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Abraham says lower prices don’t signal end to energy problems

Energy Sec. Spencer Abraham said despite easing concerns about prices and supplies, the US still faces a significant energy crisis.

Abraham, who spoke Thursday at the San Francisco Bay Area Council, promoted the Bush administration’s energy policy proposals pending before Congress.

He said, “It is my personal belief that California has been treated a bit unfairly by the editorialists and pundits. California is not the only state in America that faces energy challenges. California is not alone in facing rapidly increasing demand for energy and a relatively slow growth in energy supply. Nor is California the only place where the energy infrastructure is inadequate.

“The question is what we all learn from California’s experiences. If the only conclusion is that Herculean conservation efforts, a mild summer, and price mitigation can avert excessive blackouts, it would be most unfortunate.

“If, however, we draw the conclusion that California and America need an affordable, plentiful supply of energy or face serious consequences, it will make a huge difference.”

He said the modern economy requires a reliable supply of power, often referred to as “six nines” power, or 99.9999% reliability.

“California’s experience demonstrates that thoughtful efforts to promote conservation and to increase the use of renewable energy are not enough to guarantee that kind of reliability.”

He said the problem with solving the energy crisis is the “pervasive and paralyzing myth” that there isn’t one, or that it can be resolved with conservation or efficiency.

“I hope that as we overcome California’s energy problems, the nation receives a wakeup call and recognizes that the status quo is leading us into a serious national energy supply crisis over the next 20 years. We’ve ignored the signs for almost a decade – and many people still want to ignore the signs.”

Abraham said, “While our demand for oil is expected to increase by one third over the next two decades, we produce 39% less oil than we did in 1970, and that downward trend is sure to continue unless we change course.

“While our demand for electricity will rise by 45%, demand for natural gas, which is currently the fuel of choice for generating electricity, is projected to rise by 62%. We would be hard pressed to supply that demand for natural gas unless we locate and develop far greater domestic reserves than currently exist.

“While transmission and distribution outages cost U.S. businesses $119 billion annually, there are currently plans for only a 4.2% increase in transmission lines over the next 10 years.”

Abraham said the US consumes almost 99 quadrillion BTUs/year and in 20 years will probably need 127 quads, assuming energy efficiency gains, or up to 175 quads without them.

“So even with expected efficiency gains, we will still need to add at least 28 quads to keep our homes heated, our schools brightly lit, and our factories humming. And yet, during the past 10 years — as a country — we have increased domestic energy supply by just 1 quad. That’s not what I would call optimistic news given what is going to be needed over the next two decades.”

Abraham said 1 quad is equal to the natural gas required to heat 15 million homes or enough power to provide electricity to 28 million households. “In other words, this is an arena where getting close is not good enough. Reduced to its core, we have a crisis that requires us to confront and solve five great challenges.”

He said the first is over dependence on a single, depleteable, source of electricity — natural gas. Second is heavy reliance on fossil fuels that leaves the nation increasingly dependent on foreign nations for oil and gas.

He said the US energy infrastructure, the transmission lines and pipelines, “is wholly inadequate to meet our needs in the 21st Century.”

Fourth, he said conservation efforts have centered almost exclusively on government mandates rather than market-based incentives.

“And research and development investments continue to focus primarily on sources of energy like solar and wind that are fairly mature, and not enough on promising breakthroughs that could revolutionize our production and use of energy.”

Abraham outlined some technologies that would help ease energy problems.

He said one is distributed energy, using smaller plants to generate power near the consumption point. “Distributed energy means moving away from a transmission system in which power only flows one way – from a plant to your home – and, instead, contemplates a two-way electricity grid where homes or businesses can sell their surplus power back to the grid.”

To accomplish this, the US needs investments in the controls, switchgears, inverters, and rectifiers that will give consumers some measure of independence from the central grid.

He said another solution is reform of the pricing system where electricity is typically sold per kilowatt hour, no matter when used. “The right technology allows us to go beyond this “one size fits all” pricing to real-time pricing, letting consumers choose for themselves when and how they use energy.

“Puget Sound Energy Co. in the state of Washington is doing just that. Over 300,000 customers in the Puget Sound area now pay for energy based on the time of day they use it, instead of by a flat rate.”

He said the US should improve the efficiency of generation. “We have an installed power generating base of about 800 Gw that produces power at only about 33% efficiency. If we increased that efficiency by just 7 percentage points, a very modest goal, we would have eliminated the need for about 186 power plants and reduced emissions at the same time. This is precisely why we are promoting the expansion of the role of such things as combined heat and power systems, which we know can dramatically boost efficiency.”

Abraham said expanded use of fuel cells and hybrid engines would help.

He said fuel cells, which can run on hydrogen, or traditional fuels that convert to hydrogen, are getting smaller, more powerful, and more useful every day.

“In just the past 4 years, they’ve reduced the fuel processing system from the size of a minivan to the size of the driver’s seat in a minivan. And further advances are certainly on the horizon.”

Abraham said the use hydrogen as a fuel for the cells, if realized, offers the possibility of completely clean energy since its only byproduct is water.