[StBernard] Waxman-Markey Flunks Math

[Westley Annis]

Waxman-Markey Flunks Math
08.03.09, 12:00 AM ET




A couple I know experienced a rude interruption on a recent Saturday night.
The two had settled into their seats at the AMC Cupertino Square 16 movie
theater (a 3-wood from Apple's headquarters) and were enjoying The Taking of
Pelham 123, a thriller remake starring John Travolta and Denzel Washington.
But Pelham 123 never finished; the theater lost its electricity. The cause:
a rolling brownout caused by California's heat wave and excessive use of
air-conditioning.

Electricity is a good thing. It powers our computers, drives economic
growth, transmits images from Tehran's streets, keeps preemies alive in
hospitals, prevents meat from rotting and keeps us enchanted and cool in
movie theaters.

Yes, electricity is a good thing. But from where does it come?

In the U.S. electricity is produced mostly from these sources:

--48.5%--Coal

--21.3%--Natural Gas

--19.6%--Nuclear

--1.1%--Petroleum

Got that? A tick more than 89% of U.S. electricity comes from only three
sources: coal, gas and nuclear power. Petroleum brings the contribution of
so-called "evil" energy--that is, energy that is carbon- or
uranium-based--to a tad more than 90%.

The remaining sources of our electricity are tiny players in comparison:

--6.0%--Hydroelectric

--2.5%--Other renewables

--0.5%--Other

Hydroelectric accounts for nearly 70% of renewable energy in America, but
hydro is mostly tapped out. Almost every dam that could be built has been
built. Ironically enough, political opposition to building more dams comes
from the same crowd of tree huggers who oppose coal, gas and uranium.

Do you see where I'm going?

The Waxman-Markey bill that passed the House by a 219-to-212 margin in late
June seeks to punitively tax America's electric utilities that rely on
energy sources now contributing 90% of our current electricity (or 71%, if
you want to leave out nuclear). These taxes will be used to subsidize the 9%
of renewable contributors (really only 3% when you leave out hydro). In
other words, Waxman-Markey is betting the future of U.S. electricity
production on sources that now contribute 3% of the total, which can supply
about 10 million Americans with electricity. That's enough juice for the
people in Henry Waxman's Los Angeles County or, if you prefer, in Nancy
Pelosi's metropolitan San Francisco plus Edward Markey's metro Boston.

Well, what about electricity for the other 295 million of us? You can't get
there from here with Waxman-Markey. At best, solar, wind, batteries,
geothermal and cellulosic ethanol combined will meet 20% of our needs by
2025. The smart money would bet on 10%.

Renewable dreamers, such as New York Times columnist Thomas Friedman,
believe this magical 3% is somehow different from the gritty old 97%.
Different in the way that the silicon chip is different from the Eniac
computer. In other words, they believe the 3% will see the kind of Moore's
Law exponential gains that will compound heroically in a decade. That is
precisely the bet that the giant venture capital fund Kleiner Perkins
Caufield & Byers is making with its $1 billion-plus green funds. The firm's
best-known partners, John Doerr and Al Gore (yes, that Al Gore), are
convinced that solar, wind, batteries, geothermal and cellulosic ethanol
will see Moore's Law-like gains if the world's best and brightest minds are
assembled to work on them.

I see no evidence of that. Now it's true that solar, batteries and, maybe,
cellulosic ethanol have the potential to make bigger technological leaps
than do traditional sources. But not at the pace of Moore's Law, or even
close. Moore's Law, which rules the world of silicon chips, ordains a
doubling of price-performance every 18 to 24 months. If we could be sure
that solar would double its price-performance every 18 to 24 months--for
decades--then, heck yes, I'd carry the solar flag with Tom Friedman, Al Gore
and the rest. But we don't know that. In fact, it's very much in doubt.

Meanwhile, traditional sources of electricity that are progressing in the
direction of cleaner and more-efficient power are being ignored (or dissed
by Waxman-Markey). Nuclear power has made tremendous strides since the 1979
Three Mile Island accident. Digital monitoring systems are vastly improved.
New light-water reactor designs have multiple redundant safety systems. And
best yet, startups such as NuScale Power of Corvallis, Ore. have designed
small modular power units that could slash the cost of plant
construction--think personal computers versus mainframes.

Coal gets a bad rap, but the fact remains that nearly half of our
electricity comes from coal. To walk away from clean coal technologies while
chasing windmills will be economic suicide. Skeptics of clean coal should
check out Basin Electric's carbon-capture technology at its Antelope Valley
Station in North Dakota.

Bottom line: There is no way the U.S. economy can enjoy future prosperity
without the big three electrical energy sources of clean coal, natural gas
and nuclear power.

Read Rich Karlgaard's daily blog at http://blogs.forbes.com/digitalrules or
e-mail him at publisher at forbes.com. See Rich Karlgaard's new TalkBack video
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