Is Clean Energy In Our Future?

On August 29 the California State Senate approved, on a 25-13 vote, Senate Bill 100, imposing legislation to do away with all fossil fuels. With the bill’s 43-32 approval the day before by the State Assembly, it’s now in the hands of Governor Jerry Brown who must decide whether a decree that 100 percent of California’s energy must come from solar, wind and renewable energy sources by the year 2045 shall become law. Despite objections from many sources as to the feasibility of eliminating coal, oil and natural gas as both reliable and economic sources of energy, the bill’s passage will, if nothing else, serve as a symbolic gesture against the Trump administration’s current efforts to roll back the many rules and regulations instituted by the climate change activists and environmental groups over the past decade.

A brief review of SB100’s provisions provides a glimpse as to what may be in store for Californians if signed into law by the governor. It will first confirm the requirement utilities provide 60% of their power from renewable sources by 2030. Inasmuch as solar and wind power projects across the West are being heavily promoted, this may well be accomplished. However, weaning the state completely off electricity produced from fossil fuels will be more challenging, as there are no guidelines as to how this can be accomplished. California currently relies on power plants fueled by natural gas when renewable energy sources aren’t available. It’s true industrial-scale batteries can store renewable power for use when the sun isn’t shining and the wind’s not blowing, but there are few of these in use by utilities.

As to flexibility, the law gives state agencies and utilities latitude to address the remaining 40 percent of electrical demand, except it’s specified whatever is done must be “carbon free.” This means greenhouse gases may not be emitted under any circumstances. But of special note, be aware, because of future electricity uncertainties, the bill equivocates on the 100 percent renewable energy mandate. Instead, it sets a desired target while assigning no penalties of any sort in the event the state is unable to meet the goal by 2045. For this reason, it may be argued the legislature is fully aware there’s little likelihood their aspirations can actually be fulfilled. Nonetheless, enacting a law which appears to mandate all sorts of arguably commendable accomplishments reflects well on those who both advocate it and vote for it, regardless of whether its many provisions ever come to pass.

The question to ask at this point is what factor or factors are likely to prevent the creation of a carbon-free California. As previously mentioned, utilities will require a source of industrial-scale batteries if fossil fuels are to be completely phased out … and more than just a source, but specifically an economic source. An analysis by the Boston-based energy-policy nonprofit, Clean Air Task Force, reports 200 times as much energy-storage capacity than is currently available will be required to make up for the loss of gas plants providing steady power output when there are renewable energy shortages.

If the technology cannot be developed to produce these batteries at a mere fraction of their present cost by 2045, carbon-free generation of electricity will be caught in the same bind faced by Tesla Motors, still operating at a loss these past 15 years, also due to its inability to produce a cost-effective battery,

As an aside, it’s been suggested the need for batteries, and the cost they will impose, can be eliminated with sufficient solar and wind production capability. You should be aware renewables are already in more than ample supply. At times so much solar and wind power is generated, excess supplies cause prices to plunge to negative levels, forcing the grid operators – and consumers – to pay to curtail their output. Gas plants are languishing due to low prices, forcing the grid to enter into contracts to keep some of them running, simply so lights will not go out.

The problems are not insignificant. According to the most recent government data, California consumed approximately 2 trillion cubic feet of natural gas in 2016, accounting for 7.9 percent of total U.S. demand that year. According to the Clean Energy Task Force, if we achieve the 100 percent renewable energy the legislation calls for, we’ll require 36.3 million megawatt hours of energy storage. This compares with the mere150,000 megawatt hours of storage now available in the state. According to Sharon Tomkins, vice president for Sempra Energy’s Southern California Gas, “If you don’t solve the storage problem, you will end up with more solar dumped in the middle of the day at negative prices.”

This requires us to consider expectations concerning battery technology. According to a Bloomberg New Energy Finance report, battery prices are expected, by 2030, to decline 67 percent from current levels. However, even then, according to Steven Brick, a senior advisor at the Clean Air Task Force, “California power prices will be astronomically high if a 100 percent renewables target goes into effect.” If his prediction is correct, where does this leave our clean energy project? Very simply, unless some miraculous discovery enables us, well prior to 2045, to produce industrial-scale batteries at prices dwarfing those today, the attempt to produce fossil-free electricity will be economically impossible.

While we’re contemplating both the technological challenges and economic feasibility of SB100, it’s worthwhile to consider what its benefits will be if we can successfully swing it. Specifically, what will it mean to the environment if California produces its electricity without fossil fuels? There’s no doubt, if we occupied the earth in the absence of other countries, we could customize our environment to perfection. Even as we exist, with the rest of humanity polluting the atmosphere, we need only build a massive impermeable enclosure covering us to keep out the poisonous carbon dioxide and other noxious substances produced by the polluters, so we can breathe easily … yes, this is all we need. Unfortunately, the world is a bit more complex than we may wish. Try as we might to escape from reality, it keeps pulling us back in.

Just so you’ll be aware, an ounce of smoke emitted from a chimney in Auckland, New Zealand, might well find its way to someone’s nostril in the Orange County city of Santa Ana. Sorry, but that’s how it works. And as you might guess, many nations of the world spew harmful fumes as a prodigious rate. Those countries with the filthiest urban areas include Pakistan, with average pollution concentrations of 115.7 ppm, Afghanistan –  86 ppm, Bangladesh – 83.3 ppm, Egypt – 73 ppm and India – 60.6 ppm.

When it comes to the foremost source of the earth’s defilement, the grand champion is China. Smog concentrations in the major urban areas of Shanghai, Beijing, the Tianjin-Hebei area, and the Yangtze River Delta are steadily rising. Environmental groups are dismayed that the government’s focus on northern China has driven industrial production and air contamination further south.

Six of China’s 10 most polluted cities are in the nation’s largest steel-producing region, making eradication economically challenging. The official response to the problems: China President Xi Jinping promised in a recent speech to achieve fundamental improvements by 2035. In the meanwhile, it’s best we all hold our breaths. Just as the radioactive particles from the Chernobyl reactor meltdown of 1986 settled on White Russia, Poland and Scandinavia, the corruption of the world’s polluters will find its way to our doorstep. And as the earth rotates and the winds blow, the atmospheric contamination of thousands of locales will drift to and settle everywhere – even to our crystal clear Golden State.

A final thought: California can pass laws to ban fossil fuels, control global warming and deviate from the practices of the rest of humanity, but with our population of 39,540,000, we comprise only about one-half of one percent of the world’s inhabitants. We can engage in well-meaning efforts of all sorts, but with our land area of 163,696 square miles, we occupy less than one-quarter of one percent of the world’s land mass. We can, if we choose, operate counter to the customs of other nations while bankrupting ourselves in the process, but we’ll hardly be noticed in the process. As long as we exist on earth, we’d better conduct ourselves with a degree of sensibility.

Al Jacobs, a professional investor for nearly a half-century, issues weekly financial articles in which he shares his financial knowledge and experience. You may view it on http://www.roadwaytoprosperity.com