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The New Energy Debates

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– For Z Magazine, January 2007

One of the most pressing issues facing us all, including the new Democratic-controlled Congress, is what to do about energy policy and climate change. With sweeping changes in the leadership of key congressional committees, and heightened public concerns about the consequences of disruptive climate shifts, the time appears ripe for significant changes in US policy. Environmental lobbyists in Washington, however, are bracing themselves for only minimal steps. California Senator Barbara Boxer, the new chair of the Environment and Public Works Committee, is planning comprehensive hearings on climate and energy policy—a departure from the approach of her predecessor, the notorious right wing climate-denier James Inhofe of Oklahoma, who called global warming “the greatest hoax ever perpetrated on mankind,” and included science fiction writer Michael Crichton among his “expert” witnesses. But with many congressional Democrats beholden to automobile, agribusiness and other corporate interests, Capitol Hill is braced for only the most incremental changes.

The consequences of inaction on climate have become much clearer over the past year, from ever-more disturbing changes in our daily weather, to unprecedented droughts and floods in many locations. Al Gore’s self-promoting but strikingly graphic and substantive film, An Inconvenient Truth, helped bring the issues to the forefront of popular attention last summer, and the consensus predictions of climate experts worldwide continue to point toward impending catastrophe.

In a particularly noteworthy New York Review of Books article last July, NASA climate expert James Hansen reported that a business-as-usual scenario would result in at least 5 degrees (Fahrenheit) of global warming this century, and a concomitant eighty-foot rise in world sea levels. This would be enough to flood the homes of 50 million people in the US (inundating most East Coast cities), as well as 250 million in China, 150 million in India, and 120 million – almost the entire population – in Bangladesh. Perhaps equally disturbing, the lines on the map that link regions of equal temperature would double their rate of movement toward the poles from 35 to at least 70 miles per decade. The rate of migration of plant and animal species is only about four miles per decade; in this scenario, more than half the earth’s living species could become extinct, leading to widespread ecological collapse.

In October, the British government released the results of a 16-month climate study predicting significant declines in world food production and water shortages affecting as many as 4 billion people, along with coastal flooding, species extinctions, and a rapid fall in the world’s standard of living. The study, led by Britain’s chief economist Sir Nicholas Stern, was front page news across the UK—The Independent proclaimed “The day that changed the climate” when the report was released —while the New York Times relegated it to page 15. Stern and his colleagues projected a cost of at least $7 trillion to the world’s economy of failing to take steps within the next decade to significantly ameliorate global warming. Per capita consumption would fall at least 5% on a global average basis; in practice, the less well-off will bear a far greater burden. On the other hand, steps toward stabilizing the climate could save as much as $2.5 trillion per year.

The US, with only 4.6% of the world’s population, is now responsible for 23.5% of global emissions of carbon dioxide, the primary greenhouse gas responsible for alterations in climate. Our emissions per capita are twice that of Germany and Japan, three times France and Italy’s, and five times the world average, according to International Energy Agency statistics.  During the 1970s and early eighties, the US economy made significant strides toward more efficient use of energy. Economic growth became decoupled from energy use, and nearly as much energy was saved every year as a result of cumulative conservation measures and efficiency improvements as was produced by burning oil. Since 1979, however, public investment in energy research and development has fallen by more than half, and private spending has declined steadily, reaching its lowest level since the early 1960s. Per capita energy consumption has increased by half. While many European economies have struggled to meet Kyoto Protocol requirements, stabilizing and in a few cases reducing CO2 emissions, US emissions have steadily increased.

What is to be done?

The emerging consensus is that emissions reductions of 60 – 80% are needed to forestall the worst case scenarios, and that meaningful steps toward these emissions goals need to begin almost immediately. Is this possible? James Hansen and other analysts have posited an alternative scenario in which CO2 production levels off by the end of this decade and begin to decline rapidly as new technologies kick in by mid-century. This would slow warming to less than 2 degrees, still insufficient to prevent massive habitat losses or the submersion of numerous island nations, but enough to reduce the projected sea level rise to only 15 feet or so. Some economists, however, predict a 30 to 40-year turnover time for significant capital investments on a large scale. Can anything be done to head off impending disaster?

Hansen’s confidence that this can occur draws partly on the successful phasing out of chloroflurocarbons (CFCs), once the world learned of these chemicals’ decisive role in the thinning of the earth’s ozone layer, as well as in furthering global heating. “If … growth of CFCs had continued just one more decade,” Hansen reports, “the stratospheric ozone layer would have been severely depleted over the entire planet and CFCs themselves would have caused a larger greenhouse effect than CO2.” But when voluntary measures proved ineffective in curbing the use of CFCs, especially for refrigeration, the US and Europe took the lead in negotiating the 1987 Montreal Protocol, which completely phased out the chemicals and promoted the rapid development of alternative refrigerants, coatings and propellant compounds.

Energy guru Amory Lovins, the founder of Colorado’s Rocky Mountain Institute, has been a leading advocate for drastically reducing energy use since the 1970s. He believes we can rapidly lower the energy intensity of the world’s economies, and save millions in doing so. His data suggests that the efficiency of oil use can be doubled once again, as it was in the 1970s, mainly through changes in the transportation sector. Ultralight vehicles and biofuels, as well as the retooling of buildings and factories, can dramatically lower energy consumption without requiring dramatic lifestyle changes, he argues. Lovins proposes a mix of fees and consumer rebates designed to favor the most efficient vehicles in each size class, along with targeted changes in government procurement, loan guarantees, and other ‘market-oriented’ measures. He suggests that a $180 billion investment over ten years can eventually produce net savings of $70 billion per year, a significant boon to investors.

Energy experts interviewed by the New York Times in October proposed an equally ambitious research agenda, aimed toward major improvements in the efficiency of solar panels, as well as batteries able to store large quantities of energy.  These areas have languished since the ‘energy crisis’ years of the 1970s. Battery technologies, for example, barely changed at all from the beginning of the 20th century to the dawn of the hybrid car era, but they are essential for storing energy from intermittent sources like the sun and wind, capturing energy when it is most available and releasing it when needed.

Lovins acknowledges that such changes in technology are “fundamentally disruptive to current business models,” yet he insists that business be in the lead in implementing these necessary changes. While he supports shifts in government procurement toward more efficient technologies—and even large-scale buyouts of people’s old gas guzzlers—he implies that the sum of individual business decisions will be largely sufficient to show the way forward. However, as the history of automobile fuel economy standards shows, industries only alter their behavior on a large scale in a short amount of time when they are mandated to do so and all manufacturers have to follow the same rules.

Are ‘biofuels’ the answer?

Of all the possible solutions to our current energy problems, biofuels are by far the most aggressively promoted today. Stories in all the major newspapers and national magazines, and even ads from major auto makers, suggest that ethanol fuel and biodiesel are the keys to saving oil, reducing pollution and preventing climate change. Bill Gates, Sun Microsystems’ Vinod Khosla, and other major venture capitalists are investing hundreds of millions in new biofuel production, whether in the form of ethanol, mainly derived from corn in the US today, or biodiesel, mainly from soybeans and canola seed. It’s literally a “modern day gold rush,” as described by the New York Times, paraphrasing the chief executive of Cargill, one of the main benefactors of increased subsidies to agribusiness and tax credits to refiners for the purpose of encouraging biofuel production.

The Times reported last summer that some 40 new ethanol plants were then under construction in the US, aiming toward a 30 percent increase in domestic production. Archer Daniels Midland, the company that first sold the idea of corn-derived ethanol as an auto fuel to Congress in the late 1970s, has doubled its stock price and profits over the last two years. ADM currently controls a quarter of US ethanol fuel production, and recently hired a former Chevron executive as its CEO.

Several well-respected analysts have raised serious concerns about this increasing diversion of food crops toward the production of fuel for automobiles. WorldWatch Institute founder Lester Brown, long concerned about the sustainability of world food supplies, says that fuel producers are already competing with food processors in the world’s grain markets. “Cars, not people, will claim most of the increase in grain production this year,” reports Brown, a serious concern in a world where the grain required to make enough ethanol to fill an SUV tank can also feed a person for an entire year. Others have dismissed the push for ethanol fuel as little more than the subsidized burning of food to run automobiles.

The biofuel rush is having a significant impact worldwide as well.  Brazil, often touted as the the most impressive biofuel success story, is using half its annual sugarcane crop to provide 40 percent of its auto fuel, while increasing deforestation to grow more sugarcane and soybeans. Malaysian and Indonesian rainforests are being bulldozed for oil palm plantations—threatening endangered orangutans, rhinos, tigers and countless other species—in order to serve the booming European market for biodiesel.

Are these reasonable tradeoffs for a troubled planet, or merely another corporate push for profits? Two recent studies aim to document the full consequences of the new biofuel economy and realistically assess its impact on fuel use, greenhouse gases and agricultural lands. One study, originating from the University of Minnesota, is moderately hopeful in the first two areas, but offers a strong caution about land use. The other, from Cornell University and UC Berkeley, concludes that all domestic biofuel sources – the ones currently in use as well as those under development – produce less energy than is consumed in growing and processing the crops.

The Minnesota researchers attempted a full lifecycle analysis of the production of ethanol from corn and biodiesel from soy. They documented the energy costs of fuel production, pesticide use, transportation, and other key factors, and also accounted for the energy equivalent of soy and corn byproducts that are available for other uses after the fuel is extracted. Their paper, published in the July 25, 2006 edition of the Proceedings of the National Academy of Sciences, concluded that ethanol production offers a modest net energy gain of 25%, resulting in 12% less greenhouse gases than an equivalent amount of gasoline. The numbers for biodiesel are more promising, with a 93% net energy gain and a 41% reduction in greenhouse gases.

The researchers cautioned, however, that these figures do not account for the significant environmental damage from increased acreages of these crops, including the impacts of pesticides and nitrate runoff into water supplies—nor the increased demand on water, as “energy crops” like corn and soy displace more drought tolerant crops such as wheat in several Midwestern states.

The most serious impact, though, is on land use.  The Minnesota paper reports that in 2005, 14% of the US corn harvest was used to produce nearly 4 billion gallons of ethanol, equivalent to 1.7% of current gasoline usage. About 1 1/2 percent of the soy harvest produced 68 million gallons of biodiesel, equivalent to less than one tenth of one percent of gas usage. This means that if all of the country’s corn harvest was used to make ethanol, it would displace 12% of our gas; all of our soybeans would displace about 6% of diesel use. But if the energy used in producing these biofuels is taken into account – the fact that 80% of the energy goes into production in the case of corn ethanol, and almost 50% in the case of soy biodiesel, the entire soy and corn crops combined would satisfy less than 3% of current gasoline and diesel use. This is where the serious strain on food supplies and prices originates.

The Cornell study is even more skeptical. Released a year earlier, it was the product of an ongoing collaboration between Cornell agriculturalist David Pimentel and engineering professor Ted Patzek of the University of California at Berkeley, and was published in the journal Natural Resources Research. This study found that, in balance, making ethanol from corn requires 29% more fossil fuel than the net energy produced and biodisel from soy results in a net energy loss of 27%. Other crops, touted as solutions to the apparent diseconomy of current methods, offer even worse results.

Switchgrass, for example, can grow on marginal land and presumably won’t compete with food production (readers may recall George Bush’s mumbling about switchgrass in his 2006 State of the Union speech), but it requires 45% more energy to harvest and process than the energy value of the fuel that is produced. Wood biomass requires 57% more energy than it produces, and sunflowers require more than twice as much energy than is available in the fuel that is produced. “There is just no energy benefit to using plant biomass for liquid fuel,” said David Pimentel in a Cornell press statement. “These strategies are not sustainable.”

The Cornell/Berkeley study has drawn the attention of numerous critics, some of whom suggest that Ted Patzek’s background in petroleum engineering disqualifies him from objectively assessing the energy balance of biofuels. Needless to say, in a field where both oil and agribusiness companies are vying for public subsidies, the technical arguments can become rather furious. An earlier analysis by the Chicago-area Argonne National Laboratory (once a Manhattan Project offshoot) produced data much closer to the Minnesota results, but a response by Patzek pointed out several potential flaws in that study’s shared assumptions with an earlier analysis by the USDA. In another recent article, Harvard environmental scientist Michael McElroy concurred with Pimentel and Patzek: “[U]nfortunately the promised benefits [of ethanol] prove upon analysis to be largely ephemeral.”

Even the extraction of ethanol from Brazilian sugarcane, touted as the world’s model for conversion from fossil fuels to sustainable “green energy,” raises questions. The energy yield appears beyond question: it is widely suggested that ethanol from sugarcane may produce as much as 8 times as much energy as it takes to grow and process. But a recent World Wildlife Fund report for the International Energy Agency challenges this approach to future energy independence. It turns out that 80% of Brazil’s greenhouse gas emissions come not from cars, but from deforestation—the loss of embedded carbon dioxide when forests are cut down and burned. A hectare of land may save 13 tons per year of carbon dioxide if it is used to grow sugarcane, but the same hectare can absorb 20 tons of CO2 if it remains forested. If sugarcane and soy plantations continue to encourage deforestation, both in the Amazon and in Brazil’s Atlantic coastal forests, any climate advantage is more than outweighed by the loss of the forest.

Genetic engineering, which has utterly failed to produce healthier or more sustainable food—and also failed to create a reliable source of biopharmaceuticals without threatening the safety of our food supply—is now being touted as the answer to more sustainable biofuel production. Beside manipulating crops for nominally more efficient conversion to fuel, biotech companies are proposing huge plantations of fast-growing genetically engineered trees to temporarily sequester carbon and ultimately be harvested for ethanol. Genetically engineered trees, with their long life-cycle, as well as seeds and pollen capable of spreading hundreds of miles in the wild, are potentially a far greater environmental threat than engineered varieties of annual crops (see Z March 2006). Even Monsanto, long the most aggressive promoter of genetic engineering, has opted to rely instead on conventional plant breeding for its biofuel research, according to the New York Times.

Despite all these concerns, however, biofuels still prove advantageous in many local applications, such as farmers using crop wastes to fuel their farms, and people running cars on waste oil that is otherwise thrown away by restaurants. New innovations, such as extracting a diesel substitute from pools of oil-rich algae, may also make an important difference in certain settings. But as a solution to long-term energy needs on a national or international scale, the costs of a society-wide conversion to biofuels may far outweigh the benefits.

Promoting a transition

Whichever alternatives prove to be the most viable for addressing our near- and longer-term energy needs, their development and full deployment will require massive investments of labor and capital, as well as a dramatic shift in investment priorities in both the public and private sectors. How can such a transition come about?

Proposals for financing a transition to a low-energy scenario tend to hinge one or more widely advocated approaches, including energy taxes, cap-and-trade systems for CO2 emissions, renewable portfolio and performance standards, and public works programs or incentives mandating specific changes in technology. A full economic analysis of these alternatives is beyond the scope of this discussion, but some general comments on their differing political and environmental implications are clearly in order.

Energy taxes are a proposed solution long favored by many environmentalists and some politicians. Al Gore, for example, has proposed a gradually increasing tax, proportionate to each fuel’s level of carbon dioxide emissions. He suggests decreasing social security taxes at the same time so as to make the overall result revenue-neutral. One difficulty with energy taxes, though, is that it is difficult to design a system that doesn’t disproportionately hurt those who are less well-off, and invariably spend a much larger proportion of their income on energy. A recent study from economists at Stanford and NYU suggests that energy demand is sufficiently inelastic that price increases would have to be 3-4 times greater than a straightforward policy analysis might suggest.

The problems with emissions trading have been discussed in detail elsewhere (see Z February 2006). It is the solution favored by advocates of “free market environmentalism,” and was enshrined in the Kyoto Protocol on climate change following then-Vice President Gore’s intervention in the proceedings. Carbon trading creates an entirely artificial “carbon market” on a global scale, one highly prone to manipulation and abuse. It also encourages environmental damage, such as the conversion of native forests to faster-growing commercial tree plantations by companies and governments seeking to profit from carbon credits or offsets. In the global South, this invariably leads to displacement of peoples whose livelihood depends on the forest. The wholly voluntary, corporate-supported carbon trading system currently operating in the US, under the auspices of the Chicago Climate Exchange, has been criticized for inflating the benefits of very small changes in emissions and offering credits for some practices that make no real difference for the climate at all.

Performance and portfolio standards appear more promising, but have high political hurdles to clear. They can require increased public intervention in the hallowed “free market,” something that has become politically unfashionable in recent decades.  Performance standards include mandated fuel economy goals for automobiles—which have not changed in the US since the late 1980s—and standards for efficiency of household appliances, which have steadily improved over the past two decades despite efforts by the Bush administration to slow the process. Portfolio standards are a more recent invention, and have been adopted by more than 20 US states, mandating utilities to obtain a certain minimum percentage of their power from renewable energy resources.

The 2005 federal energy bill mandates that at least 7.5 billion gallons of automotive fuel be obtained from renewable sources by 2012. The most tangible expression of this policy is a 51 cents per gallon subsidy for ethanol, which could be expanded to promote a much wider range of renewable technologies. Public investment to support advances in energy efficiency, as well as solar and wind energy technologies, could prove far more cost effective than subsidies targeting ethanol production. One new study commissioned by the International Institute for Sustainable Development reports, with no intended irony, that current US biofuel subsidies could purchase 30-140 times as much savings in greenhouse gas emissions if invested in existing “carbon markets.”

In recent years, the most innovative steps toward reducing energy use and promoting renewables have come from the state and local levels. California’s recent energy legislation—which helped Arnold Schwarzenegger bolster his environmental credentials prior to the November election—mandated reductions in carbon dioxide emissions from industries and automobiles, and required builders to offer photovoltaic roofing tiles, among other measures. California utilities are now only allowed to enter into long-term power contracts with facilities that meet the highest emissions standards. While many state-level programs also emphasize emissions trading, including a recent program that includes seven northeastern states, they allow a variety of approaches to be implemented and tested, challenging two decades of inaction at the federal level.

“I’d put my money on the sun and solar energy,” the inventor Thomas Edison told a colleague, shortly before his death in 1931. “I hope we don’t have to wait until oil and coal run out before we tackle that.” Seventy five years later, solar energy is still considered too speculative by conventional capitalist standards. Despite his large investments in subsidized ethanol production, venture capitalist Vinod Khosla told the New York Times that he would not back solar power because it did not show a profit without subsidies. Genuinely forward-looking energy technologies are still at a significant disadvantage compared to “quick fixes” like ethanol.

Similarly, no one has yet figured out how to make a fortune on conservation and efficiency. While Amory Lovins and others have demonstrated for thirty years that it is possible to reap huge savings at minimal cost from investments in energy efficiency, corporations prefer to seek even greater short term gains from worker layoffs, outsourcing production, and other socially disruptive measures. As predictions for climate changes become ever more severe, we need to confront the reality that the needs of the planet, and of a genuinely sustainable society, remain in fundamental conflict with the demands of wealth and profit.

Brian Tokar directs the Biotechnology Project at Vermont’s Institute for Social Ecology (social-ecology.org). His books include Earth for Sale (South End, 1997) and Gene Traders (Toward Freedom, 2004).