In 2007, the Energy Independence and Security Act was legislated by the US House and Senate as a means to promote petroleum based independence and alternative forms of energy in the United States. While originally intended to directly affect the federal and institutional subsidization of the oil industry, effectively “leveling” the playing field for new technologies and innovative ways of thinking, political negotiations necessary for the act's passage significantly limited and altered the final version of the bill that we know today. Instead, this roadmap now focuses mainly on automobile fuel economy, development of bio-fuels and efficiency measures in public buildings.
The policy has steps in the right direction, and coupled with aggressive Renewable Portfolio Standard (RPS) mandates in at least 25 states, the future of those working in the renewable energy sector appears rather sunny (pun intended). Goals have now been set within the energy generation sector of our economy as they relate to increasing the use of renewable fuels, and a de facto line in the sand has been drawn. Meanwhile, the clock continues to tick and impending target dates, most notably the year 2020, are getting closer and closer.
The most pressing questions surrounding energy policy now are: 1) How do we reach these goals? And 2) Are they even attainable? Advocates from both sides of the aisle and in many industries, such as wind, solar, biomass, nuclear, and even domestically sourced natural gas and clean coal, have all thrown their hats in the ring professing that their technological approach is the way to go if there is any hope of truly changing the energy landscape. However, as this argument continues to be broadcast live on nightly news programs, CSPAN floor votes, and The Daily Show, no single front-runner has emerged. And the clock keeps ticking.
Author and NY Times columnist Thomas Friedman speaks of this quest for cheap, abundant, clean, reliable electrons as the next truly world changing industry. As global populations continue to grow exponentially and energy demand sets new records with each passing year, it is evident that there currently is no silver bullet when it comes to solving our looming energy and environmental crisis. In many ways it is very similar to the IT bubble of the 1990’s and the oil bubble at the turn of the century: AOL Search or Google, Betamax or VHS. Each had its own internally perceived competitive advantage and unique business model, but it’s clear who won out in these instances.
This illustrates that what is needed is a combination of public/private partnerships, interaction of market forces and new innovative companies offering superior solutions to carve out niches in ways that have defined the American Dream and the capitalistic ideals that this country was founded on. These are great words, but still there is no demonstrable proof that these goals will be met on time, despite state and federal progress reports indicating movement towards RPS attainment in some states.
There are many reasons to have concerns about the progress of RPS. First, as the Energy Independence and Security Act was intended to level the playing field, many state RPS requirements included all forms of renewable energy as eligible. However, some technological applications simply don’t have the same financial attractiveness as others. Michigan, for example, has great-untapped wind resources offshore, but little to no opportunity for meaningful solar installations. Thus solar becomes a non-player in the state, creating a divisive wedge between technology providers all trying to produce tangible results.
The only way around this is to create subsidies for certain technologies, and this of course flies directly against the reason that RPSs were created in the first place; namely to level the playing field. It could then be argued that if a technology doesn’t make sense without subsides to artificially increase its attractiveness, then it shouldn’t be considered an eligible renewable technology in the drafting of a state’s RPS mandate, thereby effectively limiting the ability of the state to meet it’s RPS goal through the exclusion of multiple technologies. Factor in political wrangling and even concerns about climate change and what is left is a lot of uninformed decision making.
A second major problem arises when the Not In My Back Yard (NIMBY) mentality pits towering pinwheels against rustic farmland, or offshore industrial turbines miles out to sea that glisten in the waning light of a beautiful summer sunset. Some citizens say that these technologies are necessary, while other claim that they're eyesores. There is a growing populace that doesn’t believe these behemoths have any place obscuring or interfering with the inherent beauty that our landscapes and neighborhoods are entitled to. Of course no one wants to see a peaking power plant on every other corner or a nuclear base load plant two blocks away from grandma’s house either. With all of these expansion objections, a solution remains elusive.
Finally, now that there are thousands of megawatts of new generation capacity dotting the nation's landscapes, the question of how to create the necessary transmission infrastructure becomes a vital component. The nation's existing infrastructure is already in a state of disrepair, and the costs associated with developing a new model, one capable of handling existing coal fired power plants as well as distributed generation facilities stretching great distances, could exceed the cost of generating the power itself. What does this do to the financial model necessary to truly create change and meaningful movement towards attainment of RPS goals? State goals are highly limited to the individual states in which the RPS applies with little cooperation between neighboring states in terms of splitting transmission and distribution costs, with some exceptions. In the absence of a federal RPS, greater cooperation between the states could allow reliable and efficient renewable energy goals to truly be met.
Recognizing Thermal Resources
Another point worthy of attention is the grossly ignored use of the needs of thermal energy users. While total energy demand for thermal application is only a fraction of the overall energy needs of our country, most RPS goals and the incentives they bring largely ignore technologies that don’t produce electricity. Even the Investment Tax Credit (ITC), Production Tax Credit (PTC), and cash grants in lieu of ITC (which are all powerful financial tools for wind/solar/geothermal installations) largely ignore good projects or technologies simply because the energy they produce doesn’t involve sending electrons down a wire.
Experience has shown that the menu of financial incentives for these thermal use type projects is rather slim. Most utilities are not obligated to purchase something like Renewable Heat Credits (they don't exist), or carbon credits to help offset the costs to level the playing field with oil and other petroleum based products. There is no pot of money to help subsidize these installations to ensure more wide spread adoption.
These industries, however, produce and manufacture products Americans use every day. The wood to build one's home, the bricks and steel to build factories, the cement you drive on everyday, even the flowers planted every spring, all require enormous amounts of heat in order to provide consumers with these goods. Interestingly the technology and resources are available right now to change these patterns of operation, without having to worry about expensive transmission infrastructure or wind turbines blocking scenic vistas.
The Way Forward
The concept of refocusing energy policy has significant backing by many in the renewable energy sector. A multi-pronged attack that incorporates electrical and thermal incentives, multiple technologies implemented in areas of most practical use, and best practice approaches will help to achieve measurable progress while striving for target attainment. Private players must be allowed and encouraged to participate in reinvigorating the energy sector, but they must also work within a collaborative framework.
It is clear that US energy policy is in its infancy, with its first words coming in the form of 2007’s Energy Independence and Security Act, but it will be forced to grow up fast. A comprehensive strategy involving cooperation between public and private, state and federal, technology and technology, must be developed with appropriate incentive packages necessary to change behavior and patterns of resource use. Without this fundamental agreement on all sides, energy policy will continue to languish and slowly move forward, all the while the clock continues. Tick tock, tick tock.