Thursday, August 03, 2006

Jeremy Rifkin on Georgia's Energy Future

Creative Loafing
August 3, 2006

Jeremy Rifkin’s 2002 book, The Hydrogen Economy, trumpets the prospect of an energy future in which clean, renewable energy could be stored by companies — and even individuals — in the form of hydrogen.

A well-known social critic and author, Rifkin is a lecturer at the Wharton School of Business at the University of Pennsylvania and a consultant to major companies. He spoke last week with CL Editor Ken Edelstein:

Some 70 percent of Southern Company’s generating capacity relies on coal. On one hand, there’s plenty of coal in the United States. On the other, coal emits a huge amount of greenhouse gas, which seems likely to face some sort of regulation soon. So does Southern Co.’s reliance on coal bode well or poorly for the company future?

I think it bodes poorly. Let me put it this way: The power companies and energy companies understand that we’re heading toward peak oil. That’s No. 1. We don’t know how soon. The optimists say we don’t peak on oil until 2037. That’s the wisdom of the International Energy Agency, that’s the optimists. ... [Peak oil is] when half the oil’s used up and of course that’s the top of the bell curve. That’s when it’s over because you can’t afford the price after you’ve reached peak oil production. The pessimists now — some of the world-class geologists, some of the best in the business — are relooking at the numbers. They say, “Well, we might peak as early 2010 to 2020.” I have no idea who’s right.

As I said in the book [The Hydrogen Economy], they’re only arguing about 20 years, it’s still a small window. They do agree that when we do peak, two-thirds of the reserves of oil will be in the Middle East, which is politically unstable.

What’s happening with most power companies is they’re making a shift to natural-gas-fired power plants because they’re cheap. But this shift — I think 270 natural-gas-fired power plants were scheduled to come on line in the decade — these are decisions that were made early in the decade before the price of gas started rising. What should have been anticipated is that the price of gas would absolutely shadow oil, which is exactly what’s happening. Gas is shadowing oil on the prices, and gas is finite and will probably peak in shadow of oil.

Natural gas burns a little [cleaner than coal], and I would certainly say that as a transition strategy, I would certainly favor natural gas to either oil-burning plants or coal-burning plants. But natural gas doesn’t buy you much time, and it still emits [carbon dioxide]. So now the power utility companies and energy industry have to deal with this: There’s plenty of other fossil fuel. There’s coal all over the world. There’s heavy oil in Venezuela, and there’s oil sands in Alberta. Of course, as you know, Canada is the largest supplier of energy to the United States, not the Middle East. ... So there’s plenty of oil sands in Canada; they’re competitive at 12 [dollars] a barrel. There’s plenty of heavy oil. The problem is they are dirty and they emit a lot more CO2.

Now, with that as a premise, here is the statistic that I think is a relevant statistic to the question you raise. ... You get so many statistics over so many years, you get totally insensitized to them after a while, but there’s one statistic that I would share with Southern [Co.] and with your readers, because I think it’s the single most devastating piece of information that we’ve ever been privy to in the history of the Homo sapien species.

Now, that’s a very audacious statement, but wait until you hear the statistic: Last year, the journal Science published an article. Scientists went down to the Antarctic, and they dug under the ice into the landmass to get a pristine picture of the geological record of the planet. And what they found was absolutely overwhelming in every sense of the word. They found that the concentration of global warming gasses in the Earth’s atmosphere today is greater than at any time in the last 650,000 years. Homo sapiens have been here less than 150,000 years, so I’m not sure we have emotionally understood the nature of this experiment that humans have with fossil fuels. I think this is a policy question. It’s become a wonk issue. It’s an issue that political parties and NGOs debate. But I’m not sure the Homo sapien species, that we as a whole, have grasped the enormity of this shift in the chemistry of the planet with the full implications of what it means in terms of the habitability of this planet by human beings in the 21st century or for there on out.

So, given that as a premise, by what rationale would either the power and energy industry, or civilization — our country — allow us to go to dirtier fuels, coal, tars and heavy oil just to get few years, or maybe a decade of economic activity, at the expense of the future habitability of the planet on which we live? If this is what we are willing to do, then perhaps we don’t deserve to be here as a species. It is so shortsighted.

What about the idea of sequestering the CO2 and other greenhouse gases from fossil fuels so that they affect the climate?

If you were to go back to the companies that are using heavy coal, they’ll say, “Well, wait a minute. Let’s put more coal-fired power plants on line because we could be energy independent, we’ve got coal in the United States, and we can find a way if you give us enough time and enough money from the federal government, we’ll find a way to sequester CO2, we’ll find a way to bury the CO2. Just give us enough time, enough money, enough government subsidies. But in the meantime, allow us to continue to build new gas and coal-fired plants.”

The older generation I’m sure will remember. This is déjà vu. We’ve been there. This is what they said about nuclear industry in the 1950s. “Let’s build a power plant, and then we do have a problem transporting and safely disposing the waste. But if you give us enough time, enough money, enough subsidy, enough government help, we’ll figure out a way to do this.” We’re 50 years in, and we still don’t know how to safely transport spent nuclear rods from the nuclear facility, on trains, on trucks, into waste sites, and we still don’t have a waste site up ... .

So given the history of the nuclear industry, my point is this: My science and tech team, which is some of the best scientists and engineers in the whole world, I mean Nobel laureate, top people. They never say never, but what they say to me is, one, it’s completely economically unfeasible under anything on the horizon, to be able to sequester and bury CO2. The cost is through the roof. Two, how would we ever find enough mediums, both underground and, y’know, in old wells or reservoirs or under the deep ocean, to bury the CO2 in this volume? Three, how would you ever ensure that it would never leak for all of eternity? And if you do leak — No. 4 — imagine CO2 leaking from under the water in deep oceans up into the atmosphere or from caverns under the ground, everything does leak. When you have massive release of CO2, then you’re talking about truly a cataclysm. So given all of that, my belief is that the coal industry’s suggestion that this is a new lease on life, "clean coal" ... is not a just misspent opportunity. It’s just a no-go.

Having invested so heavily in coal, what should a company like Southern Co. do about its coal predicament?

I advise many of their competitors in the top 10. What I have said to them is: You need a transition strategy at every level of the company. You need a short-term, midterm and long-term strategy. Wean your company off coal and toward natural gas as a short-term transition, and then [make] steep, steep investment in renewable energies in your region stored using hydrogen. That’s what you need to do.

In the short run, obviously, natural-gas-fired power plants are coming on line, but they don’t buy you much time, and they do emit CO2 [although] they do burn better in terms of CO2 than coal. That’s track one. It’s a very short track and it’s not a very deep track. But at the same time that your transition teams are moving toward the natural gas power plants, most of the investments they’re making — most of the revenues they’re making now — should be in exploring every opportunity for renewable energy within the regions they serve.

Then, as you find the optimum pockets — just like you would scout for coal or you would for uranium — you scout for the optimal region where you can get solar geothermal, hydro, biomass, wind, tide. And you begin to seek that out, and then you have to not only use that for primary electricity, but then you have to bring in hydrogen infrastructure to store your surplus so that you can have backup for the grid. And the reason that’s critical is that many people, even in the environmental movement, say, "Well, why can’t we just have renewable energy? Why do we need hydrogen?"

But the point is you can’t actually go to a renewable energy society without a way to store the energy. The problem with renewable energy is that it’s intermittent. The sun isn’t always shining. The wind isn’t always blowing. Your water tables can be down for hydroelectric on the dams. Even biomass has yearly differences in terms of yield although it’s more predictable. The point is that when the sun is shining and the wind is blowing and the water tables are up, you generate electricity with these renewable sources of energy. Now, you’ll have surplus because electricity can’t be stored in any major way, even with lithium batteries. ... So, electricity blows as soon as you generate it. But if you have a surplus when it’s cheap, you take some of that surplus electricity generated with renewable energy, and you electrolize the water, just like in high school chemistry, with the anode and cathode, and grab the hydrogen. Hydrogen’s the way to store renewable energy so that you have backup for power, and you have it for transport, because with transport you have to have stored energy. ... It [hydrogen] is a medium to store renewable energy. ...

The good news about hydrogen is that it’s the basic element of the universe. It’s ubiquitous. It’s the lightest element. And if you use it for power, you get pure water and heat, that’s the only byproduct. You’re finally off carbon.

Kyoto is too little too late. We’ve got to get off carbon within 30 years across the planet. So once you move to hydrogen, you’re off carbon-based fuels. That’s the good news.

The bad news about hydrogen is it’s not free-floating. You have to take it from some other compound. So you can get hydrogen from natural gas, you can steam it out of coal, [and] the coal industry says, “We’ll be the hydrogen makers! Get the hydrogen from the coal, we’ll find a way to bury the CO2 and we’re in.”

But for all the reasons I’ve said, that’s not going to work. Now, you can use nuclear power to electrolize water. But with nuclear power, the costs are prohibitive. It’s $2 billion even with the new generation of power plants. So the cost to the consumer or taxpayer is prohibitive unless it’s totally subsidized by government. Two, with nuclear power as a source, we still don’t know how to transport away the waste. And, three, uranium faces deficits. Under a modern usage, the Atomic Energy Commission has said that you’re going to have a uranium deficit between 2025 and 2035. And, four, you create terrorist soft targets.

Why not use nuclear power as a bridge out of fossil fuels, as some environmentalists are now arguing?

It makes no sense. The key is we've got 103 nuclear plants out there. They're amortizing out in the next 20 years. If you just wanted to rebuild them — 20 percent of our energy out there is nuclear. If you wanted to double it to 40 percent, you would still not make much of a dent in terms of fossil fuel substitution. You'd have to really triple it. You're talking about $600 billion to a trillion right at the get-go over 30 years.

America's broke. We've got massive consumer debt. Massive government debt. Massive trade deficits. Where would we come up with that kind of money? Secondly, the cost of a nuclear power plant at $2 billion is 50 percent more than a coal-fired power plant, and it's much more expensive than a natural-gas-fired power plant, and so if you were going to go to nuclear, you'd have to have a discussion with the public — eventually we will have this discussion, because Blair, Bush and Putin all want nuclear, but they've not had this discussion. The discussion is: Who's going to pay for it? The taxpayer will have to pay for it with deep, deep subsidies, or the consumer, or both, and I don't think the public's going to be willing to take that price. And the other reasons are I think its equally a no-go: We don't know how to get rid of the waste. No governor wants it transported across their state.

The uranium deficit is pretty critical. The studies by the Atomic Energy Commission and others, suggest that at a modern scenario we run out in 2025, and we have a deficit. At a brisk scenario, which doesn't even mean doubling nuclear power, we run out within 12 to 15 years. Uranium is finite, just like fossil fuel.

And then, of course, the big reason I would suggest is that it's a soft target: We don't want Iran to have nuclear power, but we're willing now to export nuclear power and build hundreds and thousands of nuclear power plants with uranium and transit all over the world? It's insane. In an era of Islamic extremist terrorism, this is pathology to do this.

The Australian government, last year, you may remember, just in the nick of time, arrested 18 Islamic terrorists who were planning to destroy the only nuclear power plant in Sydney. And the U.S. Nuclear Regulatory Commission did a study just before 9/11. It hasn't changed much, I don't think. In a sample study of simulated attacks, over half the nuclear power plants in the sample flunked. ... This is more esoteric, but I think your readers will appreciate this: These technologies — uranium-based nuclear, coal, gas, fossil fuels — they're old, centralized, elite 20th-century technology. They do not fit the kind of open source, flat distributive world that a younger generation is moving into in the 21st century.

So we need an energy source that's distributive, that's open-sourced, that provides power to the people, and that is nonpolluting. And the way to do that is to bring the high-tech hydrogen fuel cells from outer space and bring them down to Earth and make it cheap and make it broad so we can actually go to renewable and store it with hydrogen.

It's going to be difficult. There are a lot of problems. But it seems to me that when you want to look back 30 years from now, you don't want to spend money creating a black-hydrogen infrastructure, which will keep us on the old energy grid, you want to get to clean-energy infrastructure.

Doesn't Southern Co. have an obligation to its shareholders to make its numbers, to spin out those dividends, to maximize the profit from its coal-fired plants?

From a business point of view — and I work with businesses around the world — there is a responsibility to the bottom line. I'm suggesting that the bottom line is best served if you serve the community and you serve the needs of regions you're in in the short-, middle- and long-term. I don't think the future of this planet is in coal.

So what I would say to any power company is that if you're looking at coal in an era when we desperately need to deal with global warming and get off carbon-based fuels, you're doing a disservice to your stockholders and ultimately to your consumers — those who buy your energy — because people's energy needs are not just about the price of the energy [but] also the quality of the life — the ability to have self-sufficiency and energy independence and have a non-polluting world for their children to live in. There's no reason that you can't have a celebration of all of that.

The idea that you can only go with the dirtiest fuel because it's available, and therefore that's the only way to actually optimize the long-term advance of your company — I don't buy it. The companies I work with that have coal, they're still moving to other kinds of technologies.

And yet there's a sort of inertia that takes place. As I'm sure you know, Southern Co. is a politically active company. They spend a lot of money on lobbying and campaign contributions, and they've been very successful at helping to set energy policy in favor of doing things the way we've done things in the past. How does a company like this and our society as a whole overcome that inertia so that it can reform?

You need pressure from the inside and pressure from outside. There's nothing unique about Southern. In most industries, while companies talk about thinking out of the box, they never get out.

Unless, they do get out. But very infrequently, and when they do get out of box, and think out of the box, it's because a younger generation of civil society organizations and the public demands new things.

[And also] inside the company, a younger generation moves toward leadership and begins to see a new way to operate their business that provides new opportunities for them. There's no doubt in my mind that the opportunities are in renewable energy and a green hydrogen — what we call a Third Industrial Revolution.

It's more complicated than that. I'll add one more piece to this. The great economic revolutions in history occur when you change your energy regime, and then change your communication regime to organize the new energy regime. The convergence of new energy and communication regimes changes the human equation for long periods of human history.

I'll give you an example: You go back to ancient Sumeria — Iraq. They were the first to create sophisticated agricultural society. Hydraulics. Irrigation. And surplus grain was their “energy.” It was complicated. They had to have a new way to communicate with each other to organize the books. To figure how to plant, and sow, and distribute, etc. It was called cuneiform — writing. Well, writing converged with agriculture, and you had a 10,000-year multiplier effect called the Agricultural Revolution.

In the early modern era, Gutenberg's print press became the communication tool to organize coal and rail, the first Industrial Revolution. You couldn't organize it with codex, or, you know, oral culture.

In the early 20th century, the telegraph and telephone — electricity, that new form of communication — was agile enough to organize the Second Industrial Revolution: the internal combustion engine, oil and the auto culture, which gave us a 100-year multiplier effect.

So what I've been introducing to the power and utility companies — and I work with many of the auto companies, and most of big industry — is the idea of a Third Industrial Revolution. We have this distributive communication revolution in the last 15 years with computers and the Internet, satellite, wireless, Wi-Fi. So we've outed the central nervous system of a billion, and we have a flat distributive communication revolution.

But companies like Southern and many companies have not yet understood the real potential of this revolution for energy, and that is that even though we think of this as an IT and software revolution, it's really anthropology, which I think will be clear to a younger generation in these power companies. It's that a fuel cell powered by hydrogen that stores renewable energy is analogous to a personal computer. When you get a personal computer, you generate your own information and then you share it by a click with a billion people on the Internet.

But they have to figure out a way to make money.

I'm going to mention that right now. Bear with me. If you would have said 30 years ago that there'd be millions of computers and every person in the world could communicate with a billion people in one second, you'd say that's insane. Even 20 years ago, maybe 15.

You have to imagine companies like Southern and the public — millions and millions of fuel cells in 30 years. Portable fuel cell cartridges, which are coming out in the market this year. Stationary fuel cells. Every home every office, every factory, every business, every industrial park has a power plant. Every car, every truck, every bus is a power plant as well as a vehicle. So that when you generate power, you become your own power company, not Southern. So then, what do you do when you generate power — your own home, your own business, your factory, your own industrial park — you're going to have more than you need. You're going to send it back to the grid.

This is where the communication revolution of the last 15 years converges with distributive energy for the Third Industrial Revolution, meaning companies like Southern will realize their new task — which is [that] they are no longer the providers of energy. They are the bundlers and distributors, meaning we're going to take the same software and hardware that we developed in Silicon Valley to create the Internet, and we're going to smarten the grid and make it distributive and intelligent, so that when you generate power in your community, [it's] with renewables. And with hydrogen, you can send the surplus peer-to-peer back to the grid, and the power companies will distribute and bundle it peer-to-peer.

Now this is not just intellectual. This is being tested right now in the Northwest part of country ... many companies are testing it right now in communities.

For energy?

For energy, for electricity. What I'm saying is that none of this is academic. They're testing it now.

I keep thinking of Enron.

That's right. That's why it's amusing. I remember going to Enron years ago. Unfortunately, Enron actually had the model, but they were crooks.

But, in the future, the companies I'm working with are realizing this is the Third Industrial Revolution — power to the people, where power companies become the bundlers, but you and I become the source of the power. Renewable allows you to do that because renewable is found all over the place. There's always biomass and garbage or wind somewhere.

What a younger generation at companies like Southern can begin to do is to realize it's not an endgame here. It's the beginning of a new game.

When do some of the actions of companies to try to prevent reform, in your mind, cross an ethical line?

There's a built-in intransigence in every industry, and what happens is there's a combination of things that force the change. Usually, most change is forced from the outside in every industry. And that is by communities, by neighborhoods, by organizations, by civil society. Most pressure comes from the outside in and then companies change their policy.

Look at Wal-Mart, terrible on labor policy — absolutely, you know, 19th century. But on environment and energy, they're going wild. They're really doing it. They're bringing in organic. They're trying to be sustainable. They're really doing it, and they can control the whole supply chain.

But how did it happen? The pressure from the outside in. It didn't start from the corporate headquarters, but what they saw is an opportunity, both to reduce their energy costs and to move to a new generation of materials that are organic, because they knew that's where the public's heading.

So pressure from the outside's critical. And then enlightened leadership that is responsible on the inside [needs] to say, “You know what? These old ways don't work. They're counterproductive. We're losing our public support. We're losing our public image, but we're also losing the opportunity to move to a new future that's going to be more positive.”

So I think it comes from the outside. It never comes from the corporate headquarters first. But there are moments when the corporate headquarters can see the opportunities and get a little bit ahead of their own game with their own industries. There are companies that never budge no matter what. And what happens is they become anachronisms and they go out of business.

I gotta ask the big question before we go, which is can we do it? Are we going to be able to turn this thing around? What does your gut tell you?

Nobody knows. There are two things we don't know. We don't know the extent to which we've affected the climate of this planet. We know it seems more serious now than the projections that we had.

When I first wrote about this in 1980 in a book called Antropy, we had one little study from the National Academy of Sciences. I should say that I know in my lifetime, I underestimated given the studies — and also in the U.N. models all the projections have been underestimated. That's what's scary. That's what's scary.

Now, we have to act as if there is enough time. We may have already reached beyond the tipping point, but we have to act as if we hadn't.

No. 2, can we do it? I think it depends on whether all of civilization can be centered around one mission in the next 30 years and only one mission, and that is the Third Industrial Revolution, with a convergence of distributive communication and energy and renewables and hydrogen storage. If we don't do it, and we waste time on marginal issues, we're lost.

The negatives are clear. Peak oil production. Price of oils going through the roof, and it's not going back down to 20. Global warming is the biggest issue we face. We've got political instability in all the oil producing countries of the world. We're in trouble.

But the positives should be clear. It looks OK in Europe. They're on the way, though it's going slow ... .

This is the beginning. I'm not sure if we can focus enough of the energies of our human race on this for it to happen. To do this, we've got to say we're getting off carbon.

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