Sunday, April 11, 2010

Energy Independence: Still a Long, Tough Slog

by John L. Watkins

Last week, I attended an event on bioenergy sponsored by the German American Chamber of Commerce. The featured speaker was Mr. Jörg Mayer, the Managing Director of the Renewable Energies Agency in Berlin, Germany.

By way of background, Germany is far ahead in the field of renewable energy, being a world leader in solar, bioenergy and other alternative energy technologies, as well as conservation. Electricity is three to four times more expensive in Germany than in the U.S. Gasoline and diesel are also much more expensive in Germany than here. Thus, Germany has plenty of reason to become a world leader in alternative energy. Germany has adopted many government policies designed to promote, if not force, the development of alternative energy technologies.

What struck me most about Mr. Mayer's remarks was his statement that Germany's policy goal is to have alternatives supply 20 percent of Germany's energy needs by 2020. Given the cost of energy in Germany and the German government's push for alternatives, this was a pretty sobering statistic: If Germany's goal is to achieve only 20 percent in the next 10 years, it says very little for the chances of advancement toward energy independence in the U.S.

Many of my clients are involved in various aspects supplying energy or developing alternative energy technologies. Dieffenbacher GmbH + Co.KG, for example, has recently developed machinery for turnkey wood pellet production plants. Wood pellets are used to fire very efficient stoves used for heating in Europe, and usage is increasing in the Northeastern United States. Georgia is a logical place to develop pellet production plants because it is heavily forested and has a well-developed forest products industry.

Other clients are developing solar technologies. Another client has developed a system for extracting and processing grease from restaurant grease traps so that it can be processed into biodiesel. All of these technologies have great promise.

The legal issues arising from the development and adoption of these new technologies are many. The U.S. has traditionally produced electricity in centralized power plants (coal, nuclear and natural gas) and then transmitted the power by long distance through transmission lines. Many of the alternative sources favor a more decentralized approach, where the energy is produced at or near where it is consumed. Simply put, our grid system as it exists is not particularly well-suited to the adoption of alternative technologies.

Other challenges include protective intellectual property rights while still allowing for widespread adoption. Our research universities, such as Georgia Tech, need to become more streamlined in working with industry, and in respecting the intellectual property of their industry "partners."

Our public policy toward energy independence remains, frankly, an uncoordinated disaster. I am old enough to remember (as a teenager) the 1970s oil embargo. The simple truth is that our politicians only pay attention to energy policy when prices rise to an uncomfortable level or there are supply disruptions. Thus, when gasoline climbed past $4.00 per gallon, we paid attention. When the recession took hold and demand and prices fell, energy once again became yesterday's news.

Even when our politicians pay attention, their chief response is to hold hearings -- the modern day equivalent of a show trial -- and to demonize oil companies and other traditional energy producers. For the almost 40 years since the oil embargo, politicians of both parties have occupied the White House or controlled Congress. The simple fact is that nothing meaningful has been done and all of our leaders -- past and especially present -- ought to be ashamed of themselves on this issue.

It seems clear based on the German experience that alternatives -- as valuable as they may prove to be -- will not supplant the need for traditional sources of energy. Demand will continue to increase. We need to support the reasonable development of all sources of energy, alternative and traditional, as well as conservation and wise energy usage. In some instances, this is going to require abandoning the "not in my backyard" mentality that has stifled a number of initiatives.

It is also clear that we need to take advantage of technologies that are available now. For example, clean diesel technology is now widely available for automobiles. We just drove my four door sedan with a clean turbo diesel engine to Jacksonville and back and averaged 35.5 miles per gallon. The list price of the car was only $1,000 more than the comparable gasoline model. Other models are available (mainly from the German manufacturers) in different price ranges. In Europe, a very high percentage of autos have diesel engines. Diesels have not been as popular in the U.S., perhaps because we remember smoky and sluggish diesel cars from years past. Modern turbo diesels do not smoke and have plenty of power.

Hybrids, such as the Toyota Prius, offer very high fuel efficiency. My Dad has a Prius. It is quite comparable to other smaller cars to drive.

Other available options include modern foam insulation for existing houses. We installed spray foam insulation (it is sprayed in between the roof joists in the attic) about two years ago. We have found the manufacturer's promise of a 30 to 40 percent energy savings to be quite accurate, and it should pay for itself in a very short while. We also replaced our tank water heater with a tankless models. The tankless models are very expensive (largely because of installation costs), and the payback analysis really is not there, but ours has performed well so far.

Other existing technologies would provide substantial energy savings. In many hotels in Europe, you insert your room key card in a slot near the entrance of your room to activate the electricity. When you go out, you remove the key, and the lights go out. As it is, we could simply remember to turn the lights out when leaving our offices. In any city in the U.S. at night, you can see lights left on at night in office buildings. It is just a huge waste of resources.

Whether you believe in global warming or not, most people would agree that energy independence from potentially hostile foreign sources would be a good thing. Most would also agree -- hopefully -- that wasting resources is a bad thing. The policy and legal issues have a long way to go, but there is a lot we could do now if we just paid attention.


  1. Congrats on this enlightening post!

    >>If Germany's goal is to achieve only 20 percent in the next 10 years, it says very little for the chances of advancement toward energy independence in the U.S.<<

    I beg to differ, concerning this one point. I wasn't born yet when Germans invented the automobile, and not even when America's made the automotive manufacturing their "signature" industry. But I bet, looking at industrries and innovations that happened in MY lifetime - take Google, for instance - that the U.S. still have it in them to make a "game-changing" effort in this, the renewable energy market...

  2. Dear John,

    thank you so much for attending our Luncheon last week. It is great to read your thoughts and conclusions on this important topic. One goal (of many) was to spark such dialog and thinking. Please do not hesitate to contact us if you need any more information.

    Sebastian Eich