History Contradicts the U.S.’s ‘All of the Above’ Energy Strategy

I hope you’re sitting down. Republicans and Democrats agree on something, at least nominally. It’s called an “all of the above” energy policy. That phrase occurs in both White House policy pronouncements and the 2012 Republican platform, meaning basically that the U.S. should pursue all of the energy options favored by whoever’s in power. The parties differ on details, but, you know, “details.”

Bipartisan agreement is a rare thing, and yet it’s still not nearly as rare as the notion of having multiple energy choices in the first place. For 200 years the world burned wood, then coal, then oil. Now toss in gas, nuclear, hydropower and renewable power generated from wind, sun, water and earth. Judging by the projections of Citi Research, above, these options will be with us for some time.

The problem is, while we’re basking in glee over all our options, we’re overlooking the fact that proponents of each of these power sources are trying to pound each other out of business. Historically, only one dominant energy source emerges as its predecessor falls off a cliff. “We believe it would be naive to ignore the waterfall progression that history suggests is likely,” Citi’s researchers say in an overview of the global energy market released this month, Energy Darwinism: The Evolution of the Energy Industry.

As a case study, researchers flag Germany, where the 30 gigawatts of solar power built since 2007 have up-ended the country’s power mix. Solar generates its peak power when the Sun is highest, particularly in summer; no surprise there. Those hours coincide with peak electricity demand from the grid, when the price is highest. The peak demand now goes to solar production, leaving traditional generators with a lot of capacity they’re not using, and a lot of money they’re not making.

Americans glomming onto new power options is creating problems for U.S. utilities as well, as Bloomberg News has explored recently.

The availability of both solar power and smaller natural gas generators are challenging the utilities’ monopoly by letting companies, universities and communities own smaller, nimbler electricity distribution networks. “Microgrids may be the mechanism through which this revolution in clean distributed generation will be carried out — a portal for leaving the traditional power grid,” Bloomberg’s Ken Wells and Mark Chediak wrote this week.

Large capital investments in power are more sensitive to small, incremental changes to the energy mix, according to Citi. With trillions of dollars flowing into projects in the next 20 years, according to the International Energy Agency, investors might see hundreds of billions of dollars in long-term investment put at the whim of quickly evolving consumer energy choices. Investment decisions made today might start to seem dated sooner than many people think given the speed of change in the sector. Solar is only going to improve and conventional fuels are only going to be harder to find, the report notes.

“All of the above” is a privileged policy to have. For investors, it warrants observation and judgment of how so many players will affect each other’s business in the long-term. Just because Republicans and Democrats say they don’t like “to pick winners and losers” doesn’t mean they shouldn’t prepare for the emergence of both.

Bloomberg

16 Comments on "History Contradicts the U.S.’s ‘All of the Above’ Energy Strategy"

J-Gav on Fri, 25th Oct 2013 11:42 am 



Whatever the energy mix that come out of all this jockeying for market position, it won’t prevent us from eventually coming off the net energy plateau we’ve been bouncing along on aleady for a few years. And that time isn’t as far off as some would have us believe.

Kenz300 on Fri, 25th Oct 2013 1:12 pm 



Quote — ” Solar is only going to improve and conventional fuels are only going to be harder to find, the report notes.”
———————-

The cost of oil, coal and nuclear keeps rising and causing environmental damage.

The price of wind and solar keeps dropping and its safe and clean……

The transition to alternative energy sources has begun.

foxv on Fri, 25th Oct 2013 1:28 pm 



Kenz, as much as I love the idea of “off grid” and “self-sufficiency” (both impossibilities in the ideal sense), alternative energy requires a lot of rare earth mining and processing.

All of which produces extremely hazardous waste. That’s why china has 97% of the world’s rare earth production. Nobody else wants to touch the stuff.

When scaled up to meet global energy demands, renewables will make us look back to fossil fuel days with fondness.

rockman on Fri, 25th Oct 2013 2:08 pm 



“The transition to alternative energy sources has begun.” A nice sentiment even if all the data contradicts the expectation that a significant transition is anywhere on the horizon IMHO. Global oil, NG and coal production has boomed over the last 5 to 10 years. While the US may be burning less coal we’ve mined more coal in 2008 than ever before in the history of the coal industry in the US. And this has pushed us to be the 4th largest coal exporter on the planet. In fact the US has exported so much coal so fast (especially to China: a 500% increase in recent years) that we knocked the price down and caused a slight drop in US production. And most of the reduction in burning coal has resulted from burning another fossil fuel (NG) and not from the alts.

It’s great to offer big % gains in energy from the alts. But the reality is that in absolute terms the amount of energy production increase from fossil fuels in recent years is magnitudes greater than the increase from the alts. Even if the energy from alts increases 200% in the next few years (wishful thinking IMHO) the energy from burning fossil fuels will increase above current level as the global economy continues to recover.

ghung on Fri, 25th Oct 2013 2:28 pm 



Hi Rock, yeah, the article says this:

“Historically, only one dominant energy source emerges as its predecessor falls off a cliff.”

Coal didn’t skip a beat as oil became the ‘dominant energy source’. Oil just sweetened the deal as the industrial world found new uses for any and all economically viable energy sources. Seems that the author is indulging in a bit of wishful thinking.

@foxv, who said: “When scaled up to meet global energy demands, renewables will make us look back to fossil fuel days with fondness.”

…the same way one looks back on an abusive boss who paid well, but did everything to ultimately destroy one’s career. We’ve been ‘off grid’ for sixteen years, (solar) and not a day goes by that I’m not thinking of new ways to get as far off of boss oil as I can. Fearing the transition isn’t something I indulge in. I worry most about others who lack the imagination and fortitude to accept and embrace the change, since they’ll just keep burning stuff until they can’t.

Beery on Fri, 25th Oct 2013 3:40 pm 



See that wedge in the top right corner. Trust me, that’s not ‘renewables’, unless by ‘renewables’ you mean ‘wood’.

bobinget on Fri, 25th Oct 2013 4:39 pm 



Without much notice we see more and more obviously decentralized power generation in the form of roof-top solar. “Normal” (electric) consumption has been falling because so far it’s difficult to track grid-tie systems.
I spoke to my insurance agent last week and had to explain how grid tie (solar, hydro or wind) functions.
He did not know. Most people believe we use batteries.
With a grid-tie system, depending on number of kilowatts produced vs used it’s not so easy to track.

Most systems operate with almost zero human interference. (except in dusty, droughty regions,
where some hosing down pays off)

Take roof-top solar HOT WATER heaters. Who is going around counting those? The biggest electrical consumer in most homes and we can only guess energy saved.

I grew up in South Florida where solar hot water heaters were a common sight from 1935 to 1947
when cheap electrical water heaters came on.
Ours lasted till mid 20th century till the tank rusted through and my mom bought into electric.

rockman on Fri, 25th Oct 2013 4:39 pm 



ghung – “Coal didn’t skip a beat as oil became the ‘dominant energy source’.” So true: I was very surprised when I researched US coal production and found that it didn’t have its hay day 30 or 40 years ago but had peak production in 2008. And looking at the continuous increase in US coal production for the last half century it’s easy to expect the climb to continue despite the minor cut back in 2008 IMHO. Especially since US coal exports have ramped up significantly in the last few years. It’s as if the increase in oil/NG consumption had almost no impact on coal mining in the US.

DC on Fri, 25th Oct 2013 5:53 pm 



Name one energy source that has been displaced. And by displaced, I mean more or less disapeared from the scene.

Hydro did not displace Coal
NG did not displace Coal
Nuclear displaced neither Coal, or NG, nor Oil.
Mythical ‘fusion’ would not displace Hydro, coal, oil or nuclear(if it ever appears).
Renewables, for all there virtues, show no signs whatsoever of displacing any the power supplies I listed above either.

The reason for this is simple to grasp, though few people stop to think about it. Our ‘strategy’ when it comes to energy, is not displacement, but additive. We just keep piling on ‘new’ ways to generate power into the existing power base.

Renewables for example, wont shut down coal plants. Anywhere. If they could, China and the US might have breathable air. ‘Our’ goal, is to expand the TOTAL ENERGY SUPPLY, not to displace more destructive existing energy sources with less destructive ones. In the unlikely event a coal plant did shut down somewhere, would that stop coal mining? or mountaintop removal in the US of Coal?

Nope, the coal will still be dug up and sold on the ‘world’ market to some IMF funded 3rd world resource colony of the US.(because coal is cheap). OR even worse, someone would suggest we go all CTL for all that coal that wind\solar has ‘freed’ up. Net gain-more fossil-fuel extraction and pollution-not less.

This more than anything explains why progress seems so glacial for wind\solar to the casual observer. That is because the rest of the energy base is also expanding faster than wind and solar. The only role wind and solar fulfil, is to make more energy available.

Arthur on Fri, 25th Oct 2013 7:35 pm 



“Renewables, for all there virtues, show no signs whatsoever of displacing any the power supplies I listed above either.”

http://tinyurl.com/o8pbtnc

In Holland it happens all the time that expensive and efficient gas fueled power stations are forced to be switched off because of an oversupply of cheap renewable energy from Germany. Since kwhs from wind or solar have nearly zero operational cost, they always push fossil out of business in times of high supply.

rockman on Fri, 25th Oct 2013 8:36 pm 



Arther – True…the Dutch have made some nice advances. Unfortunately most of us are talking about the US where no such change has been made and none appears to be on the horizon. Perhaps we might become more Dutch in the future but currently the happiness in these parts is all about how much more oil we’re producing today and how much NG (and not the alts)is replacing coal. Except, of course, for the increasing amount of coal we’re exporting to other countries like China.

We can spend hours talking about what COULD be done in the US to change our energy dynamics. But in the end we always come back to what we’re actually doing (or not doing) in that regard.

Arthur on Fri, 25th Oct 2013 8:46 pm 



rockman, unfortunately the Dutch are the suckers in Europe when it comes to renewables, thanks to the overarching presence of Royal Dutch Shell and gasfield #9 on the global ranking:

http://en.wikipedia.org/wiki/List_of_natural_gas_fields

In Europe the renewable show is made by Denmark, Germany, Spain and Italy, in that order, not counting hydropower.

As a former Francophone Canadian student tenant from Montreal of a room in my house once remarked about Holland: “this is the most g*ddamned Americanized country I have ever seen”. I am sure he meant it as a compliment.lol

RICHARD RALPH ROEHL on Fri, 25th Oct 2013 11:26 pm 



No matter.

I PREDICT… that the United States of Perpetual War Profiteering will NOT exist by 2050 or 2060. And the rest of humanity will be perched at the edge of EXTINCTION by the end of the century.

action on Sat, 26th Oct 2013 12:02 am 



Germany is the biggest consumer of coal in Europe…

rollin on Sat, 26th Oct 2013 1:54 am 



Statistics lie and so do graphs. Who is this writer trying to fool. As more fuels come on line, percentages of a given fuel will drop -if you use total energy not functional energy. Also, the graph does not show the ever increasing use of energy over time which skews the percentages.
Wood energy is misrepresented, world wood use for primary energy is 7% of the total energy used.

BillT on Sat, 26th Oct 2013 3:17 am 



This article and all of the comments ignore the real dinosaur sitting at the energy table … the world economy and the coming crash. The Western world is so deeply in debt that it impossible to continue much longer without a major reset. When that happens, the consumer is going to be knocked into the 3rd world or worse and consumption will kill ALL expensive energy sources. The charts and graphs are BAU, not a real projection as no one knows what will happen next week, and certainly not into 2100.