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Playing Chicken

Continued low energy costs as far as the mind can envision-what could be wrong with that? Anti-global-warming activists know the answer: it’s hard to launch novel energy technologies when the old methods are cheap, even if the new techniques would provide important benefits. Indeed, if history is any guide, the biggest obstacle to a technical solution to climate change may not be devising mechanisms to reduce carbon emissions, but making them cheap enough to compete in the market.

According to United Nations estimates, the United States, which has one-twentieth of the world’s population, is responsible for more than a quarter of the carbon dioxide pumped into the atmosphere every year-about 5.6 billion metric tons in 1999, the latest year for which estimates are available. About a quarter of that total, 1.5 billion metric tons, came from energy. (The rest is due to a variety of sources ranging from cement production to agriculture to termites.) The great majority of atmospheric scientists believe that these carbon emissions will lead, sooner or later, to climatic change. If and when the greenhouse effect substantially heats the planet, U.S. energy consumption will bear a disproportionate share of the blame.

The problem is that curbing these emissions would have a disastrous impact on economic growth. When activists decry global warming, they often single out the American love affair with driving for special opprobrium. But the automobile is far from the only culprit. In 1999, the use of energy by industry released almost exactly as much carbon dioxide as did the national fleet of cars, trucks, planes and sport-utility vehicles; households emitted almost two-thirds as much. Coal-fired electricity plants, gas grills and ranges in the home, agricultural and timber wastes-the list of greenhouse producers is as varied as postindustrial society itself. (Nuclear power plants are an obvious exception, but activists view them, rightly or wrongly, as posing other unacceptable risks [see “The Next Nuclear Plant”]; hydroelectric dams create their own ecological problems.)

Finding ways to curb emissions in all of these areas is a “sobering prospect,” says Paul Joskow, an energy economist at MIT. “With the best will in the world, it’s difficult to see as a practical matter how it could be done.” And with oil prices falling to $17 a barrel last fall-and billions of dollars already invested in the nation’s petroleum-based infrastructure-there are few economic motivations for adopting new technologies. Take fuel cells, for example. Energy researchers like fuel cells because they are silent, efficient, have no moving parts and produce no direct carbon emissions. Unfortunately, fuel cells also have drawbacks. They typically have to warm up, sometimes for as long as half an hour. Worse, the hydrogen in fuel cells is usually stored under high pressure, creating the risk of a Hindenburg-like fireball (see “Fill ‘er Up with Hydrogen,” TR November/December 2000).

But even if these and other technical challenges can be overcome, proponents of fuel cells will still have to convince ordinary Americans to replace their internal-combustion cars. When horseless carriages appeared on the scene, people could get around more conveniently: it was much easier to drive into a city and park a car than to ride there and find lodging and food for a horse. By contrast, fuel cell cars provide exactly the same service as gasoline cars except for producing less of an invisible, odorless gas. Moreover, they will cost more than regular cars, at least in the beginning. Yet even if consumers take the plunge, they won’t actually be able to drive anywhere unless businesses simultaneously spend billions of dollars establishing a network of hydrogen dealers with as wide a service area as today’s profusion of gas stations.

As fuel cells show, new energy technologies always face what Jostrow calls “a classic chicken-and-egg problem.” To attract consumers, fuel cell vehicles must cost the same as or less than conventional automobiles. But that can’t happen until enough hydrogen vehicles have been sold that manufacturers can lower prices. The same is true of hydrogen filling stations-they won’t be present in sufficient abundance until a lot of fuel cell cars are on the road, but fuel cell cars can’t be on the road in numbers until companies put up hydrogen filling stations.

Similar problems affect most new technologies, says Stanford’s Victor. “To replace coal-generated electricity with wind farms-even if that was technically feasible-you’d still have to build the wind farms,” he says. “You have to learn how to design them, how to operate them, how much redundancy you need in the system. That’s all additional costs. Meanwhile, you already have the coal plants.”

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