September 22, 2017 - From the September, 2017 issue

Technology Disruptions Needed to 'Unlock' Clean Energy Economy 

Will the world transition to clean power in time to avert the worst catastrophes of global warming? Varun Sivaram, the Council on Foreign Relations’ Philip Reed Fellow for Science & Technology, warns that more technological innovation is needed to reach that goal. Sivaram, whose policy recommendations were adopted by the Obama administration, advocates continuous disruption in energy fields to ensure that the cleanest possible solutions “unlock”products. He also explains why investing in research is critical for the U.S.’s international leadership in the green marketplace.


Varun Sivaram

"The rise of solar energy is on track to sputter out without three kinds of innovation: financial, technological, and systemic. But collectively, these types of innovation can enable solar to meet a majority of humanity’s energy needs by the end of this century." —Varun Sivaram

Technology disruption and clean energy are focuses of your extensive writing in Foreign Affairs and elsewhere. What is your thesis? 

Varun Sivaram: The reason I think technology disruption is badly needed in the energy sector is that we don’t have the tools we need to accomplish a clean energy transition.

The most urgent priority of the clean energy transition is to decarbonize the electric power sector. Most models predict that, by starting with the power sector, humanity has a chance of slowing climate change enough to avert catastrophe. They say that we need to reduce power sector emissions by 80-100 percent by mid-century. But we’re not going to get there with existing technologies.

We don’t need innovation in just one or two technologies; we need it in a range of different technologies. I argue that we need innovation across energy supply technologies—including solar energy, nuclear energy, and the technology to capture and sequester carbon dioxide from fossil power plants—as well as in demand technologies, such as highly efficient air conditioners and algorithms or equipment to manage the smart grid. And although the power sector is where the most rapid progress can be made, innovation will be even more important in other sectors over the long term, in particular to decarbonize transportation. Unfortunately, in the United States, we’ve taken policy steps backward, not forward, to advance the technologies we’ll need.

Describe your role at the Council on Foreign Relations as the Philip Reed Fellow for Science and Technology.

The Council on Foreign Relations, founded in 1921, is an independent, nonpartisan membership organization, publisher of Foreign Affairs magazine, and think tank dedicated to being a resource for understanding the foreign policy choices facing the United States. I am a researcher in the think tank focusing on science, technology, and energy. For example, I’ve written recommendations about how the U.S. should maintain its stringent targets for automobile fuel economy (CAFE) standards; the Obama administration’s Environmental Protection Agency incorporated my paper into their rulemaking.

More recently, I wrote a blueprint for energy innovation that I suggested would enable the federal government to advance new technologies. Unfortunately, the Trump administration instead came out with a budget proposal proposing to slash funding for energy innovation. And rather than modernize and reform the Department of Energy, they just want to axe large parts of it, such as the Advanced Research Projects Agency of Energy (ARPA-E). These are steps in the wrong direction. We need to support the energy innovation ecosystem on the government side, especially because that’s our best hope of mobilizing much more private sector investment in cleantech.

In March 2018, I’m releasing a book on the future of solar energy, which I argue will be bright only if we invest heavily in innovation. In Taming the Sun: Innovations to Harness Solar Energy and Power the Planet, I warn that the rise of solar energy is on track to sputter out without three kinds of innovation: financial, technological, and systemic. But collectively, these types of innovation can enable solar to meet a majority of humanity’s energy needs by the end of this century.

What do you make of the Trump administration’s recent decision to disband the federal advisory panel for the National Climate Assessment?

It follows a trend of policy actions by the administration that, bluntly, don’t take the issue of climate change very seriously—and that’s regrettable. Announcing plans to withdraw from the Paris Agreement was another example. The administration is stepping back from climate leadership, including ceding progress that was hard-won under the Obama administration.

It’s a terrible idea for the United States not to put resources and attention toward the National Climate Assessment, which tells us the effects of climate change at home. Climate change can be an abstract concept that folks don’t understand. But the National Climate Assessment has done a wonderful job every four years of pointing out the real impacts of climate change right here around the country. The last one came out in 2014, and we definitely want to see an updated one that tells us how climate change is accelerating in the U.S.

Elaborate on the importance of technology transfer activities and tech-to-market facilitation for international trade, diplomacy, and economic growth.

I believe that encouraging innovation is important both from a domestic and an international point of view. In my opinion, the most important outcome from the Paris Climate Change Conference in 2015 was not the agreement itself, but Mission Innovation: a pact among 22 countries to double investment in clean energy research, development, and demonstration. It was accompanied by a pledge from Bill Gates and the Breakthrough Energy Coalition of billionaire investors to redouble the private sector’s commitment, as well.

Unfortunately, the United States is now reneging on that commitment. That’s unwise—not just for climate reasons, but also for economic reasons. China currently monopolizes the world’s $300 billion-and-growing clean energy market. Without innovation, the United States can’t compete with China’s commodity production of lithium-ion batteries, wind turbines, and silicon photovoltaic panels. And China is actually on pace to surpass U.S. investment in energy innovation. So the first order of business is that the United States needs to carve out its share of this growing economic pie. 

Additionally, I believe that there are ways for countries to cooperate with each other and still continue to compete. I argue for countries to cooperate on things like technology standards and precompetitive R&D; then, every country can try to develop the most innovative, useful products to seize their share of the economic pie. For example, if the United States were to cooperate on international standards for how appliances are connected to smart grids, the effect would be to increase the effective market size for a particular clean energy product. Then, any country that succeeded in developing products to tap into that market would enjoy greater economic returns. But to get started on this vision, the U.S. needs to increase its commitment to R&D at home.

In addition to clean energy investment and innovation, you’ve written extensively on the downsides of technology “lock-in.” Please elaborate on that notion.

I argue that, in many cases, the first generation of a clean energy technology—which is absolutely a step up from a fossil fuel or other dirty technology—can cause us to get “locked in” and prevent us from getting to the second-generation, superior clean energy technology.

An example of a technology that got locked in is nuclear power. In the post-World War II decade, the U.S. Navy, led by Admiral Hyman Rickover, developed the light-water reactor (LWR), because they were able to get it up and running on a nuclear submarine. Then, because the LWR worked on a nuclear submarine, Adm. Rickover moved it to an aircraft carrier. Then he moved it onshore to a shipping port, where it became the first civilian nuclear reactor on land. Today, over 90 percent of all nuclear reactors are LWRs.

The problem is that LWRs can melt down—as we learned, for example, in Fukushima. There are better designs out there, some of which were invented in the 1950s and ’60s, but we’ve never been able to commercialize them because our regulations were tailored to enable these first-generation LWRs. Finally, China and Russia are now making pushes to commercialize generation-IV reactors—the newest kind—that can’t melt down and are cheaper and more efficient. But the United States has largely fallen behind.

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By contrast, a technology that did not get locked in is efficient lighting. The first technology that really took market-share away from the conventional incandescent lightbulb was the compact fluorescent lightbulb (CFL). The next-generation technology—the light-emitting diode (LED)—has since successfully captured market share from both incandescents and CFLs. One reason LEDs were able to do this was that, even as the first-generation CFL was gaining traction, LEDs were being developed in niche markets—for example, in electronic indicator lights or flashlights. These stepping-stone markets enabled the firms that were developing LEDs to get experience and skill en route to commercializing the technology. As a result, we’ve transitioned from a dirty technology (incandescents) to a cleaner first-generation technology (CFLs) to the cleanest second-generation technology (LEDs).

Now, I fear that we’re getting locked in to silicon solar panels and lithium-ion batteries. It’s too early to tell, but these technologies are being produced at such scale that they’re quite cheap per unit, whereas an upstart emerging technology that may be cheaper in the long run has no way of breaking in to these enormous industries. If we do get locked in, and preclude the use of even better technologies, that could hurt our long-term attempts to decarbonize the power sector.

How quickly will batteries and solar storage become cost-competitive, in your view?

Cost-competitiveness is often a red herring. There is no number I can tell you that will imply cost-competitiveness, because that concept is the result of thinking about a whole set of energy resources, running a simulation that takes into account the demands on the electricity system, and seeing which energy resources the computer picks to minimize total system cost. That’s far more complicated than picking cost metrics.

I can tell you, however, that a cost-optimal deployment of solar and storage depends on the cost of each unit as well as how many of them you have on the grid. The more solar you have on the grid, the less valuable the next solar panel is going to be, and the more valuable the next battery is going to be. The National Renewable Energy Laboratory has a great report out explaining that, today, solar plus storage is not very economical. But by 2020, when over 15 percent of California’s energy is coming from solar panels, then solar plus storage could be more economical than standalone solar.

However, I want to caution that it’s not true that batteries are the panacea to affordable solar. Even if batteries get down to a cost where solar-plus-battery can replace gas for some applications, solar-plus-battery is never going to be the equivalent of a gas plant. The reason is that lithium-ion batteries are most economically used when they’re storing four hours or less of energy. Any more, and you start to underutilize the power discharge capacity.

It’s complicated, but the bottom line is that storage–including lithium-ion batteries, pumped hydro storage, and other options—will meet some of the needs of the grid, but not all of them. We’re going to need more resources than just batteries, solar, and wind.

What might California learn from other countries and subnational jurisdictions advancing grid decarbonizing public policies? 

California is a pioneer when it comes to a high penetration of renewable energy, so in a sense, there’s not a whole lot you can learn from other places. You’re doing a very good job of integrating a high percentage of solar and wind power—around 20 percent in 2016 (counting behind-the-meter solar). But that percentage is far different from 100 percent.

It’s my opinion that a 100 percent renewable target is not the most cost-effective way for California to decarbonize its grid. It needs to have resources like nuclear power, and perhaps even fossil fuel power with carbon capture and sequestration. These are flexible baseload resources—resources that can operate at a high capacity factor, but also can vary their output up and down to match intermittent solar and wind energy.

To integrate even more intermittent energy, California should learn from Germany. Germany is part of a large load-synchronized area grid, and California ought to expand its own grid in the western United States—starting with the PacifiCorp expansion. On the topic of nuclear reactors, on the other hand, California should not be learning from Germany, but from China, which is rapidly building out nuclear capacity (or France, which already uses nuclear reactors in a load following capacity.)

California can also learn from the United Kingdom. In the UK, they have electricity regulatory reform that advances a concept known as total expenditure (TOTEX). This is a utility compensation mechanism wherein the utility shareholders get paid as a percentage of both the firm’s operating and capital expenditure. In other words, a utility doesn’t just profit from building new grid infrastructure; it gets paid for anything that reduces demand and greenhouse gas emissions. That’s a much better paradigm, and it would encourage utilities in California to spend money not just on centralized resources, but also on distributed resources.

Those are the three lessons California might take from elsewhere: Keep your flexible baseload reactors, like nuclear reactors; expand your grid, like they’ve done in Europe; and reform the markets. 

Lastly, what impact will the Paris Agreement have on the deployment of clean energy innovation and on the U.S.’s share of a growing clean energy “pie”?

The Paris agreement certainly has the potential to expand the clean energy pie if it becomes a vehicle for countries to ratchet up the ambition of their goals. If they do, then we’ll see markets from India, to China, to the Middle East, to Latin America for clean energy products.

Of course, that’s only half of the equation. The other half is that, in order to deploy those clean energy products—and make countries want to deploy them—you’re going to need better ones. That’s why I keep harping on innovation.

Is the United States shooting itself in the foot by pulling out of Paris? Absolutely. If President Trump follows through on his pledge to pull out by 2020, it will be an own goal (to borrow a soccer term). In the near term, it’s an own goal for diplomatic reasons. The United States built up a lot of goodwill with its partners, from whom we are going to need cooperation for subjects completely unrelated to climate. We need cooperation on counterterrorism, on nuclear non-proliferation, on freedom of navigation in the South China Sea—all kinds of things. The United States will squander that goodwill if it pulls out of Paris.

In the longer run, I think we may get left out of side venues where there is cooperation on advancing innovation—for example, on technology standards—because countries resent that the U.S. has pulled out of the central climate agreement.

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© 2017 The Planning Report | David Abel, Publisher, ABL, Inc.