It’s January 2040, and under our newly sworn in 48th president, America is leading the world in clean energy technology. Thanks to a massive innovation boom, energy resources and technologies are our fastest growing exports, creating a global win-win that the left and the right fight over getting credit for:
Win 1: The world pays for advanced American energy technology, boosting our economy.
Win 2: U.S. clean energy innovation makes existing global efforts to reduce carbon emissions more affordable.
The technology we invented in the 2020s overtook China’s massive state energy industry, bringing back jobs by playing to our strengths in advanced manufacturing. We outflanked China.
Modular nuclear reactors built in highly automated factories and sent around the world revived our struggling nuclear industry from a near-death experience. Millions of printable solar panels were built in the Rust Belt, and are neck-in-neck with China’s old-school photovoltaic solar. China is ahead of us in lithium-ion batteries, but they can’t build advanced flow batteries for the grid or lithium-air batteries for cars at the cost or quality that we can. And no country can match our zero-emission fossil fuel technology. Energy technology joined Silicon Valley as an only-in-America success story that kept our economy growing.
How did we get there?
Wise policy decisions made in the late 2010s paid off slowly. Reinventing energy is slower than turning the Titanic. It requires 20-year lead times for cutting-edge technologies to mature. The 2010s were the decade of energy resource abundance. The easy choice would have been to be complacent with our current energy systems, do nothing else and hope nothing changes in the long-term. The hard choice would be to compete with China and invest in advanced technology, which is critical for long-term energy dominance, job creation and national security. This choice is the one America faces today. At ClearPath, we believe in the hard choice: Choosing breakthrough innovation, outcompeting the Chinese and investing for the long-term. This piece will address three questions that led us to supporting the hard choice.
1. Why focus on the Chinese Market?
2. Why involve the government?
3. Why not just do renewables?
The stakes of this energy choice are high.The world is moving its money to clean energy. All nations except the U.S. are aligned behind reducing carbon emissions and will now invest $10 trillion for cleaner electricity in the next 25 years.1 Nearly every one of our major sources of power, from oil to solar to gas, largely exist because government investment in research and development helped them break into the market. Advanced clean energy technology will be no different and the rewards could be even greater.
Chinese Premier Wen Jiabao: “To reduce carbon dioxide emissions on such a large scale
and over such an extended period of time will require tremendous efforts on our part.”
This is a trillion-dollar export opportunity, and we’ve already let China take the lead. They’re selling photovoltaic solar technology we originally invented from Berlin to Arizona, and they’re planning more than 100 new nuclear plants while overtaking us in nuclear exports by 400%.2
Additionally, we think carbon emissions are very risky. The conservative approach is to hedge against that risk with clean energy technology, focusing on China and India’s growing pollution. As Mitt Romney put it: “They don’t call it America warming, they call it global warming.”
If clean energy gets cheap enough, long-term climate goals can succeed. If not, developing countries such as China and India will choose economic growth over global climate promises every time and their pollution will negatively impact the rest of the globe. Even if America never rejoins a formal global carbon-reduction effort, we will still be the country that determines its success through our technology. China can keep building existing clean technology, but they aren’t likely to invent the next breakthrough, which is what’s eventually needed to deeply reduce pollution while keeping consumer costs low. The developing world wants energy that’s cheap, clean and reliable. That technology isn’t finished yet, and we can and should help raise the world’s standard of living with our innovation.
We believe electricity (our focus here at ClearPath) is the biggest piece of the global clean energy puzzle. Electricity is the common currency among the five big drivers of carbon emissions: The power sector, buildings, transportation, land use and industry.
The rise of electric cars means that clean electricity is needed for clean transport. And the advanced nuclear and carbon capture technologies developed for clean electricity are critical for clean industry. Advanced nuclear is useful beyond electricity in that it can cleanly provide huge amounts of heat for steel and iron. Same with carbon capture, which can be applied to cement. Solar and nuclear power can work together to make hydrogen. By getting clean electricity right, you solve key problems for four of the big five.
And we don’t need to agree on the extent to which humans are causing climate change. Energy innovation is an economic no-brainer, given the trillions of dollars on the table. And coal needs to be able to thrive under carbon regulation so that it can survive a Democratic White House, which can and will use the Supreme Court decision that obligates EPA to regulate carbon dioxide. Carbon capture technology is the solution and the sure way to keep coal in business for the long term. And it will also preserve coal as an attractive export even in a world intent on reducing carbon.
What would it look like today? We must supercharge innovation at our national labs and universities with our top scientists. We must connect this research with the private sector, helping them build demonstration projects and deploy first-of-a-kind plants. Then they can compete fairly against the incumbent technologies and succeed or fail on their own merits.
As a bonus, this innovation-centric approach would allow America to cut its own carbon emissions much more cheaply than with the Clean Power Plan’s top-down approach, which is something all should celebrate. And yet aside from folks like Bill Gates, little focus is given to this innovation-centered approach.
To lay out our case, we will tackle the three most common objections to this innovation approach: First is China. Then the role of government. Last is renewables.
1. Why focus on the Chinese Market?
At ClearPath, we take every one of our energy initiatives and then put it to a “What about China?” test. China is the biggest market for clean energy technology, our biggest competitor for technology exports and the world’s biggest emitter.
60% of the world’s carbon capture retrofit potential (the cleaning up of existing coal plants) is in China.5 In 2016, China installed 42% of the world’s new wind turbines, nearly triple what America built.6 And they’re expected to build 40% of new wind, 27% of the new solar7 and 45% of the new nuclear plants through 2040.8 Of the $10 trillion energy market, China alone is projected to be worth $2.8 trillion.9 To dominate that market, we must sell technology to China and the developing world.
Meanwhile, China is not just trying to supply their own energy technology, they’re fighting for (and winning) that export market. They already dominate the solar panel market, manufacturing 60 GW of panels in 2017, equal to two-thirds of the global production capacity.10,11 And they’re making the same play for nuclear energy dominance. They’re building 28% of the world’s planned nuclear reactors, second only to Russia, and quadruple the struggling U.S. nuclear industry.12
How is China is doing it? There’s a three-legged stool of industrialization, government policy and innovation.
China is the dominant industrial power and they’ve turned that power to clean energy – constructing nuclear power plants and wind turbines rapidly – and are now building the world’s biggest grid battery.
America won’t be able to beat China when it comes to cranes and massive construction. That’s a big reason why China has overtaken us in nuclear power plant construction. Catching up will mean changing the playing field with new technology, not catching up on cranes and concrete.
China has thrown the full force of government policy behind their clean energy technologies. Electric vehicles is one of their top 10 priority industries and they’re aiming for an 80% local supply chain. Chinese electric car buyers receive up to $15,000 in incentives14, while gasoline-powered car purchases are restricted in many cities15, gas-powered motorcycles are banned16 and a new credit system will require 10% of car sales to be electric by 2019.17 Then there are all the policies that are hard to see in a state-run economy, including the preferential financing and guaranteed purchasing that China uses to pick and scale-up winners. And of course there’s the protectionism and tariffs that China is famous for and which helps them to nurture domestic companies.
China is also prioritizing research and innovation, though the U.S. still at least holds the edge in innovation. U.S. basic research budgets and capacity still out-do China, and energy is no exception.18 But China is now beating us at development research – innovation that produces commercial products and manufacturing processes – and will soon have doubled our development research budget.19 Meanwhile, China graduates more scientists and engineers than any other country.20
But the bulk of their effort is in the last leg of innovation, which often means commercializing technologies Americans invent. This effort includes finishing in 2018 the first high temperature gas reactor in decades and a Memorandum of Understanding to explore building another one for Saudi Arabia. Who invented that technology? We did, with General Electric in 1966. America still holds a wide lead in technology innovation, even if we’re losing the construction projects for our ideas.
And that innovative edge is how we can dominate the market and advance clean energy throughout the world. China is doing manufacturing innovation. They’re driving down construction costs. They have generous subsidies and state-led building projects that help commercialize new technologies. That includes the world’s biggest battery: A 200 MW, 4-hour vanadium flow battery under construction.21
But they haven’t taken the lead in breakthrough innovation. That’s America’s almost-unique strength. That big vanadium battery relies on technology from our Pacific Northwest National Lab and China partnered with an American company to help build it.22
China’s basic manufacturing prowess means that we’ll be importing Chinese technology and products for a long time. If we accelerate our energy innovation, we’ll be able to balance this by exporting our inventions to China and India and the rest of the world. Breakthrough innovation and advanced manufacturing is our pathway to overtake China in the clean energy race.
Right now China is beating us with clean energy technology we invented. But the next generation of technology, which is again coming out of America, plays to our strengths. We can’t beat China on manufacturing iPhones but can at building printable solar panels, modular nuclear plants and carbon capturing fuel cells.
2. Why involve the government?
When Silicon Valley innovates, it doesn’t need the government. Why shouldn’t energy companies be the ones to invest in research and bringing new energy technology to market? Unfortunately advanced nuclear isn’t Uber and isn’t created by two guys in their garage. Energy innovation takes decades to get from lab to market. It just wouldn’t happen without the Department of Energy.
All of our primary energy sources today were supported by government R&D early on and in many cases tax credits to facilitate their initial commercialization: natural gas, coal, solar, nuclear, wind and oil.
Energy research is a multi-billion-dollar opportunity to find the next fracking-like technology breakthrough. But without support, even a superior energy technology won’t be able to break into the market because the incumbent technologies are too big to compete against and have a 50-year head start.
What America needs is a technology-neutral approach to supercharging innovation and helping financing first-of-a-kind projects, such as the successful Petra Nova carbon capture project in Texas and the pending NuScale small modular reactor in Idaho. Then the new technology can succeed or fail on its own merits and on a level-playing field. That’s the governmental role we need, and it’s neither a command-and-control approach that picks winners, nor a do-nothing-and-hope approach. The potential rewards are great.
Some upcoming energy breakthroughs already have received important help from the Department of Energy. Others still need much more to get to scale.
4 Energy Technologies That Could Change the World
NetPower – Demo plant: Early 2018
- A North Carolina company designed a new power plant that captures all its carbon emissions and uses the carbon (rather than steam)28 to turn the turbine to make electricity.
- No carbon emissions from coal or gas, and it could be as efficient as a traditional power plant.
- Their 50-MW demo plant will be done in Texas in the next few months, and if all goes well, a full-size 295-MW plant in the next 5 years will test if this is the future of clean fossil fuels.
- The design could be licensed globally, selling American technology, and potentially be paired with our gas and coal exports, capitalizing on all of our energy expertise and resources to supply clean energy around the world.
Terrapower – Demo plant: Around 2030
- Founded by Bill Gates, Terrapower is developing an advanced molten chloride nuclear reactor that could be cheaper, scalable and actually reduces nuclear waste instead of generating it.29
- With the help of a $40 million grant from DOE, Terrapower is developing the molten chloride reactor with Southern Company, aiming for a 2030 demo reactor.30
- In a prime example also of direct partnering with a U.S. company and technology, China completed a joint venture agreement with Terrapower to develop a world-first travelling wave nuclear reactor, which is a different technology from the molten chloride reactor being developed in the U.S.31
Perovskite Solar – Demo plant: Around 2018
- Using a whole new material to capture the sun, called perovskite, we could make printable or paintable solar, potentially thinner and more efficient than today’s solar panels.
- The National Renewable Energy Lab in Colorado is a world leader in this research.32
- The key challenge today is getting these panels to be durable so they last for decades instead of years.
- The first commercial use will come in the next few years, adding perovskite solar on top of silicon solar to make it more efficient.33
- Later could come pure perovskite solar panels, that could be as cheaply printed as newspaper.
FuelCell Energy – Demo plant: 2025
- FuelCell Energy, now partnered with Exxon, found a way to produce electricity that filters carbon dioxide as a side-effect of producing clean power from a carbonate fuel cell.34
- The National Renewable Energy Lab in Colorado is also a world leader in this research.
- It’s a power plant that eats pollution, and it can be attached to existing coal plants, like the 1000+GW of coal that China will have already built.
- The trick is a “chemical bait-and-switch,” where they run a natural gas fuel cell that uses power plant exhaust as an input. The fuel cell reaction then produces power and while capturing carbon.
3. Why not just renewables?
“Without carbon capture we’re going into—the technical physics word is deep doo-doo” -Obama Energy Secretary Steven Chu
Liberals often claim that we already have the clean energy technology we need and the world can and should move to 100% renewable electricity. It’s true that solar and wind are our fastest growing clean energy sources and they’ve become economically viable in the last few years. But because of the variable and intermittent power the sun and wind produce, their economics change the more you build.
There’s a race between declining cost and declining revenue. First, the cost of solar and wind will decline as we build more: the technology improves and bigger factories can build panels and turbines cheaper. And at the same time, the revenue from the electricity they sell will decline. There already is so much electricity available on a sunny day in California, that electricity will sell for $0. But when solar and wind together make up around 50% of an electricity grid, they become much more expensive and challenging to integrate. As the National Renewable Energy Laboratory has shown37, electricity actually gets wasted because there’s so much surplus, even when you factor in the use of batteries to store power. It’s unclear at where the tipping point gets serious exactly – 30% solar and wind? 50%? 66%?
Batteries can solve part of this problem by storing electricity, but it would be too expensive to build enough batteries to store all the excess power. Batteries might be technically able to store the power, but they won’t necessarily solve the economic problem of making a solar and wind electric grid cheap enough to work.
In the most prominent 100% renewables scenario, America had to have storage equal to 37.8 billion Tesla PowerWalls, or 100 batteries per person.38 That’s not feasible, and it’s not a smart approach.
That’s why our position is that we need clean energy that can be turned on and off. Study after study, from the Intergovernmental Panel on Climate Change39 to JPMorgan Chase40, has shown that the cost of going to all clean energy double or triples when you build too much renewable generation, compared to a balanced approach that also includes carbon-captured fossil power and nuclear.41
Even California isn’t committed to a renewables-only strategy. The long-term clean energy bill California state lawmakers are considering (SB 100) aims for 60% renewable power. But it also allows for any zero-carbon energy in order to get from 60% to 100% clean energy.42 If the goal is to reduce carbon emissions, why restrict your carbon-free options? Why put all your eggs in the renewables basket?
The renewables-only approach assumes China will shut down the coal plants worth $237 billion.43 It also imagines India, which is in the process of doubling its coal fleet, will then be happy to shut those down, even as they’re striving to provide electricity to 240 million Indians who don’t have it. That’s just not going to happen.
India has plans for 100 GW of solar, more than double what America has today.44 China is leading the world in building wind turbines. But that’s not going to shut down all their brand-new coal plants.
The answer is carbon capture. Technologies such as NETPower to replace new-build coal plants, Petra Nova and FuelCell Energy to retrofit what’s already been built to reduce emissions. Even if we were wrong and renewables could power most of America’s electricity, carbon capture would still be critical to allow China and India to affordably clean up their energy mix. And it’s the only technology that can allow for negative emissions: using carbon capture on biomass takes the carbon dioxide plants suck from the air and captures it when those plants are burned, essentially pulling carbon out of the atmosphere.
Imagining The Future
Here is what U.S. clean energy dominance might look like in 2040.
After its second successful advanced nuclear reactor in the U.S., Terrapower inked a deal with India to build 10 GW powered by molten chloride fast reactors. Combined with the NuScale’s small but steady exports of small modular reactors, America overtakes Russia in nuclear energy exports and has China in its sights. Advanced nuclear reactors are replacing retiring U.S. reactors, helping maintain our nuclear generation and reduce waste left at those sites. Globally, nuclear energy increased by 50%, enough to continue to supply 10% of the world’s electricity as population and energy demand grew.
Meanwhile, there’s a vicious price war between the Chinese silicon solar and the new U.S. perovskite solar industries, which prints panels mainly in the Rust Belt. For the last 15 years Perovskite solar has been eating into China’s market share, cracking $100 billion a year in revenue as solar produces 8% of the world’s power, quadruple its share today. China solidifies its grip on the wind industry, which now produces slightly more power than solar or nuclear.
Battery storage can be done cheaper with advanced flow battery technology that came out of Pacific Northwest National Laboratory, but is mainly used in wealthy states such as California and nations such as Germany and Spain that opt for a particularly high solar pathway. Developing countries still trying to expand basic power mainly ignore storage, except for remote areas. Electric cars, not the electric grid, are far and away the largest use for batteries.
But the biggest success story of all was carbon capture. Beginning in 2020, the oil and gas industry invested billions in perfecting carbon turbine technology, and our exports of natural gas and zero-carbon natural gas plants soared together. Five years later, we began to export carbonate fuel cells powered by natural gas as the global solution to cleaning up existing coal plants. That’s 2025, the same year that the last new fossil fuel plant is built without carbon capture technology installed.
Fracking was just the first half of the natural gas revolution. Zero-carbon technology became the second. Natural gas is tied with coal as the dominant power source, each providing 25% of electricity and each mainly zero carbon power sources. Half of existing coal plants are now paired with carbonate fuel cells and are carbon free. That’s 800 GW of carbon capture, including 400 GW in China alone. Because they run more often, these plants account for two thirds of actual coal generation.
Imagined Power Mix, 204046
From 2030 to 2040, America brought in $1 trillion of revenue from its energy technology exports, a renaissance for large-scale American manufacturing and innovation from Houston to Detroit to Atlanta. The politics of reducing carbon emissions were totally transformed by technology, and the main arguments are about trade policy and technology ownership. Global power emissions in 2040 have plummeted while demand increased.
The world is hopeful. American technology has provided a path forward for the developed and developing world to help each other grow more prosperous and reduce emissions at the same time.
America today could choose to aim for this bright future. It would give our energy innovators the chance to reinvent America’s economy and the world’s energy. It would require smart long-range policy out of Washington. We’d give ourselves a chance to outcompete the Chinese, rather than just complain about their growing dominance. It would cut carbon emissions in a way neither the left nor right is expecting. Zero-carbon fossil fuels would thrive.
The energy innovation approach is the hard choice. It’s long and uncertain. America may never again unleash innovation like we did to defeat Germany and dismantle the Soviet Union. But if we do, we will win the clean energy race, and it will be worth every ounce of effort it takes.
- This is different than Terrapower’s other advanced reactor design, the Traveling Wave Reactor, which they’re planning to build in China. ⬏