Friday, April 04, 2008

The Mobilization

I'm accustomed to seeing proposals for reducing greenhouse gas emissions and making the US energy independent that assume it will all be a stroll in the park, requiring only the expenditure of a few more billions each year for R&D, after which some clever folks will transform energy the way they did the internet. Few critics of the status quo seem to grasp the scale of the global energy economy, nor has the media done a good job of explaining it to the public. The industry has tried, but let's just say it's not currently well-positioned to influence opinion in that regard. So imagine my surprise to encounter an argument that comprehends the scale of the challenge all too well, and yet finds the task not only worth doing, but doable. That's just what I see in this recent op-ed by Bill McKibben, of Middlebury College. He suggests that the appropriate model for transforming our energy systems is not the Manhattan or Apollo Projects, but the New Deal and World War II.

That's a truly mind-blowing notion. It's one thing to imagine that for a few hundred billion bucks, spread out over a decade or so, we might break our hydrocarbon addiction and embrace a cleaner world, with wind and solar energy powering an all-new fleet of electric vehicles, perhaps with plug-in hybrids as a transitional technology. Mr. McKibben suggests that what is needed is orders of magnitude bigger than that, and frankly, given the scale of a global fossil fuel economy that delivers 14 times as much energy as all the hydro-electric dams in the world--our oldest and still largest renewable energy technology--that sounds realistic. Nor is he alone in reaching this conclusion. Dr. Joseph Romm, a former DOE official and prominent environmental blogger, has also suggested the need for a World War II-sized effort, involving the construction of up to a million wind turbines globally.

I recently heard a comparison between the number of wind turbines necessary to power a new generation of US vehicles and the number of aircraft the US built from 1941-1945, which amounted to 275,000 fighters, bombers and transports. Now, I actually think that this could be done, and under the more pessimistic scenarios of climate change it might just be what is required. However, I do not see anything approaching sufficient motivation or the sense of urgency necessary to transform our economy to such a degree. Consider that in order to build all those airplanes and the other means of defeating Germany and Japan--with more than a little help from the USSR and the British Empire--we turned over a third of the economy to the war effort, with the federal government's share of GDP exceeding 40% from 1943-45--about twice the current level. Whole sectors of the economy ground to a halt, including the production of civilian automobiles. And that was at a time when manufacturing accounted for about twice as large a share of GDP as it does today, albeit with much lower productivity.

In 2004, energy expenditures accounted for 7.4% of GDP. With higher prices, it's probably closer to 10% today. Just our net imports of crude oil and petroleum products amount to 3% of GDP, at today's prices, compared to about 1.5% in 2004. But there's a real question about how much of our total economy we can devote to energy production, without crowding out the parts that turn energy into higher value outputs of goods and services. How much investment can we divert to creating a green energy economy, while maintaining large parts of the hydrocarbon economy during a transition that could last a decade or more? And the starting point for this effort would be an economy that is already running enormous fiscal and trade deficits, and facing the dramatic and entirely predictable expansion of government obligations to an aging population.

At the peak of the Apollo Program, NASA's budget consumed 5% of the federal government's expenditures, putting it somewhere around 1% of GDP. Devoting a similar share to new energy today would come to $150 billion per year, 30 times larger than the Department of Energy's 2008 budget. Ramping that up to World War II scale would put it in the vicinity of several trillion dollars per year. That is a long way, indeed, from the view of the UK government's Stern Report that addressing climate change would require around 1% of global GDP. So far, most of the campaign rhetoric about expanded energy and climate programs, as ambitious as it might be, falls well short of the relative commitment we made to landing on the moon, and even that will face opposition. While I understand the arguments of those suggesting the need for a de facto wartime mobilization to combat climate change, there is simply no way to ask the American people to undertake something of that magnitude, when we are still struggling to pay for the extension of the renewable energy tax credit, and before we have even taken our first steps on an emissions cap & trade.

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