US Energy R&D: can it beat $1 Saudi oil?
I post here a number of charts which helped me put Energy R&D in the US into perspective, as well as some discussion. I conclude by asking a question:
“Are the people who say a “moon shot” of energy R&D will produce “cheaper than fossil” energy really thinking they’re going to beat $1 a barrel Saudi oil, or $15 a ton US coal?”
Let’s start with this famous chart prepared by Kei Koisumi for the AAAS:
People point to the yellow band, which is the burst of federally funded Space R&D starting after the 1957 Russian launch of Sputnik and think about what an investment like that, if done today for Energy R&D, might mean for the prospects for meaningful action on climate change.
Revkin published the above chart on Dot Earth in a Nov 2008 post “What Would an Energy Moon Shot Look Like” and noted that the green band, which represents the history of federally funded energy R&D, “resembles an emaciated python that had one decent meal”. He was referring to the burst of attention energy got in the US after the “energy crisis” of the early 1970s.
I took the Health and Energy data from Koisumi’s chart, threw in the Defense R&D over time which I got from this AAAS table and came up with this:
This shows that federally sponsored Health R&D isn’t even close to being the biggest investment the US makes in R&D. Military R&D dwarfs everything.
As I pondered what this ratio of military and health spending to energy R&D will deliver in terms of security of any type to our descendants, I ran into this chart on climate science research expenditure, also done by Koizumi at the AAAS. His climate science data only went back to 1997 so I cut out everything prior to that date and came up with this:
When you hear about “uncertainty”, or “natural variability”, instead of a clear explanation about what the accumulating greenhouse gases are doing to the planet, think about this graph. I suppose the US could still choose to have other priorities, but I guess what I’m seeing here is something like the Fall of Rome. Imagine you were poring over statistics as the Huns closed in and noticed the budget for coping with Huns was about as sizable as the climate science and energy R&D budgets are here compared to the more important things the Roman Senate were putting their money into.
A question that comes up at this point: is the US federal government sustaining its commitment to R&D over time compared to the size of the US economy.
The answer is no.
Although it has to be said that things look better if you look at the same data expressed in constant dollars as opposed to percentage of GDP:
And keep in mind, in the US there is a very large component of private industry research. R&D done by industry here is much greater than what the federal government is doing. Although this chart excludes military research it put things into perspective for me:
(The above chart came from an article “US science and Technology: An uncoordinated system that seems to work” published in Technology in Society 30 (2008) pages 248-263. It is worth reading).
For those who find this chart comforting, keep in mind that the article itself noted that
“because companies must demonstrate to stockholders the value of substantial R&D investments, they focus on short term applied R&D where the problems are well defined and useful results are probable”
Stephen Chu gave a speech at the National Press Club recently where he described a United States that should have experienced a new “Sputnik moment’ some years ago over the prospect of Chinese high tech dominance. Chu said China is using what used to be the US playbook as it prepares to take over world leadership from the US, which is to encourage the private sector with judicious application of federal funding for R&D in areas where the private sector falters.
He showed this graphic to illustrate that Energy R&D is one of these areas in the US
Here are all of Chu’s slides from this speech.
He pointed to and quoted from a report done by the American Energy Innovation Council, i.e. “A Business Plan for America’s Energy Future”. Federal Energy R&D urgently needs to be beefed up, Chu says these business types were saying, because the market is holding back innovation in the energy sector. As if that stark fact is not obvious from the chart he displayed, he quoted:
“the energy business requires investments of capital at a scale that is beyond the risk threshold of most private-sector investors. This high level of risk... limits the rate of energy equipment turnover. A slow turnover rate exacerbates the dearth of investments in new ideas, creating a vicious cycle of status quo behaviour. The government must therefore act to spur investments in energy innovation and mitigate risk for large scale energy projects”.
You read this post so far and you’d think I’m totally onside with those who say they want to “reframe” America’s energy debate along the lines the Energy Innovation 2010 crowd are promoting. I’m not.
I wonder at those who are saying they want to hear less talk about a price on carbon or who think we should forget about a carbon price altogether because they think their energy innovation strategy will produce some new low carbon energy source that is cheaper than fossil fuels.
How can a low price for alternate energy by itself keep enough carbon in the ground to avert dangerous climate change? Where is the data?
People should think about what “cheaper than fossil fuels” means. You can’t just take today’s price or some imaginary price from a peak oil scenario, and dream that your new energy source, if cheaper than that, will be the solution that can stop the accumulation of greenhouse gases in the atmosphere.
Imagine how the market will respond to your new “cheaper than fossil fuels” energy source as you deploy. You’ll cut off development of the harder to get at, i.e. more expensive, oil sands, coal to liquids, oil shales, unconventional gas, etc., anything that costs more than what you’ve come up with.
But what happens to the entire existing known stock of cheap fossil fuels that have so far not been produced that will still be sitting there? The Saudis can produce another barrel for less than $1. Powder River coal in the US costs less than $15 a ton in today’s market.
If this forget about a carbon price strategy is to be taken seriously as a climate solution, it will have to be shown that using the fossil fuels that can be produced at minimal cost using existing infrastructure in a distressed market where prices fall to the cost of production will not cause enough CO2 to accumulate in the atmosphere to cause damage greater than anyone will want to or be able to pay for once the bill comes in, i.e. the dangerous climate change most try to deny is heading for us right now.
Or, the target price for this “cheaper than fossil energy”, will have to be assumed to be far lower than what most imagine right now. Are the people who say a “moon shot” of energy R&D will produce “cheaper than fossil” energy really thinking they’re going to beat $1 a barrel Saudi oil, or $15 a ton US coal?
Chu was asked, after his speech, how he views things, given today’s political reality where it looks like it will be impossible, for some time, for Congress to put a price on carbon:
“I think a price will be placed on carbon worldwide. We’re going to go forward with what we can do now… “
David Lewis: I made pottery in rural Canada for a number of years starting in the early 1970s. When scientists confirmed what the Antarctic ozone hole was in 1987 I felt a call to understand what was happening to the atmosphere. I was a delegate to the Toronto Changing Atmosphere conference of 1988. I told the scientists I met there that I was an artist, but I could read their journals, ...
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