Oil Lobbies or Civil Society: Which Will Die First?

by John Berger

Within about 50 years - and possibly sooner, if we choose - the world will greatly reduce its massive reliance on fossil fuel and nuclear energy by shifting to clean, sustainable renewable energy sources.

Since 1970, we've spent more than a trillion dollars just buying foreign oil. More than 50 percent of the oil we use is imported. The growing costs of these imports deprive us of money we could otherwise use to rebuild our industries and transportation systems, and to fund our medical care and educational systems.

Each year the US spends $56 billion on imported oil and another $25 billion for the military defense of our oil interests in the Middle East. Federal subsidies to the oil industry drain another $20 billion or so while the environmental and health impacts of air pollution add another $150 billion. The total comes to more than $250 billion a year.

The nation's domestic petroleum reserves are declining sharply. In 1994, for the first time, the US began importing more than half of its oil. Slaking the nation's growing thirst for oil already consumes 9 million barrels of foreign crude a day. If current trends continue, the US will be totally dependent on imported oil in just 15 years.

The sooner we make it a high priority to create a modern, energy-efficient and renewable energy economy, the sooner we can begin enjoying all its economic advantages in trade, energy security, employment and domestic investment. A global fossil-fuel economy is not sustainable for environmental reasons, especially in a world likely to contain ten billion people by the year 2070.

Efficiency: The Sleeping Giant
Efficiency is unquestionably the best resource because it makes energy cost-effective, profitable, safe, clean and dependable. At least half of all electricity we generate could be saved through the use of readily available energy-efficient motors and lighting.

With the US spending about $500 billion on energy every year, even a 1 percent net energy savings is worth nearly $5 billion a year. Greater efficiencies mean less pollution and improved public health and safety - with no sacrifices or lifestyle changes.

In addition to savings on energy, powerplants and equipment, efficiency also spurs economic activity. And, since industries that are more efficient require fewer powerplants, they also create less pollution, and less money would need to be diverted for costly cleanups.

Because a kilowatt can be saved for a fraction of the cost of producing a new one, saving energy often pays far better internal rates of return than typical financial investments. But, unlike ordinary investments, the payback is tax-free, since it comes in the form of savings rather than as taxable income.

By taking full advantage of all the renewable and energy-efficient (R&E) technology now available, the US in the long-term could save more than $300 billion a year in energy costs while eliminating billions of tons of air pollution.

Energy savings in US buildings (which consume 40 percent of all our energy) could amount to more than $100 billion a year. Savings from making electric motors and lighting more efficient would yield another $75 billion annually. Overall electricity use could be reduced by three-quarters - with no loss in energy services. Huge improvements in energy efficiency are also possible in the transportation sector (which derives 97 percent of its energy from oil). Vehicle fuel efficiency, for example, can be increased tenfold.

Increased energy efficiency already saves the US economy more than $110 billion a year over what we would be spending had energy efficiency not begun increasing after the 1973 oil embargo. By 1990, the reduction in actual electricity use, compared to forecasts based on US economic output (GNP) growth, was equal to the output of 350 large (1,000-megawatt) baseload powerplants. From 1973 to 1986, reduced electrical demand from improved efficiency averted the production of more than 880 million tons of CO₂.

Making the Transition
What the steam engine was to the 18th and 19th centuries and electricity was to the 20th, renewable energy, energy efficiency and electrified transport will be to the 21st century.

Major transformations in energy technology have occurred swiftly in the past. From about 1920 to 1970, US coal use dropped from 70 percent of our energy supply to less than 20 percent as we shifted to oil. During the 1980s and 1990s, a shift from oil to natural gas occurred. California, which produced 25 percent of its electricity from petroleum in 1980, now derives less than 1 percent of its power from oil.

We can have vast quantities of solar-thermal, photovoltaic, wind and biomass power as well as passive and active solar heat, if we choose them. Most renewable technologies are already less costly than nuclear power, and several are within 2 cents a kilowatt-hour of new coal plants.

Photovoltaics, the most expensive of the commercial renewables, is already cost-competitive in 60 niche markets that include remote power and decentralized grid support. Solar cell panels that cost $1,000 a peak watt in the 1960s and $30 in the early 1970s cost only $4 by the mid-1990s, and the price is still decreasing rapidly.

Wind power, the most cost-competitive renewable, is now cheaper than nuclear power or electrical power from petroleum, and its costs are comparable to those of new coal plants. Wind power, which used to cost about 30 cents per kilowatt-hour (kwh) in the late 1970s, dropped down to about 6 cents per kwh in 1995. It now costs about 4 cents per kwh in the windiest areas.

Most renewables can be built in resilient, decentralized, efficient networks, close to users. They create few significant waste hazards and require no need for authoritarian political institutions to protect the public from "solar energy terrorism" or "silicon cell proliferation." Except for the risk of dam failures in the case of hydropower, renewables present no risk of catastrophic accidents.

Today we live in a "throwaway" society. We consume resources and discard the resulting waste at a furious rate. Conventional energy systems epitomize the throwaway approach: They burn fuel and produce copious waste. These practices presume both infinite resources and an infinite planetary capacity for assimilating waste.

Creating a sustainable energy economy would be a major break with the throwaway approach. Living primarily off of efficient, renewable energy income rather than off fossil fuel capital would allow us eventually to achieve not only a clean energy economy but a clean environment with clean industries.

Sustainable Nations
Developing nations that lack an adequate national electricity transmission and distribution grid would find decentralized renewable energy systems to be economically competitive and generally preferable.

If renewables fail to take root in the developing nations, those countries will most assuredly resort to the cheapest combustion technologies they can find, including coal and wood (often cut in unsustainable ways from dwindling tropical forests).

The US today is neither modeling the rapid commercialization of renewables nor providing developing countries with sufficient assistance in adopting them. The US Agency for International Development's energy assistance budget for the fiscal year of 1996 was less than $20 million. Meanwhile, as developing countries get richer, their energy-use surges and their air pollution grows.

China's CO₂ emissions have grown more than 200 percent between 1970 and 1990. At this rate, China will be the world's largest CO₂ producer in a mere 20 or 30 years. If we fail to vigorously bring the merits of efficiency and renewables to the attention of developing nations, they will make massive long-term commitments to fossil fuel plants that will spew pollution into the air for the next 30 to 40 years.

Making the Transition
Renewables have been held back by enormous economic and political obstacles. Taxpayer subsidies have helped make fossil fuels inexpensive and difficult competition for renewables. The fossil fuel and nuclear industries today command more than 90 percent of the US energy market, and their dominance has enabled them to grow rich and powerful.

The decades-old practice of putting fossil fuels and nuclear power first in federal funding is clearly inappropriate to our national needs as we approach the next millennium, and it is counter to the wishes of most Americans.

Polls conducted in 1994 and 1995 by Republican pollster Vince Breglio show that almost two-thirds of Americans believe that renewables should be the Department of Energy's (DOE) highest or second-highest funding priority; 73 percent said that funding for nuclear and fossil fuel development programs should be cut to reduce the DOE's budget. But in 1995 the DOE spent over $3.3 billion on applied energy R&D and energy-related basic research, but only $363 million on all renewable energy technologies combined. The FY 1998 R&E budget has been raised to $914 million, but the Sustainable Energy Coalition [315 Circle Avenue, No. 2, Takoma Park, MD 20912-4, (301) 270-2258, fax: 891-2866] has called for a 52 percent increase to $1.4 billion "consistent with President Clinton's recent call for an increase of $5 billion over the next 5 years; to achieve his proposed climate change goals."

The US currently has about 100,000 megawatts of electric generating capacity that is at least 40 years old. We could design strong incentives for utilities to voluntarily accelerate the retirement of these obsolete, polluting plants and replace them with renewables.

Over the next 15 years, the US is expected to build the equivalent of 180 new large powerplants (180 gigawatts) at a cost of $150 billion. Were this new demand to be met by renewables, it would help bring down prices, greatly enhancing their competitiveness. But the DOE estimates that, without intensified support for renewables, their share of the US energy pie will grow by only 2 percent from 1990 to 2010 (rising from 11 to 13 percent).

Placing a modest carbon fee on natural gas and oil fuels would generate enormous revenue that would make possible reductions in other taxes, including personal income taxes. Even a 50 cent-a-gallon gas tax would generate perhaps $60 billion a year, while leaving US gas prices less than half those in western Europe. (Transitional impacts of any fuel-price increases on low-income Americans should be offset by appropriate direct compensation payments to affected people and regions.)

By shifting taxation from labor to energy, a carbon charge would also make labor less expensive relative to energy and would, therefore, tend to stimulate both employment and investment.

Internationally, the US should undertake a cooperative Renewable Energy Initiative to set timetables for nations to convert from fossil and nuclear to sustainable energy sources. This could culminate in a renewable energy pact, along the lines of the Earth Summit convention signed in Rio de Janeiro, Brazil, in 1992.

Conversion to a sustainable energy economy will be a long-term change, not nearly as abrupt as the corporate downsizing that has thrown many people out of work.

Bringing about a renewable energy economy will be a complicated and contentious process. No single set of national policies will take best advantage of local renewable resource assets, political realities and institutional conditions. Ultimately, an intricate lattice of policies will be crafted by state, regional and local stakeholders operating under broad federal guidelines.

Presidential leadership is greatly needed. President Clinton should project an inspiring vision of a sustainable energy economy and should challenge the nation to become the world's first renewably powered nation.

Adapted from Charging Ahead: The Business of Renewable Energy and What It Means for America by John Berger (Henry Holt and Co. Inc., 1997).

John Berger, a California-based writer, teacher and environmental consultant, is author of Nuclear Power: The Unviable Option and Restoring the Earth.

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More Climate and Energy News

Life in a Global Greenhouse

Burning fossil fuels creates 30 billion tons of pollution worldwide in the form of soot and ash, and carbon dioxide and other gases. More than 5.5 billion tons of carbon dioxide are discharged into the air throughout the world every year - about a ton for every person alive. Emissions in the US are currently about 500 times those of developing nations like China and India. Maintaining current levels of CO₂ emissions would bring about a doubling of atmospheric carbon dioxide within 100 years. The world has not experienced a 3.6°F warming in more than 10,000 years, but such an increase is near the lower end of the range of expected temperatures in response to a doubling of preindustrial CO₂ levels. The prestigious Intergovernmental Panel on Climate Change (IPCC), a 2,500-member scientific body, states that no matter what we do now, Earth's average temperature will grow 1-3°F hotter because of the CO₂ already in the atmosphere. And if current exponential rates of CO₂ production were to continue unabated for another century, climate models predict global temperature increases of as much as 18°F, a situation that would cause environmental damage of grotesque proportions. The IPCC also concluded that CO₂ emissions must be cut by 60 percent just to stabilize CO₂ concentrations at present levels. If the populous developing nations like China and India are to grow economically by increased combustion of coal and other fossil fuels, as now planned, they will undermine efforts elsewhere to decrease CO₂ emissions. If global warming is indeed the menace that the vast majority of scientists believe it is, then efficiency and renewables are not just our best hope; they are the world's only hope.

Can Green Power Survive Deregulation?
The main obstacles to renewables are no longer economic but political. The existing political, financial and industrial framework based on utility monopolies has actually impeded the development of renewables.

The picture is complicated by the current deregulation of the power industry, including the entry of new independent power producers to the marketplace. (Utility mergers are also on the upsurge.) Utilities are struggling to hold down costs, accelerate the depreciation of older plants, and diversify into unregulated business areas. All these developments destabilize the electric power market, create financial uncertainty, make it riskier to develop new R&E technologies and thus make it more expensive to finance them.

To become more competitive, some utilities have already scaled back their investments in R&E. This represents a significant threat to the future health of the domestic renewables industry.

the danger is that power purchases in a deregulated energy market will be made, and generating assets acquired, primarily according to short-term market incentives that fail to reflect long-term environmental costs and fuel-price risks.

The immediate challenge for renewable energy advocates is to see that deregulation is accompanied by the institutionalization of potent market incentives for R&E.

The federal government could give renewables a big boost by gradually shifting the $9 billion or so it spends annually on energy to R&E. The Department of Housing and Urban Development could require that federally assisted buildings make maximum use of R&E.

In a deregulated utility world, renewables should at a minimum remain as great a percentage of the generating portfolio, and supply as many kwh, as before deregulation - and percentages should increase systematically over time. The government could require that all new licensed capacity will have to be renewable and all expanded power purchases be from renewable sources. While requiring a 100-percent transformation would be technically and politically infeasible, the standard could begin with a goal of 5-10 percent, increasing to 25 percent by the year 2010. (By contrast, the Electricity Consumers' Power to Choose Act - the federal deregulation law - only proposes a 2 percent standard that would peak at 4 percent by 2010.) - JB