There are lots of pressing economic reasons to kick our fossil-fuel habit — the risks posed by peak oil and climate change to name just two. Yet our response to these threats remains insufficient by any measure. Why?
There’s an assumption, often implicit, that underpins the North American energy debate: clean, renewable energy is not up to the job. Oh, green energy is a nice idea, but we’re repeatedly told that only by melting tar, drilling for oil or mining coal can we power the economy.
That assumption is flat-out wrong. Clean energy — mainly solar, geothermal, hydro and wind — isn’t just competitive with fossil fuels, it is better able to power our civilization. It can be reliable, large-scale and cost-effective, without the political, social and environmental risks of hydrocarbons. But (there’s always a “but”) that’s true only if we commit to build clean energy infrastructure on a scale comparable to the fossil-fuel apparatus built over the past century. That scale is enormous.
The U.S. Energy Information Agency estimates we need to invest more than $45 trillion in our energy infrastructure over the next 30 years to meet future demand. That’s $45 trillion on drilling, refining, storing and transporting energy. Up to now pretty much all of that investment has gone toward fuels based on carbon.
It is only fair then, to ask how clean energy might perform with similar levels of capital. What do you get for a trillion dollars?
One thing you get is a continent-wide energy Internet: High-voltage DC (HVDC) lines criss-crossing the continent, connecting multiple sources in many places. The wires and substations are all two-way, and grid-wide storage means we use all the energy we produce, no matter when or where it’s generated. Automated demand response means you can match capacity with user needs in real time.
A trillion dollars of solar can replace half of our coal-based electrical production, mainly with large-scale solar thermal electrical plants in America’s southwest. Existing plants in the U.S. and Spain generate heat in excess of 2,000°C, and solar energy on this scale is cost-competitive with coal.
The new grid mitigates the variability of wind by connecting thousands of wind farms and tidal plants across weather systems, on land and at sea. When the wind dies down on the Prairies, it might pick up along the east and west coasts. We store power in pumped hydro plants in Northern Quebec and Ontario, as well as in the batteries of millions of electric cars.
But the holy grail of clean energy is enhanced geothermal (EGS). Drilling just six to 10 kilometres down anywhere on the continent exposes hot, dry rock. We fracture that rock and extract the heat to make electricity. A 2006 study by MIT reports that EGS alone can supply all our energy needs thousands of times over. EGS plants in Australia and Europe are now producing power 365 days a year.
Why not drill EGS holes next to each coal plant? Replace the furnace with a heat-exchanger, and say goodbye to coal. If the carrying costs of the capital required for the EGS can be made lower than the input cost of coal (plus carbon risk), it’s a no-brainer.
A trillion dollars of EGS can produce enough energy to replace all current coal production.
We’re kidding ourselves if we think we can escape peak oil or carbon emissions for anything less than trillions. Spending that much may sound absurd. But what’s the cost of the Iraq war? According to Joseph Stiglitz, it’s about $3 trillion. The liquidity injected to save North American banks was more than three times that much.
But to spark this massive green investment, we need to intervene in the marketplace. Coal is still cheap to burn, and there’s lots of tar to melt in Alberta. Cap-and-trade and an escalating price on carbon emissions are clear requirements to shift the economic incentives away from fuel that burns. But even more important is providing low-cost capital to the sector. The cost of clean energy is almost entirely dependent on the cost of capital. The sun, wind and heat of the Earth are free. The technology to harness them is not.
It might sound daunting, but we’ve done this sort of thing before, and it creates wealth over the long term. The U.S. interstate highway system was funded by the federal government in the 1950s. That paved the way for the auto sector to fuel the North American economy for almost half a century. Silicon Valley was founded on military and academic support of the microchip processor. Neither of these bonanzas would have happened without government intervention.
Clean energy can be the basis of sustained economic prosperity over the next few decades. But only if we decide to do it.
Tom Rand is Cleantech Lead at MaRS, and author of Kick the Fossil Fuel Habit: 10 Clean Technologies to Save Our World