The US already has a diversified domestic energy mix for power production but would face challenges in moving beyond its dependence on global oil markets.
Moving to a fully renewable energy future in the US is more than 25-35 years away, BP Americas head of supply and trading Andy Milnes said, speaking at the CME Global Financial Leadership Conference in Naples, Florida. Technology would need to make significant leaps before the US could move away from coal, and with natural gas supply in the country set to expand significantly, fossil fuels will remain in the domestic energy mix for the foreseeable future.
An “all of the above strategy” is what the US needs to pursue, Chevron’s former chief technology officer Don Paul said at the CME event. “US oil independence does not mean price immunity” from global markets even if it was achievable or desirable, Paul said.
The Global Picture
Moves the US makes on changing either its power supply or transportation will all happen in the context of an international energy mix that is as reliant on fossil fuels as ever, particularly as coal electricity generation expands in the developing world, BP’s Milnes pointed out.
“The challenge in non-OECD growth arises from coal not oil,” Milnes said.
In addition to the potential climate impacts of huge increases in carbon dioxide emissions, the market impacts of climbing fuel demand would feed back into the US market for both transportation and generation energy commodities. The boom in natural gas production is set to alter the US energy economy by setting the marginal cost on generation, potentially limiting renewables uptake and drawing technology research and investment to the booming natural gas fields from other energy forms.
Use of natural gas in transportation could also alter US energy economics, said Chevron’s Paul, but storage density issues that have restricted natural gas use as a transportation fuel to large vehicles like city buses and trucks would need to be overcome first.
The conversation among panelists discussing the global energy landscape at the CME conference turned quickly to advanced technologies that could result in sweeping changes, including nuclear fusion.
The biggest challenge for the energy business is planning and investing on lengthy timelines is the degree to which unknown advances in science could change the operational picture over the coming 50 years, Chevron’s Paul said, especially when large-scale energy infrastructure can take up to 15 years to complete.
Basic research remains the role of the government, former Secretary of the Department of Energy and Governor of New Mexico Bill Richardson said. The US needs to diversify, and investments like those in recently-collapsed solar firm Solyndra are “worth the risk” overall, Richardson said.