support new renewable energy generation and transmission, as well as how to best wean America off of foreign oil. In reality, the summit was a made-for-media event designed to show the breadth of the coalition pushing for a comprehensive federal green energy policy. Other participants included AFL-CIO President John Sweeney, Service Employees International Union President Andy Stern, Wal-Mart Chairman Lee Scott, American Wind Energy Association CEO Denise Bode, National Rural Electrification Cooperative Association CEO Glenn English, Sierra Club CEO Carl Pope, Owens Corning CEO Michael Thaman, Robert Kennedy from the Natural Resources Defense Council, American Electric Power CEO Michael Morris, and National Association of Regulatory Utility Commissioners President Fred Butler.

But just because the special interests are having fun doesn't mean that they are all wrong—at least, not when it comes to bringing America's national electric grid into the information age. This "most anesthetizing of issues," as Wirth dubbed it, involves complex changes in regulatory procedures, new cost allocation formulas, and the setting of technical standards among power generators, transmission companies, and equipment manufacturers.

The current balkanized regulatory system, which is divided among 50 different state public utility commissions, offers few incentives for utilities and transmission companies to invest in a smart grid. State utility regulators don't want to antagonize their residents by approving ugly long-distance transmission lines that cross through local communities to deliver power from outside the state to businesses and homes in yet another state. More transmission capabilities also means that power generators in any given state could start selling power to other states at higher prices. Naturally, state utility commissioners have little interest in approving projects that would tend to increase the wholesale price of electricity for their own residents.

Sen. Reid noted bluntly that the new federal energy legislation he will introduce later this week will effectively trump the parochial concerns of state regulators. The feds will soon have a much bigger role in the planning and siting of transmission facilities. Ideally, the federal government might bring all of the stakeholders together to create a set of standards ensuring the interoperability of the smart grid. Even more useful, Congress could repeal some of the onerous environmental regulations that have tied up proposed energy projects for years.

Summit attendees were reminded several times that the $787 billion stimulus package just passed by Congress allocates $11 billion to the electricity transmission system. This includes upgrading 2,000 miles of transmission lines and putting 40 million smart meters in homes. But this sum is regarded as just a small down payment.

Part of Reid's new energy bill will create national renewable energy portfolio standards mandating that utilities produce a specified percentage of their electricity by means of wind, solar, or geothermal sources. The draft version of the energy bill backed by Reid would reportedly require utilities to increase the energy they produce using renewable sources by 4 percent by 2012, then 8 percent by 2015, 12 percent by 2018, 16 percent by 2020, and 20 percent by 2039. The summiteers know that without a smart grid, it will be impossible to vastly expand the production of electricity from renewable sources such as wind and solar. The current grid simply cannot manage such intermittent sources.

Reid's fellow summiteer, T. Boone Pickens, is pushing a plan that would require utilities to replace the 20 percent of our electricity that they currently generate burning natural gas with wind energy over the next 10 years. The natural gas would then be used to fuel much of our transport fleet and thus reduce our imports of foreign oil. At the summit, Pickens made an entertaining and insightful point when he shared the advice his daddy gave him in his sophomore year in college: "A fool with a plan can beat a genius with no plan." I am not sure what conclusion Pickens meant for us to draw about his plan.

Can wind power produce that much of our electricity? Technically, it does seem possible. Last year, the U.S. Department of Energy released a study that found that the country could produce 20 percent of its energy using wind by 2030. A 2008 study by the transmission industry offered a ballpark figure of $1 trillion for building the generation capacity to meet a national renewable energy portfolio standard of 20 percent wind energy by 2024. It would cost $80 billion just to upgrade the grid with extra-high voltage transmission lines to transfer this renewable electricity from our windy prairies to East Coast cities. These figures stand in contrast with the assertion made at the summit by Robert Kennedy that the U.S. could obtain 100 percent of its energy from renewable sources for only $750 billion.

As noted, Reid will introduce an energy bill mandating national renewable energy portfolio standards this week, but he is waiting until the heat of summer arrives before introducing a climate change bill that would ration carbon dioxide emissions. That is a policy puzzle. During a post-summit press conference, I tried unsuccessfully to ask Reid the following questions: If Congress and the Obama administration are going to set a price on carbon dioxide emissions from conventional power plants, why wouldn't that be enough to encourage utilities, consumers, and innovators to develop and switch to low carbon renewable fuels? Why does Reid think we need his proposed panoply of tax credits and mandated renewable energy portfolio standards? More pointedly, why does Reid think that Congress knows just what the right mix of energy sources is? I would still like to know the answers to those questions.

Ronald Bailey is Reason magazine's science correspondent. His book Liberation Biology: The Scientific and Moral Case for the Biotech Revolution is now available from Prometheus Books.

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  1. “During a post-summit press conference, I tried unsuccessfully to ask Reid the following questions: If Congress and the Obama administration are going to set a price on carbon dioxide emissions from conventional power plants, why wouldn’t that be enough to encourage utilities, consumers, and innovators to develop and switch to low carbon renewable fuels? Why does Reid think we need his proposed panoply of tax credits and mandated renewable energy portfolio standards? More pointedly, why does Reid think that Congress knows just what the right mix of energy sources is? I would still like to know the answers to those questions.”

    Ron, you are just a wise-guy, if not a one-man “student uprising” on behalf of “the goddess of democracy.” So don’t get carried away.

  2. PRESIDENTIAL ADVISOR URGES BEATING OF INTELLECTUALS

  3. Would it be to much to argue that this summit was probably 99% bull and 1% practical. If these were really such great ideas, the market would have already implemented them.

    The 1% practical is removing environmental road-blocks and state regulation. However, wouldn’t usurping state regulatory powers be unconstitutional? Perhaps part of the stimulus is a bribe to the states.

  4. I tried unsuccessfully to ask Reid the following questions

    Have you been talking to LoneWanker?

  5. “A fool with a plan can beat a genius with no plan.”

    I’ve never liked, or believed in this expression, despite all of its folksy charm.

    I’ve worked with plenty of fools with plans, and the plans were just as foolish as the fools presenting them. And to the last, they all thought their plans were pure Genius.

  6. More pointedly, why does Reid think that Congress knows just what the right mix of energy sources is?

    Because that’s the plan those fools put together.

  7. Perhaps part of the stimulus is a bribe to the states.

    All of the stimulus is a bribe to the states.

    One stimulus to rule them all…

  8. At the summit, oilman T. Boone Pickens offered this homey bit of wisdom: “A fool with a plan can beat a genius with no plan.”

    But a man with a Congressman in his pocket will beat both of them.

  9. However, wouldn’t usurping state regulatory powers be unconstitutional?

    If there is anything non transportation more interstate commerce than electric power, I’d like to hear it.

    I hate to say this but here goes –
    Get the states out of electric generation, distribution and pricing businesses. The big blackout of a few years ago convinced me the system is not fully funtional. It should be fully integrated.
    There’s my bone thrown to the Dems.

    Just wait until the NIMBYs and Greens start the court battles over transmission lines, bird cuisinarts, solar arrays destroying the desert environment, etc. I’m going to laugh my ass off while the Dem “allies” fight the Dems’ ideas of progress tooth and nail every step of the way.

  10. More transmission capabilities also means that power generators in any given state could start selling power to other states at higher prices. Naturally, state utility commissioners have little interest in approving projects that would tend to increase the wholesale price of electricity for their own residents.

    This does not quite follow. For example, the fact that Hawaii exports pineapple all over the world makes it quite cheap here; a long term closure of the export market would shift the equilibrium eventually to locally higher prices.

    Of course, if you restrict supply (i.e. no new generating capacity) then you are indeed in a zero sum game between local consumption and interstate consumption.

  11. If these were really such great ideas, the market would have already implemented them.

    Is the world really this simple to libertarians?

  12. “A fool with a plan can beat a genius with no plan.”

    Pickens is no fool. He’s been advertising this plan in the DC area for months. Strangely, this plan would bailout some rich guy who invested a ton of money in wind power just before oil prices tanked.

    If these were really such great ideas, the market would have already implemented them.

    Is the world really this simple to libertarians?

    No, but we are smart enough to realize that when the government gets involved, people like T. Boone Pickens will game the system, so our tax dollars go into his pocket instead of saving the world.

  13. A one size fits all program will likely be counterproductive. All congress should do is pass enabling legislation for more interstate compacts.

  14. If these were really such great ideas, the market would have already implemented them.

    Is the world really this simple to libertarians?

    Not really, but as a default starting point, it works pretty well. It raises the question of why X hasn’t happened on a voluntary basis, which really is something that you should have a deep knowledge of before you go mandating/incentivizing X.

    Whole economies and generations have been thrown down the rathole because nobody cared to ask the question of why, if it is such a great idea, it hasn’t, and can’t, happen in a free market.

  15. Because electricity is currently generated in plants outside of heavily populated areas, Galvin said, by the time it reaches its destination, it’s been reduced by two-thirds to three-fourths as energy is lost as heat in the transmission cable, dissipates into a magnetic field or is absorbed in insulating material.

    In Galvin’s plan, utility companies would build several small-scale power generators located close to consumers, as many as one in each neighborhood, to reduce the amount of lost electricity.

    “Electricity should be produced close to where it’s going to be used,” Galvin said. “[A smart grid] is entirely feasible?The technical things are all doable. We have the recipes.”

    Under Galvin’s plan, customers would see savings of 50 percent to 70 percent on electricity bills.

  16. ‘Energy plan’ equals ‘smart meters’ so you can be shut down by remote control, hundreds of thousands of windmills that grouped in rank upon rank will alter wind patterns and (horrors) maybe slow earth’s rotation leading to a noticeable shortage of gravity, and a windfall for Boone Pickens as his subsidized wind corridor will also house his tax funded water corridor and natural gas facilities. That ‘ol coot ain’t no fool, he’ll have us on the hook for his capital while he pockets the profits!

  17. Here’s from the Galvin Power Iniative site:

  18. sorry again

  19. trying to unfrak this

  20. Once more into the breach:
    Here’s from the Galvin Power Iniative site:

    The Galvin Electricity Initiative is leading a campaign to create a perfect power system. A perfect power system cannot fail the consumer. It is environmentally sound and fuel-efficient. It is robust and resilient; able to withstand natural and weather-related disasters and mitigate the potential damage caused by terrorist attack. The perfect power system provides affordable electricity to all consumers and allows consumers to control their own energy use to the extent they choose.

    My engineering spidey sense alerts on the word ‘perfect’ – besides tanstaafl, there ain’t nothing that ‘cannot fail’.

    As a the former president of Motorola, I’ll give the benefit of the doubt as far as street cred.

    But re: ‘neighborhood generators’ – putting aside the political implications*, and the fact that I thought that last mile losses were the big efficiency stealer – the ‘smart grid’ may be enough to gain back the efficiencies lost from switching from a centralized to a distributed generation model, but a back of the envelope gut feel says that just from required increased manpower costs alone, it’s gotta to be a closer call than their citation of 50-70%.

    *an oversimplication that likely makes all further discussion moot.

  21. Let’s not pretend that government hasn’t been interfering in the energy market for decads (not saying it’s right, just saying it’s been happening). This puts new energy like renewables etc at a competitive disadvantge against established energy sources.

    Also, electricty generation is heavily regulated, and this again often puts new ideas at a disadvantge. Although some changes have occured, CA for example has made it so that companies can profit by getting consumers to use energy more efficiently etc.

  22. Would it be to much to argue that this summit was probably 99% bull and 1% practical. If these were really such great ideas, the market would have already implemented them.

    There is a legitimate interest in placing restrictions on burning coal, since one opf the byproducts is this thing called “soot”.

  23. […]and allows consumers to control their own energy use to the extent they choose.

    Like the one I have in my 80-year-old house… you know, with ON/OFF switches and stuff.

  24. Until we go ahead and take 100+kVA directly into our homes we aren’t going to improve too much on the transmission losses. So that whole distributed generation stuff is not that amazing. Unless we can get it into our homes and go off grid at a competitive cost.

  25. There is no term I loathe more in politics than “special interest”. It’s meaning is nothing more than “People who support policies that I disagree with”. It drives me crazy. Ron, quit using this vapid term.

    And btw, the grid is around 90% efficient in transmitting electricity, not 25-33% as some earlier posters implied. Of course, we need a much better grid, and a much better energy system in general. No matter what, we are going to spend trillions over the decades upgrading and replacing our energy systems. We may as well not be stupid about it.

  26. The accurate name for this conference would be “rent seekers ball”

  27. I just don’t see how individual pursuit of profit will necessarily result in green energy, especially without a functioning incentive structure imposed by the government. I don’t see how the market takes pollution, let alone worldwide climate change, into account.

  28. The real answer is to de-centralize power generation. All new construction should be required to have a certain amount of solar generation built in, and the stimulus pay for installation on existing structures. The existing structures’ improvements can be attached to the homes’ mortgage and paid out over time. This will produce peak power during peak demand times. Our current grid can handle the base load.

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