Breaking the climate deadlock with R&D

It is starting to sink in that the world's heavy reliance on fossil fuels will only end once the alternatives become a lot cheaper and that this requires a much bigger research and development effort. The alternatives are still too expensive for widespread deployment. There is considerable reluctance to bare the extra costs, particularly in developing countries such as China and India where CO2 emissions are growing the most. Indeed, in recent years fossil fuel has been the biggest contributor to energy production growth by a long shot.

The American Energy Innovation Council headed up by a number of capitalist big fish including Bill Gates is leading the charge, calling for a tripling of US federal funding of energy related research and development (R&D) or, more precisely, research, development, demonstration and initial deployment (RDD&D). They remind us that private firms usually under-fund this sort of activity. They cannot capture the benefits, there is too much uncertainty and the results are too long term. Furthermore energy is a pure commodity with no room for businesses to develop a differentiated product for which they can charge a premium. It is not like an iPhone. Another group called the Breakthrough Institute is singing from the same hymn sheet. Their website is worth a regular check.

You do not need to be terribly alarmist about the climate impact of increasing CO2 emissions to want to see a big move away from carbon based energy. The idea of doubling and then tripling annual CO2 emissions in the second half of this century would make just about anyone a bit queasy. Besides, coal is rather unhealthy stuff and oil and gas may well get more expensive as they require increasing extraction effort. So there is hope that the call for increased energy R&D can attract bipartisan support.

There is a whole range of technologies that require a lot of work. It is not just the renewables. Even if your preference is for wind and solar, it would be unwise to rely on them entirely. Solar thermal electricity only works when the sky is cloud free and the sun virtually overhead. Photo Voltaic solar cells give far more power in a sunny climate than a cloudy one. And of course there is no solar power at night and some places have very long nights during winter. This is a big problem when you take into account that most electricity demand is in the evening. Wind varies greatly from place to place and moment to moment. Most energy demand will be in large dense cities which are likely to be some distance from the large available land areas required for wind and solar. You would need considerable over-build of capacity and some major advances in energy storage and long distance electricity transmission. For biomass to fill the breach, you would need to ensure it does not compete with food or environmental needs, and is truly carbon neutral after taking into account harvesting and transport.

Two other big energy options are enhanced geothermal and nuclear power. Enhanced geothermal relies on fracturing hot underground rock and then pumping water through it. It is a massive resource, however it has failed to get going even in quite favorable regions in Australia after $1 billion in government and private funding. More research and learning by doing is needed.

A range of various next generation nuclear reactors are at the conceptual stage. These would use the spent fuel of current reactors, have passive safety systems, be mass produced cheaply and have low running costs. However, to ensure that we have at least one good option ready for widespread deployment 15 to 20 years from now will require an extensive ramping up of R&D.

Another area for increased R&D is in carbon capture and storage (CCS). A trial facility has already opened in Canada and a few others are under construction, but costs need to come down a lot. It is important to keep in mind here that much of the world's fleet of coal and gas power plants is still relatively new and many more are in the pipeline. You can imagine governments particularly in poorer countries resisting the closure of such facilities when they still had years of life ahead of them. In these cases retrofitting CCS has to be the solution. There are also a number of industrial processes such as concrete and steel production where it is the only option.

Once alternatives are a lot cheaper than they are at present, a carbon price might start to make more sense. It would not have to be set at a crippling level to induce a change in technology.