Gigaton Throwdown Blog

I will be giving a short talk tomorrow at Next Agenda, an organization started by Peter Leyden to be a kind of next generation think tank that leverages video and internet to engage people to evaluate big problems and communicate the results.The press (Reuters) labelled the effort “The US CAN Get All Its Electricity From Clean Energy by 2020.”

One important bit of perspective I’ll be bringing is that its hard enough to just avoid the massive growth in global emissions by 2020.  Actually cutting them to zero for the electricity sector seems — at first blush — incredibly hard, even if limited to just the US.  It will be interesting to see if the folks assembled by Next Agenda can put together a compelling case.

The biggest problem with going to 100% clean energy by 2020 is that it means shutting down existing power plants that have years of productivity left in them, including ones that haven’t yet been fully paid off.  Someone has to pay for that remaining capacity.  If its factored into the cost of that new electricity, it would make that electricity much more expensive.  As a practical matter, it’d probably be worked into the rate base and paid across the entire user base.  It raises the hurdle that clean energy sources have to clear to be competitive.  For Gigaton Throwdown, we chose to focus on displacing new energy demand for electricity (fuels were a bit different) for exactly this reason.

Exactly how much more laying off that capacity is a bit of analytic work that would be good to do.  A back of the envelope calculation is pretty easy, but a more complex analysis would look at the remaining productive capacity for the fossil-fuel portion of the US electric grid and estimate what that its worth on a discounted cash basis.  That would at least be a basis for discussing the potential price impact of shutting down that capacity.

If someone would like to do the back of envelope calc, we’d be happy to post it here.

- Sunil Paul

The press on Gigaton Throwdown has been mostly positive and mostly
accurate. But there seems to be a bit of confusion, including in the FT,
that we wanted to clear up before any inaccuracies got repeated.

The FT recently wrote:

A bigger cloud still hangs over the industry, says Sunil Paul, a
venture capital investor who has led lobbying in Washington.

Far larger amounts of capital – he estimates $8,000bn over the next
decade – need to be sunk in the industry to make it truly competitive
with traditional sources of energy, which have a huge advantage thanks
to past infrastructure investments.

http://www.ft.com/cms/s/0/28586e22-8e7b-11de-87d0-00144feabdc0.html

Its important to be clear what we found through our study:  A massive
scale up for clean energy and efficiency is possible to achieve at
prices that are cost competitive with fossil-fuel technology.  This
scale up could displace current fossil-fuel energy production
infrastructure to the tune of about $8 trillion over ten years out of
the expected $13 trillion expected to be invested in all energy
infrastructure.

For examples of press that got it right see these three:

Forbes:

Currently more than $13 trillion in private capital is prepared to
invest in the traditional base of energy technologies over the next
decade. Redirecting that capital to clean energy is an $8 trillion
opportunity that will depend in large part on US energy and climate
policy.

San Francisco Business Journal:

Energy demand will cost $13 trillion over the next decade and most of
that will be paid for by the private sector. Annual private investment
will have to more than triple over the next ten years to $500 to $800
billion to satisfy 60 percent or $8 trillion of that demand with
alternative energy. And that’s where the government comes in.

New York Times Green Blog:

“Annual private investment must grow by more than three times in the
next 10 years to scale up renewable energy technologies to meet
climate stabilization goals. This level of growth is feasible, but
policy action is needed immediately to support it.”

The necessary cumulative investment over a decade would be $8.4
trillion, the study said, compared to currently projected global
expenditures of nearly $3.7 trillion.