National Academy of Sciences: So Wrong on Energy (Bailey on 1980 report)

The 1980 report heavily emphasized conservation, and noted that coal and nuclear fission were the “only readily available large-scale domestic energy sources that could even in principle reverse the decline in domestic energy production over the next three decades.” The report was extremely pessimistic about petroleum, stating that “world supplies of petroleum will be severely strained beginning in the 1980s.” Government-funded research on synthetic coal-based fuels was trumpeted as a great source of hope.

Bailey reviews the actuality versus the predictions:

So how well did the NAS foresee America’s energy future back in 1980? Well, for starters, energy prices did not quadruple or even double over the past 30 years.

• According to the Energy Information Administration (EIA), the real price of electricity in 1975 was 9.2 cents per kilowatt hour (in 2000 dollars) and it was 9.28 cents per kilowatt hour in 2008.
• In real dollars, a barrel of oil cost $48 in 1975. In 2009, the price has so far averaged $43 per barrel.
• In real dollars, a gallon of regular gasoline averaged $2.21 in 1975, and in August 2009 the EIA reported that regular gas was going for an average of $2.51 per gallon.

And the good news is that the U.S. economy grew at slightly more than 3 percent per year on average since 1985—not the pessimistic 2 percent rate envisioned in five of the six scenarios considered in 1980.

The NAS scenario in which energy prices remained essentially unchanged while the economy grew at a 2 percent rate projected that the U.S. would be using 130 quads of primary energy by 2010. (A quad is a quadrillion British Thermal Units (BTUs), which is equal to the amount of energy in 45 million tons of coal, or 1 trillion cubic feet of natural gas, or 170 million barrels of crude oil.) The 1980 NAS scenario in which the economy grew at 3 percent per year while energy prices were double their 1975 rates projected slightly less than 130 quads of energy consumption by 2010.

As we now know 30 years later, energy prices remained essentially flat and the economy grew at 3 percent. The 1980 report noted that “more rapid economic growth…implies higher energy consumption.” Had the assumptions behind the 1980 NAS scenarios been accurate, Americans should be using far more than 130 quads of primary energy by now.

Bailey then offers a “why” for the discrepancy between predicted and actual.

What actually happened? According to the EIA, the U.S. uses just 98 quads of energy today up from around 80 quads in 1980.

Were various energy conservation measures adopted by federal and state governments over the past three decades responsible for substantially lowering the amount of energy Americans use? Nope. In 2004, Resources for the Future, a think-tank based in Washington, D.C., performed “a comprehensive review of energy efficiency programs in the United States, with a focus on the adoption of energy-efficient equipment and building practices.” They found that energy efficiency programs reduced annual primary energy consumption by 4 quads below what it would otherwise have been. So most energy efficiency improvements in the U.S. over the past 30 years were adopted without government mandates.

The 1980 report also confidently predicted that “technical efficiency measures alone could reduce the ratio of energy consumption to gross national product…to as little as half its present value over the next 30-40 years.” According to the new NAS report, energy use per dollar of GDP has already fallen by 44 percent since 1980, dramatically exceeding expectations without dramatic government intervention.

And what about the mix of energy we would be using? The middle of the road scenario in the 1980 report was called “enhanced supply.” In that scenario policies are enacted to facilitate the fast permitting of energy facilities like synfuels and solar power plants, mines, and offshore oil wells. Not all sources would be maxed out over the next 30 years, but the scenario gives us some insight into what leading energy experts were thinking back then. According to the study, Americans might be using as much as 16 quads of crude oil, 14 quads of natural gas, 8 quads of synthetic liquid fuels from coal, 5 quads of synthetic gas from coal, a total of 50 quads of energy from coal, 41 quads from nuclear, 5 quads from hydropower, and nearly 11 quads from solar energy.  

The 1980 guesses were way off the mark. Next year, Americans will use 27 quads of crude oil, 22 quads of natural gas, 22 quads of coal, 8 quads of nuclear, 2.5 quads of hydropower, 10 quads of other liquid fuels such as natural gas condensates and ethanol, 3 quads of biomass, and 1.5 quads of renewable fuels like wind and solar.

The prospects of various nuclear technologies—including fast breeder and thorium reactors—filled many pages in the 1980 report. However, no nuclear reactors have been ordered in the United States since 1978, and no exotic new kinds of reactors have been built at all. Achieving President Jimmy Carter’s announced goal of 20 percent solar energy by 2000 would cost a predicted $3 trillion (or $7.7 trillion in 2008 dollars). For comparison, keep in mind that the total capitalization of all shareholder-owned electric utilities in 2008 was $652 billion. America’s Energy Future reports that solar power supplies just 0.08 percent of U.S. energy needs today.

Bailey then jumps to the new NAS study (2009), also considered a consensus document–and this time excluding a vibrant group of free-market energy specialists.

So what about the new America’s Energy Future report from the National Academy? Just like in the 1980 report, energy efficiency is seen as the “near­est-term and lowest-cost option for moderating our nation’s demand for energy.” The experts who wrote the new report believe that the accelerated deployment of energy efficiency technologies could reduce energy use by 15 percent in 2020 and by 30 percent in 2030. Interestingly, this is roughly the same rate of efficiency improvement that was achieved over the past 30 years, largely without the help of government mandates and subsidies.

In the 1980 report, coal was king—and fossil fuel still reigns in the Energy Future report. Instead of predicting exciting new nuclear tech, the new report foresees a role for “evolutionary nuclear technologies,” upgraded reactors very similar to the ones operating today.

Although climate change was mentioned in passing in the 1980 report, concerns over man-made global warming loom much larger for many energy experts today. Instead of getting excited about new kinds of nuclear power, the new report focuses on today’s trendy technology of carbon capture and sequestration (CCS). The idea is to safely bury huge quantities of carbon dioxide underground rather than releasing it into the atmosphere. How huge? A single standard 1,000 megawatt coal-fired electricity generating plant would have to bury 300 million cubic feet of carbon dioxide per day. According to the NAS study, this is equivalent in volume flow to about 160,000 barrels of oil per day, comparable to the daily output of a large oil field.

He concludes:

The National Academy of Science reports are supposed to guide the thinking of policymakers about what is needed to advance future energy production. One constant in both reports is the unwavering faith of energy experts in the efficacy of government-subsidized energy research and development, and government intervention in energy production markets. Looking back we can see that the Energy in Transition report from 1980 was largely a failure as an exercise in technical and economic prognostication. More happily, we can also see that it had little apparent effect on public policy.