Are We Stuck in 1970s Thinking About Energy?

Federal policy focuses on obtaining more supply rather than doing more with what we have

By Elisa Wood, Energy Changemakers

Build, build, build is the mantra as forecasts emerge about AI’s appetite for energy. How many more power plants do we need? How much transmission will that require? Will we run short, causing blackouts and further price increases?

My most recent guest on the Energy Changemakers Podcast offers a different perspective. International energy economist Skip Laitner sees slack in the system that needs to be addressed first: a lack of energy productivity, measured as the amount of benefit we derive from primary energy.

Laitner makes several intriguing points about what's causing the problem. He talks about how much energy we waste in our collection of excess stuff — not just in the manufacture of it but also in its storage. We need more closets, bigger houses, and more parking spaces, all of which translate into more energy consumption.

But what struck me most was his comment that we are stuck in a 1970s mentality when it comes to energy. We focus on building more supply rather than deriving greater value from what we have.

On top of that, current federal policy promotes a less productive form of supply, fossil fuels, over more productive renewables, Laitner says.

But Washington's illogic doesn't stop there.

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On the one hand, the White House claims we face a national energy emergency, with prices rising, demand growing, and supply failing to keep pace. On the other hand, the White House is attempting to block renewable projects near completion.

Case in point, the Bureau of Ocean Energy Management (BOEM), last week halted construction of Ørsted's near-complete 704-MW Revolution Wind project off the Rhode Island coast, citing vague "national security concerns."

For anyone who has followed BOEM's permitting reviews of offshore wind farms, it's hard to imagine any national security issue going unexamined. Revolution Wind's review lasted 3 1/2 years.

"The claim by the Administration that national security concerns have arisen is particularly galling given the fact that the Bureau of Ocean Energy Management and the U.S. Coast Guard meticulously analyzed ‘protection of national interests of the United States’ as part of the record of decision years ago. That exhaustive review ensured that transit by Coast Guard vessels and U.S. Navy warships would not be hindered by the final placement of Revolution Wind towers,” said Connecticut Congressman Joe Courtney.

It's not only renewable energy taking a hit; so is energy efficiency, and again, the federal government seems to contradict its own narrative that we face an energy emergency.

In a brief published last week, David Hart, senior fellow for climate and energy at the Council on Foreign Relations, notes that the Trump administration is proposing a 78% cut to the federal office that administers energy efficiency programs.

Cutting energy efficiency would be "bad news for one of the administration’s highest technology priorities: artificial intelligence (AI)," Hart writes.

"Data centers to power AI are driving a surge in demand for electric power. Unfortunately, new power supply is scarce. Power plant equipment manufacturers are quoting lead times of five years or more for new gas turbines. Nuclear reactors will take at least that long to build. The grid’s efficiency, on the other hand, could be improved pretty quickly—but a lack of federal investment could hamper that response as well," Hart writes.

So, in short, the federal government claims we urgently need more power, while thwarting near-ready renewable projects and energy savings, in favor of slow-to-build fossil fuel and nuclear projects.

Fortunately, amidst all of this, distributed energy is becoming the little engine that could. We're seeing a rise in microgrids, virtual power plants, demand flexibility and other quick-to-install forms of local energy that weirdly (and fortunately) seem to fall between the cracks of the political strife of the day.

And it turns out, distributed energy enhances energy productivity too...Check out the podcast: Less Waste, More Productivity: An Economist’s Take on Our Energy Dilemma