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Finding an End to Energy Gridlock

A new book outlines an energy strategy that might actually work.
December 20, 2011

In recent years, people who recognize the need to revamp our energy infrastructure have debated whether the priority should be to impose policy-driven changes immediately or to find technology breakthroughs that would radically redefine our energy sources. The answer is that we need both. And in their well-argued new book, Unlocking Energy Innovation, Richard K. Lester and David M. Hart explain not only why this is true but, perhaps more interesting, how to simultaneously begin addressing both priorities.

Transforming our energy system won’t be simple or fast. Lester, head of MIT’s Department of Nuclear Science and Engineering and founding director of its Industrial Performance Center, and Hart, director of the Center for Science and Technology Policy at George Mason University, describe energy innovation as occurring in three “waves.” In their description, the first wave is improving energy efficiency; a second, which will have its largest impact between 2020 and 2050, will involve the deployment of low-carbon energy sources such as renewables and nuclear; and a third wave of radically new technologies, such as carbon-neutral biofuels and advanced solar technologies, will not be a significant factor until after 2050. The authors argue that we must work faster and in parallel on all these types of innovation if we are to have any chance of meeting long-term goals for slashing greenhouse-gas emissions.

It’s a simple description of how energy technologies will unfold. But it will shock many that energy sources such as wind and solar are a decade away from making a large impact. It is even more sobering to realize that radically new technologies, some of which have begun appearing in the lab, might be at least 40 years from actual use.

The authors of Unlocking Energy Innovation describe four stages of energy innovation: the creation of new options; demonstration; early adoption; and the optimization of large-scale technologies. The costs associated with each are vastly different, and they increase by roughly an order of magnitude as technologies are scaled up. This analysis highlights one of the most challenging aspects of energy innovation: how to fund and select the demonstration and adoption of new technologies before they are commercially competitive. Lester and Hart call these “learning investments” and point out that they can cost billions of dollars.

Conventional wisdom among many energy experts, particularly economists, suggests that an effective energy policy will be based on supporting research and setting a price, or tax, on carbon emissions. But Lester and Hart say that such a strategy neglects to support the critical middle stages of early adoption and deployment. The problem is that new technologies cost so much a modest carbon price alone will provide few incentives to producers. So how to support these costly stages of energy innovation? Lester and Hart spend much of the book laying out a scheme that they believe might work.

The problem is complex. Specifically, it will require reforming our system of electricity generation and distribution, which is a mess after decades of partial deregulation. Though Lester and Hart readily admit that their proposals might not be the eventual solution, they do offer something that is all too rare these days: a logical strategy for tackling climate change that has both the aggressiveness needed to lower carbon dioxide emissions in the coming years and the planning needed to support the far greater changes needed by midcentury.

Of course, these days it’s doubtful whether we have the political will or the consensus in place to overhaul our energy system. But despite the gridlock in Washington, that doesn’t negate the need for strategic thinking about the problem. “Incremental changes won’t be enough. The system is pretty badly dysfunctional,” said Lester in a recent interview. “There’s always a pressure to fix it immediately. So people look at the small changes that can get done in a short period of time. But we need to be setting up systems that will work over much longer periods.”

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