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ANSWERS TO POST-HEARING QUESTIONS
Responses by Dr. Albert A. Bartlett, Professor Emeritus of Physics, University of Colorado at Boulder
Examples of Policies That Have Been Successful
Q1. In your oral testimony you stated that overall energy policy is a mess. Can you cite any examples of individual policies that have been successful?
A1. Yes.
Example No. 1. During or after the energy crises of the 1970s the Congress enacted tax credits for individual home owners who made significant investments in energy conservation in their homes, or who installed solar energy or (possibly) wind energy systems for their homes. Following this very constructive lead that had been provided by the Congress, state legislatures enacted similar tax credits. I believe these state and federal tax credits were successful in slowing the rate of growth of energy consumption in homes in the U.S., and in encouraging the development of industries and infrastructure in the U.S. to manufacture, install, and maintain these systems.
It was tragic that the Congress allowed this system of tax credits to lapse in the 1980s. This lack of action by the Congress caused state legislatures to follow suit. The result was the near total collapse of the conservation and solar energy industries and infrastructure. Congress should re-enacted these programs of tax credits now, but it will take some years for the nation to rebuild anew the industries and infrastructure that we once had and that will be needed by a new generation of these systems.
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Example No. 2. I am aware that the State of Florida has an active Solar Energy Research Center that carries on research and development in the field of solar energy systems for homes and commercial/industrial buildings in Florida. The work of this Center is of enormous benefit to the people of Florida. I regard this program as a success that needs to be expanded.
Example No. 3. The state of Hawaii has no fossil fuels, so all of the energy used in the Hawaii must come from imported fossil fuels (mainly petroleum) or from solar energy. A few years ago the Legislature enacted a program of tax credits for the installation of solar heating systems for domestic hot water, and this program has resulted in large savings of fossil fuels. This saving comes about because electricity is the energy option for producing domestic hot water if solar energy is not used. Producing electricity in Hawaii requires the burning of imported petroleum. I regard the Hawaiian policy of tax credits for solar hot water heating as a success that should be extended.
Example No. 4. When the Congress mandated improved fuel efficiency standards for automobiles, the requirements were met, reluctantly, by the auto industry. This action of the Congress was a success because it has saved uncounted millions of gallons of petroleum, with a corresponding reduction in air pollution. Unfortunately, the congressional fuel efficiency standards were applied only to automobiles and not to trucks etc. This initial success should now be expanded significantly by applying the standards to all motor vehicles, and by increasing the standards significantly and progressively, a few miles per gallon each year. We know that such actions by the Congress have been successful in producing the desired results.
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Reliance on Market-Based Approach
Q2. Should the U.S. rely on a market-based approach to meet the country's energy needs?
A2. No. Here's why.
The market generally assumes that supplies are unlimited, so that when demand rises, production will always rise to meet the increased demand. I don't think the market will work well when a resource is expiring. Prices will rise and this will hurt low-income people the most. The market will try to find substitutes, but in this age of advanced technology, possible substitute technologies are bound to be expensive, and again, the biggest part of the burden of the cost of the shift will be borne mainly by low-income people.
Petroleum is crucial to our entire economy. My mathematical estimate (Mathematical Geology, January 2000, Pg. 1) is that we have used about three quarters of the recoverable petroleum that was ever in our ground in the United States and we are coasting downhill on the last 25% of this once enormous resource. By 1980, it was pretty clear that U.S. domestic oil production had passed its peak (highest) value in 1970 and that more than half of our oil had been consumed. If markets were working, as many claim they are, then the passing of the peak of domestic oil production should have seen strong signals coming from the market to warn us to stop our growth in petroleum consumption. I am not aware that any such signals came from the market. Instead, we compensated for the declines in domestic petroleum production by increasing our imports of oil. In doing this we were taking oil away from undeveloped nations which will certainly need that oil in the future if they are to realize their dreams of developing in the style of the U.S.
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The market has given us no signals about the national risks associated with our rapid depletion of domestic petroleum reserves.
The market has given us no signals about the morality and the ultimate peril of trying to continue a society such as ours in the U.S. where each individual consumes more than four times as much petroleum per day as the world's average per capita daily consumption.
Markets seem to work well in small local situations, but the global markets are so manipulated by governments and cartels that they fail to give us the signals we need to warn us of the impending peril.
Since the markets don't give the needed signals, we need leadership in the legislative and executive branches of the federal government. We need people who can see and understand the signals so that they can communicate the signals and their significance to the American people. Unfortunately, it seems that one cannot be elected to public office in the U.S. if one talks honestly and frankly about the precarious position we are putting ourselves in by our continued high rates of consumption of fossil fuels. As a result, none of our leaders have much to say about this problem, and so our national peril increases with each passing year.
All of this arises from the fact that, as H.L. Mencken observed, the American people welcome news that is false but comforting and reject news that is true but unpleasant.
We as a nation must find a way around this fundamental impediment to sustainability.
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Planning and Subsidizing for Long-Term Energy Needs
Q3. How far should a Democratic government go in planning and subsidizing for long-term energy needs?
A3. Quite far. Let me explain.
A stable long-term energy supply is essential for the survival (sustainability) of democracy in the United States. The market place has not provided the signals that Americans need if we are to achieve long-term sustainability of the United States. Therefore, if we are to survive as a democracy, we must plan for survival.
The provision of along-term energy supply is essentially a question of science and engineering. It is important to note that science and engineering are not democratic. For example, we can argue and even vote on how much petroleum remains in the ground in the U.S., but the outcome of such a vote won't change the amount of remaining petroleum.
The governing imperative among all species of flora and fauna is the preservation and survival of the species. Individuals are ''programmed'' to take such actions (even self-sacrificial actions) as will help insure the survival of the species. In times of war, we show great determination and willingness to sacrifice in order to preserve democracy from the obvious threat of hostile actions. In times of war, we put the imperative of preservation of democracy ahead of the rights of individuals, many of whom will ultimately make the supreme sacrifice. But in times of peace it appears that we put the rights of the individuals above the need to preserve our democracy. If democracy is to survive, we must plan for its survival. And the steps needed for survival will almost certainly call for some of the sacrifices that people are called on to make in times of war. But we are not programmed to make these peacetime sacrifices and, thus far, our political leaders have not been willing to map out a realistic course of actions for the long-term survival of our democracy.
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Amory Lovins recently called attention to an observation by the great biologist E.O. Wilson. Wilson observed that insects such as ants individually have very little in the way of brain power, but collectively a colony of ants shows remarkable intelligence in choosing courses of action needed to assure the survival of the colony. In contrast, humans individually have enormous capability to think and reason, but collectively we demonstrate little or no common sense about strategies of long-term survival and sustainability.
All of this adds up to the need that I see for strong leadership in planning and ultimately in subsidizing vast improvements in the efficiency with which we use energy, and in the development of renewable solar energies to replace the dwindling supply of petroleum and other fossil fuels.
Compounded Energy Growth
Q4. In your testimony you noted that rates of compounding make demand growth greater than expected. In the 20 years since the 1973 OPEC oil embargo, the U.S. population has grown by about 25 percent (from 211 to 280 million) while the economy has grown by about 50 percent. At the same time, our energy demand has grown by only 10 percent indicating tremendous energy efficiency. Where has energy demand growth been compounded over any sustained period of time?
A4. World petroleum consumption sustained a growth rate of approximately 7 percent per year for about 100 years from 1870 to 1970.
The doubling time for growth of 7 percent per year is about 10 years. With steady growth one consumes as much in one doubling time as the total that had been consumed in the entire previous history of the steady growth. Thus President Carter was correct when he said, in his famous energy speech, ''and in each of those decades, (the 1950s and 1960s) more oil was consumed than in all of mankind's previous history.''
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In the last 30 years, the OPEC oil price hikes and the imminent peak of world oil production have caused the growth to fall below the 7 percent per year growth curve.
Now, let's examine the figures given in the question. Here are the figures that I find in government publications. The energy data are from the Annual Energy Review 1999, (DOE/EIA–0384 (99) ) The population figures are from the Statistical Abstract of the U.S., 2000.
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The increases in population and in total energy consumption in these 26 years are:
28.8 percent 27.4 percent
The average growth rates over the 26 years are:
0.974 percent per year 0.932 percent per year
From these figures we can calculate the average annual per capita consumption of energy in the U.S.
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1973 358 million BTU per person each year
1999 354 million BTU per person each year
These remarkable figures show that the growth in total energy consumption in the U.S. was slightly less than the population growth. Two observations follow from these numbers.
First: In spite of all of the new ways we have developed to use energy, the improvements in energy efficiency have more than compensated for the increase in the ways we have to use energy resulting in a slight decline in per capita annual total energy consumption in the U.S.
Second: Essentially all of the increase in total U.S. energy consumption (27.4% in 26 years) can be attributed to population growth in the U.S. (28.8% in 26 years).
Now let's look at the figures for petroleum for 1973 and 1999.
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The changes in these quantities in these 26 years are:
Decline by 29% of 1973 Increase by 69% of 1973 106.4%
So we have experienced a decline in annual domestic oil production by about 30% while our annual imports of oil increased by nearly 70%.
This large expansion in our U.S. imports of oil increasingly places the welfare of our economy in the hands of the nations that have the oil.
What are the sources of the imported oil in million barrels of oil per day?
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The fraction of our oil that we import from OPEC has changed very little in 26 years, while our imports from OPEC have increased by about 62% in the 26 years.
The numbers make it clear that our national economy is rapidly increasing the magnitude of its dependence on OPEC oil.
Approximately 69% of our petroleum consumption is for transportation, and transportation is perhaps the most important single item in our national way of life.
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Put these observations together and you see that OPEC's ability to control our national way of life is increasing.
Convincing Statistics of Imminent Exhaustion of U.S. Energy Resources
Q5. Please provide one hard statistic that could convince all the members of Congress that the U.S. energy resources will begin to run out in the next decade or two and spur drastic price increases?
A5. Let me give two statistics.
First: U.S. oil production peaked in 1970. When the Alaska pipeline started delivering its oil, there was a brief recovery, but even then U.S. production never reached the level of the 1970 peak. My published analysis leads me to conclude that we have consumed about three-quarters of the recoverable oil that was ever in our ground in the U.S. This leads us to import over half of the petroleum we consume.
Second: Worldwide, we are pumping about four barrels of oil from the ground for every one new barrel of oil that is discovered. We are taking four dollars out of our savings account for every dollar we deposit in the account.
Policy Recommendations to Get Us from Tomorrow to the 22nd Century
Q6. What policies would you recommend that Congress follow to ''get us from tomorrow morning to the 22nd century''? In your oral testimony you recommended policies to:
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have a planning horizon that addresses problems of sustainability through several future decades,
create a continual and dramatic improvement of the efficiency with which we use energy in all parts of our society,
rapidly develop and deploy all types of renewable energies throughout our society,
continually reduce the annual consumption of non-renewable energy,
to recognize that population growth is the ultimate driving force behind energy demand.
Is this testimony the totality of your present recommendations?
A6. Yes.
The last of these recommendations is by far the most important because of The First Law of Sustainability: Population growth and/or growth in the rates of consumption of resources cannot be sustained.
Factors Affecting Population Growth
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Q7. It would appear from first world statistics of birth rate that prosperity leads to people voluntarily choosing to limit the number of children they have and, conversely, poverty leads to many children and perhaps to continued poverty. U.S. population growth appears to be mostly from immigration. Your comments?
A7. Response to the statement, ''U.S. population growth appears to be mainly from immigration.
True. Approximately two-thirds of current U.S. population growth is due to immigration.
We have growing unemployment, and at the same time we have enormous pressures to increase immigration into the U.S.
In the absence of any net migration into or out of the U.S., the U.S. population would stabilize within something like 30 years, in accord with the implication of the assumption stated in the question. With continuing immigration at present levels, there is no sign that the population of the U.S. will stabilize any time in the next hundred years.
Let me express my appreciation to the Hon. Tom Tancredo (R–CO) for his courage in recognizing the seriousness of the problems of immigration for the people of the United States.
Response to the opening part of the question.
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There are more factors affecting family size than those cited. The anthropologist, Prof. Virginia Abernethy of the Medical Faculty of Vanderbilt University, has made many studies of different populations, both contemporary and historical, and she has put forth a model that is quite different from the traditional ''demographic transition'' model that is cited.
Professor Abernethy finds abundant evidence that, at the level of the individual couple, a major factor in determining their number of children is the couple's perceived coming change in economic opportunity. If things seem to be improving economically, the couple has more children. If things seen to be deteriorating economically, the couple has fewer children. This is quite the opposite of the conclusion indicated in the question.
In her book, ''Population Politics'' (Insight Press, 1993) she cites many independent studies that support this hypothesis.
In support of Prof. Abernethy's hypothesis, let me cite the experience here in the United States.
During the difficult times of Great Depression of the 1930s, couples saw few signs of things getting better in the near future. The result was that, on the average, couples had fewer children than couples had had in earlier decades when the economic prospects looked better. In the post-WWII euphoria every aspect of the economic outlook was good and improving, and so couples had much larger families. The children in this period became known as the ''baby boomers.''
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Comments Related to the Events of September 11, 2001
POSTSCRIPT: General comments related to the response to Question No. 4 and to the terrible events of September 11, 2001.
The OPEC oil crises of the 1970s were characterized by President Carter as being ''the moral equivalent of war.'' These crises highlighted our growing national dependence on imported oil and pointed out to us that we in the U.S. no longer control our destiny. Our dependence on imported oil put our national well-being in the hands of other nations, some of which are not friendly to us. The OPEC price hikes had a devastating effect on the American economy and this triggered an enormous interest, both in the Congress and in the American people, to use energy more efficiently, especially in automobiles.
But later, lulled by the pronouncements of the Ph.D. prophets of plenty and the cornucopian conjectures of the political optimists, the sense of urgency passed. The amount of oil we were importing increased very rapidly so that in 1999 we are importing about 58% of the oil we consume. A significant fraction of the imported oil on which we depend comes from countries that are not friendly to us.
So every month we import boatloads of oil from OPEC and in return we export boatloads of money to the OPEC countries. It is inevitable that some of the money that we export to pay for the purchase imported oil will fall into the hands of terrorists who will use this money to fund terrorism against Americans.
Our large and growing dependence on imported oil puts us at the mercy of people and governments that are not necessarily friendly to us. Some of the money we pay for oil helps finance international terrorism. In a sense, our prodigious national appetite for petroleum is a contributing factor to the terrorism that is now so indelibly etched in our mental library of visual images.
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In the days since the terrorist acts in New York and Washington, I have spent hours watching television, where I have heard several dozen commentators, analysts and experts, both technical and political. They all utter words of wisdom about the origins of the terrorism and about the remedies open to us.
I have not heard a single person point out the obvious fact that there is a close tie between terrorism and America's insatiable appetite for imported oil.
The problem is even larger. The military establishment of the United States, which will be prominently involved in efforts to bring the terrorists to justice, is almost completely dependent on oil, more than half of which is imported.
So if we are to regain our national independence, we must significantly reduce our presently growing dependence on imported oil.
Unfortunately the President's Program of drilling widely in remote and distant places for more oil may bring a brief but temporary respite, and then only after a few years of drilling. Our entire experience with petroleum points to the fact that the remaining U.S. reserves of oil are insufficient to make the President's Program a long-term solution to the problem of energy in the U.S. Only by reducing our total national annual consumption of oil can we move significantly in the direction of energy independence and sustainability.
How did our dependence on foreign oil become so large? The numbers indicate that the growth of our U.S. domestic oil consumption in recent years has been driven largely by U.S. population growth.
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The long-term solution to the problem of energy in the U.S. has to be based on:
1) Stopping our population growth and then letting our population decline naturally to levels that can be sustained. Many western European countries are now experiencing this natural decline which will moves them in the direction of sustainability.
2) Vastly improving the efficiency with which we use energy.
3) Developing renewable energies that are ultimately derived from solar energy.
The unspeakably terrible acts of terrorists in New York City and Washington, D.C. are another wake-up call. We woke up after the OPEC oil crises of the 1970s but then we went back to sleep. Again we have been rudely awakened. The Congress must not let us go back to sleep once again, for if we go to back to sleep again, we greatly increase the peril to our national existence.
Conclusion
America has been rudely awakened to our great national peril. Our great and growing dependence on foreign oil is a major contributor to that peril, and that dependence is driven largely by population growth in the U.S..
Acknowledgment
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I wish to thank the Subcommittee and Chairman, Hon. Roscoe Bartlett, for the invitation to submit testimony to the Subcommittee, and for the opportunity to respond to these questions.
ANSWERS TO POST-HEARING QUESTIONS
Submitted to Dr. Suzanne D. Weedman, Program Coordinator, Energy Resources Programs, U.S. Geological Survey
These questions were submitted to the witness, but were not responded to by the time of publication.
Q1. If the three tables in your written testimony are taken together with the hearing testimony on the rate of world oil use, the data seems to imply that there is about thirty years worth of oil left in the world, and that prices will begin rising due to supply constraints in the next ten years or so. Is this a correct interpretation of your tables?
Q2. Should the U.S. rely on a market-based approach to meet the country's energy needs?
Q3. What have been the successes and failures of long-term, Federal energy planning and could you point to examples?
Q4. How far should a Democratic government go in planning and subsidizing for long-term energy needs?
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Q5. For geothermal resources, what advances in scientific knowledge are needed to be able to locate geothermal sources all over the U.S. and the world?
Q6. In addition to uranium resources, what information does USGS have on thorium resources?
ANSWERS TO POST-HEARING QUESTIONS
Submitted to Dr. W. David Montgomery, Vice President, Charles River Associates
These questions were submitted to the witness, but were not responded to by the time of publication.
Q1. In your oral and written testimony you indicate that you believe in a market-based approach to meet the country's energy needs. You also state that you believe that the government should support R&D to provide alternatives. Typically, new technologies are more expensive than existing technologies, so what policies should be used to steer a shift to the new technologies?
For example, there is a production tax credit for electricity produced from wind generation. Is this a correct policy, or should there be a tax on other electricity to drive its price up to the point where wind generated electricity will be preferable?
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Q2. What have been the successes and failures of long-term, Federal energy planning and could you point to examples? You cite the past regulations requiring electric generation fuel shifting as a failure as one example.
Q3. How far should a Democratic government go in planning and subsidizing for long-term energy needs?
Q4. You cited in your testimony the Clean Air Act's sulfur trading program as a successful approach to achieving environmental goals while not disturbing the market place. How might this scheme work in the petroleum-based transportation sector and should it be designed to transition to non-petroleum-based energy sources?
Q5. In your testimony you stated that the energy futures market is a predictor of future price. How accurate has this been and should we continue to rely on its predictions?
Q6. Assuming conventional fuels are a finite resource, when should we begin to prepare for the transition from fossil fuels? Will market forces be adequate, or should there be significant intervention by the government? Should there be a ''market steering'' tax on petroleum that is intended to anticipate the future price rise due to a diminishing supply? What performance would you anticipate if the market knows that the governments policy is to adjust the ''market steering'' tax to create a small but continual rise in the price of petroleum over as many years as it takes to cause the market to shift to alternatives?
Q7. Without government intervention, how will market prices respond as we exhaust conventional fuels.
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Q8. Your San Diego example of consumers' response to increased prices, also called demand elasticity, seems to have contradicted Dr. von Meier's testimony that consumers have limited ability to respond to price increases. Please comment.
ANSWERS TO POST-HEARING QUESTIONS
Submitted to Mr. Howard S. Geller, Executive Director Emeritus, American Council for an Energy Efficient Economy
These questions were submitted to the witness, but were not responded to by the time of publication.
Q1. In your oral and written testimony you advocate a market based approach to energy policy with the government sending signals to the market through tax incentives, standards, and taxes. Is this a correct statement of your position? Are there any additional mechanisms that you now believe should be used, based on the electric energy savings reported in California?
Q2. In you testimony you stated that DOE R&D is needed for both supply and use technologies with Energy Efficiency and Renewable Energy being most important. What are your suggested priorities for supply R&D? Do you recommend any changes to the National Energy Plan issued by the President?
Q3. What have been the successes and failures of long-term, Federal energy planning and could you point to examples?
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Q4. How far should a Democratic government go in planning and subsidizing for long-term energy needs?
Q5. Is there any DOE Office of Energy Efficiency and Renewable Energy program you think should be dropped, or have its funds decreased, or remain level funded?
Q6. You recommended in your testimony a ''non-bypassable'' (i.e., mandatory) wire charge to create a ''National System Benefit Trust Fund'' to be used for demand-side energy management. In a deregulated electricity market, do you see any market-based way to promote and accomplish demand-side management goals?
Q7. What incentives do you recommend for older homes and commercial buildings to improve energy efficiency?
Q8. In your view, why do we now have so many low fuel-efficient Subs on the road?
ANSWERS TO POST-HEARING QUESTIONS
Responses by Mr. Henry A. Courtright, Vice President, Power Generation and Distributed Resources, Electric Power Research Institute
Recommendations for Total Energy Policy, Including Energy Efficiency and Renewable Energy
Q1. Your testimony briefly mentioned renewable energy. Could you expand on your recommended total energy policy, including energy efficiency?
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A1. My recommendation is that our energy policy should utilize a diverse portfolio of energy supplies (as outlined in my testimony) and a viable program to encourage energy efficiency and electric demand management. In its Electricity Technology Roadmap report, EPRI indicates that energy efficiency is an important element to reduce the level of resources needed to meet energy demand and lessen the environmental impact of energy demand growth.
Problems With Use of Electric Power Grid in Ways for Which It Was Not Designed
Q2. You stated in your testimony that the electric power grid is being used in ways for which it was not designed. Could you please explain this in more detail, stating why it causes problems and how should address the misuse of the grid?
A2. First let me stress that the changed use in the grid is not a ''misuse'' but a change brought about by deregulation of the wholesale and retail markets in the U.S. Some of the changes include:
Increased number of transactions.
The desire to deliver electricity across distances to fulfill transactions.
A demand for higher levels of reliability and power quality to serve digital loads.
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The current grid cannot direct power flows nor provide the high speed switching to make optimal use as desired by markets. And improving the level of reliability requires the use of new power control technologies closer to the end-use devices.
''Ouality Power''
Q3. Could you explain the concept of ''quality power''?
A3. ''Quality power'' refers to electricity, which meets the needs of a growing digitally based society, including high tech manufacturing and data systems/communications. These uses require essentially perfect power, free of harmonies, disturbances and interruptions. Today's utility supply is generally between 99.9 and 99.99 percent reliability with varying levels of power quality (voltage fluctuations, etc.). However high tech manufacturing and critical communications often need reliability of six 9's (99.9999%) with no voltage fluctuations or distortions.
Needed Developments in Hydrogen Technology
Q4. You said in your testimony that developments in hydrogen technology are needed. Yet, we product hydrogen commercially, electrolytic hydrogen generators are commercially available, and fuel cells for large-scale applications are also commercially available. What breakthroughs are needed? How long will it take and how much will it cost to create a hydrogen economy? Is EPRI following these programs?
A4. Although hydrogen is commercially produced today, substantial technology gaps exist for safe transport and storage. Enhancements to reduce hydrogen production costs, through electrolysis using photovoltaic cells, wind power or high temperature reactions using nuclear power, are an important future step. The development and deployment of the infrastructure necessary to establish a ''hydrogen economy'' is estimated to take up to 50 years. And I have seen estimates that will require from tens of billions and possibly up to $100 billion in research, and development and investment costs.
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EPRI is following hydrogen R&D activities since hydrogen technology development is an important component of the Electricity Technology Roadmap. EPRI is also currently reviewing how to expand its involvement in hydrogen R&D.
''Power Parks'': Centralized vs. Distributed Renewable Energy Generation
Q5. DOE has a program to develop ''power parks.'' Are you familiar with it and what is EPRI's position on centralized renewable energy versus distributed generation?
A5. Yes, we are familiar with DOE's energy parks program. Renewable energy, either centralized or distributed, are encouraged as part of America's energy policy since they can reduce the need for other resources and minimize the creation of greenhouse gases.
Effect of Deregulation on EPRI R&D Funding
Q6. To what extent has electric utility deregulation affected EPRI's funding—in particular your R&D funding?
A6. Deregulation and the resulting focus on near term solutions by the electric industry has resulted in about a $150 million decline with approximation $100 million of that due to reduced levels of especially in longer term, strategic R&D.
Applicability of Technological Improvements to All Large Electric Power Facilities, Not Just Nuclear
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Q7. You cited in your testimony a number of the technology improvements that will decrease the costs of nuclear power plants. Is it correct that these improved technologies are not specifically confined to nuclear power plants but could be applied to all steam electric plants, and to all large electric power generating facilities?
A7. The modular design and construction technologies could also apply to other electric generation plants. This is already being seen in the growth in the combustion turbine generating plants over the past five years.
Time Frame of Recommendations
Q8. What is the time frame of your recommendations, specifically, do you think we will be burning fossil fuels 100 years from now?
A8. Most of the recommendations reflect research and development steps taken over the next 10–15 years to provide a new power generation capabilities for the period 2020 to 2050. We do envision fossil fuels being used 100 years from now but in radically different ways that result in near zero-emissions (fully controlled processes) and much higher efficiency energy cycles.
Breakthroughs Needed for Solar Photovoltaics
Q9. In your testimony on renewable energy, you spoke of breakthroughs needed for solar photovoltaic technologies. In May, a week before the hearing, there was a demonstration house on the mall here in Washington, DC that included photovoltaic panels, batteries, and a rectifier/inverter/control system for operating on the grid. The design is such that during a year the house will be a net seller to the grid, but there are times when the house needs power from the grid. These products are commercially available, so can you be more specific about what breakthroughs are needed?
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A9. Breakthroughs are still needed to advance the mentioned technologies from being available to be economically attractive. These include:
Lower cost solar pv panels
Improved performance of batteries and development of other storage technologies such as flywheels.
''Plug and play'' interconnection devices
Improved communications to enable control of grid inputs from dispersed sources.
Reliance on Market-Based Approach to Meet U.S. Energy Needs
Q10. Should the U.S. rely on a market-based approach to meet the country's energy needs?
A10. Solely relying on a market-based approach neglects the need for basic research and long-term technology R&D to provide public benefits that the markets may not serve.
Examples of Successes and Failures of Long-Term Federal Energy Planning
Q11. What have been the successes and failures of long-term, Federal energy planning and could you point to examples?
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Planning and Subsidizing for Lone-Term Energy Needs
Q12. How far should a Democratic government go in planning and subsidizing for long-term energy needs?
A11/12. These questions on energy planning are outside of my expertise area.
ANSWERS TO POST-HEARING QUESTIONS
Responses by Dr. Alexandra von Meier, Director, Environmental Technology Center, Sonoma State University
Reliance on Market-Based Approach
Q1. Should the United States rely on a market-based approach to meet the country's energy needs?
A1. Yes. I know of no viable mechanisms other than competition among firms and free consumer choice that can consistently produce outcomes in the best interest of society. Markets, when functioning properly, can maximize social welfare. In order to assure this proper function, however, we must carefully distinguish the limitations of market performance in different situations and recognize the appropriate role for government intervention where market failures exist. Such intervention should not be considered antithetical to a market-based approach; rather, it should be considered as a key enabling tool for efficient market performance.
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The production and delivery of energy in particular has inherent properties leading to some of the classic market failures which, according to the most basic tenets of economics, prevent markets from achieving socially optimal levels of production and consumption. These failures include negative externalities due to environmental impacts of energy production (leading to over-consumption of energy in general and of environmentally hazardous types of energy in particular); positive externalities of research and development (leading to under-investment in energy technology R&D on the part of private firms); price inelasticity of demand; imperfect information concerning the costs and benefits of all available energy options; market power on the part of certain suppliers; and, in the case of electricity, technical constraints on the realization of market transactions. I believe that the general tendency in public discourse on energy policy in recent years has been to underestimate the significance of these market failures.
A top priority for Federal energy policy, then, should be to identify and correct market failures and approximate the ''level playing field'' so ubiquitous in cliche yet so elusive in reality. Here it is indispensable to recognize all the various forms of implicit and explicit subsidies that have supported and continue to support today's leading energy resources and technologies, most notably fossil fuels. Not until these subsidies are equaled in magnitude by subsidies for competing resources, particularly renewable energy, and not until a sincere attempt is made to internalize the many short-term and long-term costs of energy production to environment and human health, is it meaningful to speak of a functional, competitive energy market.
I believe that in such a functional market, the equilibrium price of energy—both electricity and fuels—would be somewhat higher than accustomed as a result of internalized costs, and that it is an appropriate mandate for government to ease the impact of what would essentially appear as a regressive tax on energy consumers of lower income. I also believe that the structural changes effected by an energy market with more realistic prices—including increased end-use efficiency and the substitution of cleaner energy sources for fossil fuels—would, in their benefits to society, far outweigh their considerable costs.
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Examples of Successes and Failures of Long-Term Federal Energy Planning
Q2. What have been the successes and failures of long-term, Federal energy planning and could you point to examples?
A2. In an attempt to respond to this broad question, it seems plausible to begin by considering what might be the earliest instances of deliberate, long-term Federal energy planning. The expansion of the electric grid during the earlier part of the 20th century, and particularly its systematic extension into rural areas in the United States, surely stands out as an endeavor of momentous significance. Interestingly, this development was not driven by economic rationale, since extending power distribution to rural areas was by no means the least expensive way to get electricity to villages and farms: With a nascent wind industry in the 1930s, power could actually be supplied more cheaply in many rural locations through small-scale wind turbines. (Indeed, rural electricity distribution continues not to pay for itself, but is now subsidized through the electrical rates of customers in densely populated areas that are less expensive to serve.) However, the notion of a completely connected electricity infrastructure in and of itself represented a vision of progress, prosperity, and equality, and was therefore seen as a value to society beyond its pragmatic and calculable benefits. Seeing that this sort of long-term social benefit would be under-supplied by competitive markets, Federal government took on its proper intervening role, creating the Rural Electrification Agency and expending considerable public funds to connect every American town to the grid. Though an unfortunate side effect was to put the U.S. wind industry more or less on hold for half a century, rural electrification must be considered a ''success'' of Federal energy policy in terms of having achieved what it set out to do, and having created what we now consider an absolutely essential artifact of our civilization.
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Rivaling the electrification program in magnitude would be the U.S. Government's effort to develop nuclear fission as an energy resource. Again, judged by the criterion of whether the policy accomplished its goals—in this case, to produce a viable energy resource alternative that could be commercially employed on a large scale, and to position the United States internationally as a respected leader in peaceful nuclear technology—the nuclear program has to be considered a success. This success is notwithstanding the political difficulties nuclear energy has subsequently encountered, and notwithstanding the fact that its economic costs turned out to be considerably greater than many had hoped. As with rural electrification, the driving force behind nuclear research and development was not economic but based on broader social and political concerns, which to address the Federal government was indeed the appropriate agent.
In responding to the first oil crisis of 1973, Federal energy planning first took on its present, self-conscious role that includes not only initiative in specific technological directions, but a more complete sense of accounting for all the energy used and resources available, along with a sense of responsibility to somehow assure that society's projected needs can be met. For the first time in modern history, a vital natural resource was recognized as being scarce not only regionally but globally, in a way that might dramatically constrain human activities. In this sense, the oil crisis represented not just an economic threat but a profound philosophical challenge to a modern culture that had embraced the notion of unlimited growth. Government appropriately stepped up to the plate in attempting to mitigate the impact of the new energy scarcity for Americans and to develop long-term alternatives to imported fuels.
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The diverse specific efforts that ensued, particularly with regard to developing and implementing new technologies, certainly vary in the extent to which they ''succeeded'' as planned. Thus we now have improved techniques for the production and conversion of fossil fuel energy; we have effective and reliable means for solar heating and electricity generation; and yet we are still at a loss in making nuclear fusion produce more energy than it consumes. But it was and remains fundamentally correct for government to hedge the risk for society by pursuing a portfolio approach and insisting on a diversity of options, even if this means investing in some approaches that ultimately turn out to be dead-ends.
What stands out to me as the most compelling success of energy planning in the late 1970s is the remarkable reduction in the energy intensity of the U.S. economy, as reflected not only in declining per-capita energy use but also the increasing ratio of economic productivity to energy use. Clearly, this development was driven by market forces and did not come without hardship on American citizens. Yet credit is due to government for lending both financial and moral support toward energy conservation and efficiency, resulting in technological advances and structural changes that have produced enduring benefits to society beyond ameliorating the impact of high energy prices.
By contrast, the abandonment of energy demand reduction as a priority once the acute energy crisis had relented in the 1980s strikes me as a failure of long-term planning to which we partly owe our present predicament: a society that has again become more, not less, dependent on fossil fuels, with clearly detrimental economic and environmental effects. Though the intention of the Reagan Administration's approach in particular was to benefit consumers through increased supply, lower prices, and altogether less worry about any deleterious effects of resource consumption, sufficient knowledge was available even in the '80s to realize that increased consumption levels of fossil fuels can, at the most, bring temporary gains to society.
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Domestic as well as global reserves are undeniably going to become more scarce, meaning more expensive technically to extract and more expensive politically to claim entitlement to them. At the same time, local as well as global environmental impacts of burning these resources are undeniably increasing in severity, to such an extent that industrialized nations other than the United States are already looking to greenhouse gas emissions as a key constraining factor in their future fossil fuel consumption—quite apart from resource availability and price. It should come as no surprise, then, if policies aimed at increasing domestic supply of fossil fuels and keeping their price low should face increasing economic, environmental, and political challenges, as they are essentially attempting to sustain a fiction of abundance and carefree living that is bound to collide with reality sooner or later.
In this sense, I interpret the energy crisis of 2000–01, which manifested largely as price spikes due to market power on the part of energy-supplying firms, as but a gentle foreshadowing of problems ahead. Expanding domestic supplies of fossil fuels, the major aim of the S.A.F.E. Act of 2001, addresses the problem of supply shortages quantitatively, and thus, by necessity, only temporarily. What is needed, however, is long-term Federal planning that addresses the energy problem qualitatively by promoting structural changes in our economy, directing us toward dramatic efficiency improvements and renewable resources that can be used at tolerable levels of environmental impact for centuries to come. Like the visionary steps undertaken by government in the 20th century that helped transform the United States into the technological leader it is today, we now need leadership to transform our energy system once again, not on the basis of short-term economics, but for the good of society in the long run.
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Finally, I would like to offer a comment on transportation. From the standpoint of energy and environment, the dismantling of regional and long-distance public transportation systems and the development of highways in their place was arguably the most tragic planning failure of the 20th century. Yet one must realize that until the 1970s, transportation was not generally thought of in terms of its energy-consuming and pollution-causing characteristics. Without our present understanding of these negative externalities, and failing to extrapolate exponential growth to its logical conclusion (i.e., hours spent in traffic jams), the plan to build a huge infrastructure based on individual motor vehicles with grossly inefficient internal combustion engines made perfect sense at the time, embodying the cultural values of equality and independence that are at the heart of our national identity. While giving credit to the highway planners of years past for their resounding success in realizing a grand vision, it is vital for us now to revisit transportation policy from a contemporary perspective that recognizes its key role in energy use and its attendant environmental impacts. I believe that the best thing Federal government could do for society in this regard is not only to insist on dramatic improvements in automobile efficiency and emissions for the coming years, but to offer leadership toward a sensible long-run transition to a transportation and urban planning infrastructure that is not centered around individual cars.
Planning and Subsidizing for Long-Term Energy Needs
Q3. How far should a democratic government go in planning and subsidizing for long-term energy needs?
A3. This question is fundamentally answered by #1 above. Government should go as far in planning for and subsidizing energy as is necessary in order to correct market failures. In other words, government should do that part of the job, and only that part, which competitive markets cannot accomplish if left to their own devices. In general, this will mean subsidizing goods and services with positive externalities where insufficient market incentives exist to provide for the level of supply that maximizes social welfare. Such policies may involve significant expenditure of funds, but it is important to note that appropriate government intervention may also include taxation (in the case of negative externalities) or revenue-neutral incentive mechanisms.
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While this approach is straightforward in theory, and while a number of market failures in the energy sector are quite obvious, the more difficult problem in practice is to agree upon the proper magnitude of government intervention. Thus, for example, the appropriation of funds for energy research and development in a given fiscal year will be guided by constraints other than a theoretical derivation of the precise level of support required to attain a socially optimal level of supply. I submit that arguing about the magnitude of funding levels should not distract us from the essential point, namely, that the direction of government intervention be correct—that is, in the best long-term interest of society.
At different times in history, the nature of this long-term, best interest of society may or may not be obvious. Today, this interest is painfully obvious, and not to act on it is unconscionable. In the 21st century, industrialized nations must reduce their reliance on fossil fuel combustion. Competitive markets will, eventually, lead us to this outcome—but not before incurring tremendous and possibly irreparable damage to the earth's physical and biological systems that support human life, not to mention the social, political, and economic costs of struggling to hold onto our share of a globally diminishing resource. Rather than committing our society to this struggle, we know enough about energy resources and their environmental effects today to initiate an historic transition to energy efficiency and renewable resources with complete confidence that this will bring tremendous good for the American people and for all humanity—both in terms of averting damage and in terms of opening new opportunities for prosperity. Our knowledge of the vital importance and urgency of this transition should be an objective guide as to the appropriate extent of government action.
Past and Future Resource Potential of Nuclear Power, Efficiency and Renewable Energy
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Q4. When discussing resource potential you said in your testimony that what has happened in the past does not predict the future unless the connection is shown. How does this pertain to nuclear power and efficiency and renewable energy?
A4. I argued in my testimony that the potential future contribution of renewable resources cannot be judged solely on the basis of their limited past contribution. This argument applies not only to renewables but to any resource, including efficiency and nuclear energy. For example, it would be fallacious to argue that because nuclear fission is now supplying only 20% of U.S. electric generating capacity, it could never be expected to supply more than, say, 60%. Similarly, the fact that nuclear fusion provides zero commercial energy today does not in and of itself preclude the possibility of fusion becoming an energy resource in the future. Instead, we want to know why use of a given resource has been limited and examine whether or under what conditions the same factors might apply in the future.
In the case of renewables, I would argue that the factors limiting their implementation to date have primarily had to do with an evaluative framework that incompletely accounts for their particular capabilities and benefits. For example, one might argue that solar photovoltaic (PV) power generation has not been widely implemented on a utility-scale because it is not cost-competitive with other resources. This leaves open the problem of how cost-competitiveness is defined. An analysis of PV that takes into account benefits of strategically sited, small-scale arrays to the transmission and distribution (T&D) system—for example, by avoiding or deferring capital-intensive upgrades of delivery capacity, avoiding line losses, and providing reactive power compensation—may very well arrive at a favorable benefit/cost ratio. Recognizing and accounting for these specific benefits, however, requires overcoming either a cultural or an institutional barrier: an institutional barrier because there may not exist a single entity in an electricity market with the correct incentives to trade off generation against T&D investments, or a cultural barrier because in traditional utility planning, where the financial incentives may exist, the philosophical concept of such trade-offs may not.(see footnote 28)
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The larger market context therefore plays an important role in determining the relative competitiveness of resources and technologies. We must assume this context to be fundamentally changeable, as new rules in electricity markets have already challenged many old conventions.
But in order to judge future possibilities, it is necessary to look at the intrinsic properties of a given resource or technology that are not readily changed. For example, in the case of PV, one such intrinsic property that could have easily been a show-stopper is the energy requirement for manufacturing PV cells. If it were true, as some researchers warned decades ago, that it takes more energy to produce a PV panel than it ever generates during its lifetime in full sun, then the technology would be essentially doomed: no change in accounting or valuation could address the intrinsic problem of losing net energy with every panel you manufacture, and you will never ''make it up in volume.'' This was a serious, credible threat to the viability of photovoltaic technology on a large scale. As it turns out, fortunately, some of the earlier estimates were based on highly inefficient production processes, and PV modules on the market today typically recover the energy expended in their manufacture within months or a few years at the most. But until this was known empirically, it would have been quite imprudent to bet on substantial growth projections for PV technology.
In summary, with regard to the renewable resources referred to in my testimony (particularly solar and wind power), I see no intrinsic problems that would preclude their implementation on a large scale in the future. Given basic technical feasibility and proven reliability, the two fundamental constraints are capital cost and land use requirements, and neither seems particularly frightening or unreasonable. Indeed, capital costs for solar and wind power have been steadily declining with increasing manufacturing volumes, and they may well continue to do so. Even if they remained fixed at today's levels, these capital costs are well-known and bounded—the sticker price is what you pay—and thus offer sound and plausible risk-hedging investments. Given this condition, I have every reason to believe that people will increasingly discover opportunities and niches for a continually expanding role of small-scale and renewable energy.
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The pessimism expressed in my testimony concerning the potential for nuclear fission must be carefully clarified in these terms. Just as in the case of renewables, it would be fallacious to argue that, simply because commercial nuclear energy has not been financially successful in the past, it could not be so in the future. Again, we must examine why nuclear energy was expensive and whether we have good reason to believe that these reasons will remain in place, or what it would take to make them go away. I submit that the specific problem areas listed in my testimony as implying future costliness of nuclear power do, in fact, reflect its intrinsic properties—technical, social, and political—that appear to me very difficult to change.
For example, consider the financial uncertainty entailed by the possibility of siting and construction delays due to political opposition. While this latent resistance is a social, not a technical problem, it is beyond the reach of policymakers to alter. We can expedite licensing procedures, but we cannot simply, as I have heard one nuclear enthusiast advocate, ''change our society to become more like the French.''
Similarly, the complexity of nuclear technology in terms of the numerous support systems required within and in addition to the generating plant itself is an intrinsic property that is not susceptible to sweeping change. Though it is true that plant designs can and have been greatly simplified, a commercial nuclear reactor will still require peripheral items like back-up cooling, seismic safety, back-up generators, a spent fuel pool, and a security fence to operate safely. And a nuclear plant will always require a uranium mine somewhere, an enrichment facility somewhere, a fuel fabrication plant somewhere, a spent fuel repository somewhere, a truck to come and pick up the spent fuel, and a reliable electric grid to feed. It also needs qualified operators, training facilities and simulators, a regulating agency to look over their shoulders, and a host of technical experts and political players to reach some consensus about the spent fuel. Finally, the tragic events of September 11 are a forceful reminder of our technological society's vulnerability to acts of terrorism—and the efforts that protecting sensitive targets such as nuclear facilities may entail in the future.
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It is because of this inherent complexity and vulnerability of nuclear technology—the absolute dependence on having a large number of components working together correctly—that I believe we cannot expect to fully break with the past and have nuclear energy that is cheap and safe, no matter how smart we are about improving reactor designs. This is by no means to say that it cannot work or that we would necessarily go broke trying to get it to work. But I simply cannot imagine that, once all the various costs are accounted for, the best nuclear energy system of the future will ever be able to produce electricity less expensively than a decent wind farm.
Biomass Baseload Generation vs. Central Power Stations
Q5. You stated in your testimony that large infrastructure investments and aggregation are caused by central station electric power generation, presumably nuclear and fossil stations. Yet you advocate biomass generation as baseload in an all-renewable electric generation scheme. Won't the biomass steam electric plants be central stations?
A5. I mentioned infrastructure associated with coal and nuclear central-station generation in the context of land use requirements and overall cost, arguing that it is easy to underestimate land use and costs for these resources if auxiliary facilities and mining are not accounted for. This does not mean that central station power plants, which would include biomass generation, are necessarily a bad idea.
In fact, power system engineers know that some proportion of large synchronous generators are indispensable for the stability of an interconnected a.c. grid, as these machines are capable of absorbing and thus leveling out transient fluctuations in power (or a.c. frequency) through their rotational inertia within the split-second time frame until turbine output is adjusted. (A ''large'' machine here would mean on the order of tens to hundreds of megawatts.) There is insufficient empirical evidence to say exactly what the minimum contribution of large synchronous generators would have to be in order to assure stability for an interconnected system on the scale of, say, the Western United States. However, I find it difficult to imagine that we would ever be pushing this limit even in an all-renewable scenario, as synchronous machines would be used by biomass, hydropower, and solar thermal generation. (The only exceptions are photovoltaics and fuel cells that use d.c.-to-a.c. inverters, and wind turbines with induction generators.)
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As for biomass steam generation plants, it should be noted that they tend to be of smaller size than those fired by fossil fuels, favoring the range up to 100 megawatts (which still leaves them capable to perform the stability service described above). This practical limit results from diseconomies of scale with respect to collecting and transporting the bulky fuel, as fresh biomass has a high water content and a considerably lower energy density than fossilized biomass. Even though constructing and operating it would get cheaper per megawatt, at some point it simply isn't worth making a biomass power plant bigger because the fuel would have to be gathered and trucked from so far away.
For any generation unit—and this is certainly as true for biomass and other renewables as it is for traditional resources—there is also an infrastructure and thus an environmental ''footprint'' associated with manufacturing the generating equipment in the first place. To be fair, this component will tend to be worse for smaller-scale technologies and those of lesser power density in generation, simply because more material is needed in order to build a certain number of megawatts of generating capacity. This issue deserves to be studied carefully. Nevertheless, I believe the production and delivery of fuel, and the management of its waste products, to be the more significant infrastructure and land-use factor over the lifetime of a generating facility.
Land use and its environmental costs for the case of biomass are by no means trivial. As agriculture in general can be considered the most environmentally burdensome human activity on the planet, very careful attention ought to be paid to cultivation practices for biomass fuel if the use of this energy resource were to expand considerably beyond using waste products from food crops and logging. The key question is for what time period agricultural practices can be reasonably sustained. The same concerns that apply to growing food—soil depletion, overuse of inorganic fertilizers, aquifer contamination, over-irrigation, erosion, salinization—may also apply to fuel plantations. Another profound concern for biomass energy is the net carbon balance: that the rate of replanting biomass fuel provides a rate of carbon sequestration at least commensurate with the rate of CO release in the fuel's combustion. I am confident that all of these environmental concerns can be feasibly addressed, but it is crucial for government to ensure that the correct economic incentives exist.
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''Power Park'' Infrastructure Investment
Q6. DOE has a ''Power Park'' program where they are investigating large parks with wind generators, solar panels, hydrogen production, and fuel cells. Do you object to these, as they would seem ideal for investment by power generating companies that can aggregate investment? Please comment on the large infrastructure investment in manufacturing, installing, operating, and repairing hydrogen generators, fuel cells, and wind generators that are taller than the Capitol dome.
A6. I do not object to ''Power Parks'' at all; on the contrary, I believe they represent one important avenue for research, development, and demonstration. My understanding of the program objective is that it intends to explore efficiencies and economies of scope that may be achieved by the co-location and coordination of successive energy conversion steps, such as the generation of electricity, production of hydrogen, and delivery of heat. The emphasis, therefore, is on the effective matching and combination of technologies rather than on scale.
Infrastructure investment must be considered in terms relative to the amount of capacity or energy provided, and relative to the alternative means. I see no a priori reason why infrastructure investment should be prohibitive for the technologies under consideration. If one were to envision a network of hydrogen pipelines, storage devices, and conversion devices on a national scale, the effort might seem daunting indeed. However, it has to be compared with the existing infrastructure for fossil fuel delivery and the costs of its various components. Also, this infrastructure was not put into place all at once.
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Need for Pumped Storage Hydro
Q7. In your testimony you mentioned pumped storage hydro as part of your scheme. How many of these facilities would be needed nationally? Are there enough suitable sites with acceptable environmental impacts?
A7. To determine the storage capacity that would be needed on a national scale for an all-renewable electricity scenario would require careful modeling which, to my knowledge, has not been done. This determination would be an optimization that trades off the cost of energy storage capacity against the cost of additional dispatchable generation. Based on qualitative and anecdotal knowledge (see Q8), I would be surprised to learn if the need for storage thus calculated came to more than five to ten percent of the total consumed.
Potential sites for hydro development in the United States have already largely been established and environmental concerns are likely to prevent the development of new sites in the future. It may be feasible, however, to add pumped storage capability to some existing conventional hydro generation sites without dramatic environmental impacts. While the majority of conventional hydro sites in the United States already have upper reservoirs (as opposed to ''run-of-river'' plants), converting them to storage facilities involves creating a lower reservoir as well. The volume of the lower reservoir may be much smaller, however, as its role is not to provide seasonal water storage. According to the U.S. Energy Information Administration, there were 3207 conventional hydro generators and 139 pumped hydro storage facilities operating in the United States as of 1999. How many of the existing conventional sites could feasibly be expanded to include storage capability, taking into account specific topography, engineering, and environmental factors, would be an interesting and worthwhile investigation.
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It is also possible to excavate lower reservoirs underground, and to isolate hydroelectric storage from natural water sources altogether, thus avoiding impact on sensitive environments. Finally, while pumped hydro is the most common electric storage technology today, it is by no means the only option. Solar thermal generation may include thermal storage capacity for several hours' worth of generation at a plausible cost. If more storage capability were needed than could reasonably be supplied by pumped hydro and solar thermal storage, especially on a seasonal rather than a diurnal cycle, hydrogen can be considered as a storage medium. The drawback of hydrogen is that the round-trip efficiency (with electricity being converted into hydrogen by electrolysis and then back to electricity in a fuel cell) is quite low, necessitating a larger capital investment per unit of energy finally obtained.(see footnote 29) Other technologies such as compressed air or superconducting magnetic energy storage might be stronger candidates for electricity-specific applications.
In any case, while the availability of acceptable hydroelectric sites is certainly an important constraint for an all-renewable energy scenario that may force the use of more costly alternatives, this constraint does not, in my view, pose an insurmountable problem.
Projected Costs: Variable Wind and Solar Output vs. Unused Hydro and Biomass Capacity
Q8. Have you performed, or do you know of economic studies that project the cost of electric power in your solar, wind, biomass and hydro scheme? It would seem that there will be a large generating capacity in biomass steam electric and hydro idling when solar and wind are at their maximum, or when the wind is strong at night. How much will it cost? Couldn't hydrogen be used as a storage medium?
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A8. While the literature abounds with cost projections for individual electric generating resources, I am not aware of any current study that sketches out an all-renewable electric supply scenario for the United States and attempts to derive an overall cost. Such a study (which, incidentally, I think would be well worth funding) should assess very carefully the plausible contributions from the respective resources in various geographical areas, taking into account regional resource availability, the magnitude and time distribution of regional demand, and existing and potential new transmission capacity.
The basic analytic tool that utilities have used traditionally for planning and scheduling generation is the ''load duration curve,'' which shows electric demand (MW) for each of the 8760 hours of the year, displaying these hours not in temporal sequence but ranked by demand in each hour, starting with the peak demand hour. The area under the load duration curve represents the total amount of energy demanded. The process of allocating generation units to meet this demand can then be worked through a straightforward graphical method by ''filling in'' the area from the bottom with baseload generation, adding non-dispatchable intermittent generation for those hours where it is available, and finally filling in the remaining hours with dispatchable units.
Pacific Gas & Electric performed one study in the late 1980s that illustrated how the load duration curve for their service territory could be hypothetically filled with a combination of resources including hydro, biomass, geothermal, solar thermal, wind power, pumped hydroelectric storage, and some thermal storage as part of the solar generation. For a summer-peaking utility like PG&E, this exercise was aided greatly by the coincidence of solar generation with the demand peak. Essentially the entire summer and mid-day peak (mostly due to air-conditioning loads) can be ''shaved off' with solar generation which, though non-dispatchable, has an extremely high availability during the hours when it is hot. Another convenient factor is that wind speed often tends to pick up later in the day, complementing the solar resource. For the California case, then, hydro, biomass, and geothermal units could be operated at a reasonably high capacity factor, i.e., not idling excessively. Though, to my knowledge, PG&E didn't cost out this scenario, it certainly demonstrated the basic feasibility of an all-renewable generation strategy. It would be very interesting to repeat this exercise on the scale of the entire United States.
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The overall cost of an all-renewable energy supply scenario would depend on the relative contributions from each resource as well as the storage and transmission needs determined (and traded off against each other) by examining resources and demand regionally. Still, the marginal costs of the individual components can give a general sense of the composite. Geothermal and hydropower are among the lowest-cost generating resources available even compared with fossil fuels; their contribution will be limited by resource and site availability. Wind power, which is much less constrained in terms of site availability, can be expected to provide energy in the neighborhood of five cents per kilowatt-hour. Solar thermal generation, using parabolic trough technology, is the most expensive bulk generation at about 10 /kWh (though most analysts expect this figure to drop with mass production). Transmission capacity is expensive and would certainly constitute an important factor for large-scale, inter-regional energy transport. In this context, it should be noted that the construction of new transmission capacity (and Federal initiative for putting it in place) has already been the subject of public discussion. The strategic placement of this new transmission capacity will have important implications for the economic competitiveness of future generation sites.
Four Policy Criteria Applied to Nuclear Power
Q9. Considering that the waste products from nuclear power plants are contained, don't your four policy criteria apply to nuclear power? (page 8 of your written testimony)
A9. Each of my criteria applies to nuclear energy to some extent, but with qualifications.
Environmental benefits owing to absence of pollution or greenhouse gas emissions. While the solid form and ''contained'' character of nuclear waste might distinguish it from ''pollution'' in the minds of technical and scientific experts, and while it is arguable whether the possibility of future leakage from a waste repository should be considered ''pollution'' like other forms such as air pollution that exist with certainty and in the present time, the general public certainly appears to view radioactive waste as a highly undesirable product. I would argue that the political rather than the scientific definition of ''pollution'' is more relevant here.
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Continuous resource availability and price stability to offer reliable support for long-term economic planning. Uranium reserves are large, but not infinite. Depending on the time horizon, it could be fair to project nuclear fuel as abundant and cheap, but this time horizon is inherently limited, while that for the availability of renewable resources is not. Price stability depends not only on the price of fuel, but on other components as well, which are inherently less predictable for nuclear power as a complex and politically controversial technology.
Potential development of a lucrative and socially responsible export commodity. Lucrative, perhaps. But exporting nuclear technology is not socially responsible in my opinion unless the recipients have an established industrial culture that permits them to operate it safely under any conditions. The proliferation of weapons-usable materials and know-how is another concern. Finally, the international transport of nuclear materials has met with political opposition in the past and may continue to do so. I doubt that large segments of the American public would agree to the ''socially responsible'' characterization of nuclear technology as an export commodity, particularly to developing countries or politically unstable parts of the world. Such concerns might intensify as of September 11, 2001.
Intrinsic compatibility with competitive markets. Nuclear technology does not afford the advantages of flexible scale, distributed siting options, short lead times, and easy market entry for diverse small firms that are characteristic of renewable energy and that tend to enable efficient market function.
California's Savings in Electric Power Consumption and Use of Load Management Tools
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Q10. You stated in your testimony that electric power consumers lack the ability to reduce load. Are you aware of the residential programs that provide load control devices that are automatically controlled by the utility? Could you advocate the increased use of load management tools? Can you comment now, after the savings in projected electric power usage in May, June, and July in California?
A10. California's summer of 2001 has indeed shown remarkable savings in electric consumption as compared to projections. While these savings have resulted in large part from unusually mild summer weather (with lower temperatures especially in Southern California, where air conditioning loads dominate demand), conservation behavior on the part of consumers certainly had an effect.
While demand-side management (DSM) programs of various scales have been sponsored by most U.S. utilities, these programs have generally focused on putting in place energy efficient appliances rather than control devices. For instance, the Energy Information Administration's estimate of 1998 combined energy savings through the DSM programs of 971 utilities show approximately 53 billion kWh savings due to energy efficiency and only 940 million kWh (less than two percent of the total) due to load management. Few electric customers currently have automatic load control devices installed.
There remains, therefore, a largely untapped potential for load management, particularly for loads that are less sensitive as to time of use (e.g., washing machines and dryers). In order to allow for markets to perform efficiently, it is important that load management capabilities be combined with real-time pricing (RTP).
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Subsidies for Nuclear vs. Wind Power
Q11. You say that the Price-Anderson insurance law for nuclear power plant insurance is a subsidy, which it is, even though the government pays nothing unless the claims become very large. You advocate free market competition for nuclear power. Shall we then eliminate the production tax credit for wind generation on the same basis?
A11. Subsidies such as the production tax credit for wind generation are warranted in cases where positive externalities or public goods are produced. Most people would agree that this is the case for the development of wind power, which offers distinct environmental and risk-hedging benefits that will accrue to society over decades to come. Therefore, we should continue to subsidize wind power.
An analogous argument can be made for the case of nuclear power, though I personally do not agree with it. If one believes the availability of nuclear energy as a resource alternative to constitute a significant public good, then it is legitimate to call for subsidization of its development and implementation. Indeed, the continuing cultivation of technological capability and know-how in the nuclear sector can be considered a public good in and of itself, particularly in view of the need to address nuclear proliferation issues in the international community. In my opinion, this latter concern is the most important and justifies some level of Federal expenditure on nuclear R&D, although its purpose should be explicit and limited. I am not convinced that the social benefits of nuclear technology overall exceed its social costs, and therefore do not advocate subsidizing it as an energy resource.
Reclamation of Strip Mines and Decommissioned Nuclear Plant Sites
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Q12. In your testimony you say, ''land used for fossil fuel extraction and nuclear facilities becomes permanently sacrificed.'' Haven't there been strip mines reclaimed and nuclear plant sites (Shippingport) restored to ''greenfield'' conditions?
A12. The decommissioning of the Shippingport plant in the 1980s is indeed widely recognized as a success, and the site has been released for unrestricted use. It is important to recognize, however, that this particular case presented almost uniquely ideal conditions for effective decommissioning:
At 72 MW, the reactor vessel was considerably smaller than those for PWRs and BWRs in the 1000 MW range and therefore easier to transport.
The radioactive inventory of the Shippingport reactor was comparatively small, estimated by OTA as 16,000 Ci at the time of dismantling (whereas typical commercial reactors would have an inventory on the order of millions of curies after 30 years of operation).
DOE facilities were available for the disposal of contaminated plant components, including 24,000 cubic yards of low-level waste, at low cost.
These favorable circumstances resulted in a cost of less than $100 million for the Shippingport case. By contrast, the costs of decommissioning of larger commercial reactors are typically estimated at least about three to four times that amount. These estimates are inherently vulnerable to upward adjustment, since it is unlikely to discover something in the course of decommissioning efforts that will reduce the cost, but there are many ways the cost can increase. For example, estimates of decommissioning costs for the Yankee Rowe plant were revised from $368 million to $508 million due to the increased cost of spent fuel storage.
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The high costs of decommissioning, which decline somewhat over time with the radioactive decay of the inventory, present a general incentive to defer decommissioning for as long as permissible. Uncertainties about the availability of disposal sites due to political factors may further delay decommissioning efforts. Current U.S. regulations allow for 60 years to reach Stage 3 or ''unrestricted site use''; in the U.K., this period has been stretched to 130 years. This is not ''permanent,'' but it is a long time to wait to do something with your real estate.
Aside from reactor sites, the high-level and low-level waste disposal sites that accommodate the materials not only from reactors but from other steps in the nuclear fuel cycle are in fact ''permanent'' on any reasonable human time scale. Accounting for their land use must also include the safety perimeters or exclusion zones dedicated to disposal facilities.
The problem of reclaiming strip mines is analogous in the sense that economic incentives tend not to favor the speediest and most thorough clean-up possible. Also, compared to the nuclear industry, the level of environmental and safety regulations is less stringent and their enforcement probably less reliable in the fossil-fuel and mining industry. Thus, the extent to which strip mines can realistically be expected to be restored to greenfield conditions is questionable in my mind. Finally, having a former strip mine covered in vegetation and restoring it to its pre-mining environmental status are quite different things.
Design and Operation of Nuclear Reactors in a Load Variable Environment
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Q13. In your testimony you say that ''Adapting the design and operation of nuclear reactors to function in the context of less reliable grids, as may emerge under competitive market pressures, entails potentially high costs in addition to those of basic reactor design and operation.'' Since part of the design of all power reactors is the ability to safely shut down in the event of a ''loss of off-site power,'' what additional changes did you have in mind?
A13. All power reactors must be able to shut down safely when off-site power fails. This does not mean that they can do so with zero risk (loss of off-site power ranks at the top among initiating events for potential accident sequences analyzed by the NRC), nor that they can do so repeatedly without strain on mechanical and operational systems. Often, a loss of off-site power event at a PWR or BWR results in a reactor ''scram'' or rapid emergency shutdown. It is well recognized in the industry that scramming your reactor frequently is a bad idea and will cost you money, as it entails material fatigue and possible damage from rapid thermal expansion and contraction (including the pressure vessel) and thus a need for increased maintenance and safety inspections, not to mention cumbersome procedures to bring the reactor back into normal operation each time.
A reactor scram after a turbine trip can be avoided if a sufficient heat sink is available, which means sufficiently large steam dump valves (for venting steam to the atmosphere) and enough makeup water for the transient release while reactor power is ramped down in an orderly manner.
Increased thermal inertia, as is featured by some newer designs like the Pebble Bed Modular Reactor, is certainly helpful in permitting slow and controlled reactor shutdowns.
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While avoiding a reactor scram affords greatly improved safety, it does not enable a nuclear plant to come back on-line at full power immediately after the transient disturbance. Following a turbine trip, it is necessary to repeat the process of ''paralleling'' the generator to the grid starting at zero power and then gradually ramping up steam output. For conventional steam generation plants, this process takes at least several hours; for a nuclear plant, owing to the many procedural steps that need to be taken in the interest of safety, it may take a day or more.
It should be noted that standard operating practice in the United States frowns upon frequent variation of power level even for the purpose of following changes in demand, based on the reasoning that any change in the operating conditions (even without unit shutdown) will entail mechanical strain, potential for error, and thus unnecessary risk. Thus, U.S. nuclear plants are now operated exclusively as baseload plants. To be fair, perspectives on this issue vary: the French, for example, designate a number of their reactors as load-following plants under direct digital control from dispatchers, and they don't appear to lose much sleep over it (with nuclear providing upward of 75% of electrical energy, they have little choice). Few would disagree, though, that the present design conditions for the safest and most cost-effective operation of nuclear reactors involve being on-line consistently and without interruption at 100% power for as long a time period as possible.
Renewable Energy Technologies and Economies of Scale
Q14. In your testimony you stated that nuclear technology cannot be done piecemeal; that it depends on economies of scale. Later you say that renewable resources never have a declining cost scale. It seems that many renewable energy advocates are counting on economies of scale. For example, manufacturing of the current design of 1 MW wind turbines would seem to be very expensive, and [it would seem] that DOE's ''Power Park'' program is an effort to take advantage of economies of scale. Shall we advise DOE to abandon their Power Park program?
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A14. As mentioned above (Q6), the aim of the Power Park program as I understand it is to explore economies of scope rather than economies of scale. The emphasis is not on making the individual components as large as possible, but on combining them in smart ways that increase overall efficiency—for example, by avoiding transportation losses from one energy conversion site to another, or by taking advantage of waste heat from one process for another.
Economies of scale exist for renewable energy technologies up to a point. For example, a 1 MW wind turbine will tend to cost somewhat less than two 500 kW turbines because of the fixed costs associated with some of the materials and installation labor. However, these economies of scale are quite moderate. The optimal sizing of a wind rotor and generator also depends on the wind speed distribution at a given specific site. Thus, bigger is not always better. Finally, diminishing returns on scale occur past a certain practical limit, which is on the order of 1 MW for wind machines.
For solar thermal generation, economies of scale exist in the steam generation component analogous to conventional steam generation. These are balanced by diseconomies of scale in terms of collecting and transporting the solar heat (analogous to geothermal steam generation units that gather steam from multiple wells, where thermal losses begin to matter when the collection area becomes too large). Photovoltaics are the least scale-sensitive of solar and wind technologies; minor economies of scale exist with balance-of-systems components like d.c.-to-a.c. inverters and installation labor.
By contrast, the economies of scale that analysts count on when projecting declining future costs for renewable energy technologies involve large manufacturing volumes. The possibility of mass-production and thus cost savings on many identical components is a fundamental advantage of smaller scale technologies: we will never have the benefit of rolling thousands of reactor pressure vessels off the assembly line.
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I suspect that in many situations smaller-scale, distributed installations of renewable energy generation will turn out to be preferable both technically and economically. I also believe that there is a place for larger-scale and aggregated projects, particularly in view of drawing investment from established actors in energy markets. It is certainly worthwhile to obtain the construction and operating experience with large-scale installations, so as to be able to address the question of economies and diseconomies of scale for various technologies with empirical data. Again, an advantage of modular renewable energy technologies is that one can harmlessly experiment with different sizes and combinations.
The attempt to exploit economies of scale by making larger renewable energy production facilities has not met with unqualified success in the past. For example, as was learned in DOE's MOD program, increasing the diameter of wind rotors eventually compromises efficiency, owing to the fact that wind speed is not uniform across the swept area. Critics have argued that the motivation for making solar and wind facilities large and centralized is rooted in cultural tendencies as opposed to technical rationales. While I suspect that they are probably right, this in itself doesn't mean that the large plants cannot work well, nor does it preclude the possibility of large centralized and small distributed installations co-existing and complementing each other.
In summary, the Power Park program is not primarily aimed at making renewable energy facilities larger in scale, nor would it be fundamentally wrong or dangerous to do so (it will probably simply turn out to be somewhat less cost-effective). I see no reason to abandon the program; on the contrary, the prospect of exploiting synergies among different technologies deserves ample support.
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Appendix 2:
Additional Material for the Record
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Next Hearing Segment(3)
(Footnote 28 return)
Before California's restructuring, when individual utilities still had ownership of both generation and T&D, at least one utility (Pacific Gas & Electric) began to seriously investigate placing PV generation on the secondary side of certain distribution transformers threatened by summer overloading, as a cost-effective alternative to upgrading the transformers. A 500kW test installation was successfully completed in 1992 at the Kerman substation.
(Footnote 29 return)
Hydrogen could have a uniquely important place, nevertheless, with those end-use applications that call for thermal energy (thus skipping the costly step of converting low-quality chemical energy back into high-quality electricity), or in motor vehicle applications.