Energy Efficiency. Prior to 1973, the value of energy efficiency was not widely recognized. As a result, U.S. energy consumption grew rapidly, more than doubling from 1950 and 1973. Then, U.S. oil and natural gas production peaked in the early 1970s and OPEC imposed its oil embargo in 1973. The resulting economic, political, and psychological shock forced the U.S. to focus on energy efficiency. Consequently, energy consumption grew more slowly after 1973 and leveled off in the last ten years at about 100 quad per year. By continuing (and redoubling) its focus on energy efficiency, the U.S. can achieve robust economic growth for the foreseeable future without increasing per capita energy consumption. For example: 1) the efficiency of new light vehicles could double in the next 15 years if the U.S. implements the recently proposed CAFE (Corporate Average Fuel Economy) standard, 2) new natural gas power plants are twice as efficient as old coal plants, and 3) new buildings, equipment, appliances, and industrial processes are often much more efficient than old buildings, equipment, appliances, and industrial processes.

Natural Gas. U.S. natural gas production peaked in 1973 and declined 17% by 2005. Then a near-miracle occurred: U.S. natural gas production began increasing again. Why? Because two technologies (horizontal drilling and hydraulic fracturing) enabled economic production of shale gas. Between 2005 and 2010, U.S. natural gas production increased 19%. It now exceeds peak production in 1973. As a result, natural gas is plentiful in the U.S. and its price is less than half that in many other countries. The EIA (Energy Information Administration) projects that U.S. natural gas production could increase another 24% by 2030. This is enough to satisfy not only normal demand growth, but also allow natural gas to replace coal and oil in some applications. Abundant, low-cost natural gas could give the U.S. a significant competitive advantage for many decades.

Oil and Liquid Fuels. U.S. production of oil and other liquid fuels peaked in 1970 and declined 30% by 2005. Then a turnaround occurred, just as with natural gas. From 2005 to 2010, U.S. production of oil and other liquid fuels increased 16%. In parallel, oil imports from Canada increased over 300% since 1970. As a result, U.S. liquid fuels production plus imports from Canada are now roughly equal to their peak value in 1970. Most of this growth is attributable to increased oil production from unconventional resources (oil sands, shale oil, and shale gas liquids), but some is also due to biofuels (primarily ethanol). This increased production, coupled with reduced consumption, has dramatically decreased U.S. oil imports -- from 60% in 2005 to 49% in 2010 and 45% in 2011. In addition, imports from Canada have steadily increased, so Canada now provides over one-quarter of U.S. imports. The EIA projects that liquid fuels production in the U.S. (and Canada) could increase an additional 30% (and 62%) by 2030. Smart energy policy could take advantage of this opportunity and eliminate most oil imports from countries other than Canada by 2030, making the U.S. essentially energy-independent. Energy independence will improve the U.S. economy, enhance national security, and expand foreign policy options.

Renewable Energy. Eventually, the U.S. and the world must transition from fossil energy to renewable resources or other alternatives. Currently, renewables provide only 8% of U.S. energy supplies, and less than half of this is provided by "new" renewables such as biofuels, wind power, and solar energy. But renewable energy production is increasing rapidly, about 7% annually during the past four years. If renewable energy production continues to grow 7% annually for the next 20 years, renewables could provide over 25% of U.S. energy needs in 2030. However, if the U.S. relies too heavily on (arbitrary) government mandates and subsidies to force widespread adoption of high-cost renewables, the public will become disenchanted with renewable energy and slow its growth. A better approach is to 1) reduce the cost of renewable technologies (for example, with research and development) and 2) internalize the external cost of fossil fuels, so renewables can compete in the marketplace. Note: Internalizing the external cost of fossil fuels will help renewables compete in the marketplace because it will increase the price of fossil energy and also stimulate industry research and development to reduce the cost of renewables.

Climate Change. A great deal has been learned about climate change since the Rio Earth Summit highlighted the problem in 1992. Clearly, those who deny that human activities are increasing the concentration of carbon dioxide in the earth's atmosphere and affecting the world's climate are wrong. But so are those who say that climate change is the most urgent problem facing humanity. Smart energy policy will find the middle ground and address climate change by encouraging cost-effective low-carbon, carbon-free, and carbon-negative (sequestration) technologies, without sacrificing U.S. and global economic growth. Some approach for internalizing the external cost of greenhouse gases is needed to provide market incentives to address climate change.

Cap and trade is not the best way to address climate change. Carbon taxes would be better, but the best approach may be a "bottle bill" for greenhouse gases. Such a bill would work as follows: Those who extract carbon from the ground, import it, or emit other greenhouse gases would pay a fee, similar to the refundable deposit for beverage containers. Any company or person who prevents this extracted carbon from entering the atmosphere (or removes it from the atmosphere) would receive a payment equal to the refundable deposit. Bottle bills generally reduce bottle litter by 70% to 80%, and a well-designed bottle bill for greenhouse gases could be equally effective over a period of several decades.

The U.S. will benefit from implementing a bottle bill for greenhouse gases -- whether or not other countries follow -- for four reasons. First, and most importantly, such a bill will stimulate investment in new, clean, and efficient facilities, equipment, vehicles, and technology. This will encourage economic growth and reduce oil imports and air pollution while also decreasing greenhouse gas emissions. Energy is much cheaper in the U.S. than in most other countries, so even with a reasonable refundable deposit on carbon and other greenhouse gases, the U.S. will still enjoy a significant "energy cost" competitive advantage.

Second, the U.S. has many oilfields, farms, and forests that can beneficially sequester carbon, so the refundable deposits will not be wasted, but rather put to good use expanding oil production and encouraging good farming and forestry practices. No other country has so many opportunities to usefully sequester carbon and the technical and entrepreneurial capability to take advantage of these opportunities.

Third, a bottle bill for greenhouse gases will make renewable energy more competitive with fossil fuels and thereby allow elimination of the current (unsustainable) government mandates and subsidies for renewables. Instead of politicians picking energy winners and losers, a bottle bill will allow free markets to decide which technologies are best (and lowest cost).

Fourth, a bottle bill will provide a large financial surplus for at least several decades. This surplus could be instrumental in addressing the current government fiscal problems. For example, it could be used to reduce taxes (perhaps as part of fundamental tax reform), stimulate economic growth, and limit the size of the national debt.

The U.S. is in a unique position to take advantage of these opportunities. By improving energy efficiency and increasing oil and natural gas production, the U.S. can create many good jobs, reduce the real (explicit and implicit) cost of energy, achieve energy independence, and stimulate robust economic growth. Energy independence will allow the U.S. to be a more effective global leader, because foreign policy and military strategy will not be as constrained by oil-supply concerns. By developing cost-competitive renewable energy technologies, the U.S. can ensure that these technologies will be available (and scalable) when they are needed. By implementing a practical market-based approach to address climate change, the U.S. can cost-effectively position itself for the future by encouraging 1) energy efficiency, 2) fuel shifting from coal and oil to natural gas, 3) renewable energy, 4) nuclear power, and 5) value-added carbon sequestration.

The whole world will benefit if the U.S. exploits these opportunities. A strong U.S. economy will be an engine for global economic growth. More importantly, energy technologies developed in the U.S. can be used worldwide for the benefit of all people on the planet. By solving its own energy problems, the U.S. can help the world address global energy challenges.

What will it take to capitalize on these opportunities? To some extent, the U.S. is already benefitting from them. Energy is the primary engine for economic growth in some states such as North Dakota (which has the lowest unemployment rate in the nation) and Texas (which has created more jobs in the past few years than any other state). It is also a major contributor to economic growth in several other states such as Louisiana, Arkansas, Oklahoma, Pennsylvania, and Colorado. Nevertheless, to realize the full potential of these opportunities, politicians must put aside their ideological differences and work together to implement pragmatic, nonpartisan energy policies based on common sense and compromise. Three policy objectives of particular importance are 1) improve energy efficiency, 2) expand oil and natural gas production, and 3) implement a practical, cost-effective system to internalize the external cost of fossil fuels.

Other Posts by: Jim Hartung

Related Posts

Comments

March, 06 2012

Ferdinand E. Banks says

I don't agree with some of the things in this article, but I can reveal what those are later. Maybe. I am pleased however to get an estimate of how much renewables the US will need later in this century - for example in 2030. As far as I am concerned we are moving toward a situation where nuclear and renewables and alternatives will have to carry a large part of the energy load after the middle of the century, although I am skeptical about how much natural gas will have to offer about that time.

Report This Comment

March, 07 2012

Harry Valentine says

There are many aspects to the concept of "efficiency" in regard to energy consumption. The related term, "productivity" may be more appropriate. There is much to explore and develop in the world of productivity, that could reduce overall energy consumption. Example, a slave working with a foot-treadle driven sewing machine could sew 100-times more sail than if using needle and thread. The sewing machine raised the productivity of the worker by some 100-fold.

There may be scope to implement a similar paradigm in many areas that involve the use of energy. Technical and logistical innovations that ultimately increase productivity, perhaps by changing the methods by which to achieve the desired end result, may go a long way in terms of energy efficiency.

Report This Comment

March, 08 2012

Michael Keller says

Conventional wisdom’s logic is that man is going to turn the planet into a sauna by emitting CO2, therefore we must embrace renewable energy. Not only is the first part of that assertion completely unproven by science, the proposed solution is not supportable by analysis.

Fact is we simply do not know whether or not CO2 will significantly warm the planet. Further, we have no idea whether or not any warming will be particularly catastrophic. Case in point: the current climate is more beneficial for mankind than the substantially colder last ice age.

To leap to the conclusion that renewable energy is going to meaningfully reduce man’s rather feeble contribution to global CO2 levels is just plain dumb, as a simple mathematical calculation easily demonstrates.

Worse yet, spending vast amount of money on a fundamentally wrong-headed solution only serves to make us poorer from an economics standpoint.

What we should be doing is using energy wisely to save money and that directly leads to a stronger economy. More efficient production and use of energy is the very definition of wise. The byproduct (as opposed to the driving force) of such an approach happens to be lower CO2 emissions.

Further, from a purely engineering standpoint, the best forms of energy are those that are the most concentrated. That places renewable energy more-or-less “off-scale, low” and not particularly helpful. Nuclear energy happens to be “off-scale, high” and is thus superior in terms of usefulness.

Report This Comment

March, 13 2012

bill payne says

In editng stage but must be submitted by close of business Wednesday March 13, 2012.

Comment: The actor John Wayne is alledged to have said:

"Life is hard; its harder when you're stupid."

Lot's of email activity seen in New Mexico Gas Company Case No. 11-00369-UT. Let's look through the 674 page document for examples of unintelligence. Tuesday March 13, 2012 09:46

Ms Annette Gardiner, President New Mexico Gas Company

http://www.prosefights.org/nmgco/intervene/hearing//hearing#gardiner

Subject: Rate increase procedure complaint

Hello Ms Gardiner,

Procedure used to present case to public for gas price increases needs to be changed, I feel.

Methodology of verbal assault to reach a conclusion in New Mexico Gas Company Case No. 11-00369-UT by apparent liberal arts educated participants appears not to be working because data is not being examined.

And we can prove this with 649 page document which I feel should have never been assembled or apparently published at expense of New Mexico Gas Company customers.

What I heard appeared to be be unintelligent nonsense uttered by Ms Stevens and Ms Rising. They tried to appear intelligent and well educated but hubris, arrogance, incompetence and poor education emerged instead, imo.

Let's look at examples from the record.

[Have you ever had so much fun? This would have been impossible before Internet!]

Mary Homan has not returned my phone requesting data.

Regards, bill

Our complaint is liberal arts 'educated' attempting to dominate energy issues..

We hope to file

http://www.prosefights.org/pnmrider/pnmrider.htm

by the end of 1390. :-}.

Report This Comment

March, 13 2012

bill payne says

Professor Aboulghasen Zirakzadeh taught me higher alegbra at the University of Colorado in the summer of 1958.

http://www.prosefights.org/nmlegal/shorthistory/shorthistory.htm

Cheers, http://www.radiojavan.com/mp3s/mp3/Ahmad-Saeedi-Dooset-Daram

Report This Comment

March, 14 2012

Jim stACk says

Fracking is causing big problems. NG is still a finite fossil fuel.

Only reduced use with smarter technology and more Renewables is the way to go for a real clean and prosperous future.

Our homes should all be built efficient for zero energy use or even positive energy. Our vehicles are also very inefficient . All should be full hybrid at the least and lighter and smaller. The CFL light is so last century. LED last longer,makes no heat and is 10 times more efficient !

We have the technolgy we just have to start using it. The best way is to let prices rise on gas and electric rates. That is the only way prople respond. In Germany gas is $8-10 a gallon so people drive micro cars and bicycles since they see the payoff. To do this we stop subsidizing OIL, Nuclear, COAL and NG.

Report This Comment

March, 14 2012

Scott Brooks says

People who think renewables are the answer have not done their homework. For example, despite Denmark having gone to 20% wind energy they have not replaced one coal fired plant and pay the highest electrical prices of the entire EU conglomerate.

Although the energy is free and renewable as long as the sun shine. Effectively harnessing it 24/7 on the grid is another matter. Insanity is doing the same thing and expecting different results. The RPS, or feed in tariff, has been one big failure in making countries independent of oil or even coal. Therefore energy policy makers should let the free market decide and restrict their actions to incentives instead of subsidies and mandates.

Then there's the continuing fallacy that emissions, particularly CO2 are causing so called global warming or even climate change. A quick review of reality, past the hype and mantra of politico, reveals no real increase nor acceleration with the increasing CO2 levels. In fact studies show that increased CO2 levels are good for plant growth, especially food crops.

Perhaps we should all stop drinking the koolaide and let real scientists discover the causes which do not parallel CO2 emissions.

Ref:

http://mises.org/daily/5892/The-Skeptics-Case#.T0eUhlmYO74.email

The Skeptic's Case

http://wattsupwiththat.com/2012/03/08/climate-change-impacts-in-the-usa-is-already-not-happening/#more-58595

Mar 08, 2012

Climate Change Impacts In The USA is Already [NOT] Happening

http://notrickszone.com/2012/02/25/klaus-eckhart-puls-hello-globalcooling-scientists-bordering-on-fraud/

Klaus Eckhart Puls: “Goodbye Warming - Hello Cooling” From Wrong Science to Fraud Science”

Can we now move on to real energy development past the renewable, clean, green hype as most of the infrastructure/maintenance costs are neither! The best case for renewable is passive solar and some bio like processing methanol into a liquid gas alternative. But so far they can only supplement the mainstay of either coal, gas or nuclear.

Report This Comment

March, 14 2012

Ferdinand E. Banks says

Most of the things proposed by Jim Stack will take place, and just about everywhere, BUT THEY CANNOT TAKE PLACE OVERNIGHT, except in the silly dreams of inveterate dreamers. As for wind and solar, I have the impression they they are hopelessly uneconomical, but they should not be completely abandoned because a small amount might make sense, and future technology might improve them considerably.

The problem here is that too many environmentalists want to completely dump nuclear. I view that attitude as an attack on the living standards of the gainfully employed, in whose ranks I include a large fraction of millionaires and multimillionaires.

Report This Comment

March, 14 2012

bill payne says

What was sent

http://www.prosefights.org/nmgco/intervene/hearing/hearing#response

to the energy parasites.

Report This Comment

March, 15 2012

Malcolm Rawlingson says

An interesting article Jim except the focus is on North America and all but ignores the massive social changes occurring in China and India which are set to wreak havoc on energy supplies - indeed already ARE doing so. If you have no electricity or gas supplies as is the situation in many parts of the world how do you make that more efficient. Energy efficient light bulbs are meaningless to most of Africa where there is no electricity supply. To rectify that situation energy supplies must be developed on a massive and unprecedented scale and as much as many would like to think otherwise solar panels and wind farms are just nowhere near up to the job. That leaves natural gas (unavailable in many parts of the world) Coal or nuclear power. To bring the worlds population to even 10% of the standard of living in North America Don Hirshberg - a frequent commentator here - estimates that a 1000MW power plant is required to be built EVERY WEEK for the foreseeable future. Such a vast increase in the consumption of coal to power these facilities would be catastrophic to the worlds atmosphere aswell burning natural gas at that rate will rapidly deplete world reserves. That leaves one option which is nuclear.

Despite the rhetoric nuclear is the safest industry in the world bar none and when it dawns on people that the 7 billion people in the world WILL live in poverty without it then - as in China - large numbers of plants will be built.

Energy efficiency has a role to play and of course engineers strive to do things more efficiently every day - it is what we do. New developments like the CO2 Brayton Cycle being developed at Sandia Labs will increase the thermal efficiency of existing nuclear plants by using CO2 - not water as the working fluid. But efficiency can only take you so far. Sooner or later you must produce more and that production is going to come from nuclear. Even the United Arab Emirates is building a 4-unit nuclear plant and they are sitting on some of the worlds richest oil field.

Why would they do that - it is simple. The UAR knows oil is going to skyrocket in price as it gets harder and harder to find so they are conserving what they have left by using nuclear to power their state. Wise thinking in my view.

Malcolm

Report This Comment

March, 28 2012

Scott Brooks says

I read the article on the CO2 Brayton cycle on the Sandia Labs Website. It looks real promising, even over the helium gas medium.

So from the article I assume it's used directly from the reactor core to the turbine? Or are they using an intermediate loop?

Report This Comment

August, 08 2012

Shashi Dhungel says

I kind of disagree with the two points that you posit as advantages. First, energy price looks cheap for people whose annual energy bill is a fraction of their annual income. For the vast majority even a single digit increase in energy prices would be a lot to bear. And, as energy prices increases every things price increase. Second, carbon sequestration through agriculture is reversible so there is no guarantee that the sequestered carbon will remain in the ground. We have not yet designed a mechanism to discount temporary carbon storage. Things are just starting to pop up. Carbon capture technology is too expensive! I agree that internalizing the cost is necessary but most of the times these costs are past to consumers. We need policies that prevent oil companies from passing the cost to customers and in this regard cap-and-trade probably is a good choice than carbon tax.

Report This Comment

May, 10 2013

aldrichdevon vigorda says

What to Look for in a Hard Drive That You Are Purchasing? When you are going to buy laptop hard drive, it is extremely important to look for one that is going to be fast and large enough to accommodate all of your files and data needs. It
Yeah, it's just what I need, I'm about to have a new one
I always use Dell Hard Disk Drives, what about you, guys?
Gateway!!!lol

Report This Comment

May, 10 2013

aldrichdevon vigorda says

Find out what to look for when you are shopping for a hard drive

Report This Comment