Energy And The Economy: An Overview Between environmental concerns and rising gasoline prices, energy use has never seemed more entwined with the economy. Guests discuss how oil prices are tied to economic growth, and give a roundup of the latest energy news.

Energy And The Economy: An Overview

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Up next we're going to be talking about the latest on energy policy, while the financial markets have been dominating the news this week. Flying under the media radar was a very important development on Capitol Hill, and that was the passage in the Senate of the Energy Tax Credit that so many developers of alternative energy say they need to continue developing their energies, wind, solar, geothermal, biomass, things like that.

The measure was expected to pass the House, and be signed by the President, but has now once again been stalled in Congress, mixed up with a lot of other tax bills. And not to be missed in all of this talk of banking and Wall Street collapse, is the effect that the markets have on energy in this country, both energy supply, energy policy, energy resource, energy research.

And joining me now to talk more about it is Martin Hoffert. He is professor emeritus of physics at New York University. He's here in our New York studio. Thanks for being with us today.

Dr. MARTIN HOFFERT (Professor Emeritus of Physics, New York University): Hi, Ira. It's a pleasure to be here.

FLATOW: You're welcome. Also with us is Amy Myers Jaffe. She is the Wallace Wilson fellow in energy studies and associate director of the energy program at Rice University. Welcome back to Science Friday. It's been a few years.

Ms. AMY MYERS JAFFE: (Wallace S. Wilson fellow in Energy Studies; Associate Director, Energy Program, Rice University): Yes, it has. Thank you for having me.

FLATOW: Let me ask you while I have you on - well, you're first up. Well, what do you think all this bailout? Is it going to have an effect on the money that might have been put toward alternative energy research and development?

Ms. JAFFE: Well, there was a lot of Wall Street and venture-capital money moving towards renewable energy. Goldman Sachs had some big investments, and so we were seeing some money coming from the Street in that way.

But I do think that that's a fundamental direction for investors today, so to the extent that there are investors and they have money, and we don't have a complete collapse of the banking system where we all lose our deposits. Probably that trend will continue.

FLATOW: Dr. Hoffert, do you agree?

Dr. HOFFERT: Yeah, let's cut to the chase. I think the fundamental issue to even discuss this is to understand the organizing principle that we have of energy policy, which is not really been stated very forthrightly by the candidates. There are going to be several components to this.

One of them, it'll be the private sector. Obviously, it's important to be able to tap the strength of the U.S. for 200 years, a leader in technological development. But in my opinion, new technology - the technologies that we're going to need to fundamentally transform our energy system, and I think it's going to take a revolutionary change, is going to come from the Federal Government.

And I think it has to be an initiative of the new administration. Of course, we need to continue the tax credits that are in place right now, and to have a vibrant renewable energy business.

FLATOW: Mm-hm.

Dr. HOFFERT: But that's not going to be enough. We have to transform the infrastructure, we need entirely new kinds of electric-power distribution and storage systems.

We need to explore a range of primary-energy-production technologies, coal with carbon capture and sequestration, nuclear reactors, particularly new kinds of nuclear reactors with different fuel cycles that can last a long time, and most of all, renewable energy which we still haven't resolved whether the best way to - it's to utilize and distribute, is through to distributed-energy system.

Everybody has a fuel cell in their house, and PV cells on the roof for long distance power transmission.

FLATOW: Mm-hm.

Dr. HOFFERT: I think this is only going to be done through a major program of government research and development, something like an Apollo or Manhattan project.

FLATOW: Dr. Jaffe, do you agree?

Dr. JAFFE: Yeah. I do agree with that. I do - maybe I'm a little bit more optimistic that the market will bring some of these technologies, and it doesn't - I mean, there's a - it has to be a big role for government. I think that the financial crisis unfortunately becomes a competing problem, because to the extent that federal government dollars that were unexpectedly going to now have to be spent on bailout.

That might have been money that couldn't have been put to alternative-energy research, but the Congress is looking at some interesting new ideas for bipartisan compromise. So one of the things that's been introduced up on the Hill, that I think is particularly interesting, is a bill that would allow more areas - offshore the United States to be drilled for oil and gas, but the royalties that would accrue to the U.S government from opening those federal lands, would be dedicated specifically to alternative energy research. So that sort of like a good…

FLATOW: Mm-hm.

Dr. JAFFE: Republican-Democrat compromise were both sides are getting something, and we the American public are getting extra energy supply, and the bridge and road to the future.

FLATOW: The Energy Tax Credit though seems to be caught up now in a morass of other tax-cutting fights upon Capitol Hill. And we keep hearing from alternative-energy people that they really need this tax break to get going on some of these huge projects. 500 Megawatt, 700-megawatts solar-power plants in California, things like that. Is that going to get out in time, do you think?

Dr. JAFFE: I think it's hard to say, but those same bills or those same proposals are also embedded in some of the energy legislation that's floating around.

FLATOW: Mm-hm.

Dr. JAFFE: So, my opinion is the Congress is going to focus on the financial crisis, and then they're going to go into recess, we're going to have the election cycle, and that we will then visit as soon as the elections are over.

There will be this pressure on the Hill to come back to that topic and finish up, and I mean it's possible that they'll get it out under the wire now, as partisan make a compromise on many different things, but I think it's much more likely that the Democrats might actually want to wait for the elections, and have a lot more votes hopefully in their pockets.

From their point view they're thinking that they're going to take over more seats, and there is this sort of effort at a bipartisan energy bill…

FLATOW: Mm-hm.

Dr. JAFFE: That was gaining momentum before the diversion of the financial crisis.

FLATOW: All right. We're going to take break, and come back and talk lots more with Doctor Amy Myers Jaffe, Martin Hoffert. Your questions at 1-800-989-8255 and Second Life, go to Find Science Friday Island there. Ask a question. Stay with us, we'll be right back after the short break.

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FLATOW: I'm Ira Flatow this is Talk of The Nation: Science Friday from NPR news.

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FLATOW: You're listening to Talk of the Nation: Science Friday, I'm Ira Flatow. We're talking on this hour about energy policy, and connect it to politics and the bailout that might be coming. With Martin Hoffert, professor emeritus of physics at New York University, and Amy Myers Jaffe who is also associate director of the energy program at Rice University.

Our number, 1-800-989-8255. Let's go to Scott in Palo Alto. Hi, Scott. Scott, are you there? Scott? One last shot? Though - well, I think one of the things he was talking about, it's kind of what I wanted to ask was - I don't know if Scott isn't there anymore - was whether we can use this as an opportunity to rebuild an infrastructure.

Dr. HOFFERT: Well, look this is not a business-as-usual problem. This is a massive problem that's an existential challenge to our civilization. I mean, the tundra is melting, the ice caps are melting, I never thought in my lifetime, I'd see Antarctica start to go, but the satellites are showing that that's happening.

The oil peaks that were predicted by geologist King Hubbert back in the '50s predicted that 1970 domestic oil peak, and the global oil peak at the beginning of the 21st century. They're not only happening, they're causing an increase in the price of oil, and more than anything else, they're causing a shift in the fossil fuel mix from gas and oil to coal, which is re-carbonizing the fossil-fuel mixture, and making the problems of climate change even more dangerous than we thought they were going to be several years ago.

So we need a response that's appropriate to the nature of the challenge. And I think one of the things that really needs to be done by the next president, I don't think we have any time to waste, is to upgrade the position of secretary of energy to something that would have the stature of secretary of state or secretary of defense.

Because whoever this man or woman is, is going to have to negotiate with countries like India and China. This is an international problem, isn't restricted to the United States, and do something about the fact that a power plant is being built virtually every week, primarily by China, but also by India and the U.S., that's putting so much CO2 into the atmosphere, that by 2012, there are going to be five times as many carbon dioxide - as much carbon dioxide emitted to the atmosphere, as would be reduced by the Kyoto protocol...

FLATOW: Have you got names of people who you'd put in those positions?

Dr. HOFFFERT: Yeah. I'll tell you what my like short list is. I'm going to be - I'm always accused of being your typical eastern liberal college professor, but I've got two Democrats and two Republicans.

FLATOW: Mm-hm.

Dr. HOFFERT: Certainly Al Gore would probably be my first choice, but Bill Clinton could do it. Mike Bloomberg, mayor of my fair city of New York, and Arnold Schwarzenegger are both guys who have a lot of political experience and who are very interested in the problem.

FLATOW: Mm-hm.

Dr. HOFFERT: And we have to carry the ball now after eight years of basic neglect.

FLATOW: Mm-hm.

Dr. HOFFERT: And what would these people do? I would use as a model, the FDR's War Production Board, which got a lot of things done in a remarkably short time. Time prevents me from going into the details, but I would set up a brain trust in the West Wing of the White House.

These could be people that the president would meet with everyday, along with the Secretary of Energy, and they would be drawn from many sectors of our society, heavily from Silicon Valley. People who know how to run businesses, as well people who understand the technical challenges.


Dr. HOFFERT: And I would set specific targets that would involve the construction of demonstration plans, across a very broad spectrum of technologies that would include nuclear coal with carbon sequestration, new kinds of transmission lines, and some fairly advanced kinds of energy-distribution system that might even collect solar energy in space and beam it to the earth.

FLATOW: Dr. Jaffe, would you agree with this kind of approach?

Dr. JAFFE: Well, I - we certainly need a national initiative. I sort have had an alternative view which I've discussed with the congressman that are interested in having a science initiative. I don't have a lot of great faith in, you know, creating a new sort of homeland security department though, I guess they were effective, but because I really think that it is a challenge of science as Professor Hoffert said.

So, I really think we need to have a national summit, and that summit should really involve our top scientists, in different fields. I mean one of the things that happens in government-funded science today is you have stove-piped pet projects, where you know, university A or national ad B are looking only at cellulosic ethanol, and there's somebody else in a different lab looking at pebble bed or thorium nuclear.

And you're not getting the cross fertilization from crosscutting fields like nanotechnology and new material science, that could really benefit us in many different of these spaces. So what you really want to do is figure out who's doing what, what has the greatest potential, you know, public private partnerships to get massive funding. I agree with Professor Hoffert, we're talking about billions of dollars of program, not hundreds of millions.

FLATOW: Mm-hm.

Dr. JAFFE: And some of the funding can come from the private sector, we're seeing even the, you know, traditional oil and gas companies responding with the BP, giving a giant grant to the University of California for biofuels, and other companies looking at specific interest in technologies.

And we want to have a national direction, and I agree with Professor Hoffert, that the key to the space program was they would define goals, we want to be able to do A, B and C to get into space, and therefore grants were given based on (unintelligible) science that could get you to that goal in a five-year time frame or a 10-year time frame, and there were exact deadlines, and exact technologies that were needed.

FLATOW: Mm-hm.

Dr. JAFFE: And that's we need, we need a highly-focused effort that targets the kind of technologies we're looking for. I think, for example - I mean, I'm a big believer in distributed electricity being a solution, if we could have battery storage and plug-in cars that gives us a lot of flexibility.

FLATOW: Yeah. If you could just agree that everything would be electrical, then you could just agree that the final source would be electricity if you're having plug-in cars. But speaking of distributed systems, you have one right there in Texas that at least T. Boone Pickens is trying to set up for the - his own state, right? What about this idea that he has for using liquid natural gas as a stepping stone to other alternative energies, and running cars on them?

Dr. JAFFE: Well, we - listen. We are definitely going to use more natural gas in this country, and despite all the "we're-running-out-of-resource claims," you know, there's a new play in the United States called gas shale, so we're seeing renewed production of natural gas in places like Virginia, Pennsylvania. They're saying there's potential in New York, so it's not just here where I am in Texas and Louisiana where the play started.

FLATOW: Mm-hm.

Dr. JAFFE: So we are going to see more natural gas in the United States, so I understand where the Pickens plan comes from, but we're not going to see so much that someday in my lifetime, and I won't date myself, but let's just say, you know, we're talking in decades hopefully and not years, that we're going to be importing a lot of gas from the Middle East just like we do with oil.

And so it doesn't make sense to spend billion of dollar to change our transportation infrastructure to gas, when as you yourself correctly point out, Ira, if we make electricity the medium, then all I have to answer to the question with this, how do I generate that electricity?

So as Dr. Hoffert correctly says, if I'm going to use coal, it has to be with some technology that decarbonizes it, but I could also switch to renewables if I can get there. But storage of electricity is going to be key, because in the current technology we have today as everybody knows from walking around with their cell phone, and having a fight a with their mother and having it take a long time, we don't have electricity storage mediums that are very long in nature.

FLATOW: Mm-hm.

Dr. HOFFERT: But...

Dr. JAFFE: And so for something like wind which can be intermittent or something like solar where you only have half the day of supply, we really need to hit this storage technology.

FLATOW: What about hydrogen? People talk about storing the electricity as hydrogen when they have peak, you know, and you can move it around the country.

Dr. HOFFERT: Look, if I may comment. I think if - one of the most immediate areas that is of interest to Red States, as well Blue is transportation, because of the peeking of oil. And generally, you have three kind of classes. You can go to biofuels, and that leads you directly to cellulose, because corn ethanol was a loser, and everyone agrees with that.

You can go to hydrogen, but it's a very expensive infrastructure, or you can go to battery technology. Now, there's a certain amount of overlap. The question is, how do we know which direction that we're going to go in. It's very expensive to build any of these infrastructures, just as it's going to be a major commitment to rebuild the infrastructure for electric-power generation and distribution.

I think the most important issue right now is to shift the terms of discussion about energy, from whether we want to pay for it with a cap-and-trade scheme or carbon tax, which I'm for as long as it's revenue neutral.

I think that's the least-important part. I think that the real analogy of the situation that we're in right now, is World War II, when we confronted a terrible crisis, and we were in the midst of a terrible depression. We had no money, much less than we have right now. We had to pay for World War II, of course, we sold war bonds, and we borrowed.

But by the end of the war, the United States was the strongest country in the world.

FLATOW: But the whole country realized that as a problem. They were willing...

Dr. HOFFERT: Precisely why this is a political problem, and we require political leadership. And I think that's why - where the emphasis should be right now. We should be holding their feet to the fire of the candidates, to be explicit in what they're energy policy is, and to face some of these real issues...

FLATOW: Mm-hm.

Dr. HOFFERT: Which are technical and engineering issues, as well as political and economic matters.

FLATOW: Mm-hm.

Dr. JAFFE: But politicians have to honest with the public, because you know...

Dr. HOFFERT: Sure.

Dr. JAFFE: There is this theme that somehow with no change in habit to myself, the U.S. government is going to come up with a plan, and create a doohickey, and once the doohickey is in place, there'll be no carbon and no energy shortage. And I mean, I'm an optimist, I'm a technological optimist, I believe that if we put enough money on it, we'd find it, because we did get to the moon and people at Rice University, you know, in five years, came up with a way to take a nanoshell and cure people of breast cancer.

So I believe that it can be done, that same nanoshell can collect solar energy. But the bottom line is, it's not going to happen overnight. Even if you get the technology quickly, like some of the nano research's done, you still have the scale up of deployment which is time consuming. And you know, it might be more than one technology, it might be many technologies. So the question is, you know, all the candidates stand up and say, you know, here, I - you know, Obama or even McCain, I have announced the number. And even President Bush, you know, we're going to reduce our dependents on oil by X amount, by X year. Well, you know, show me the detail, all right.

FLATOW: Do you think...

Dr. JAFFE: Because when all of them start talking about the detail - I've seen public puling on this, people believe that in 10 years, it is possible to shift the entire country to solar energy, and that is really actually not possible.

FLATOW: Do you think this will ever come up in the presidential debates? I mean, some real talk about the details?

Dr. JAFFE: You know, you'd have to put someone like me or you, Ira, into the town meeting and let us have that question.

Dr. HOFFERT: That's precisely the problem. The problem is that the real issues are not being debated. You don't actually get to see an energy expert or a climate expert on shows like "Meet The Press."

There are very few publications that are adequately covering it. And even people who are concerned with things like climate change, and environmentalist tend to tune out when the science is discussed. Now this is a complex issue, and there's a real question about whether complexity is a challenge for democracy.

I mean, how in a democratic society, when you have very wide spread scientific illiteratcy(ph), particularly in the government, are you able to deal with these kinds of problems, where you don't have the right kind of advisement to the President or the Congress.

There's no technology assessment organization that analyzes these issues, and therefore we're sort of dancing around the real problems.

FLATOW: This is Talk...

Dr. JAFFE: And we get things like...

FLATOW: Wait, wait, let me - Dr. Jaffe, let me just interrupt for a second, I have to take care of business to pay the bills. I remind everybody that I'm Ira Flatow, and this is Talk of the Nation: Science Friday from NPR News. OK. Amy Jaffe, go ahead.

Dr. JAFFE: And so, you get things like the Pickens plan, when you first hear the Pickens plan, it sounds very exciting. But then when you get in to the details, and we in West Texas last - within the last year, we had a week or two where it actually wasn't windy.

And that means that you have to bring on more electricity from natural-gas peaking plants, so we didn't have a brown out. But...

FLATOW: But Dr. Jaffe, if you had other wind mills around the country where it's always windy at some point, or you had solar energy where the sun is always shinning...

Dr. HOFFERT: I'm sorry, but...

Dr.. JAFFE: Then I need to have transmission wire...

FLATOW: Right. Right.

Dr. JAFFE: That can bring electricity over long distance.

FLATOW: That's right. And we don't have those.

Dr. HOFFERT: Or we need storage.

Dr. JAFFE: No, but of course (unintelligible)...

Dr. HOFFERT: Or we need - look, the country with the biggest penetration of wind energy right now is Denmark. They - in their generation, they're 20 percent wind, not near usage, and the only reason they can do it, is they have an electrical grid in Scandinavia that's connected to Norway.

Norway is a hundred percent hydro, so what happens is that the Danish electrical generators use pump storage. They pump the water up in impoundments in Norway, and that's basically free.


Dr. HOFFERT: We don't have anything like that. Pump storage is a very small fraction in the United States.

FLATOW: It doesn't mean we couldn't develop energy storage system or create networks if really wanted to.

Dr. HOFFERT: We could. We could. But this is why, I think, the importance of a government R&D and having people who are actually smart about these issues, advising on what needs to be done. There are very few people working on the storage issue. There are very few people thinking about national and international grids.

The reason for that is that the deregulation of the electric utility industry made nobody responsible for the electric grids. And we have a need as nation for that kind of infrastructure, why is it all right to have a national highway plan, where the government builds the interstate highways system which was done under a Republican, Eisenhower.

FLATOW: Eisenhower, yeah.

Dr. HOFFERT: And not realize that we need the same kind of infrastructure for electricity to make it friendly to renewables.

FLATOW: Amy Jaffe, how do you get this on the radar screen? Or...

Dr. JAFFE: You know, it's - Martin and I have been working on this for a while. It is very difficult, because I find - you know, it was very easy I think, I spent a lot of time and so did many other experts and you yourself Ira, really making the public aware that the kind of mileage their car got made a material difference.

And I think that most Americans understand that today, we got a great bill out of the Congress this year, with the 35-mile-an-hour target. And I think thae people understand that going to 50 would be even better, people get that. But when you talk to people about electricity, it seems invisible, I flip my switch.

Right? So that when I may - environmentalist who doesn't want a dam to stay on, because I want to go kayaking. Right?


Dr. JAFFE: I'm not understanding how much electricity is provided in the United States from hydroelectric. And if we turn it off, that might be more coal (unintelligible).


Dr. JAFFE: So there is this - and even the Kennedy's who, you know, love them as I do, you know, they want to have tidal power in windmills, but not where their summer house is.


Dr. JAFFE: So we have this really huge problem in electricity. And I do think that you, Ira, do a great service, and I hope all the other media listening to this show today, take on to it, because there hasn't been enough attention and education in the electricity space.

And, you know, people have all kinds of interesting things we could do in electricity. But we do - we're not giving, we spend...

FLATOW: All right. Dr. Jaffe, we have to hold on. We have to take a break. I know, you're just getting wound up, so stay with us. And I don't blame you. Stay with us, we'll be right back after this short break, talking about energy with Martin Hoffert and Amy Jaffe, we'll be right back. I'm Ira Flatow, this is Talk Of The Nation: Science Friday from NPR News.

FLATOW: You're listening to Talk of the Nation: Science Friday, I'm Ira Flatow. We're talking this hour about energy policy with Martin Hoffert, professor emeritus of physics at NYU and Amy Myers Jaffe, associate director of the energy program at Rice University. And Dr. Jaffe, you were talking about trying to get public attention, and mentioning, and getting some sort of details from our candidates in any of these debates that are coming up.

Dr. JAFFE: Yes, we - these - the level of detail - I mean, you know, they say, go to my website, you'll see the detail, but the level of detail is not highly informed. And you know, you see some discussion about needing R&D and so forth.

But again, having a really informed knowledgeable plan that was - do the (unintelligible) things that need to be looked at, and the level of spending that is needed, and no candidate has a plan where they actually mention where will we get the money from and how are we accomplish that.

So the (unintelligible) 11:23 is sort of, you know, devil-in-the-details mechanism. And when it comes to electricity, just to sort of give you the scale, so maybe we spend a couple of billion dollars a year now on clean-coal research or continuing nuclear research. But the DOE's budget for transmission-technology research is $3 million a year.

FLATOW: For power lines.

Dr. JAFFE: For power lines.

FLATOW: $3 million bucks is...

Dr. JAFFE: That's all.

FLATOW: Losing the paper clip some place.

Dr. JAFFE: Right, precisely. OK. The budget for solar energy is similarly meager at $70 million dollars a year.

Dr. HOFFERT: Look, the entire...

Dr. JAFFE: So if either of those things was increased to a billion dollars or $5 billion or whatever, we would be getting a lot farther along.

Dr. HOFFERT: The entire DOE budget for energy is about $3 billion, out of a total of about a $120 billion that we spend for R&D. We think that you - we ought to be increasing that to something like $30 billion a year. And in fact Obama, although, I completely agree with you, about the lack of specifics, Obama has talked about a $150 billion over a 10 year period, which would be 15 billion a year, but he's not telling us how this is going to be spent.

And I think it would probably be very infective to just dump this money on the Department of Energy. This is going to require a lot of thinking, and a lot understanding, and a commitment to education and to people who have an understanding of science and technology, we have to revitalize, revamp our whole science education. There's one point though that I really think (unintelligible)...

FLATOW: You got about a minute left.

Dr. HOFFERT: Right, that I want to leave with. Leadership is the key. When JFK gave a very famous speech, it was at Rice University at the beginning of the Apollo program, he said, people ask us, why do we go to the moon and why do we do the other things.

We're not going to the moon because it's easy, we're going to the moon because it's hard. And because going to the moon will serve to organize all of our skills and our energy. In other words, he called upon the strengths of the United States to address a challenge. When was the last time we heard a president say that. I think that's what we're going to need, and I think that's what needs to be input into the campaign to the U.S. presidents.

FLATOW: Mm. Any last words, Dr. Jaffe?

Dr. JAFFE: I would add to that, that all the technologies that run our lives today, BlackBerries and the little batteries in them, our laptops, the Internet, you know, (unintelligible). I mean, a lot of these sciences - technologies came as the outshoot of basic science that was done for that space program.

And unless we have a comparable program, and we can inspire young people to stay in engineering. We will not be a competitive society 10 years or 15 years from now. After we get out of our banking crises, we won't be able to compete in science and technology the way we have and what's kept this country great. So, it's more important even beyond the energy problem. It has a lot of, lot of direct consequences for our future and for the next generation. So it really is an imperative thing. I certainly agree...

FLATOW: Mm-hm.

Dr. JAFFE: That it's got to go outside the Department of Energy. We need to bring the top people in science together under political leadership, to meet this challenge the way we did during the space race.

FLATOW: All right. Thank you both for taking time to be with us. And maybe we'll see something mentioned on the debate tonight. Amy Myers Jaffe, Wallace Wilson fellow in energy studies, associate director of energy at Rice University. Martin Hoffert, professor emeritus of physics at NYU, here in New York. Thank you for being with us today.

Dr. HOFFERT: Thanks a lot.

Dr. JAFFE: Thank you.

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