January 26, 2009
It is breathtaking how easily many now say, "This is the worst economic crisis since the Depression." The Depression remade America. It spawned the Public Utility Holding Company Act of 1935, transforming the business landscape occupied by electric and natural gas utilities. It led to the construction of towering federal hydroelectric dams in the West, and brought electrification to the poorest hollows of Appalachia.
The changes coming to the power industry promise to be equally sweeping - if not more revolutionary - than what occurred eight decades ago. Energy, national security and the environment have become so intertwined that each will shape the other for years to come. Crises in any of the three will quickly inflame the other two. Barack Obama promises a new era in which America will be led by a vigorous, intelligent and optimistic leadership team. Energy is certain to be at the core of his administration's agenda.
Profound change is in the air. It is palpable. The excitement was evident at a round of energy meetings Energy Central attended immediately before and after our sea-change election. Big challenges are out there. Big solutions are in the wings.
David Ratcliffe, the chief executive of Southern Company, at the Edison Electric Institute's financial conference in Phoenix recently sketched the dimensions of the playing field. Up to $3 trillion needs to be invested in energy by 2030.
Rep. Rick Boucher, D-Va., said he and other leaders in Congress are relying on industry estimates that a research investment of $1 billion a year for a decade will solve the puzzle of how to best capture and lock away carbon dioxide. Averaged out, it amounts to a manageable $12 a year for consumers, Boucher said. A program for capping carbon emissions and trading emissions allowances will be enacted by Congress by next fall, he predicted. "This will be the single most complex environmental act by Congress," he said. Ever. If done improperly, the results "could be catastrophic."
The avuncular T. Boone Pickens, speaking at a Forbes magazine conference in New York, said, "We are in a deep hole." The legendary oilman and wind power developer said that everyone in America needs to make sure our political leaders deliver on their promises to pursue energy independence. A new power grid is essential to bring new energy resources to our cities. "We don't have a 21st-century grid in the United States. If we did, I am told by the experts, our efficiency would improve by 20 percent."
David Crane, the chief executive of NRG Energy, the giant power generator, at a Platts Lecture in New York, said we cannot afford to wait for a new national power grid, even though it is urgently needed. We should immediately develop solar in California's deserts to power Los Angeles, massive wind power installations in the upper Midwest to light Chicago, and next-generation nuclear power in the South, which lacks renewable energy alternatives. The entire country, Crane said, must champion clean coal.
"Fortunes will be made by those who lead the way to a de-carbonized world," Crane said. And the world will be remade too. Crane pointed out that if we are to take the 6 billion poorest souls on Earth and bestow upon them the modern lifestyle enjoyed by the most fortunate 1 billion on the planet, "energy consumption will need to triple."
Making it happen - with renewable energy, clean coal and safe nuclear power - will be the most profound revolution in the history of mankind. Making it happen using every bit of human intelligence to minimize harm to our environment will be equally revolutionary. The stakes are high. Our new leaders have been summoned to the task. Let's make it happen.
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Martin Rosenberg Editor-in-Chief EnergyBiz Magazine
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