You’ll hear “energy independence” batted around. Some folks will undoubtedly be tying it to Independence Day, the 4th of July, in the U.S. And it is a great aspirational goal.
Let’s blow away the smoke, though. Energy independence for the U.S. will not happen overnight. It won’t happen in a decade. It may never happen completely as it may always make more sense for the Northeastern U.S. to get some of electricity from hydroelectric plants in Canada. And we may find it makes sense to continue to import some “energy” from Mexico and Canada for raw energy or for products where petroleum or natural gas is the best feedstock.
Let’s also be clear that real energy independence is not about drilling for more oil in this country. We simply don’t have enough to quench our current thirst. It’s not about switching more to coal—we already generate more than half our electricity from coal, and we simply cannot afford the damage to our air, mountains, streams, and lakes. But nor is it just about building massive wind farms in Texas or massive solar farms in Nevada. We cannot generate enough that way to meet our current demands in the next decade, and even if we could, we would have to think about how to move electricity from Texas to Chicago and beyond.
But I’m very optimistic about a cleaner energy future. Not only is it urgently needed, but it also makes a lot of sense for economic, security, and environment reasons.
The place to start of course, is energy-efficiency. The McKinsey cost curve (here, as depicted in National Geographic) illustrates this perfectly. It’s almost one of those “duh” observations—but an observation that we unfortunately haven’t embraced yet. The “increased cost” argument is a red herring on the efficiency side. Wasting less energy—wasting less, period—saving us money! As DOE Secretary Chu put it, “Energy efficiency is not just low-hanging fruit; it is fruit lying on the ground.” If we make the efforts to do more, do it better, and do it with less, we win. And if we decrease our need for energy, the supply side of the equation becomes more simpler. We don’t need as much, electricity, gas, oil, ethanol, etc. The scale of our wind farms and PV arrays can be smaller. We don’t have to worry as much about massive energy distribution infrastructure. Energy-efficiency is the critical first step, and it makes the next steps more achievable. Once we start making significant inroads there, we can tackle more manage supply issues, especially including renewables.
The good news is that this creates economic opportunity. “Green” jobs are certainly a big part of this. These jobs are for the most part very local. They cannot be exported our outsourced. The ensure that money that was formerly sent overseas stays in our communities. And obviously good jobs give the economy a boost. It doesn’t stop there, though. As businesses save energy, they save money. Money that formerly went up a chimney, flue, or smokestack can be reinvested in the core business, creating new and better widgets, improved services, and stronger competitiveness. In short, the less businesses waste, the easier it is for us to maintain a leadership role.
This same principal holds at the household level. These less money we spend on energy, the more we have to send our kids to school, pay our mortgages, and protect ourselves from the ups and downs of a global market and global energy costs.
There are upfront costs for energy-efficiency. But they are actually less than the costs to build and maintain new power plants, new power lines and gas pipelines, and the fossil-fuels needed to run them.
Total energy independence may be a far-off dream. There is absolutely no good reason, though, we shouldn’t begin running in that direction, and saving money and increasing our resilience, right now. With energy-efficiency first.
Thanks,
Mike
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