Publications

Navigating the energy transition
- March 1, 2022: Vol. 9, Number 3

Navigating the energy transition

by Carolyn Marshall

As scientists, government officials, multinational corporations, Wall Street investors and environmental activists scramble to foster a viable “energy transition” and reach net-zero carbon emissions by 2050, it seems fitting to look back at some key events that got us where we are today.

Remember 1969, when astronauts took photos of earth from the moon’s surface, triggering an epiphany about humanity? That same year the disastrous Santa Barbara oil spill contaminated the Pacific Ocean, in what was then the largest environmental oil disaster in United States history (now ranked third behind the Exxon Valdez and the Deepwater Horizon). By 1970, concerns over choking smog, acid rain, water pollution, fish kills and mysterious cancer clusters gave birth to the environmental movement and the new Environmental Protection Agency. Remember 1972 to 1973, when America ran out of gas and panicked motorists rushed to refuel, idling for hours in mile-long car lines that snaked around filling stations, all due to a bloody war in the Middle East and an OPEC oil embargo? Remember the stock market crash that followed?

Fast forward to 2022 when the so-called energy transition is finally under way, rushing forward at a glacial pace after more than 50 years of stark warning signs. It is touted as a global endeavor to redirect the production of energy away from fossil fuels, such as oil, gas and coal, to renewable technologies including solar, wind, hydropower, ocean tides, and ambitious federal programs and private-sector initiatives for replacing gas-guzzling vehicles with electric cars. Everything is on the table, including nuclear power.

During the end of this past year, the United Nations’ Global Climate Change Conference, known as COP26, convened in Glasgow, Scotland, where more than 190 countries diplomatically debated how best to stop the planet from warming beyond repair. Many government and corporate stakeholders pledged to phase out coal, oil and gas and to scale up clean energy production. The goal: to reduce CO2 emissions to net zero by 2050, in an effort to keep Earths’ average temperatures from rising by more than 1.5 degrees Celsius. Scientists say anything above the 1.5-degree threshold could trigger unrelenting climate change, including rising sea levels, floods, heat waves, droughts and animal extinctions. The Climate Action Tracker, an independent scientific group that follows net-zero progress, says even if governments adhere to current emission limits, average global temperatures are expected to warm by 2.4 degrees Celsius by 2100. Global warming is here.

Green investors, governments and multinational corporations devoted to changing climate conditions are hard pressed to agree on how to reverse global warming. Some even believe net-zero goals can be reached without eliminating fossil fuels. Others insist a specific technology such as nuclear power holds the only answer. Most stakeholders, however, embrace any and all possible renewable energy sources if they can keep the lights on and global warming at bay.

Everyone gets that a coordinated net-zero energy transition won’t be cheap. Conservative estimates put the price tag at $3 trillion to $4 trillion a year. Even then, experts anticipate hundreds of millions of job losses, the elimination of entire industries that cement the global economy, possible social unrest and the probability of unforeseen environmental chain reactions caused by global warming — the melting of polar ice caps, altered ocean tides, or untamed wildfires in the Amazon Rainforest.

Eliminating fossil fuels in the United States is far from a done deal. A growing number of economists and climate scientists believe the use of fossil fuels will linger or increase before renewables become the norm. To date, more than 61 percent of U.S. electricity is still generated by coal, oil and gas; 20 percent comes from nuclear energy and another 20 percent from renewable energy, according to the U.S. Energy Information Administration (EIA). In the renewable category, wind power accounts for close to 8.5 percent of the segment; hydropower provides 7.3 percent; and solar energy provides 2.3 percent of renewable power generation, with bits of energy coming from biomass, geothermal and other technologies.

Energy advocates say far more needs to change, even though wind and solar were deployed at a record-breaking pace in 2020 and 2021 and the trend is expected to continue this year. The EIA estimates that 46.1 gigawatts (GWs) of new utility-scale electric capacity will be added to the U.S. power grid in 2022 (1.21 GWs can power more than 10 million light bulbs of 60 watts to 100 watts). Nearly 50 percent of the added gigawatts will come from solar, 21 percent from natural gas, and 17 percent from wind.

In January, the Biden administration released a 21-page list of new renewable energy projects, noting: “The Biden-Harris administration is making major leaps forward on wind, solar, transmission, and other clean energy projects to create high-quality jobs and deliver affordable, carbon pollution-free electricity across the country. Seven federal agencies are announcing clean energy projects and plans that demonstrate the administration’s unwavering commitment.” And, the new $1.2 trillion Infrastructure and Jobs Act includes federal funding in the form of grants, loans, tax credits and other incentives to advance and finance an array of net-zero, energy-efficient technologies.

Plans announced thus far include a massive scale up of offshore (ocean) wind projects. The Department of Interior in January orchestrated “a record-breaking offshore wind lease sale,” to promote ocean projects along the coast of New York and New Jersey. The Department of Transportation, the Department of Commerce and a number of other federal agencies will provide money to U.S. ports to advance offshore wind resources, using dock warehouses as staging areas to build new ocean wind turbines.

By all accounts, government funds can’t bankroll the entire energy transition. Fortunately, venture capital and private equity investors have agreed to help finance an array of new renewable energy projects, especially for wind, solar and hydropower, says Benjamin Baker, managing director at Greenbacker Capital. Unlike taxpayer dollars, Greenbacker and other investors can use private money to explore some of the more innovative and expensive renewable solutions. Solar, for example, has typically deployed on open farmland or across rooftops, but Greenbacker also decided to finance a newer solar approach known as floatovoltaics. The technology uses special  racking systems designed to float on water, in this case atop wastewater treatment ponds or reservoirs.

“We take the view that if you look at all of the unused reservoirs, they represent a huge untapped resource and they can operate even on drinking water quality bodies of water,” says Baker. “Plus, early data show that the water helps the solar panels operate more efficiently and cost-effectively, by keeping the panels cool.” Greenbacker has teamed with Noria Energy, a California-based solar floatovoltaic manufacturer. Floatovoltaics are already popular in Asia and the technology is gaining momentum in Europe. It is relatively new to the United States, but in 2018, the National Renewable Energy Laboratory reported that floatovoltaics could be installed on the more than 24,000 manmade U.S. reservoirs and generate about 10 percent of the nation’s annual electricity production. Trouble is, they are expensive.

Baker says Greenbacker also has  made investments in small hydropower plant development in recent years, searching to locate old mills that once ran on hydropower but are now shuttered, abandoned, in bankruptcy or otherwise poorly maintained.  Old paper mills, garment factories, plants that made nuts and bolts, former tanneries, and other industrial facilities can be found along river shores across the country, in once vibrant small towns that employed hundreds. Greenbacker has a partnership with Clear Energy Renewables, an owner-operator of hydroelectric power generation facilities in New York. Clear Energy helps acquire and modernize hydro assets in partnership with Greenbacker.

“Small hydro is a really unloved and overlooked asset class,” says Baker. “There are fewer government subsidies for hydro, so we won’t see hydropower explode the way solar and wind did. But we think it is especially worthy because these are already existing plants that are available and underused. We believe we can rehabilitate and refurbish these hydro-assets without too much capital.”

Another investment firm working to advance the energy transition is Goehring & Rozencwajg Associates, but G&R has a different approach. Adam Rozencwajg, managing partner says traditional renewable energy sources such as solar, wind and hydropower hold no interest. Instead, G&R invests in nuclear power, which now provides about 10 percent of the world’s electricity and is used in more than 50 countries, according to the World Nuclear Association.

“We are huge advocates for nuclear power,” says Rozencwajg. “It may sound like a view that’s in the weeds or esoteric, but no one is looking at the energy return on the energy invested or the EROEI for nuclear. The metrics are there.”

Rozencwajg says he is keeping watch on one of the more exciting developments in the nuclear industry involving small modular nuclear reactors, like those designed by TerraPower, a startup co-founded by Bill Gates. He believes Gates is poised to revive and revolutionize nuclear power with TerraPower’s first demonstration project of the Natrium reactor, to be built in Kemmerer, Wyo., a frontier-era coal town selected by Gates in November. The new plant will cost roughly $4 billion, with half coming from TerraPower and half from the U.S. Department of Energy’s Advanced Reactor Demonstration Program. Natrium plants use liquid sodium as a cooling agent instead of water, which reduces pressure inside the reactor, thereby reducing the risk of explosion. That’s why the small reactors are expected to be safer, cheaper and less conspicuous.

Advocates of nuclear energy consider the technology “green” in that it does not generate greenhouse gas emissions. But it is not renewable, says Rozencwaig, because it relies on a finite resource for fuel, that is uranium, a natural element found in rock deposits around the world. Additionally, most nuclear plants use a rare type of uranium, U-235, which can be difficult to harvest and creates waste known as tailings.

“Nuclear is unbelievably efficient and even if the price of uranium doubles or triples, it would barely affect the cost of the plants’ energy,” says Rozencwajg. “The biggest benefit of the nuclear modular technology is they are small. You could place a small nuclear reactor in a person’s backyard, for example, and they would be more comfortable than with large nuclear reactors, which are like having someone build an entire airport.”

When asked why G&R has no renewable assets in its portfolio, Rozencwajg is blunt: “Unfortunately, wind and solar are almost useless,” he says. “We are building our energy economy around a faulty assumption, that the cost of energy using renewables will go down, and it’s not true.”

Rozencwajg argues the true cost of renewables has been masked by depressed energy prices.

“For years, the cost of oil has continued to fall; coal has dropped by about 90 percent. As the energy crisis moved forward, it was great for renewables because traditional energy prices were down. The cost of energy fell between 2008 and 2020, and over the same period the installation cost of wind and solar dropped as well. Nobody seems to realize there is this feedback loop. When energy costs go up the cost of wind and solar goes up. We will be confronting this reality in 2022,” he says.

You can almost hear Rozencwajg roll his eyes when asked about the federal government’s huge push to develop and promote hydrogen.

“Hydrogen power is a really bad idea. It’s the worst of all of them. To make hydrogen is very costly. You have to take water and run a current to break the bond to get the hydrogen. The fuel cells to date have only been 80 percent successful, because 20 percent of the energy is lost in the process.”

Nuclear is clean and green, says Rozencwajg, and the only option to achieve a true energy transition.

“There is a big barrier to getting people to change attitudes, but they need to change. People need to open their minds to reality and look at more of the nuances. Nuclear is the most successful failed technology of all time.”

 

Carolyn Marshall is a freelance writer based in Florida.

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