The New Future of Energy Policy

The rise of the powergrid (and new taxes)
Monday, November 26, 2012, 2:32 PM

Flood myths are common to human culture. Swollen rivers, tidal storms, and tsunamis make their appearance frequently in literature. But Hurricane Sandy, which has drawn newly etched high-water marks on the buildings of lower Manhattan (and Brooklyn), has shifted the discussion from storytelling to reality.

Volatility in climate has drawn the attention of policy makers for a decade. But as so often is the case, a dramatic event like superstorm Sandy – the largest storm to hit New York since the colonial era – has punctured the psyche of the densely populated East Coast, including the New York-Washington, DC axis where U.S. policy is made.

Not surprisingly, in the weeks since the historical hurricane made landfall, new attention is being paid to the mounting costs that coastal world megacities may face.

Intriguingly, however, this new conversation about climate, energy policy, and America’s reliance on fossil fuels comes after a five-year period in which the U.S. has dramatically lowered its consumption of oil and seen an equally dramatic upturn in the growth of renewable energy. » Read more


The Demise of the Car

Doomed by escalating oil and infrastructure costs
Monday, August 20, 2012, 10:37 AM

India’s recent series of power blackouts, in which 600 million people lost electricity for several days, reminds us of the torrid pace at which populations in the developing world have moved onto the powergrid. Unfortunately, this great transition has been so rapid that infrastructure has mostly been unable to meet demand. India itself has failed to meets its own power capacity addition targets every year since 1951. This has left roughly one quarter of the country’s population without any (legal) access to electricity. That’s 300 million people out of a population of 1.2 billion. Indeed, it is the daily attempt of the underserved to access power that may have led to India’s recent grid crash.

But the story of India’s inadequate infrastructure is only one part of the difficult, global transition away from liquid fossil fuels. Over the past decade, the majority of new energy demand has been met not through global oil, but through growth in electrical power.

Frankly, this should be no surprise. After all, global production of oil started to flatten more than seven years ago, in 2005. And the developing world, which garners headlines for its increased demand for oil, is running mainly on coal-fired electrical power. There is no question that the non-OECD countries are leading the way as liquid-based transport – automobiles and airlines – have entered longterm decline.

Why, therefore, do policy makers in both the developing and developed world continue to invest in automobile infrastructure? » Read more


The Real Story Is the Rise of the Global Powergrid

Oil's importance usurped
Monday, August 20, 2012, 8:51 AM

Executive Summary

  • Worldwide, global energy demand is beginning to shift strongly from oil to electricity
  • At the same time, developed countries are psychologically wedded to their oil-dependent infrastructure and mostly developing countries are blindly emulating their developed brethren, condemning them to suffer the same vulnerabilities
  • World demand for energy supply is proving much less elastic than demand for oil
  • Oil is likely soon going to be left to find its true (much higher) price
  • As the realization of the grid's importance dawns on economies, expect massive infrastructure investments to follow

If you have not yet read Part I: The Demise of the Car, available free to all readers, please click here to read it first.

China contains 19% of the world’s population and accounts for 21% of the world’s energy consumption. But India, while containing 18% of the world’s population, only accounts for 4.6% of global energy demand. It is not possible that India can call upon oil to fund the next leg of its industrial growth.

For even after we consider the higher marginal utility of oil in the developing world – higher prices are integrated more easily to the economy as each new consumer uses only a small amount of oil – there is simply not enough economically recoverable oil for India to replicate the Western history of car and highway development.

Furthermore, the prospect that hundreds of millions of India’s citizens, already unserved by the powergrid, would turn first to oil consumption is highly unrealistic. Perhaps the government of India wagered that the Great Quadrilateral was needed as a foundational piece of national infrastructure – not as a bet on a future built for automobiles.

Regardless, we have already seen in the data out of countries like China that the mix of energy demand starting last decade began to shift, strongly, from oil to electricity. » Read more