Unfortunately, as encouraging as all this new energy awareness is, actually weaning the United States from fossil fuels is far easier said than done. To begin with, our current energy infrastructure -- the pipelines and refineries, the power plants and grids, the gasoline stations, and, of course, the cars, trucks, planes, and ships -- is a massive, sprawling asset that took more than a century to build and is worth some $1 trillion. Replacing that hydrocarbon monster with "clean" technologies and fuels before our current energy problems escalate into catastrophes will likely be the most complex and expensive challenge this country has ever faced.
And just as we've tended to underplay the flaws in our hydrocarbon energy system, we've also held far too rosy a notion of the various energy alternatives that are supposed to replace oil. In fact, to the extent that most politicians even discuss alternative energy, it tends to be in the rhetoric of American Can-Doism, a triumphant vision in which the same blend of technological prowess, entrepreneurial spirit, and market forces that helped us build an atom bomb, put a man on the moon, and produce the TV dinner and the microchip can now be counted on to yield a similar miracle in energy. Thus we find ourselves imagining a future powered by solar cells, bio-diesel, wind farms, tidal power, cold fusion, and, of course, hydrogen fuel cells, all currently being created in busy research labs and brought to us by a Free Market that is responding naturally, efficiently, and inexorably to the rising price of oil.
Yet the hard truth is that this hyper-optimistic dream is plagued by a variety of potentially killer flaws. First, many of these new technologies are nowhere near ready for prime time, and exist mainly in the conceptual stage, if that. Second, of the alternative fuels and gadgets that are technically viable today, many simply cannot compete with fossil fuels or existing technologies. Third, while the market is indeed a marvelous mechanism for bringing innovation to life, the modern economy doesn't even recognize that the current energy system needs replacing. You and I may know that hydrocarbons cost us dearly, in terms of smog, climate change, corruption, and instability, not to mention the billions spent defending the Middle East. But because these "external" costs aren't included in the price of a gallon of gasoline, the market sees no reason to find something other than oil, gas, or coal.
In late July 2004, financial analysts from across North America joined a conference call with Dennis Campbell, the embattled president of a shrinking Canadian company called Ballard Power Systems. Just a few years before, Ballard had been the toast of energy investors and the acknowledged leader in the campaign to move beyond oil. Its main product, a compact hydrogen fuel cell that could power a car, was widely hailed as the breakthrough that would smash the century-long reign of the gasoline-powered internal combustion engine. In early 2000, Ballard shares were trading for $120, allowing the company to raise a near-record $340.7 million in financing and touching off a wave of expectations that a fuel-cell revolution was imminent.
Since then, however, as fuel cells have been hobbled by technical problems, Ballard has seen its share value plummet to $8, as energy investors have all but abandoned hydrogen in favor of the latest energy darling, the gas-electric hybrid. During the conference call, Campbell insisted that hybrids were only a temporary fix, and that fuel cells remained the only long-term solution to problems like climate change and declining energy supplies. He was, however, forced to acknowledge that consumers and businesses alike were "discouraged by the long wait and the uncertain timelines" for fuel cells and had been "seduced by the lure of an easier solution to the energy and environmental challenges that we face."
In many respects, Ballard is the perfect cautionary tale for the entire roster of alternative fuels and energy technologies, which, for all their huge promise, are, upon closer inspection, plagued by problems. For example, many energy experts see natural gas as the most logical interim step in eventually weaning ourselves from oil. Natural gas emits less carbon dioxide and pollutants than does oil (and certainly coal); it can be used in everything from cars to power plants; it's also easily refined into hydrogen -- all of which make it the perfect "bridge" fuel between the current oil-based economy and something new. But even as demand for gas grows in the United States, domestic production is in decline, meaning we'll have to import an increasing volume via pipelines from Canada or through liquefied natural gas terminals in port cities. Even assuming we overcome the political hurdles, simply building this costly new infrastructure will take years, and, once completed, will leave us dependent on many of the same countries that now control the oil business. (The biggest gas reserves are in the Middle East and Russia.)
Above all, gas doesn't solve the climate problem; it merely slows the rate at which we emit carbon dioxide. According to the United Nations Intergovernmental Panel on Climate Change, in order to cut CO2 emissions fast enough to actually prevent catastrophic warming, we eventually need to produce most of our energy with carbon-free technology. And we're a long way from "most." Today, hydrocarbons own the energy market -- 40 percent of our energy comes from oil, 23 percent each from gas and coal. Nuclear provides around 8 percent, while renewable, carbon-free energy accounts for barely 5 percent of our total energy supply. Of that "good" energy, nearly 90 percent comes from hydroelectric dams, which are so expensive and environmentally nasty that their future role is extremely limited. The rest comes mainly from "biomass" usually plants and crop waste that are either refined into fuels, like ethanol, or burned to make steam.
And what about solar and wind? As it turns out, the two most famous alternative energy technologies together generate less than half a percent of the planet's energy. Here's a depressing fact: The entire output of every solar photovoltaic (PV) cell currently installed worldwide -- about 2,000 megawatts total -- is less than the output of just two conventional, coal-fired power plants.
Why do alternatives own such a puny share of the market? According to conventional wisdom, Big Oil and Big Coal use their massive economic power to corrupt Big Government, which then hands out massive subsidies and tax breaks for oil and coal, giving hydrocarbons an unbeatable advantage over alternatives. In truth, much of the fault lies with the new energy technologies themselves, which simply cannot yet compete effectively with fossil fuels.
Consider the saga of the solar cell. Despite decades of research and development, solar power still costs more than electricity generated from a gas- or coal-fired power plant. And although PV cell costs will continue to fall, there remains the problem of "intermittency" -- solar only works when the sun is shining, whereas a conventional power plant can crank out power 24 hours a day, 365 days a year. (Wind presents a similar problem.) To use solar and wind, utilities must have backup power, probably coal- or gas-fired plants.
Eventually, utilities will solve the intermittency problem -- probably with superfast "smart" power grids that can connect wind or solar farms built across the nation, or even the hemisphere, effectively getting power from wherever the sun is shining or the wind is blowing and delivering it to customers. But the very scale of this solution illustrates an even more serious weakness for wind and other renewables: They lack the "power density" of the fossil fuels they seek to replace. Coal, for example, packs a great deal of stored energy in a relatively small volume. As a result, a coal-fired plant requires only a few hundred acres of space, yet can supply electricity for 200,000 homes. By contrast, to generate equal power from wind, which is far less power-dense, you'd need a wind farm of more than 200 square miles in size. Given that by 2030, almost 60 percent of the global population is expected to live in cities of 1 million or more, meeting our power needs with wind, solar, or other renewables will be challenging indeed. "Supplying those buildings from locally generated renewable energies is either impractical or impossible," says Vaclav Smil, an expert in energy economics at the University of Manitoba. The "power-density mismatch is simply too large."
The most dramatic example of the mismatch between fossil fuels and their would-be competitors, however, can be found in the fuel cell. For decades, hydrogen proponents have argued that fuel cells, which turn hydrogen and oxygen into electricity while emitting only water vapor, are the key to the next energy economy. Like a battery that never needs charging, fuel cells can power office buildings, laptops, and especially cars, where they are roughly three times as efficient as a traditional internal combustion engine. And because you can make hydrogen by running electric current through water, advocates envisioned a global system in which power from solar, wind, and other renewables would be turned into hydrogen.
This compelling vision helps explain why the "hydrogen economy"was so touted during the 1990s, and why companies like Ballard Power Systems could partner with giants like DaimlerChrysler and Ford, igniting a fuel-cell mania that dazzled investors and policymakers alike. Indeed, in his 2003 State of the Union address, President Bush vowed that, within 20 years, fuel cells would "make our air significantly cleaner, and our country much less dependent on foreign sources of oil."