Ask almost anyone what we should do to make our economy greener and they’ll tell you we need more “renewable energy.” Renewable energy—that’s the goal behind myriad state and federal policies; it is the justification for massive subsidies to certain types of energy production and the rationale for penalizing others. It’s the reason some states (and even some countries) have spent billions on new energy infrastructure, burdened their consumers with sky-high energy costs, and yet made only modest progress bringing down carbon dioxide emissions.
That’s because we’ve been asking the wrong question. The key issue with energy technology is not whether it is renewable—that is, can it be endlessly replenished from natural sources such as sun, wind, and water—but rather whether the technology is clean and whether that clean tech can be deployed at a reasonable price. If we are serious about making our economy cleaner, we should be choosing technologies that deliver the biggest environmental benefit at the lowest possible cost. Too often, in pursuit of the renewable rainbow, we’ve done just the opposite. We burden our energy economy with high prices and complex regulations, all for fairly meager improvements in our environmental footprint.
To understand how we got on the wrong track, we need to go back to those gloomy days of the 1970s. Inflation was raging and optimism tanking. The Population Bomb was a bestseller, while environmentalists stressed “limits to growth.” Many experts believed that the U.S. had already hit “Peak Oil”—that our energy supply had nowhere to go but down. Then came the 1973 OPEC oil embargo, and with it the “Energy Crisis.” Americans faced gas lines, rationing, and fears that they wouldn’t be able to heat their homes. It seemed our very way of life was at the mercy of a handful of Arab petro-states.
In fact, the OPEC embargo played only a small role in the crisis. The real culprit was the price-control regime Richard Nixon had launched in a doomed effort to combat inflation (and in a cynical ploy to ensure his 1972 reelection). With their financial returns capped, domestic drillers and refiners cut back on production. When the embargo hit, they had little incentive to produce more fuel to fill the gap. Even after price controls on most goods expired, gasoline and diesel fuel remained subject to byzantine regulations all through the Ford and Carter years. In 1979, after the Iranian Revolution led to a dip in that country’s oil production, U.S. suppliers were once again unable to ramp up production. The country was in another oil crunch, by some measures one worse than the first.
Such was the national mood on July 15, 1979, when President Carter settled himself before the TV cameras to give the defining speech of his presidency. It would become known as the “Malaise Speech.” America was facing not just an energy crisis, Carter told the nation, but a spiritual one. The only solution was to put the entire country on something like a war footing. What would we be fighting for? “Energy independence.” Today, many remember Carter as an environmentally minded president—he put solar panels on the White House! But his sweeping energy proposals were couched mostly in the language of economic nationalism. America needed more energy, and we couldn’t trust foreigners to provide it. Indeed, by today’s standards, Carter’s plan—which called for massive increases in coal production and developing dirty oil-shale deposits—was an ecological train wreck.
Carter’s emphasis on renewable energy—mostly wind, solar, hydropower, and biofuels—was driven less by environmental concerns than by economic and geopolitical ones. Renewable energy was a matter of national security, Carter explained while visiting the Colorado lab now known as the National Renewable Energy Research Institute. “Nobody can embargo sunlight,” he said. “No cartel controls the sun. Its energy will not run out.”
When Ronald Reagan took office in 1981, he ditched the White House solar panels. He also scrapped the price controls that were hobbling U.S. energy producers. Domestic oil production recovered, and gasoline prices were soon lower than they’d been in the 1960s. By the mid-’80s, economists were warning of an “oil glut.”
Nonetheless, fears of energy shortages remained. Even after most of Carter’s program faded away, the focus on expanding renewable energy survived. Today, more than half of U.S. states have “Renewable Portfolio Standards.” These regulations require electrical utilities to purchase some set percentage of their power from renewable sources, whether or not those sources are the most affordable or even most environmentally friendly. Higher costs get passed on to ratepayers.
The rules favor wind and solar producers, and they put nuclear power—our biggest and most dependable source of clean energy—at a distinct disadvantage. (Nuclear fuel is plentiful and releases no CO2 but it is not, technically, renewable.) In fact, between economic headwinds and pressure from antinuclear activists, several perfectly good nuclear power plants—in Vermont, California, New York, and other states—have been forced to close in recent years. Every time that happens, the region’s greenhouse-gas emissions and electricity prices tend to spike.
Not surprisingly, the states that have invested most heavily in renewable energy have seen their electricity costs soar. California residents pay rates 80 percent higher than the national average. What is surprising is how little they have to show for it. California’s statewide carbon emissions have fallen by more than 5 percent since 2000, but that number barely beats the national average. More than half the states in the union did better, some cutting their emissions 20 percent or more. And California’s heavy reliance on wind and solar—whose output swings wildly from day to day and even hour to hour—has made the state’s power grid more fragile and prone to blackouts.
Despite California’s urgent need for reliable clean power, it remains committed to shuttering Diablo Canyon, its last operating nuclear power plant, in 2024. Promises that new wind and solar installations would easily replace the power from that plant have turned out to be empty. In fact, in September the state asked the Biden administration to waive air-pollution restrictions on some of its gas-fired power stations to allow the plants to operate at maximum levels. Without that extra gas power, California will face blackouts.
On the global scene, Germany presents a particularly stark example of why the renewable-only path is so misguided. The country has promised to phase out both fossil fuels and nuclear power, filling the gap with clean wind and solar. This Energiewende program costs Germany some $36 billion per year and has caused electricity prices to double. But at least they’re saving the planet, right? Um, no. Germany’s carbon emissions have barely budged over the past decade. Perhaps no one told the Germans that it might be risky for a cloudy, northerly country to stake its energy security on solar panels. To keep the lights on, Germany has been forced to keep dozens of coal-fired power plants running and to keep mining and importing mountains of dirty coal.
Meanwhile, France, which started investing in nuclear power plants back in the 1960s, is in a much more stable condition. It gets roughly 70 percent of its electricity from nuclear and has one of the lowest rates of carbon emissions in the industrialized world. And guess what? French consumers pay dramatically less for electricity than most of their European neighbors.
The renewable mirage is particularly insidious when it concerns biofuels. Making fuel from corn or grass or trees sounds great. In theory we can keep growing new plants and have an endless supply of energy. That has been the rationale for bulking up our domestic corn-ethanol industry—and forcing U.S. refiners to add 10 percent ethanol to every gallon of gasoline. But many biofuels are wickedly inefficient; by some estimates, it takes more energy to produce a gallon of ethanol than is contained in that gallon of fuel. And corn-based ethanol winds up releasing roughly as much CO2 as gasoline as well. In Europe, renewable mandates have had even more perverse effects. For years, fuel producers got special credits for employing biofuels, including imported palm oil. The upshot: Thousands of acres of rain forest in Indonesia and Malaysia have been clear-cut and turned into palm-oil plantations. (Only in the past couple of years have most European nations finally curtailed this practice.)
None of this means that renewable energy is inherently bad. Wind and solar (and even, potentially, biofuels) have roles to play in a clean-energy economy. But each needs to be assessed according to its actual merits: Is it efficient? Is it affordable? Is it clean? Favoring a particular energy source simply because it is “renewable” distorts markets and often backfires environmentally.
The key to making wind and solar work is being honest about their strengths and weaknesses. It’s great that wind and solar don’t put any carbon or other pollutants into the atmosphere. And the costs of both technologies have fallen dramatically over recent years. But wind and solar are only cheap when they are actually producing power. In the real world, wind turbines and solar panels produce electricity only about a third of the time. Moreover, the quantity of power they make isn’t determined by the needs of electricity consumers, but by the vagaries of weather. So for every new wind turbine or solar-panel utilities added to the grid, we also need to build some form of reliable backup generation, typically plants that run on natural gas. In effect, relying heavily on wind and solar requires that we build two separate power-generation systems. That’s not cheap.
Renewable advocates often gloss over the true costs of building all the backup power that wind and solar require. Or they envision a world in which the irregular power from these sources could be stored for weeks—or transported across vast distances—to fill the gaps when the wind isn’t blowing or the sun isn’t shining. That’s theoretically possible, but the expense would be astronomical. An MIT engineering study showed that the costs of wind and solar go up dramatically once they become the primary sources of electricity in the grid. The most affordable way to cut emissions, the authors concluded, is to combine renewable power with reliable, low-carbon sources, such as nuclear power.
In other words, the “100 percent renewable” power grid that California, Germany, and other supposedly green pioneers seek won’t work. Unless they want to keep burning coal and natural gas, they are going to need nuclear power. Too bad leading environmentalists in those regions pushed to shut down their nuclear power plants—in part because they aren’t “renewable.” Fortunately, some states have begun rethinking their renewable mandates to include nuclear power and other forms of low-carbon power. (Such sources could also include plants that harness the energy in natural gas, while capturing and storing the CO2 it releases.) These Clean Energy Standards focus on the amount of carbon and other pollutants an energy source produces, not on the illusion of renewability.
To its credit, Biden’s energy plan does not completely exclude nuclear power. Nonetheless, his administration seems committed to an industrial-policy approach to energy. It recently unveiled a roadmap to convert nearly half of the U.S. power grid to solar by 2050. Utilities that don’t play ball—or that think they have a better way to reduce emissions—will be penalized. Right now, solar makes up less than 4 percent of U.S. electricity. So this is a massive bet on a single alternative, one with unclear benefits and drawbacks. Is it best for the environment? Not necessarily. Solar panels require exotic materials that need to be mined, processed, and ultimately disposed of; moreover solar farms require huge amounts of land. Is it the most economical? Only when the sun is shining. A better approach would empower market forces to find the cleanest, cheapest sources of power. Those might vary depending on regional climate and local needs. Instead, the Biden administration wants to impose a one-size-fits-all solar solution. But, hey, it’s renewable.
A smarter policy would be to retire the outdated notion of renewability altogether. The world has changed since Jimmy Carter’s days, yet too many policymakers are stuck in that 1970s mindset. It’s possible to have an economy that is both dynamic and clean. But chasing the unobtainable grail of renewability won’t get us there. Let’s move on.
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