Ignoring Innovation

A Review of Michael Levi’s ‘The Power Surge’

The energy and climate challenge of the 21st century is easy enough to describe. For a world of 9 or 10 billion people to live at the per capita wealth and (highly efficient) energy consumption equivalent of present-day Germany, we will need three to four times as much energy as we consume today. If carbon dioxide levels in the atmosphere are to stop increasing, then nearly all of that future energy consumption must come from technologies that produce zero emissions.

The "iron law of climate change" says that this challenge cannot be achieved by making energy substantially more expensive. Across the world in countries rich and poor, people have repeatedly indicated that while they will pay some price for environmental objectives, that willingness has its limits.

Into this context comes The Power Surge: Energy, Opportunity, and the Battle for America’s Future, a new book by Michael Levi of the Council on Foreign Relations. In it he notes that in 2012 only 5 percent of Americans favored both expanding fossil fuel supplies and developing alternative energy sources. The vast majority of public opinion on energy development, he reports, is split across predictable partisan lines.

Levi makes a strong case for the 5 percent — for what he calls a “most-of-the-above strategy.” Levi’s tight analysis helps to explain why such an approach has emerged from Washington during the most recent two presidential administrations, if not with the clarity and rationality that Levi would prefer.

At the same time the book’s narrow focus on the United States leaves a big gap in the analysis, which shows up in a rather muddled approach to climate change and neglect of the global energy access challenge.

The book has notable strengths. Throughout The Power Surge Levi summarizes various two-sided debates on energy policy and patiently explains that reality is often more complex. Throughout the book he critiques the strengths and weaknesses of various arguments and counterarguments found at the center of US energy policy discussions. Levi is exceedingly talented at carefully disassembling arguments of others, identifying component strengths and weaknesses. When reassembled, the resulting nuanced argument brings the best of both sides together, tempered by Levi’s realism and ample expertise.

Shale gas? Not nearly as dangerous to air and water as its critics contend, but also not a game-changer in terms of jobs and growth. Levi concludes, “shale gas development can be done well, it can also be done poorly.” You won’t see that phrase on a placard at a protest any time soon.

US energy independence? Not realistic, Levi tells us. Yet expanding US oil production is accompanied by broad economic benefits, especially when the price of oil is high, and offers some security benefits as well. The largest risks are to the local environment, which have to be evaluated “one development at a time.”

Wind and solar? Despite frothy claims on both sides, these technologies deserve an important role in the energy supply mix but offer “neither huge economic risks, nor world-changing economic opportunities.” The claims of massive new employment opportunities and massive boondoggles are similarly overstated.

But Levi’s efforts to find a happy medium sometimes left me confused about what exactly he was arguing. For instance in Chapter 4 he describes the mountain pine beetle epidemic in Colorado, explaining that “a small change in climate meant big and devastating consequences on the ground.” He followed that up by explaining that “no corner of the earth, it seemed, was being spared.” And Levi ventures onto the scientific fringe when he writes that “high temperatures could lubricate the West Antarctic Ice Sheet, helping it slowly slip into the ocean” leading to “massively” rising sea levels “over time.”

Yet in Chapter 7 he tells us that “no one knows precisely what the climate dangers out there are,” in a discussion of the possibility that the world might need an emergency program of geoengineering “if climate change soon got out of hand.” I have no doubt that many of those concerned about a climate apocalypse would express some dissonance at Levi’s embrace of such catastrophism while advocating a “most-of-the-above” approach to US energy policy.

Levi rightly concludes that “slashing US emissions requires a second revolution in American energy; one that cuts emissions from power generation by using zero carbon technologies and reduces oil consumption with new cars, trucks and fuels.” But this too is hard to square with his opposition to "quixotic efforts” to address economic, security and climate concerns through supply-side polices. A revolution in energy technology won’t happen with a focus solely “on the demand side of the equation” as Levi proposes.

Simple math tells us that carbon dioxide emissions from fossil fuels must approach zero in order to halt its accumulation in the atmosphere. Such a “second revolution” — whether via technological advancements in carbon-free generation or carbon dioxide capture, storage and recycling — will only come via significant investment policies aimed at making clean energy cheap, which today may indeed be viewed as "quixotic."

Elsewhere I (and others) have compared the transformation of the global energy system to be of similar scale to efforts to extend average human lifespans, feeding the world or national defense in that each requires decades of sustained investment in innovation to work towards aspirational, public goals. With respect to energy innovation, Levi is skeptical: “betting on concern about energy to get the government to invest more in innovation is a long shot.”

Levi ignores the decades of public and private collaborations on energy technology innovation — including those that made possible the shale gas revolution. The federal government polices between 1976 and 2002, including billions of dollars in tax credits, that led to the shale gas boom are a textbook example of the critical role the public sector must play in making clean(er) energy cheap. The shale gas revolution was the result of a decades-long public-private effort, and holds clear lessons for how energy transformations yet to come will most likely occur.

Levi isn’t the first energy analyst to have difficulty reconciling US energy policy with the challenges of stabilizing carbon dioxide levels in the atmosphere. Part of the difficulty results from the book’s narrow focus on the United States, where energy resources are relatively cheap, abundant, accessible and reliable. From a US perspective, a rational approach to fine-tuning business as usual certainly appears to make a lot of sense.

Yet the broader global context cannot be ignored. After invoking some of the concerns about the potential for catastrophic climate change, Levi notes, “yet seven billion people around the world continued to use energy largely as if nothing was amiss.”

Actually Levi is off by several billion. In Africa and south Asia in particular, vast populations lack access to even the most basic of energy resources and cook with coal, wood or even dung. The global energy challenge of securing modern energy access is actually of a much larger scale that than implied by climate. Together climate and energy access concerns provide a broad-shouldered basis for broad and sustained support of energy innovation to make clean energy cheap.

The Power Surge misses what may matter most in the 21st century for US energy policies: what role the US might play on a high-energy planet. Innovation in energy systems is a global imperative, even if it is not an apparent near-term necessity in the United States. To cite one example, nuclear power plays only a cameo role in The Power Surge but is likely to expand dramatically around the world in coming decades creating both risks and opportunities. How the United States responds to such global trends in a richer, more energy intensive world may be what matters far more for our economy, our security and our contributions to addressing the 21st century energy technology challenge than our present domestic political squabbles.

Climate and global energy access issues aside, Levi has produced an excellent overview of current debates over US energy policy.The Power Surge skillfully cuts through much of the noise and ultimately makes a strong case for the importance of a “most-of-the-above” energy supply strategy. After reading it you will have a much better understanding of energy policy debates in recent years in the United States. However, both those debates and the book are focused largely within the nation’s boundaries, while much important action is taking place elsewhere.

Further Reading

Breakthrough Staff, "The State and the Innovation Economy," May 2, 2013

Michael Shellenberger and Ted Nordhaus, "It's Not About the Climate," April 29, 2013

Eric Kennedy, "China's National Innovation System," January 16, 2013

Photo Credit: Global Envision