Americans have a habit of framing our scientific history as a series of Great Inventors, from Eli Whitney to Thomas Edison to Afrika Bambaataa.The history books say each was prodded by Adam Smith’s invisible hand to come up with the great technological advances that have made our country a home of innovation.
There’s a problem with this mythology: sometimes there’s no invisible hand.Sometimes short-sighted government regulations give preference to bad technologies over good ones — stifling innovation and blinding us to our own ability to make progress.
Nowhere is this mythology more evident than in our energy system, the most heavily regulated and subsidized industry in the country.A host of bad regulations have made this system grossly inefficient, contributing both to global warming and to high power costs.
The US today converts fossil fuel into electricity at 33% efficiency, throwing away two-thirds of every unit of fuel we burn in cooling towers and smoke stacks.That’s the same conversion efficiency we had last year.That’s the same efficiency we had in 1980.In fact, you have to go all the way back to 1957 to find a year when the electric sector wasted more energy than they do today.
During the same period, we’ve seen automobile fuel economy skyrocket (especially on a horsepower-adjusted basis).We’ve seen massive increases in the efficiency of our electric appliances.We’ve even seen boring old steam boiler efficiency increases with modern controls, recuperators and preheaters.And yet the efficiency of electricity generation is stagnant.
It’s not stagnant because we’ve hit any fundamental limit.Indeed, studies by the US Department of Energy and Environmental Protection Agency have identified a whopping 200,000 MW of potential (that’s 20% of the peak power demand of the US) for proven technologies that either recover waste energy from industrials and/or cogenerate heat and electricity from a single fuel source.
The worst of these technologies is twice as fuel efficient as the current electric grid.Fully deploying that potential would not only cut CO2 emissions by 20% — about the same as if we took every passenger car off the road — but would also cut our energy costs, simply by burning less fuel.And those are just the technologies we’ve taken the time to quantify.
So what’s holding these technologies back?Nothing more than our regulatory paradigm.
A couple of examples:
- Our century-old electric regulatory model pays utilities a return on their capital investment, but compels them to pass along all operating costs to consumers at zero mark-up.This creates a great incentive to build capital-intensive boondoggles.It completely isolates electric utilities from the economic principles that drive “normal” businesses, wherein capital and operating cost reductions are a route to greater profits.This has conspired to make our electric sector openly hostile to efficient power generation.It explains why their efficiency hasn’t moved since 1957, and why that sector now accounts for 42% of US CO2 emissions.
- The Clean Air Act mandates end-of-pipe pollution control technologies that universally impose additional parasitic loads on industrials and power plants to run baghouses, catalyst beds, electro-static precipitators and any number of other technologies.All these parasitic mandates have the perverse consequence that our environmental policy mandates reduction in criteria pollution and mandates increases in CO2 emissions. Worse, a facility that has the temerity to improve the energy efficiency of their process will almost certainly trigger New Source Review, under which they will have to come into compliance with new, more stringent permits than the one they currently operate under.These two features of the Clean Air Act conspire to make many industrials openly fearful many otherwise sensible steps to lower their greenhouse-gas signature (and lower their operating expense.)
None of this is to suggest that we should not continue to pursue technological revolutions, of course.But if those technologies bring about cheaper, cleaner, more efficient energy, they will find themselves blocked by precisely the same regulations that are keeping existing technologies out of the market.Technology is important — but regulatory reform to remove our barriers to energy efficiency is the critical path.
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Sarah Lozanova is passionate about the new green economy and renewable energy. Her experience includes work with small-scale solar energy installations and utility-scale wind farms. She earned an MBA in sustainable management from the Presidio Graduate School and is a co-founder of Trees Across the Miles, an urban reforestation initiative. When she can escape the internet vortex, she enjoys playing in the forest, paddling down rivers, or twisting into yoga poses.