the Office of Energy R&D Policy, the Office supportive of the Director of the NSF in his role as Presidential Science Advisor. Craig is a physicist, and published over 60 research papers while working at the Los Alamos Scientific Laboratory and the Brookhaven National Laboratory. His present interests are energy policy, with particular emphasis on conservation and renewable resources. TESTIMONY OF PAUL P. CRAIG DEPARTMENT OF APPLIED SCIENCE BEFORE THE U.S. HOUSE OF REPRESENTATIVES SUBCOMMITTEE ON ENERGY AND POWER, WASHINGTON, D.C., JUNE 14, 1979, ON THE DOMESTIC POLICY REVIEW OF SOLAR ENERGY: A RESPONSE MEMORANDUM TO THE PRESIDENT OF THE UNITED STATES (DEPARTMENT OF ENERGY TID-22834, FEB., 1979) I am Paul P. Craig, a Professor of Applied Science in the College of Engineering at the University of California, Davis. I am pleased to speak today about the Domestic Policy Review of Solar Energy. My message is simple, and I have just three points to make: I. There have been a large number of studies which argue pursuasively that it is technically possible for the nation to be strongly on the road toward a solar-based economy by the end of the century. II. The nation is becoming increasingly vulnerable to interruption of its external energy supply, and we are paying a heavy price for this in terms of inflation and loss of national security. III. It is time for national commitment to solar energy and energy conservation. This commitment must acknowledge the national need characteristics of the problem, the continuing effort over many decades which will be required to solve it, and the many benefits which will accrue to the nation if a vigorous program is mounted. The Solar DPR package does not unfortunately propose any programs likely to accomplish this task. I. Technical Feasibility of Solar and Conservation Over the past several years there have been many studies of the role which solar energy could play in meeting the nation's future energy needs. These studies have, with remarkable consistency, concluded that the technical basis for a rapid transition to renewables exists. A review by the DOE published last June (Solar Energy, A Status Report) summarizes the conclusions of some 16 studies emphasizing solar energy. Among the more interesting of these is the CEQ study "Solar Energy, Progress and Promise", which found that about 25% of the nation's energy needs (24.5 quads) could be supplied by the end of the century. The CEQ conclusion is in essential agreement with the results of the Solar Energy Domestic Policy Review which found that 28 quads might be supplied by the end of the century. A characteristic of most solar technologies is that they are quite specific to the region of application. For that reason it is highly desirable to disaggregate the nation into regions, and to consider technical and institutional problems characteristic of these regions. A group of us at the University of California have carried out (partially with DOE funding) such a study for the region comprising the State of California, which led to rather optimistic conclusions. (I want to observe here that this study is far from complete--funding for such activities is difficult to come by; our study is at present defunct, and there are no funds available even to publish the interim report). We found that renewable resources within California are adequate to provide about 60% of the total energy needs of the State by 2025, assuming that only technologies are used which look likely to be economical at energy prices of two to four times those which exist today. By the year 2000 renewables appear capable of providing approximately one quad to final demand, or about 20% of the need, and an amount consistent with the other studies referred to above. In our work we paid considerable attention to cost effective energy conservation. Energy conservation and solar energy go hand in hand, there being little point in installing a solar system if a conservation technique is more cost effective--and today conservation is by far the best approach we have to stretching limited quantities of available energy supply resources. The primary technical problem we found in our work was in the area of liquid fuels. Indigenous sources of renewable liquids are sparce, and appear capable of providing only about 30% of the needs of the State in 2025, even assuming major improvements in the fuel efficiency of automobiles (70 miles per gallon). Liquid fuels in the form of petroleum are the major international energy issue today, so there can be no question but that this is an area which should be very heavily emphasized in an expanded research program. With your permission I would like to submit this report to the Committee. I believe it conveys an important national message, and one which is not being adequately communicated to the public. I want to make one observation about solar penetration numbers of the type quoted above. Analyses of what might occur in the future are not forecasts. The results I have discussed are of interest only because they suggest that there is a future out there which we might achieve if we want to. One can easily investigate many other futures which are either more or less attractive. Estimates of how much energy of a given form may be needed or available in a given year are of interest for scoping out of options. However, small differences matter little--an example is the discrepancy between the 95 quads called for in the $32/bbl DPR case, versus the 119 quads called for in the new National Energy Plan NEP II at $30/bbl in 2000. While these numbers differ significantly, both are far below the 193 quads of the government's last pre embargo forecase in 1972, and both are low enough that solar could make a large and important impact if we so chose. that demand growth can be held down, solar energy (even if expensive) can To the extent have a larger proportional impact. II. The Value of Security The international energy market bears little resemblance to a free market system. The U.S. is vulnerable to manipulated international prices and manipulated oil availability. We are also vulnerable to acts of God and man which can at any unannounced time disturb the flow of oil vessels across the oceans of the world. There is a cost associated with our dependence on imports, and there is every reason to suspect that this cost is large. We are captives to inflation, balance of payments problems, and uncertainty brought on by our refusal to set for ourselves import limits. The Harvard Energy Project, reporting in the spring issue of Foreign Affairs, suggests that the value to the nation of imported oil may be two or three times the market price. Whatever this value may be, (and a national dialog on this subject might be very rewarding), it represents a justification for investing more of our national resources in indigenous supply and conservation. III. A Time for Commitment This is time for national commitment. Solar and conservation technologies have the potential to make major contributions--by the end of this century. The costs of conservation is even now far below the cost of new supply. The cost of solar is higher, but solar is already competitive in some areas. A lack of national commitment, especially a firm and consistent policy, is hampering companies from entering this market. A wide variety of subsidies encourages use of depletable resources over renewables. Prices charged to energy consumers are averages based on embedded costs, while new supply must compete at the margin. It is clearly asking for too much to propose abolition of all subsidies, or for marginal pricing to consumers. It is not too much to ask that subsidies for solar be set to match or exceed those for other energy forms. Nor is it too much to ask that consumers who buy solar systems be assisted, when their solar systems avoid even larger costs of centralized supply. The amount of transfer payment involved is considerable. The California solar tax credit of 55% has not yet led to a large growth in the solar industry. Yet if solar systems are placed in competition with new supply, even larger credits than the $1000 proposed by DPR are justified. Solar and conservation technologies exist, but are being discouraged by a vast array of disincentives which the nation can no longer afford. It is time for a national act of will. We should make up our minds to limit oil imports, and to get on with the task of defending the nation through preparing ourselves for the post oil era. We have had enough studies. It is time for action. My remarks have been general. Attached to my statement are a number of specific criticisms of the DPR document, which in my view provides an unsatisfactory basis for national solar/conservation policy, together with an outline for an improved DPR document, should anyone wish to assemble one. SUPPLEMENT TO TESTIMONY BY PAUL P. CRAIG BEFORE THE I want to make some specific observations about the Solar DPR. There are some positive features: O The DPR correctly observes that the potential impact 0 The DPR identifies a large array of economic, institutional and technical problems which will have to On the other side there are an extraordinary number of major defects in the document, especially if it is viewed as a major decision making tool. O The DPR tends to force a modest program. It is a standard technique in the preparation of policy documents to propose three plans of action, the two outside ones being clearly unacceptable and the middle one representing the viewpoint of the report's author. The DPR demonstrates the technique superbly: Option I is clearly the "do nothing" option, hence is acceptable to no one. Option III is included for the solar enthusiasts, but is written Option II, the "middle option" is in fact extraordinarily The main thing to be said in support of the Option II analysis is that the DPR honestly recognizes that it wouldn't do much--just 1.4 to 2.3 quads displaced by 2000. But then it doesn't call for much either. A grand total of $340 million additional in federal expenditures in 1981. A cumulative investment by the government that by 1985 would just about equal the (present) cost of two 1000 MW conventional (coal or nuclear) power plants. The policy initiatives are similarly weak. A striking example is the proposed solar tax credit of 40¢/million BTU for residences and 20¢/million BTU for industry. Now 20¢ per million BTU amounts to $1.20 per barrel price increase for imported oil, or about 3¢ per gallon increase in the price of gasoline--and this is the sort of change we are now seeing in just a few months, or less. |