by Bill O’Keefe
State law, embodied in SB 851, requires Dominion Energy to supply 30% percent of its power from renewable energy sources by 2030 and to close all carbon-emitting power plants by 2045. In other words, Dominion must develop a plan to be emission free by 2045, less than 25 years from now.
The preeminent energy historian and author, Daniel Yergin, has just published The New Map: Energy, Climate, and the Clash of Nations. Not only does he address the geopolitics of energy but he addresses the challenges of transitioning from an energy budget that is 80% oil, gas, and coal to one that has net zero emissions.
The history of energy transitions shows that they do not happen quickly, according to Yergin. The movement from wood to the dominance of coal took 200 years and it took another 100 years for oil to replace coal as our dominant energy source. Of course, those transitions did not involve the incentives created by government policies and funding, political activism, and the push for new energy technologies. The use of industrial policy to bring about this transition sooner may succeed but right now it is a triumph of hope over experience. During the time when the first oil embargo created economic havoc, the administrations of Richard Nixon and Jimmy Carter invested heavily to bring about alternatives to oil. All they achieved was a waste of billions of dollars.
Industrial policy — government efforts using policy and funds to move an industry to a desired outcome — is an example of “fatal conceit.” History demonstrates that technological change is not a cleanly plannable undertaking. Legislatures that engage in such technology forcing are simply engaged in Baptist and Bootlegger activities. The one thing that is absolutely certain is stimulation of more crony capitalism and a waste of resources.
According to Yergin, “meeting the goal of net carbon zero — a proxy for the 2045 Dominion goal — will require breakthroughs and innovations in chemistry, physics, and materials science, as well as advances in carbon capture, hydrogen fuel, artificial intelligence robotics, software data analytics, and other technologies.” While Yergin was referring to achievement of a national goal, the challenges identified apply also at the firm level.
The crisis mentality that led to the General Assembly action ignored four important points. First, the United States has been making steady progress in reducing CO2 emissions. Since peaking in 2005, they have steadily declined from 5.9 million metric tons to 5.1 in 2019.
Second, and more important, according to Jesse Usabel of Rockefeller University the world has been decarbonizing for over a century—from wood to whale oil to coal to oil to natural gas. The next phase will be hydrogen whenever it comes.
Third, technology forcing has proven to be a fool’s errand. The notion that government knows enough to pick a target and far off date is seductively appealing the evidence suggests that it should be avoided because failure is virtually guaranteed.
Finally, since CO2 emissions are global, what happens globally is more important than what we do domestically. Asian and African nations are burning coal to raise their standards of living and China in particular has plans to build 200 to 300 coal-fired plants over the next 12 years. Ironically, 50% of the world’s electric vehicles are in China, which is building these plants, at least in part, to charge their zero-emission vehicles.
It would make more sense for Dominion to pick a five- and 10-year goal to strive for while holding utility rates constant when adjusted for inflation. Such an approach would send a message that Virginia is committed to be one of the best, if not the best for business to invest here. The late Secretary of Energy, Defense, and CIA director James Schlesinger termed such an approach as Lewis and Clark planning. When there is a great deal of uncertainty it is better to pick near-term goals, gather new information, and then adjust the goals.
Thomas Jefferson sent Lewis and Clark to discover the west after the Louisiana Purchase. Why not let their philosophy and Jefferson’s passion for science guide the Commonwealth’s energy future?
William O’Keefe, a Midlothian resident, is founder of Solutions Consulting and former EVP American Petroleum Institute.
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