The Foreign Service Journal, February 2009

18 F O R E I G N S E R V I C E J O U R N A L / F E B R U A R Y 2 0 0 9 the offshore North Sea, the United Kingdom company Centrica is re- viewing the pace at which the 180- megawatt Lynn and Inner Dowsing wind farm is being built. On the demand side, the ele- vated prices of this past summer have clearly caused some behavioral shifts that will only partially fade with lower prices. Much of the dis- cussion of assistance to the U.S. auto sector assumes an evolution toward a more environmen- tally sensitive product line, now that $4/gallon gas has got- ten U.S. consumers’ attention. Lost value throughout the markets, industrial restructuring and the lasting effects of recession will all permanently erode some portion of de- mand, as well. Crisis or Opportunity? Because any credible gaming of a sustainable energy path begins with a substantial dose of efficiency, that is the first place to look. The new administration may be able to capitalize on the reaction of consumers to the higher prices of mid-2008 by building on the precautionary behavior they have adopted during the recession. Both consumers and legislators are likely to be supportive of more aggres- sive policy on improving efficiency, including real tighten- ing of Corporate Average Fuel Economy standards. Auto companies seeking support from Washington may be less inclined to resist such obligations, while their champions in Congress may recognize the long-delayed opportunity to shift strategies. Other systemic or market imperfections that mute or block efficiency signals to consumers are well known and can be overcome by new policies affecting housing and commercial buildings, given this moment of political op- portunity. Ideas abound to make major energy efficiency gains, but the will to implement them has been weak. Still, most energy consumption scenarios projected through 2050 suggest that the 40 percent of carbon savings needed to attain a sustainable energy path can be provided by cost- effective or negative cost-efficiency sources. One low-carbon option that may find new support in this environment is nuclear power, which appears on track for a renaissance. Even in the early 1980s, the world was able to build 25 reactors a year. Given the much greater interest in nuclear power in key emerging countries, it is not inconceivable that the 30 to 35 reactors a year important for a sus- tainable future could be added, as more of the population comes to accept that option as a part of the solution to climate change. Still, major obstacles remain be- fore China and India, for instance, can incorporate large blocks of nu- clear power into their grids. These include: the ability of relatively small power grids to accept such large increments; the ab- sence of the necessary security, technical and regulatory bodies; and, perhaps most often overlooked, the inability of the rate base to pay the kilowatt-hour price for nuclear power all stand in the way. In addition, nuclear power has heavy up-front capital costs. China’s power-generating nuclear plants, each provid- ing 8.3 gigawatts of electrical energy, produced just 2.3 percent of the country’s electricity in 2007. However, the Chinese National Reform and Development Commission has announced plans to build 40 more nuclear GWe-gen- erators by 2020 and 160 by 2030. For its part, India is about to launch a new phase of nuclear development, but its institutions and markets are not well prepared for large- scale deployment of that technology. Decarbonizing in the Long Term Achieving greater energy efficiency and decarbonizing the power sector are both essential first steps, but the longer-term path to lower-carbon fuels is much more chal- lenging. Politicians are quick to support renewable ener- gies and put their hope in hydrogen and biofuels, but the obstacles to widespread adoption of these technologies are real. Renewables are generating public resistance; current biofuels have aggravated food prices; and hydrogen fuels are probably decades away. A great deal has been learned about how to integrate intermittent wind and solar elec- tricity into power grids, but substantial investments are needed to create smart and well-integrated grids that can satisfy our need for security of electricity supply. Fortunately, new renewable sources of energy (e.g., non-hydroelectric and nontraditional biomass) hold great promise for the future if we take the right steps now. The International Energy Agency estimates that renewable sources of energy could provide as much as 50 percent of power generation in 2050 — but not without unprece- F O C U S Any credible gaming of a sustainable energy path begins with a substantial dose of efficiency, so that is the first place to look.