Bill Gates is right. In a feature interview, mainly about energy, in the November issue of The Atlantic, Bill Gates begins with a pointed challenge that we have to bring “math skills to the problem” when talking about changing global energy use. May I second that notion.
The central reality today is that hydrocarbons—oil, natural gas, and coal—supply 90% of global energy. And in the future, the world will need a lot more energy, not less. If policymakers want to change that equation in order to avoid the use of the carbon in the hydrocarbons, there are no easy solutions. In fact, any technological solution will require, in Bill Gates words, “a miracle.”
For those interested in the associated issue, the debate over climate science itself, read the recent New York Times OpEd by Steve Koonin, a scientist and former official in the Obama Administration’s Department of Energy. But as Bill Gates makes clear, opinions on climate science don’t change the underlying energy math.
Gates’ claim that only a miracle could have a significant impact on global energy use is a fact that is readily illustrated by data, by the math. Herein some of that math to illustrate six statements by Bill Gates selected from that Atlantic interview.
But first let’s begin with some numbers that establish the scale of the challenge:
- America consumes energy equivalent to 15 oil supertankers per day; more than 5 of those supertankers worth of energy are delivered daily as electricity, which reaches markets essentially at the speed of light.
- In the same terms, the world uses the energy-equivalent of 90 oil supertankers every day, with 35 of those delivered as electricity and another 35 as oil.
- Bill Gates pledged to personally commit a total of $2 billion to invest in energy R&D. Compare this to the $2 billion spent every day globally on capital equipment to find and produce just oil and gas. Recommended by Forbes
And now for some of the math that Gates is clearly aware of, that illustrates the magnitude of the challenges in changing the world’s energy system. (Gates’ statements here are in no particular order, but taken as they occur in the interview.)
1. “[F]or energy as a whole, the incentive to invest is quite limited, because unlike digital products … almost everything that’s been invented in energy was invented more than 20 years before it got scaled usage.”
- 1905 and 1939 were the last times the world saw foundational inventions in energy sources. In 1905 Einstein received the Nobel Prize for the photoelectric effect leading to solar cells, and 1939 at the University of Chicago with the proof of nuclear fission. Now, about a century later, those two energy sources combined supply less than 4% of world energy (and nearly all of that from nuclear).
- Shale technology—arguably a new source of energy wherein hydrocarbons are manufactured from rocks—was pioneered in 1991 by George Mitchell. Some 25 years later, and with hundreds of billions of dollars of private investment in U.S. shale infrastructure, shale oil and gas have roiled markets but still collectively supply only 3% of world energy.
2. “But what we’re asking ourselves to do here is change energy—and that includes all of transport, all of electricity, all of household usage, and all of industrial usage.”
- We can add to the list not just all of “industrial usage” but also all data usage. The global information ecosystem now uses more energy than does global aviation.
- Everything people use and do, everywhere and always, requires energy, including and especially energy-intensive information-communications technologies:
- Watching a baseball game on a smartphone uses as much energy as driving a Prius 30 miles. Consuming 100 GB on a smartphone uses the same amount of energy as that required to produce beef for 15 hamburgers
- Even the digital monetary system uses energy: globally, computers used to create virtual currency, i.e. to ‘mine’ Bitcoins, consume as much energy as do the machines that dig for physical gold.
- When the world’s 4 billion poor people increase energy use to just 15% of the per capita level of developed economies, global energy use will rise by the equivalent of adding 15 more supertankers (an America’s worth) per day.
3. “[T]he biggest problem for the two lead candidates [wind and solar] is that storage looks to be so difficult. … We’re more than a factor of 10 away from the economics to get that [grid-scale economic storage].”
- Electricity is hard to store; economics are only half the problem.
- All of the annual output from what will become the world’s biggest battery factory—the $5 billion Tesla gigafactory under construction in Nevada—can store just five minutes worth of annual U.S. electric demand.
- It would require 40 years worth of production from 100 gigafactories in order to build a battery ‘tank’ farm capable of storing enough electricity to match the energy held in the oil tank farm at Cushing, OK, (one of many oil depots in the U.S).
4. “They [clean-energy enthusiasts] have this statement that the cost of solar photovoltaic is the same as hydrocarbon’s. And that’s one of those misleadingly meaningless statements.”
- To have “parity,” electricity sources have to match both price and availability precisely because electricity is so difficult to store. Essentially all kilowatt-hours are produced the same instant they are consumed. Today, 95 percent of America’s power comes from sources that can supply electricity any time it’s needed.
- Even spontaneous “grid parity” is “meaningless” (i.e., producing a kilowatt-hour for the same price as the grid when the sun is shining) because to match grid-scale availability, photovoltaics would still be about 400% more expensive than conventional grid power because of the extra production equipment and storage needed to ensure availability at any time.
5. “[W]e need innovation that gives us energy that’s cheaper than today’s hydrocarbon energy, that has zero CO2 emissions, and that’s as reliable as today’s overall energy system. And when you put all those requirements together, we need an energy miracle.”
- Solar, wind and battery technologies have improved 150 to 250% in the past half-decade, in terms of energy produced per dollar of capital. Shale technology, measured the same way over the same time, has improved over 400%.
- Shale technology has added 100 times more energy supply to America in the past decade than has solar.
6. “I would love to see a tripling, to $18 billion a year from the U.S. government to fund basic [energy] research alone. … That may make it seem too daunting to people, but in science, miracles are happening all the time.”
- Federal basic research funding has been in decline, and accounts for less than half of total government R&D spending.
- Less than 40% all DOE R&D is devoted to basic research, and for other agencies that fund R&D in areas relating to energy, less than 30% is directed at basic science. The majority of federal R&D funding is directed at “development” and projects, not basic science, thereby turning government R&D policy into de facto industrial policy.
- About 95% of private-sector R&D spending is directed at “development” and not basic research.
There is good rationale for increasing both federal and private sector funding of basic research in general, not just in areas relating to energy. (For more on this, see my earlier Manhattan Institute paper Basic Research and the Innovation Frontier.)
A common response to the kind of cautions Bill Gates offers is to call for an energy version of the Manhattan Project or the Apollo Program. But both of those programs constituted applied engineering, not basic research. The science underlying nuclear fission and high-energy chemistry (that made rockets possible) came decades before the engineering developments.
Google tried its hand at engineering big changes in energy. With its seemingly unlimited resources, Google launched an Apollo-like project called “ RE<C“ to develop renewable energy that would be cheaper than coal. After Google cancelled the project in 2011, Google’s lead engineers reached essentially the same conclusion as Bill Gates. Writing last year in the IEEE Spectrum they concluded:
- “Incremental improvements to existing [energy] technologies aren’t enough; we need something truly disruptive …. We don’t have the answers. Those technologies haven’t been invented yet.” [emphasis added]
Fueling society is not like putting a man on the moon. It’s like putting everybody on earth permanently on the moon. The former was a one-time engineering feat; the latter would take miraculous technology. In science miracles do happen. But they’re just not common, not predictable and can’t be conjured on demand.
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As Bill Gates also observed in his Atlantic interview: “innovation is a very uncertain process.” <>
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The central reality today is that hydrocarbons—oil, natural gas, and coal—supply 90 % of global energy. And in the future, the world will need a lot more […]