A Free-Market Energy Blog

Towards Sound Energy Policy (Part II – Sensible Approaches)

By Kent Hawkins -- January 17, 2013

Part I yesterday addressed the drivers and flawed approaches to current energy policy in many developed Western countries. Part II today describes the rational approaches necessary to best position us to withstand all challenges/threats that face us, both known and unknown.

Time frames are an important consideration in assessing the various elements of sensible and feasible energy policy programs. Here are the periods used in this discussion, which are nominal in nature:

  • Short term (Up to about 10 years) – In this time frame, major radical changes in our energy infrastructures are not advisable and should be avoided, because energy is so intrinsically bound up in everything we do. Ill-advised, extensive tinkering with these is dangerous to our well-being. Best use must be made of reliable and powerful energy sources which are consistent with existing energy infrastructures and uses. Sufficient, sound R&D initiatives must be established. This is largely an initiation period.
  • Medium Term (approximately next 30 years) – This period should ensure improvements in: (1) the best practices across the fuel life-cycle; and (2) technologies for existing energy infrastructures. R&D is important to the success of this but should also be at least equally directed to new technologies needed in the longer term. This is a transition period.
  • Long Term (beyond approximately 40 years) – This period is the realistic time frame for new technologies to start to make major, fundamental changes to existing energy infrastructures. It is a period of fulfilment of energy policies and programs put in place starting today.

In general terms, these time frames put activities and developments roughly into the first and second half of the 21st century. It is emphasized that these are not rigid boundaries, but realistic expectations of developments. Pleasant surprises are always possible and could change some aspects. It also best positions our societies to meet unpleasant surprises against which reliable, extensive and powerful energy sources are the best defense.

Fossil Fuels

The arguments used by opponents of fossil fuels are basically limited reserves, leading to shortages and high prices, and issues regarding the environmental impact in the extraction of fuels and the emissions from the conversion process to electrical energy, especially for coal. The main shortcomings of these arguments are:

  • The presumption of being able to predict the future supply and costs, as recent developments in the unconventional sources has shown. Reserves for these energy sources are: coal – hundreds of years; gas – in the order of a hundred years; oil (mainly involved in transportation not electricity) – subject to some discussion, but enough to buy time for transition to other, better energy sources. [1]
  • The implied discounting of the possibility of notable technological improvements in fuel extraction, energy conversions, pollution controls  and waste mangement.
  • Lack of understanding of the immensity of the task and risks involved in extensive and radical, short-term changes to our existing all-pervasive energy infrastructures.

One important factor is that using natural gas in electricity production produces about one-half the CO2 emissions rate as coal, and with its wide-spread new abundance makes it the most likely prospect for a large share of our energy needs consistent with all our concerns for many decades. It thus provides the means to have the quickest, reliable impact on emissions and energy security/independence. Note should be taken of some concerns about the effects of total greenhouse gas emissions.

Natural gas also has the ability to be used in the transportation sector, but not as immediately as in electricity systems. In the longer term, electricity will likely play a large role in transportation energy needs as well. However, these considerations are complex beyond the scope of this post.

The point is natural gas has to be seen for now as a candidate in the transition platform to future sustainable and environmentally friendly energy sources and conversions. Its use in a transition role should not be taken to exclude natural gas, or any fossil fuel, from the future possibilities, because the intent here is not to pick winners for a time frame decades in the future.


Nuclear has the characterisitc of the least emissions in electricity production, relatively speaking virtually none. Its share of electricity production globally is only about 12% for a variety of reasons. It also has the capability to supply the majority of our long-term energy needs, which might be made possible with strong R&D initiatives, including those addressing current concerns, along with public education programs. Think in terms of the electrification of transport and desalination of water as indicators of the extent of future electrical energy needs.

Roadblocks to a substantial early increase in its deployment are considerable and include high implementation costs and long implementation times of about six-plus years (although the result is long term, economic reliable supply of electricity). Public concerns about safety, used fuel handling and nuclear weapons proliferation will likely be shown to be largely unwarranted and counter-productive.

The financial roadblock is especially significant if all forms of government support are withdrawn from electricity generation projects, as some would recommend, and this approach has some merit in that it removes government interference. If left solely to the operation of free markets, it is unlikely that significant growth in nuclear can occur in the short term in Western democracies due to the inevitable absence of stable, long-term energy policies. Growth will occur in developing nations, such as China and India, which already plan over 30% increases because demands for energy growth are large and government intervention is almost certain.

Even so, with more advanced technologies, including some available today, and a better informed public, the medium-to-long term will likely show considerably increased use of this energy source in all countries. For example there are developments with the generation IV  Integral Fast Reactor (IFR) technology that are notable and could be commercially deliverable within a decade.

The plants using IFR technology are modular in design, inherently self-regulating and less complex than today’s nuclear plants, which adds to their operational safety. They have the capability to significantly reduce both the amount of nuclear waste and its long-term effects, including existing stockpiles and disposal of weapons grade materials, as well as reduce risks of proliferation.

Another possibility is that of small (sometimes referred to as nuclear ‘batteries’), and even medium scale nuclear electricity plants in undeveloped nations, under strict controls and physically confined, to assist these in their economic development without the attendant emissions impact.


No review would be complete without pointing out the possibility of a pleasant surprise development in any time frame. In the short to medium term, it is vital not to jeopardize our access to reliable energy in the quantities needed to support our complex modern societies as well as provide for sufficient development of other energy technologies and sources, perhaps leading to a surprise made possible by this.

By definition surprises cannot be described, but it is possible to think of possible candidates, which are already known to some, but which would somewhat qualify as a ‘surprise’ to most of us, perhaps even to those looking at it now. One such would be the use of metals as fuel, which could be important for transportation. In this case the metal is not an energy source but a carrier, like electricity or hydrogen, with the advantage that used fuel could be re-cycled (requiring energy) to recover the metal involved for re-use, and require no substantial, new infrastructure for deployment.[2]

Alternatives Summary

These are focussed on the short-to-medium term of the next 40 years. During this period it is possible to envisage the beginning of a transition to other alternatives not yet available. Importantly, this is not a process of picking long-term winners, but recognizing the reality of our current position, and the difficulties involved in changing our energy infrastructures, which are very large and intrinsically involved in all aspects of our lives. A summary of the available alternatives is:

  • New renewables – These can be eliminated as they are not capable of meeting our short to medium term energy needs, in terms of quantity and quality, to address the challenges that we face. The second half of this century might see a likely limited but notable role for improved technologies in direct solar conversion to electricity.
  • Hydro – Significant increase in hydro generation is limited by available sites and the large land areas generally required for reservoirs.
  • Energy efficiency and conservation – Although these have desirable outcomes and should be encouraged, they cannot be depended on.
  • Nuclear – In the short term of about 10 years, nuclear will likely not be allowed to play a major role in addressing the energy needs in developed countries. In the medium term, in the absence of a ‘surprise’ alternative, this will most likely change as fourth generation nuclear technology becomes generally commercially available. For now it is destined to be a large factor in developing countries and could have a important role in assisting undeveloped countries.
  • Fossil fuels – Supplies and infrastructures largely exist to be leveraged by developed and developing countries, which have good access to the fuels. In addressing AGW and some other concerns (such as fuel extraction processes, life-cycle caused deaths, and waste issues), coal is a candidate for replacement by natural gas plants for electricity generation. Within the global warming context, this assumes that high-sensitivity AGW scenarios, and not global lukewarming, gain scientific merit.

In the short-to-medium term, where growth in hydro and nuclear are not possible, for whatever reason, natural gas is a candidate for growth and plant retirement needs. On a medium-to-long term basis, natural gas also provides the possibility of reducing dependence on oil in the transportation sector.


For the foreseeable future, the optimal energy policy appears to be for the extension of the role of natural gas in electricity systems to replace coal and for growth. This lends itself best to allow private capital to act independently, which reduces the need for government intervention, provides a quick reduction in emissions of about 50%, contributes to energy security/independence and sustainable economic/industrial development, and best positions us against all climate outcomes.

Where possible, improvements should be made in fuel extraction, conversion technologies and waste handling during this transition stage. As well grid and other infrastructure improvements that are needed to support adequate and reliable electricity supply should be made. The term ‘smart grid’ should be removed from our vocabulary until we determine what is really smart.

In developed Western countries, unless a notable measure of government intervention is accepted, the immediate role for nuclear appears to be to ‘hold the line’, along with hydro to provide a strong defensive base for other initiatives. This is not to say that there should not be growth in nuclear capacity, but this will be necessarily limited by the implementation times and capital costs. For nuclear to become a significantly larger share would require long-term policies that supported the implementation time frames and the investments required to allow the private sector to take the necessary initiative. Unfortunately Western democracies seem to be not well equipped to provide this.

In the short-term, nuclear remains a serious option in developing and even undeveloped countries, where growth needs are significant and ill-informed public opinion is less a factor. In the medium-to-longer term, generation IV nuclear reactors have the potential to provide the large energy requirements needed globally.

Considerable R&D is vital to long term needs and must be conducted to develop new technologies for energy sources and conversions, as well as improving existing ones during transition periods.

If this sounds too tentative, it has to be. It represents as close to a ‘least regrets’ option as can likely be found in providing essential energy needs to meet the challenges facing our societies. In summary, the perennial questions are: is there enough ‘market failure’ to not accept natural consumer-driven markets, and if not, can government effectively improve upon the market by picking long term winners for commercialization today. A romantic view of government suggests so, but a more realistic assessment of government urges caution.

[1] Helm, Deter (2012). How We’re Getting Climate Change Wrong – and How to Fix It. Yale University Press. Chapter 7.

[2] I am not looking for a discussion of this as a possibility, nor am I championing it, but include it because of its provocative value. Anyone wanting to look further at it is encouraged to do so.

One Comment for “Towards Sound Energy Policy (Part II – Sensible Approaches)”

  1. rbradley  

    Two key questions are behind posts like this one. First, is there “market failure” with consumer-driven energy choices that still needs to be addressed either by civil society or by government? And second, if government, is it reasonable to assume that “government failure” (including unintended consequences) will be less than the market failure that is being addressed.

    I think just about anyone in the 1970s would be amazed today at both the negative correlation of energy usage and pollution, and the positive correlation between energy usage and fossil fuel discoveries/inventory.


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