“For every complex problem there is an answer that is clear, simple, and wrong.” -H. L. Mencken
The popular level discussion of climate and energy policy often oversimplifies renewables to the point of parody. Many well-meaning, educated, and intelligent people believe renewables will solve global climate issues, power the world, and resolve conflict. That is not likely to happen any time soon.
It is not that renewables can’t accomplish some of these goals, it is that too many hopes and ambitions are pinned on them without serious and critical evaluation. Like all technology and infrastructure projects, renewables like wind, solar, geothermal, and hydropower, along with nuclear and hydrogen come with serious challenges. These include high capital costs, reliance on supply chains and international markets, energy intensity to build and deploy, lifecycle emissions, waste, and environmental issues, and an uphill battle through regulatory and permitting hurdles that can take more than a decade to overcome.
Renewable energy projects and other decarbonization strategies must confront the realities of economics, regulatory policy, and timing. As critical infrastructure components, these energy projects also face another challenge: the state of existing and needed infrastructure. A solar farm cannot provide power without transmission lines, for instance. When considering new capacity from a remote plot of land for wind or solar power, that will require new transmission infrastructure and potentially new power storage facilities. These all require their own analyses.
Most decarbonization strategies fail to pass what I call a “cumulative cost-benefit analysis” that reveals contingent factors and wider external realities. When this cumulative cost-benefit analysis is completed, it reveals a ballooning effect to most decarbonization strategies and mainstream renewable advocacy.
If our view of renewable power is overly siloed, a given project often looks far more feasible than it will be in practice. All we need for a certain amount of power from a solar or wind farm is the right number of solar arrays or turbines, which can be calculated simply based on acreage and weather/climate factors. That simple view belies a vastly more complex reality.
The power project must acquire rights to the land, which may entail eminent domain or costly and time consuming community engagement campaigns. It must undertake numerous and detailed environmental and cost-benefit analyses. Often the project is delayed by environmental litigation or permit reviews. The raw material acquisition and construction can also take years. All the while, no power is being generated.
This broad view of costs and benefits is not uncommon. Experts and analyses are familiar with them – although for the most part cost-benefit analyses take place within the regulatory and permitting process. The model we put forward pulls the cost-benefit analyses to a higher plane, accounting for the regulatory and permitting process itself to be viewed clearly as a cost. Likewise, the amount of time it takes for the project to go from initial conception to generating power is a cost and tradeoff that is not adequately captured in most analyses.
The cumulative cost-benefit analysis framework that we use therefore captures more than the typical cost-benefit analysis from a traditional study that promotes renewables, and we show real challenges that must be overcome before the a given strategy or project is viable. But our framework offers a second augmentation to tradition: the cumulative nature.
The power project that is not already positioned near its end user or the power grid will require new infrastructure. This may be industrial-scale batteries, transmission lines, or even new pipelines for hydrogen. These require their own stand-alone and comprehensive analyses. That means a full economic, regulatory, and timing analysis for the supporting infrastructure.
In our latest report, we assess industrial and commercial process heat as an example for evaluating economy-wide decarbonization strategies with our new framework for policymakers.
This reveals a ballooning effect for going too fast on renewables.
In that cumulative cost-benefit analysis we use six factors:
- Environmental Impact,
- Regulatory and Permitting Compliance,
- Timing Readiness,
- Logistical Feasibility, and
- Power Potential.
Using this model, we assess multiple methods of producing hydrogen, direct heat from nuclear and geothermal sources, and electrification via wind, solar, hydropower, geothermal, and nuclear. For policymakers in a position to promote or regulate energy projects and nationwide strategies, this analysis is critical.
We cannot simply subsidize or penalize energy resources into viability or out of favor, and we must confront the existing and projected infrastructure needs inherent to each strategy. Moreover, a cumulative cost-benefit analysis means that, where necessary, the same analysis is conducted for necessary conditions that are not yet present.
Based on qualitative research and expert analysis, this paper puts forth a framework that will be utilized in future research. This framework factors in cost, environmental impact, and broader legal realities like permitting, construction timelines, and legal challenges. From the analysis conducted here, the most economically and politically feasible pathways demonstrating promise to decarbonize the industrial and commercial heat sector appear to be distributed “low-carbon intensity” production of hydrogen from natural gas and greater development and use of nuclear power. The remaining strategies appear substantially less feasible when evaluating them holistically, but engineering and public policy realities may vary or change over time.
Read our latest report to learn more.
Written by Benjamin Dierker, Executive Director
The Alliance for Innovation and Infrastructure (Aii) is an independent, national research and educational organization. An innovative think tank, Aii explores the intersection of economics, law, and public policy in the areas of climate, damage prevention, energy, infrastructure, innovation, technology, and transportation.