The Great U.S. Energy Transformation…

by BWK ~ July 17, 2008

 U.S. Energy Transformation…

This is a wide-ranging topic, in fact people write books on it. So I’ll give you just a bit of my thinking. Looking forward, the U.S. and the West simply have to buckle down and decide that it’s time to transform the energy systems of the world. We have to move away from burning scarce, expensive and often dirty carbon to using something else.

But burning carbon (coal, oil and natural gas) is what provides 87% of the U.S.’ total energy supply. Nuclear, by the way, is another 10% of total energy. Renewable energy sources are less than 3% of total U.S. energy supplies (and about two-thirds of that is from forest companies burning wood chips to run the mills).

So any transformation from carbon to that elusive “something else” will take a long time and require immense restructuring of the current energy systems that are out there.

As the transformation occurs, there will be great opportunities. But there will be a lot of political and economic pain, as well.

To achieve stable and affordable energy supplies (and, certainly, to lower energy imports), we will need an entire range of options. It will take a portfolio of technologies. These include:

– Conservation and efficiency improvements, everywhere! This is more of a “cultural” than technical issue. I mean, we already know how to insulate houses, but we just don’t do it. And many cars already get 45 miles per gallon, but Americans haven’t been buying them in the past 20 years or so. People just have to believe that conserving energy is one of their highest priorities (as if gasoline at $4.25 per gallon is not doing that already).
 
– Extremely more efficient power generation and transmission. If we burn carbon, we have to get more energy-efficiency out of it. And the U.S. transmission grid is woefully inadequate. Really, transmission is a disaster waiting to happen. So in some respects, transmission is also an investment opportunity waiting to happen.
 
– Massive use of “high-value” energy efficiency, from load reduction to combined heat and power systems. For example, you won’t recognize your household electric meter in the future. It’ll be as annoying as your BlackBerry.
 
– Dramatically increase the diversity of the fuel mix. One example is flexible fuel mixes, moving from gasoline to methanol-ethanol-butanol. Then do what Toyota is already pioneering and put solar panels on the roof of the car to augment the electric system. Your car of the future (if you have one — another story entirely) will have more chips in it than the space shuttle.

A lot of this is already happening, due to price and supply pressures, reliability issues, the rapid maturity of new technologies, new ideas for systems integration and government policies at all levels.

Unfortunately, our energy transformation is not happening fast enough or in a widespread enough manner. But the good news is that the foundation is there. As a nation, we need to “step on the gas,” if you’ll excuse me using such a primitive analogy.

Until we meet again…

Byron W. King

Note: Byron King is a frequent contributor to the free e-letter Whiskey & Gunpowder. To receive daily insights into energy, oil, commodities and other natural resources sign up here!

Additional Resources:
Rising Energy Costs and the U.S. Economy
Russian Oil Exploration — And Why The US Will Be Playing Catch-up
Are “Speculators” Causing the Oil Price Rise?
Warning from My Energy Insider…
Oil Defies a Correction…
The Oil “Melt-Up” and Why the U.S. Economy Won’t Run On Windmills Alone…
The 2nd Fed… Carbon Permits
Russia… Energy Priority #1
Talking Oil with the Vice Chairman of Chevron
Congress Beats Up On Oil Execs…
Silent Spring For Aviation
The U.S. Oil Supply — A Look At Our Future Oil Needs
U.S. Energy Policy — And Getting It Right