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Summary:

President Obama’s State of the Union address called for 80 percent clean energy by 2035. While laudable, and reachable, the goal excludes 72 percent of petroleum’s usage, and so far there are few good substitutes for petroleum as a transportation fuel.

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(This was originally published at Infinite to Venture)

President Obama made a pretty bold (and frankly unexpected) statement in the State of the Union address last week:

Now, clean energy breakthroughs will only translate into clean energy jobs if businesses know there will be a market for what they’re selling. So tonight, I challenge you to join me in setting a new goal: by 2035, 80% of America’s electricity will come from clean energy sources. Some folks want wind and solar. Others want nuclear, clean coal, and natural gas. To meet this goal, we will need them all – and I urge Democrats and Republicans to work together to make it happen.

Many journalists and bloggers have already expressed their interpretation of this statement. For my part, I’m not going to comment on what I think future policy decisions will be, or take a normative position on what our energy mix should look like in the future.

I will, however, try to paint a picture of how we’d get to “80% by 2035″ and point out that, while it’s an admirable goal, achieving it wouldn’t be a panacea.

“80% by 2035″ by the numbers

In 2009, the total U.S. net power generation was 3,950 billion kWh, according to the U.S. Energy Information Administration, Form EIA-923, “Power Plant Operations Report.”

Obama notably excludes from his laundry list of acceptable sources of electricity both conventional coal and petroleum — in aggregate 46 percent of the pie chart. To give some historical context, here’s how the U.S. electricity mix has evolved since 1996, courtesy of the EIA:

The compound annual growth rates of these sources are the following:

  • Coal + petroleum: 0.1%
  • Natural gas: 5.8%
  • Nuclear: 1.3%
  • Hydro: -2.2%
  • Other renewables (mostly wind/biomass): 5.7%
  • Other: 1.7%
  • Total: 1.3%

What’s clear is that most of the growth in electricity generation has been driven by natural gas and non-hydro renewables. Coal and nuclear are either keeping pace, or losing footing. Not surprisingly, most of the capacity added to the U.S. power system over the last 15 years runs on natural gas, according to the Energy Information Association:

Putting this together with reports on the abundance of shale gas, it’s reasonable to think that natural gas will continue to be the dominant driver of growth in the production of power, despite its already large market share today. If we were to extrapolate the current growth rates of each source through 2035, in fact, we’d arrive at the following mix:

While an admittedly crude extrapolation, this analysis points to the feasibility of Obama’s goal: 24.1 percent is pretty close to 20 percent. With some additional acceleration in renewables or a few new nuclear plants, we could see ourselves hitting 80 percent by 2035.

Is this the right metric?

While it’s encouraging to see a pathway to sunsetting the dirtier sources of electricity, we should, however, be cautious in our optimism. Why? Because the above analysis excludes 72 percent of petroleum’s usage. Most of it goes into planes, trains, and automobiles, not power plants.

In 2009, U.S. primary energy flow across all sources and uses looked like this, according to EIA:

While only 46 percent of power comes from coal and petroleum, fully 58 percent of all energy we use comes from these dirty sources. Even more daunting, while there are reasonable substitutes for coal as a power source, there are few good substitutes for petroleum as a transportation fuel.

How would you replace 35.3 quads of petroleum? That’s roughly equivalent to 466 billion gals of ethanol, which is really the only reasonable substitute at scale today. (I suppose we could all go down the T. Boone Pickens natural gas vehicle route, but I’ve already decried that in another post.)

The top two producers of ethanol are the U.S. (11 billion gals/yr) and Brazil (6.6 billion gals/yr). Those numbers are after 30+ years of heavy government intervention and subsidization in both countries. Maybe production doubles or triples over the next 30 years; but, regardless, it won’t make a significant dent in our massive need for transportation fuel.

Furthermore, U.S. ethanol is based on corn, which has 1/7th the energy density of sugarcane and half the productivity per hectare. The Congressional Budget Office has calculated that, to bridge this gap, corn-based ethanol costs the American taxpayer $1.78/gal in subsidies in addition to what he pays at the pump. I doubt this level of subsidy would be tolerated if we chose to scale this industry to even greater heights.

So, in conclusion, while Obama’s 80 percent by 2035 is admirable and even reachable, it doesn’t address the bigger need: to find a substitute for petroleum in transportation that works at massive scale. Ostensibly, we can get off coal over the next 30 years, but oil is a whole other, probably more significant problem to address as a nation.

P.S. Thanks to Chris Nedler of GetRealist.com for his input on this post.

Alex Taussig is a Principal with Highland Capital Partners and invests in startups tackling problems in some of the world’s oldest and largest industries — including energy, education, and machine automation. You can find this blog post, as well as additional content on his blog infinitetoventure.com. You can also follow Alex on Twitter at @ataussig.

Images courtesy of EIA and expat4Cebu.

  1. Simple.

    Put solar panels on EVERY house. Make them large enough to power the building AND charge electric vehicles. This quite doable (I’m already doing it at my house).

    Massive amounts of manufacturing + recent research discoveries will drive cost down and solar efficiency up.

    Put them on the office buildings too. Wouldn’t that give you most of your power consumption?

    Then all you have is an energy storage problem (for nights and bad weather), and there also solutions in the works for that.

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    1. Mark,

      Not that simple, unless you want electricity prices to increase by 4-5x.

      http://solarbuzz.com/facts-and-figures/retail-price-environment/solar-electricity-prices

      We subsidize solar power to be price competitive in some areas, but that subsidy either comes out of your electricity bill, or your tax bill. At $5-6/W installed, solar is too expensive today to satisfy the vast majority of our needs.

      When it comes to energy, cost is the first priority. There are lots of sexy solutions that seem like a good idea, but when it comes down to it MOST people really don’t want to pay more money for the same electrons.

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      1. Alex, I claim that in 10 years:
        1) The cheapest way to produce power will be with PV (un-subsidized and in most of the country).
        2) Electric Vehicles will be cheaper to buy, much cheaper to maintain and much cheaper to energize, than ICE vehicles.
        I’m confident about this, but have no interest in arguing about it. Lets just wait and see.
        (Personally, I already replaced the engine in my truck with an electric motor and batteries, and I’m charging it with the solar panels that I installed. I’m a little ahead of the curve but both projects were fun, and easier than I thought they were going to be).

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  2. I am not sure about solar power for every house in terms of powering your house and your electric car, but why not mandate solar power for every water heater like they do in Israel? that would go a long way to reducing our power consumption and is well within our reach

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