Soft Versus Hard Energy Paths: An Analysis of the Debate

Report No. 81-94 SPR SOFT VERSUS HARD ENERGY PATHS: AN ANALYSIS OF THE DEBATE G a i l H. Marcus S p e c i a l i s t i n S c i e n c e a n d Technology Science P o l i c y Research D i v i s i o n March 1981 The Congressional Research Service works exclusively for the Congress, conducting research, analyzing legislation, and providing information at the request of committees, Members, and.their staffs. The Service makes such research available, without partisan bias, in many forms including studies, reports, compilations, digests, and background briefings. Upon request, CRS assists committees in analyzing legislative proposals and issues, and in assessing the possible effects of these proposals and their alternatives. The Service's senior specialists and subject analysts are also available for personal consultations in their respective fields of expertise. ABSTRACT T h i s p a p e r d i s c u s s e s t h e major i s s u e s of t h e s o f t v e r s u s h a r d e n e r g y p a t h debate-institutional c o n s i d e r a t i o n s , d i s t r i b u t i o n of power p r o d u c t i o n s o u r c e s , s i z e of f a c i l i t i e s , and r e n e w a b i l i t y of f u e l r e s o u r c e s . It o u t l i n e s major argu- ments i n each of t h e s e a r e a s , and d i s c u s s e s t h e s i g n i f i c a n c e of t h e d e b a t e from t h e v i e w p o i n t of m e e t i n g f u t u r e e n e r g y n e e d s . CONTENTS ..................................................................... iii INTRODUCTION ................................................................. 1 TRANSITIONAL ISSUES .......................................................... 5 DISPERSAL VERSUS CENTRALIZED ................................................. 9 SMALL VERSUS LARGE ........................................................... 13 RENEWABLE VERSUS NONRENEWABLE ............................................... 21 CONCLUSION ................................................................... 25 ABSTRACT INTRODUCTION The d e b a t e on a l t e r n a t i v e energy f u t u r e s f o c u s e s on t h e extremes of spectrum of energy technologies-the path. so c a l l e d " s o f t " energy p a t h v e r s u s t h e "hard" energy The debate i s one of l a r g e v e r s u s small, d i s t r i b u t e d v e r s u s c e n t r a l i z e d , renewable v e r s u s nonrenewable. It i s p a r t of a l a r g e r d e b a t e on t h e f u t u r e d i r e c - t i o n s of s o c i e t y , and a s such h a s important i m p l i c a t i o n s f o r l e g i s l a t i v e a c t i o n . T h i s paper d e s c r i b e s t h e a l t e r n a t i v e energy p h i l o s o p h i e s , a n a l y z e s t h e major a r guments, and d i s c u s s e s how p o s s i b l e energy f u t u r e s f i t i n t o t h e s e two c a t e g o r i e s . Although d e f i n i t i o n s of s o f t and hard energy p a t h s a r e not a b s o l u t e , s o f t t e c h n o l o g i e s a r e g e n e r a l l y c o n s i d e r e d t h o s e which a r e s m a l l - s c a l e , and renewable, whereas hard t e c h n o l o g i e s a r e l a r g e - s c a l e , renewable. distributed, c e n t r a l i z e d , and non- S o f t t e c h n o l o g i e s g e n e r a l l y seem t o i n c l u d e s o l a r c o l l e c t o r s , hydro- e l e c t r i c p l a n t s , wind machines, biomass-based gas and l i q u i d f u e l s , and indust r i a l cogeneration. Hard t e c h n o l o g i e s i n c l u d e , i n t h e s h o r t term, o i l and g a s power p l a n t s , c o a l power p l a n t s and coal-derived s y n t h e t i c f u e l s , and n u c l e a r f i s s i o n , and i n t h e longer term, f i s s i o n b r e e d e r r e a c t o r s , n u c l e a r f u s i o n , and perhaps l a r g e - s c a l e s o l a r power p l a n t s and s o l a r s a t e l l i t e power systems. f o r e t h e d e s i g n a t i o n " s o f t " o r "hard" i s somewhat complex. There- For example, some t e c h n o l o g i e s , namely c o n v e n t i o n a l h y d r o e l e c t r i c and p o s s i b l y a l s o t o some ext e n t , c o g e n e r a t i o n , a r e g e n e r a l l y c l a s s i f i e d a s s o f t even though n o t s m a l l - s c a l e ; large-scale renewable t e c h n o l o g i e s such a s s o l a r power p l a n t s and s a t e l l i t e so- l a r power systems a r e g e n e r a l l y excluded from t h e s o f t technology d e s i g n a t i o n ; and c o g e n e r a t i o n , which i s not f u e l - s p e c i f i c - i n f a c t , most near-term systems a r e envisioned t o use conventional fuels--is considered a s o f t technology. The s o f t p a t h i s p r e d i c a t e d on t h e a p p a r e n t i n e f f i c i e n c y of u s i n g e l e c t r i c power p r o d u c t i o n t o meet end-use n e e d s t h a t c a n be s a t i s f i e d i n o t h e r ways. An a n a l y s i s of e n e r g y consumption p a t t e r n s showed t h a t w h i l e 8 p e r c e n t of U.S. e n e r g y u s e s r e q u i r e e l e c t r i c i t y , 1 3 p e r c e n t of end-use needs a r e s u p p l i e d by electricity. S i n c e t h e g e n e r a t i o n and t r a n s m i s s i o n of e l e c t r i c i t y , i n t h e view of s o f t p a t h a d v o c a t e s , i s a r e l a t i v e l y i n e f f i c i e n t p r o c e s s , i t a c c o u n t s f o r 11 29 p e r c e n t of t h e f o s s i l f u e l s used. - The s o f t p a t h would s u b s t i t u t e more t a i l o r e d e n e r g y s o u r c e s and a g r e a t e r u s e of c o n s e r v a t i o n . Proponents of s o f t t e c h n o l o g i e s c l a i m t h a t t h e y a r e r e s o u r c e c o n s e r v i n g , e n v i r o n m e n t a l l y benign, u n d e r i n d i v i d u a l c o n t r o l , and l e s s c o s t l y because b i g b u s i n e s s d o e s n o t o p e r a t e them. Each of t h e s e c o n t e n t i o n s i s h o t l y d i s p u t e d . Although t h e merits of a l t e r n a t i v e e n e r g y t e c h n o l o g i e s have always been a s u b j e c t of d e b a t e , t h e d e b a t e assumed i t s p r e s e n t s t r u c t u r e and i n t e n s i t y i n t h e mid 1970s and most of t h e major l i t e r a t u r e on t h e s u b j e c t d a t e s from t h a t t i m e . The s o f t e n e r g y p h i l o s o p h y was p e r h a p s f i r s t e n u n c i a t e d i n i t s p r e s e n t f o r m by 2/ Amory B. L o v i n s . - Other major e x p o n e n t s of a t r a n s i t i o n t o a n a l t e r n a t i v e 3 / and Denis Hayes 4/, e n e r g y economy i n c l u d e t h e Union of Concerned S c i e n t i s t s - 1/ S t e i f e l , Michael. S o f t and Hard Energy P a t h s : ~ e c h n o l oReview, ~~ v . 8 2 , Oct. 1979: 56-66. The Road Not Taken. 2 / L o v i n s , Amory B. Energy S t r a t e g i e s : The Road Not Taken? F o r e i g n S o f t Energy P a t h s : Toward a Durable Peace. A f f a i r s , v. 5 5 , Oct. 1976: 65-96. B a l l i n g e r , 1977. 253 p. S o f t Energy T e c h n o l o g i e s . I n Annual Review of Energy, v . 3. Annual Reviews, 1978. pp. 477-517. 3/ K e n d a l l , Henry W. and S t e v e n J. Nadis ( e d . ) . Energy S t r a t e g i e s : ( A Report of t h e Union of Concerned S c i e n t i s t s ) . ~ o w a r xa S o l a r F u t u r e . B a l l i n g e r , 1980. 320 p. 4 / Ha es, Denis. Nortoii, 197% 240 P* Rays of Hope: The T r a n s i t i o n t o a Post-Petroleum World. now Director of the Solar Energy Research Institute. The soft energy philosophy was rapidly embrarzd by environmentalists, anti-corporation people, and others. The major thrust r.' the philosophy was that soft energy technologies are an essential element of a new social order to replace the present corrupt, bureaucratic, and inhuman system. The initiation of a soft energy "movement" aroused a strong response from the proponents of conventional technologies and centralized systems. ?/ Central to the concerns of these groups was the perceived em- phasis on making a decision to pursue soft energy technologies in the absence of conclusive tech.ica1 and cost information, and the potential for disruption to society if the soft approach failed. This paper first provides a discussion of the issues associated with affecting a transition from the present energy economy to a soft energy economy. This discussion brings out soQe of the major institutional concerns of both sides of the issue. The paper then discusses the major arguments which have been raised regarding degree of centralization, size, and renewability of energy systems. Finally, the paper suggests some of the major questions of legislative concern associated with this issue. 5/ See for example U.S. Congress. Senate. Committee on Interior and Af fairs. Alternative Long-Range Energy Strategies. Joint Hearings before the Select Committee on Small Business and the Committee on Interior and Insular Affairs, 94th Congress, 2d session. Washington, U.S. Govt. Print. Off., 1977. Hearings held Dec. 9 , 1976. insular CRS- 5 TRANSITIONAL ISSUES proponents of the soft path propose to rely upon the continued use of fossil fuels used in relatively benign energy supply systems during the interim transition period between the present and a full-scale soft energy economy. During this period, intensive conservation efforts would reduce the total energy usage. The transition period is assumed to last about 50 years (until about the year 2025), 6/ after which time essentially all energy needs would be met by soft energy sources, but the basis for such an assumption has not been explained in detail. The transition period would focus particularly on cogenera- tion, district heating, end use efficiency, alcohol from biomass and fluidized bed combustion. Critics suggest that the time, difficulty and cost required to implement some of these technologies could be considerable and could affect their viability for effective use during the transition period. Furthermore, the temporary nature of the interim transition period could make it difficult to attract the investment capital required. 7/ An important element of the transition is the requirement for institutional barriers to the soft energy path to be successfully reduced or eliminated. These institutional barriers occur at local, State, and national levels. Pro- ponents of the soft path believe that, despite the present predominance of hard technologies, there are at present significant barriers to further development of certain hard technologies--including nuclear siting, regulatory issues, and funding difficulties--that are comparable to, if not more difficult than, the institutional issues associated with the promotion of soft technologies. 8/ 61 Lovins, Energy Strategies, p. 77. 71 U.S. Congress. House Committee on Interstate and Foreign Commerce. subcommittee on Energy and Power. Are We Running Out? A Perspective on Resource Scarcity. Washington, U.S. Govt. Print. Off., 1978. pp. 19-20. (95th Congress, 2d session. House. Committee Print 95-57.) 8/ Lovins, Soft Energy Technologies, p. 507. - D e s u b s i d i z a t i o n of p r e s e n t t e c h n o l o g i e s , t h a t i s , an e q u i t a b l e a c c e s s t o c a p i t a l , and t h e u s e of long-run m a r g i n a l c o s t p r i c i n g i n t h e form of "a g r a d u a l , e q u i t a b l e move t o p r o p e r p r i c i n g of d e p l e t a b l e f u e l s " 91 a r e considered essent i a l r e q u i r e m e n t s f o r t h e v i a b i l i t y of t h e s o f t p a t h and, a c c o r d i n g t o s o f t e n e r g y a d v o c a t e s , t h e o n l y p r e l i m i n a r i e s r e q u i r e d t o implement s o f t t e c h n o l o g i e s t h r o u g h e x i s t i n g m a r k e t , p o l i t i c a l , and s o c i a l p r o c e s s e s . According t o o p p o n e n t s of t h i s s t r a t e g y , t h i s e s s e n t i a l l y c o n s t i t u t e s a r e q u i r e m e n t t h a t c a p i t a l , manpower, and e x p e r t i s e be d i v e r t e d from p r e s e n t p r o c e s s e s t o a l t e r n a t i v e forms of e n e r g y , t o t h e e x t e n t t h a t f u r t h e r development of c o n v e n t i o n a l e n e r g y s o u r c e s would e f f e c t i v e l y be banned. T h i s , t h e y c l a i m , would be t h e o n l y way s o f t e n e r g y t e c h n o l o g i e s c o u l d become predominant o v e r e x i s t i n g systems. E/ F u r t h e r m o r e , opponents a l s o suggest t h a t t h e i n s t i t u t i o n a l b a r r i e r s t o t h e s o f t e n e r g y p a t h a r e more f o r m i d a b l e t h a n t h e s o f t e n e r g y e n t h u s i a s t s 111 acknowledge, p a r t i c u l a r l y w i t h r e g a r d t o i n v e s t m e n t r e q u i r e m e n t s . I t i s , a t p r e s e n t , u n c l e a r w h e t h e r t h e p r e s e n t s t r u c t u r e of s o c i e t y might make it d i f f i c u l t t o implement a f u l l t r a n s i t i o n t o a s o f t e n e r g y economy. S o f t e n e r g y c r i t i c s a r g u e t h a t , i n major c i t i e s w i t h d e n s e l y packed l a r g e a p a r t m e n t and commercial b u i l d i n g s , it would be d i f f i c u l t t o meet e n e r g y needs w i t h o u t c e n t r a l power p r o d u c t i o n . Power p l a n t s and e l e c t r i c g r i d s might con- t i n u e t o be r e q u i r e d f o r much of i n d u s t r y and commerce, and i n p a r t i c u l a r , f o r t h e i n d u s t r y t h a t would have t o be developed t o m a n u f a c t u r e t h e many d e v i c e s n e c e s s a r y t o make t h e t r a n s i t i o n t o a s o f t e n e r g y s o c i e t y . 91 - Ibid. 101 R o s s i n , The S o f t Energy P a t h , p. 58. 11/ - Are We Running O u t ? pp. 19-20. 1 2 1 R o s s i n , The S o f t Energy P a t h , p. 59. - g/ I n d e e d , soft CRS- 7 energy proponents sometimes appear to suggest that there may be some continuing needs for large energy systems, (but believe present facilities are adequate to meet those needs) =/ although they speak primarily of a requirement for society to be devoted "exclusively" to soft energy paths. It is not clear how much of the national energy need could be met by large systems without diluting the benefits attributed to soft energy systems. Critics claim that the implementation of a soft energy system will depend not only on the availability and reliability of large centralized electric utility supply systems, but also on their being economical in order for people to be able to afford both the solar system and the conventional power backup. These analysts claim that a push to drive energy prices up or introduce a tax-supported subsidy in order to make solar systems more attractive could redound to the disadvantage of solar, and particularly to the disadvantage of the poor and those on fixed incomes. 14/ Furthermore, crit- its express the concern that the plan to transition to a soft energy society does not provide either sufficient allowance for emergencies, such as oil eur bargoes, wartime disruptions of suppliers and supply routes, supply shortages, or abnormal weather patterns, all of which have occurred in the past decade, 151 or sufficient reliability to meet critical emergency needs. 161 Rossin speculates that, despite conservation, a growing population and the aspirations of people for a better future could still mean growing demands for 1 3 1 Lovins, Soft Energy Technologies, p. 489 and pp. 479-480. 14/ - Rossin, The Soft Energy Path, p. 6 0 . 151 Ibid., p. 61.. 1 6 1 Are We Running Out?, p. 1 9 . - energy. If a decision were made not to build new central electric supply ca- pacity, this could ultimately create gaps in various parts of the Nation between the total energy supply capacity and the demands. The possible responses to such a scenario could lead, paradoxically, to an increase in centralization and a consequent decrease in individual self-determination. Shortfalls in energy supply could result in routine or emergency curtailments of electric supplies-brownouts, blackouts, or other actions. Longer term impacts could include local curtailment of industrial growth, thus denying areas jobs, taxes, etc. If in- sufficient energy supply situations were widespread, there could be widespread drawbacks in commerical and industrial growth, leading to reduced economic growth for the Nation, or even to a depression in the economy. In the event of a ser- ious energy shortfall, the Federal Government could decide to take over the generation of electricity, since, in an emergency situation, there might be insufficient time or money to develop community or neighborhood sources. The total cost of such an emergency approach would probably be high because of the urgent, catch up nature of the action. And most importantly, the result would be energy supplied by a system, the Government, that is even larger and more centralized than present local or regional utilities. Furthermore, given the historical difficulties of decision-making for such an action at the national level, the Government might prove unable to meet the demand. Another alternative might involve the introduction of forced rationing, the setting of priorities for the use of the limited energy supplies available. Such rationing decisions would have to be made centrally, by Government, and thus again would substitute a large centralized system for the decentralized individual decision-making that would otherwise take place. 171 - 171 Rossin, The Soft Energy Path, pp. 61-62. DISPERSED VERSUS CENTRALIZED Many of t h e s o c i a l b e n e f i t s a t t r i b u t e d t o t h e s o f t e n e r g y p a t h by i t s prop o n e n t s a r e p r i m a r i l y t h e r e s u l t of d e c e n t r a l i z a t i o n . Other important considera- t i o n s r e l a t i n g t o d e c e n t r a l i z a t i o n i n c l u d e e n d - u s e matching, g r i d i n t e r c o n n e c t i o n , and e n v i r o n m e n t a l and o t h e r i m p a c t s . The l i t e r a t u r e i n d i c a t e s t h e wide d i v e r g e n c e of v i e w p o i n t s and c o n f l i c t i n g arguments r e g a r d i n g economics and o t h e r important considerations p e r t i n e n t t o t h e d e c e n t r a l i z a t i o n i s s u e . 181 A major argument i n f a v o r of sof t t e c h n o l o g i e s i s t h e p h i l o s o p h i c a l argument r e l a t i n g t o i n d i v i d u a l s e l f - d e t e r m i n a t i o n . A d i s p e r s e d e n e r g y s u p p l y sys- tem, i t i s a r g u e d , a l l o w s i n d i v i d u a l s a g r e a t e r v o i c e i n t h e i r own f a t e s , wherea s l a r g e s c a l e t e n d s t o c o n c e n t r a t e p o l i t i c a l and economic power i n a few o r g a n i z a t i o n s and p e o p l e . 191 Both i t s p r o p o n e n t s and o p p o n e n t s seem t o a g r e e t h a t t h e argument i s b a s i c a l l y one f o r a new s o c i a l o r d e r . According t o L o v i n s , "energy . . . offers the best integrating principle f o r t h e w i d e r s h i f t s of p o l i c y and p e r c e p t i o n t h a t we a r e g r o p i n g t o w a r d . " 201 F u r t h e r e v i d e n c e t h a t t h e s o f t energy p a t h i s m o t i v a t e d by a p h i l o s o p h y r a t h e r t h a n by s a f e t y , economics, o r o t h e r such f a c t o r s i s s u g g e s t e d by L o v i n s ' a s s e r tion that: I f m c l e a r power were c l e a n , s a f e , economic, a s s u r e d of ample f u e l , and s o c i a l l y benign p e r s e , i t would be u n a t t r a c t i v e b e c a u s e of t h e 211 k i n d of e n e r g y economy i t would l o c k u s i n t o . - . 181 U.S Congress. House. Committee on I n t e r s t a t e and F o r e i g n Commerce. subcommittee on Energy and Power. C e n t r a l i z e d v s . D e c e n t r a l i z e d Energy Systems: D i v e r g i n g o r P a r a l l e l Roads? Washington, U.S. Govt. P r i n t . O f f . 1979. 312 p. ( 9 6 t h C o n g r e s s , 1st s e s s i o n . House. Committee P r i n t 96-1FC 1 7 . ) 191 L o v i n s , S o f t Energy T e c h n o l o g i e s , p. 488. 201 L o v i n s , S o f t Energy P a t h s . 211 - Ibid. Opponents assert that there is a lack of detailed understanding of the real consequences of promoting such a new social order. issues relating to the centralization argument. They raise a number of Decentralization, though it would seem at first glance to be an approach to benefitting the individual, has not historically always been the most beneficial alternative. Although the analogy may not be exact, centralized water and sewage treatment systems are raised as examples of centralized systems which resulted in significant im221 provements in the health and life expectancy of Americans. - Furthermore, they find it is not clear that, given a choice, a majority of citizens would care to make for themselves the decisions that would be required in a decentralized energy supply system. Another advantage attributed to decentralization is that the energy source can be better matched to an end-use power density requirement. According to Lovins, the present mismatch between supply and load density in the United States has produced a requirement for a transmission and distribution network that in 1972 accounted for about 70 percent of the cost of delivered electricity to nonindustrial users. This is a diseconomy of centralization, both in terms of cost and in terms of energy losses. Furthermore, since transmission failures have been identified as the dominant cause of electric failures, decentralization of energy supply sources would tend to reduce the potential for supply disruptions. 2 3 1 Advocates of centralized systems believe that the economies of scale, discussed further in the following section, outweigh the additional transmission costs. 221 - Rossin, The Soft Energy Path, p . 59. 231 - Lovins, Soft Energy Technologies, p. 486. According to Lovins, interconnecting small, dispersed sources through an electrical grid retains the advantages of interconnection of energy sources-that is, saving capacity by load diversity, and reducing the likelihood of catastrophic failure--while increasing the resilience of the system by reducing the consequences of a failing grid. He further indicates that the reliability requirements for dispersed systems might be less than those for centralized systems in the first place because the impact of failure would be reduced. In a solar heating system combined with long-term thermal storage, for example, a short term system failure would be inconsequential because of the energy stored. If the failure was within an individual system, even if the length of the failure exceeded the storage capacity, relief might be sought from neighboring systems. Such features could allow for an end-use reliability tailored to the need, rather than as at present, where the supply system provides a very high end-use reliability in order to meet the most stringent needs, thus producing another system diseconomy. 241 Even so, Lovins' overall philosophy largely favors source independence as opposed to interconnection, and according to his critics, experience indicates that without interconnection, large areas of the country could be without electricity for significant periods of 251 time in severe weather. Dispersing energy supply systems may reduce the magnitude of environmental and social impacts locally, and therefore, increase the total number of sites which can be employed for energy production facilities. Additionally, decentralization, by its nature, tends to allocate operational costs and 241 - Lovins, Soft Energy Technologies, p. 506. 251 Solomon, Burt. Engineers Reply to Amory Lovins: Hard Numbers vs. Soft Path, the Energy Daily, v. 5. March 14, 1977. pp. 1-2. benefits to the same people, rather than to different groups, thus possibly decreasing the potential for inequities in the distribution of environmental costs, and increasing the ability of the local residents to be effective in enforcing 261 environmental standards for plant operation. - It is not clear, however, whether, many small plants would ultimately be easier or harder to site than a few larger ones, and what the tradeoffs might be between concentrating energy production impacts in a few areas and dispersing energy production impacts in many areas. Decentralization is also said to permit easier integration into total energy systems and combined food and energy systems, 2 7 1 but this may not take into full account the potential for cogeneration in large scale conventional systems, the potential for agriculture using waste heat from large power plants, or other large scale combined system possibilities. Finally, according to Lovins, decen- tralization can reduce other social costs, such as the vulnerability to disruption, sabotage, and war, and can thereby improve national security, 2 8 1 although opponents believe that energy shortfalls could hamper national security and threaten the status of the United States as a world power. 291 261 - Lovins, Soft Energy Technologies, p. 4 8 7 . 271 - Ibid., p. 4 8 4 . 281 - Ibid., p. 488. 291 - Solomon, Burt. Engineers Reply to Amory Lovins, p. 2. CRS- 13 SMALL VERSUS LARGE The major argurnents r e g a r d i n g s i z e a p p e a r t o be economic, and c o n s i d e r such f a c t o r s a s economies of s c a l e v e r s u s economies of mass p r o d u c t i o n , r e l i a b i l i t y , maintenance and f i n a n c i n g . O t h e r major arguments a d d r e s s r e s e a r c h and develop- ment r e q u i r e m e n t s and c o s t s . The r e s u l t s of an economic a n a l y s i s conducted by L o v i n s s u g g e s t t h a t though s o f t t e c h n o l o g i e s "may o r may n o t be c h e a p e r t h a n p r e s e n t o i l and g a s , t h e y a r e g e n e r a l l y c h e a p e r t h a n t h e t h i n g s one would o t h e r w i s e have t o do t o r e p l a c e p r e s e n t o i l and g a s " x / - - ( i . e . , synthetic fuels). I n a r a n k i n g of a l l a l t e r n a t i v e s c o n s i d e r e d i n h i s s t u d y , t h e l e a s t c o s t l y were found t o be t h e e n d - u s e e f f i c i e n c y improvements, t h e n t h e s o f t and " t r a n s i t i o n a l " t e c h n o l o g i e s , t h e n s y n t h e t i c f u e l s , and last, c e n t r a l - e l e c t r i c systems. According t o L o v i n s , t h i s a n a l y s i s was based on c o n s e r v a t i s m s t h a t were weighed i n f a v o r of h a r d t e c h n o l o g i e s , p a r t i c u l a r l y by not p r o v i d i n g any a l l o w a n c e f o r low-cost d e s i g n s o r f o r d i f f e r e n c e s i n f i nancing. z/L o v i n s a t t r i b u t e s h i s results a t least partly t o the fact that many of t h e economies of s c a l e c l a i m e d f o r l a r g e e n e r g y s y s t e m s "may be doubtf u l , i l l u s o r y , t a u t o l o g i c a l , o r outweighed by l e s s t a n g i b l e and l e s s q u a n t i f i a b l e b u t p e r h a p s more i m p o r t a n t d i s a d v a n t a g e s and d i s e c o n o m i e s . " 32/ O t h e r r e s e a r c h d i s p u t e s t h e c l a i m s of lower c o s t f o r s o l a r t e c h n o l o g i e s . One e s t i m a t e of t h e c a p i t a l i n v e s t m e n t r e q u i r e d t o a d o p t t h e s o f t e n e r g y p a t h i s i n t h e r a n g e of two t o t h r e e t i m e s t h a t of e q u i v a l e n t new c o n v e n t i o n a l c o a l 30/ - L o v i n s , S o f t Energy T e c h n o l o g i e s , p. 503. --31/ Ibid. 32/ - Ibid., pp. 483-484. and n u c l e a r c a p a c i t y , e v e n i f t h e s o f t e n e r g y s y s t e m s c o u l d be phased i n gradu a l l y w i t h no s u r p r i s e s . 331 F u r t h e r m o r e , t h e s e r e s e a r c h e r s a s s e r t t h a t they have weighed t h e i r r e s u l t s i n f a v o r of s o f t t e c h n o l o g i e s by making c e r t a i n a s sumptions a b o u t t h e performance of s o f t s y s t e m s ( s u c h a s t h e f r a c t i o n of t h e t o t a l e n e r g y r e q u i r e m e n t t h a t c o u l d be met by a s o f t e n e r g y s y s t e m ) t h a t a r e r e a l l y more g e n e r o u s t h a n t h e p r e s e n t s t a t e - o f - t h e - a r t warrants. On t h e o t h e r hand, t h i s r e s e a r c h l a r g e l y d i s c o u n t e d t h e p o s s i b i l i t y of economic o r t e c h n i c a l b r e a k t h r o u g h s t h a t might r e d u c e s o f t e n e r g y c o s t s s i g n i f i c a n t l y , based on e s t i m a t e s t h a t a major p o r t i o n of t h e t o t a l c o s t s of s o f t systems i s due t o labor-related i n s t a l l a t i o n c h a r g e s , and such c o s t s a r e n o t l i k e l y t o be r e - duced s i g n i f i c a n t l y , even i f m a t e r i a l s and f a b r i c a t i o n c o s t s a r e . %/ S e v e r a l of t h e arguments c o n c e r n i n g economies of s c a l e r e l a t e t o s y s t e m procurement c o s t s . Although d i r e c t c o n s t r u c t i o n c o s t s ( i . e . , m a t e r i a l s and l a b o r c o s t s ) t r a d i t i o n a l l y e x h i b i t s i g n i f i c a n t economies of s c a l e , L o v i n s bel i e v e s t h a t t h e lower c o n s t r u c t i o n c o s t p e r u n i t of o u t p u t power may be c o u n t e r b a l a n c e d by h i g h e r c o s t s i n a number of o t h e r a r e a s . F u r t h e r m o r e , c e r t a i n econ- omies of mass p r o d u c t i o n may be o p e r a t i v e f o r m u l t i p l y - p r o d u c e d s m a l l systems which a r e not i n e f f e c t f o r t h e r e l a t i v e l y s m a l l numbers of l a r g e power p l a n t s built. The l o n g e r c o n s t r u c t i o n t i m e s r e q u i r e d f o r l a r g e power p l a n t s a s com- p a r e d w i t h s m a l l ones may l e a d t o some d i s e c o n o m i e s of s c a l e b e c a u s e of t h e g r e a t e r o p p o r t u n i t y f o r c o s t e s c a l a t i o n and t h e g r e a t e r f r a c t i o n of t h e p l a n t c o s t s a l l o c a t e d t o i n t e r e s t payments ( b o t h b e c a u s e of t h e payment p e r i o d and t h e t e r m s g e n e r a l l y a v a i l a b l e f o r such c o n s t r u c t i o n ) . O t h e r f a c t o r s which might e f f e c t t h e r e l a t i v e c o s t s of l a r g e v e r s u s s m a l l s y s t e m s i n c l u d e c o s t s t o 331 R o s s i n , The S o f t Energy P a t h , p. 58. 341 - Solomon, B u r t . E n g i n e e r s Reply t o Amory L o v i n s , pp. 1-2. respond to regulatory changes during the construction period, the relatively high transaction costs of plant siting for large plants, and the hazards of 35/ mismatched demand forecasts in long term energy planning for large systems. - One 1977 study estimated a total cost of $ 8 8 4 billion to supply solar panel systems and home windmills sufficient to supply all U.S. residences with heat and electricity. The additional energy supply capacity is equivalent to increasing the total electric capacity by one-third, whereas the same study claims that for only $250 billion, the country's electrical generating capacity could be doubled by relying on the more familiar coal and nuclear technologies; and for only a portion of this total investment, an industry of large-scale coal gasification plants could be created that would essentially eliminate the problem of natural gas shortages. %/ Another concern regarding the mass pro- duction requirement for the soft energy approach is the ability to scale up production to meet demands on a national level. A significant increase in pro- duction of many soft energy systems would require an increase in various types of industrial activity, from mining, through materials processing, through system fabrication, and could require large capital expenditures to open new mines, construct new factories, or train new personnel. Several additional points were raised by these researchers, but apparently not explicitly incorporated into the study results. The required investments by individuals, based on optimally cost-effective configurations for solar and other renewable energy systems, would include the costs to install and utilize backup energy capacity from a conventional supply system, thus increasing the effective total cost. Furthermore, it is generally more difficult for 35/ - Stiefel, Soft and Hard Energy Paths, p. 5 8 . 36/ - Solomon, Burt. Engineers Reply to Amory Lovins, p. 2. CRS- 16 individuals to raise capital than it is for large institutions. This assumption is contrary to Lovins' assumptions in that the cost of money (interest rate) is higher for the soft energy systems and the costs of the facilities themselves would also be higher. If the higher costs of decentralized energy production systems require Government subsidies to make them attractive, that in turn leads to still other costs in the form of taxes to support subsidies and the attendant needs for Federal guidelines, inspection, and enforcement. of soft energy systems are short exposed to the sun, etc.), ^ t 371 If the lifetimes an assumed (due to degradation of materials the life-cycle costs could also be increased con- siderably. 381 Another argument is that smaller technologies tend to be simpler, and therefore likely to result in lesser requirements for maintenance because of fewer failure modes and easier and faster repairs. When repair needs do arise, they generally require less highly skilled maintenance personnel and standards, and consequently, are less vulnerable to the disruptions created by strikes of select and irreplacable occupational groups. In addition, the training require- ments and cost of spare parts inventories are also less. 3 9 1 However, actual maintenance experience is very sketchy for small decentralized energy systems and there are some indications of problem areas--deterioration over time of glazings of solar collectors upon extended exposure to sunlight; failures of equipment receiving the casual preventive maintenance many homeowners are likely to devote to it; etc. Also, soft energy systems may or may not be tech- nologically simple (see below). 371 - Rossin, The Soft Energy Path, p. 58. 381 - Steifel, Soft and Hard Energy Paths, p. 61. 3 9 1 Lovins, Soft Energy Technologies, p . 4 8 4 . - Lovins and others claim that there is no evidence for greater technical 40/ efficiency in larger units. - In fact, overall experience to date seems to indicate that larger scale in power stations tends to decrease overall system reliability. Major reasons for this are probably fundamental problems due to the complexity of the equipment and operating requirements, and the construction of plants in sizes that exceed the engineering experience for the technologies involved. Unavailability due to low reliability produces a require- ment for backup energy generating capacity to assure reliable energy supply, therefore creating diseconomies of scale for operating costs and increasing total energy costs. Studies of typical interconnected grids suggest that building several smaller units could provide the same level and reliability of service with about a third less capacity because the more numerous smaller plants are unlikely to fail at the same time and hence require less reserve margin. 411 However, whether this would result in a lower net cost would de- pend on the economies of scale as well as the total capacity. The major reasons for the contradictory conclusions reached in the various cost studies is that very different assumptions have been made about the future costs and capabilities of different systems. Studies which find soft energy futures to be cost-effective tend to make optimistic assumptions about cost reductions for soft energy systems, tend to assume minimal needs for backup capacity, tend to presume a high degree of owner initiative in installing and maintaining the systems, thus minimizing the high maintenance costs, and tend to make comparisons against future large-scale energy technologies, whose 40/ - Ibid., p. 485. 41/ - Ibid., p. 485. CRS- 18 c o s t s a r e a l s o n o t w e l l known, b u t a r e p r e s e n t l y e s t i m a t e d t o be h i g h . While a comparison of t r u e s o f t e n e r g y c o s t s a g a i n s t f u t u r e h a r d e n e r g y c o s t s would be a v a l i d o n e , t h e u n c e r t a i n t y of a l l t h e c o s t s makes i t i m p o s s i b l e t o r e l y on t h e r e s u l t s of such a n a n a l y s i s . On t h e o t h e r hand, s t u d i e s which f i n d h a r d e n e r g y s y s t e m s t o be c o s t - e f f e c t i v e t e n d t o r e l y l a r g e l y on t h e s t a t u s - quo, presuming n e i t h e r s i g n i f i c a n t changes i n t h e c o s t s of s o f t e n e r g y s y s tems n o r s i g n i f i c a n t a d o p t i o n of more c o s t l y advanced l a r g e - s c a l e technologies. They a l s o t e n d t o make t h e i r comparisons of s o f t e n e r g y s y s t e m s l a r g e l y w i t h e l e c t r i c power s y s t e m s , t h u s n o t f u l l y a d d r e s s i n g a l l t h e components of t h e energy supply p i c t u r e . T h i s approach i s e q u a l l y s u b j e c t t o c r i t i c i s m . There- f o r e , t h e economic a n a l y s e s a r e p r o b a b l y o n l y of l i m i t e d v a l u e , and i n f a c t , a r e n o t c o n s i d e r e d t h e primary argument i n t h e s o f t v e r s u s h a r d e n e r g y p a t h debate. 421 Another f a c t o r which may be s i g n i f i c a n t i s t h a t s o f t t e c h n o l o g i e s , b u i l t on a s m a l l e r s c a l e , c o u l d have much s h o r t e r t e c h n i c a l l e a d t i m e s t h a n complex, l a r g e s c a l e systems. The major consequence of t h i s i s t h a t t h e c y c l e of de- v e l o p m e n t , d e m o n s t r a t i o n and deployment might be condensed, many a p p r o a c h e s might be t e s t e d i n p a r a l l e l a t low u n i t c o s t and r i s k , and e x i s t i n g indust r i a l c a p a c i t y might be r e a d i l y a d a p t e d f o r p r o d u c t i o n . Thus, " t h e d i v e r s i t y , s i m p l i c i t y and p r o v e n performance of s o f t t e c h n o l o g i e s make t h e i r r i s k of t e c h n i c a l f a i l u r e lower t h a n t h a t of r e l y i n g on a few b i g h i g h t e c h n o l o g i e s , l i k e b r e e d e r s and high-Btu may n o t work." 431 c o a l - g a s complexes, t h a t a r e n o t h e r e and may o r A s a n example of t h i s l a t t e r p o i n t , L o v i n s p o i n t s o u t t h a t 40 p e r c e n t of a l l Vermont homes were r e t r o f i t t e d by t h e i r owners w i t h 421 - L o v i n s , S o f t Energy T e c h n o l o g i e s , p. 48D-1. 431 - Ibid., p. 5 0 6 . wood-burning stoves in a period of just 3 years. Furthermore, the diversity that would result from such a multi-pronged effort would likely lead to an energy production system made up of many different technologies with generally independent rate constraints. That is, the things that might delay one technology, say solar heating systems, would be unlikely to delay another technology which involves very different materials and industries, say alcohol production from biomass. In addition, during periods of rapid technolog- ical evolution, with less capital invested in large inflexible plants and infrastructure, it may be possible to adopt the technology improvements more rapidly. */ However, if ultimate energy supply is through a variety of diverse technologies, the research costs per unit of power production ultimately realized could be rather high, and the total costs to support research in many different areas may also be high. In addition, although a small-scale system might seem simple, the level of technology development involved in improving the system may be as complex and as sophisticated as research on larger, more complex systems and the requirements for the research and development may be just as important to the viability of the technology. Although there are presently operational soft energy systems, the limited use of such systems is considered 4 5 / and sigan indication of their inacceptability for cost or other reasons, - nificant developments could be required to make them more cost-effective, more adaptable to situations with limited space, more maintenance free, longerlived, etc. Some examples of critical areas for which significant research and development efforts may be necessary include low-temperature air conditioning systems, control systems, energy storage systems and materials, and 44/ - Lovins, Soft Energy Technologies, p. 508. 45/ - Rossin, The Soft Energy Path, p. 58. solar collector materials. Thus, although soft energy systems are generally regarded as technologically simple--and in many cases are so--they may also incorporate very high technology components or subsystems, which has implications not only for the R&D requirements, but also for maintenance (cited above), fabrication, etc. RENEWABLE VERSUS NONRENEWABLE Arguments r e g a r d i n g h a r d v e r s u s s o f t t e c h n o l o g i e s which a r e p r i m a r i l y r e l a t e d t o r e s o u r c e r e n e w a b i l i t y i n c l u d e e n v i r o n m e n t a l , human h e a l t h and s a f e t y , r e s o u r c e c o n s e r v a t i o n , and g l o b a l p o l i t i c a l c o n s i d e r a t i o n s . Some of t h e i s s u e s i n t h e s e a r e a s were a l s o r a i s e d i n t h e c o n t e x t on e n e r g y p l a n t s i z e and d i s p e r s i o n . Only those aspects p a r t i c u l a r t o resource renewabiity a r e addressed here. One major a d v a n t a g e c i t e d f o r renewable e n e r g y t e c h n o l o g i e s i s t h a t t h e y a p p e a r , on p r e l i m i n a r y a n a l y s i s , t o be e n v i r o n m e n t a l l y more benign t h a n h a r d t e c h n o l o g i e s , and, a c c o r d i n g t o L o v i n s , t h e i r s i d e e f f e c t s a r e more amenable t o technical fixes. 46/ F u r t h e r m o r e , s o f t energy t e c h n o l o g i e s a t p r e s e n t have no known c l i m a t i c i m p a c t s . c/A s o f t e n e r g y p a t h , t h e r e f o r e , may m i t i g a t e a g a i n s t t h e p o s s i b l e c l i m a t i c problems of combustion p r o d u c t s such a s CO by 2 r e d u c i n g t h e amount of f o s s i l f u e l b u r n i n g needed. However, t h i s comparison may not a c c o u n t a d e q u a t e l y f o r improvements i n c o n v e n t i o n a l t e c h n o l o g i e s , such a s s c r u b b e r s f o r c o a l p l a n t e m i s s i o n s , t h a t may r e d u c e e n v i r o n m e n t a l p o l l u t i o n from c o n v e n t i o n a l power p l a n t s , m r may i t a d d r e s s e x p l i c i t l y t h e e x t e n s i v e mining and m a n u f a c t u r i n g a c t i v i t i e s a s s o c i a t e d w i t h some renewable r e s o u r c e s which c o u l d r e s u l t i n s i g n i f i c a n t l e v e l s of e n v i r o n m e n t a l p o l l u t i o n . Neverthe- l e s s , based on p r e s e n t u n d e r s t a n d i n g , t h e e n v i r o n m e n t a l t h r e a t s of renewable t e c h n o l o g i e s a p p e a r t o be s m a l l . The s i t u a t i o n f o r h e a l t h and s a f e t y i m p a c t s , on t h e o t h e r hand, i s l e s s clear. P r o p o n e n t s of renewable systems c l a i m t h a t t h e h e a l t h and s a f e t y e f - f e c t s of such systems a r e g e n e r a l l y s m a l l , and many may be amenable t o r a t h e r 46/ - Lovins, S o f t Energy T e c h n o l o g i e s , p. 5 0 6 . 47/ - Ibid., p. 507. CRS- 22 simple technical fixes. %/ Some studies which have examined the entire life cycle associated with renewable systems (including mining of materials needed, manufacturing, use and maintenance), as well as possible techn~logicalimprovements to large conventional systems, such as scrubbers for fossil fuel systems, however, have concluded that certain renewable energy systems may have more health and safety impacts overall than do conventional systems, though often of 491 a different nature. The major issue of resource depletion revolves around the need to save remaining fossil fuels for those energy needs which appear at present to be more difficult to solve by the use of other energy technologies (for example, transportation needs) and for critical non-energy uses, such as petrochemical needs, for which there are few or no available substitutes. On the other hand, the development and implementation of renewable energy systems will require the extensive use of materials other than fossil fuels which may also have a limited resource base and other critical uses. Renewable energy systems require signi- ficant uses of metals, such as copper, and other materials, such as silicon, that may be resource-limited on the scale needed for widespread use of those systems. Finally, on a global scale, the widespread use of renewable energy sources is seen by some as a way to provide a more equitable distribution of energy between the wealthy, resource-rich nations and the poor, resource-deficient nations. 501 48/ The widespread use and availability of economical renewable energy Lovins, Soft Energy Technologies, p. 5 0 6 . 49/ Inhaber, Herbert. Risk with Energy from Conventional and Nonconventional Sources. Science, v. 203, Feb. 23, 1979: 718-723. 501 Lovins, Soft Energy Technologies, p . 5 0 8 . systems could presumably encourage t h e i r a d o p t i o n by Third World c o u n t r i e s i n p l a c e of c o n v e n t i o n a l a l t e r n a t i v e s t h a t might be a l a r g e economic d r a i n . How- e v e r , t h e e x t e n t t o which such a b e n e f i t would be r e a l i z e d would depend on t h e d e g r e e t o which renewable systems c a p a b l e of meeting t h e n a t i o n ' s r e s i d e n t i a l and i n d u s t r i a l energy demands could be c o n s t r u c t e d with indigenous m a t e r i a l s and l a b o r , and t h i s i s not y e t f u l l y e s t a b l i s h e d . Furthermore, t h e s u b s t i - t u t i o n of renewable energy r e s o u r c e s f o r c o n v e n t i o n a l energy systems, part i c u l a r l y n u c l e a r , i s s e e n by some a s a way t o reduce n u c l e a r p r o l i f e r a t i o n , and t h e r e f o r e t h e t h r e a t of n u c l e a r war, 51/ a l t h o u g h o t h e r s b e l i e v e t h a t e f f e c t i v e measures can be taken t o minimize t h e danger of n u c l e a r weapons prol i f e r a t i o n without p r o h i b i t i n g t h e use of n u c l e a r energy f o r e l e c t r i c power producion. 52/ 51/ - Ibid., p . 509. 52/ I n t e r n a t i o n a l Nuclear Fuel Cycle E v a l u a t i o n (INFCE). Summary Volume, ~ n t e r z t i o n a lAtomic Energy Agency, 1980. 72 p. P e r r y , Harry & S t r e i t e r , S a l l y H. M u l t i p l e P a t h s f o r Energy P o l i c y : A C r i t i q u e of Lovins' Energy S t r a t e g y . Energy Communications, v . 4 , 1978: 317-378. CONCLUSION An i n t e r e s t i n g f e a t u r e of t h e s o f t v e r s u s h a r d p a t h d e b a t e i s t h e e s s e n t i a l a r e a s of agreement and d i s a g r e e m e n t . Both s i d e s r e a l l y seem t o s u g g e s t t h a t what t h e y want i s some mix of e n e r g y t e c h n o l o g i e s , t h a t what t h e y want i s f o r market-place economics t o d e t e r m i n e t h a t mix, t h a t what t h e y want i s f o r a l l t e c h n o l o g i e s t o have an e q u i t a b l e o p p o r t u n i t y t o compete i n t h a t m a r k e t p l a c e . They have v e r y d i f f e r e n t i d e a s , however, on what t h a t mix of t e c h n o l o g i e s s h o u l d be and how i t s h o u l d be a c h i e v e d . The s o f t e n e r g y p r o p o n e n t s a r e e s - s e n t i a l l y c l a i m i n g t h a t p a s t and p r e s e n t s u b s i d i e s of c o n v e n t i o n a l power s y s t e m s , if c o n t i n u e d , would p r e c l u d e e f f e c t i v e m a r k e t p l a c e c o m p e t i t i o n from new energy s o u r c e s , w h i l e h a r d e n e r g y p r o p o n e n t s l a r g e l y d i s c l a i m t h a t any s p e c i a l b e n e f i t s a r e b e i n g p r o v i d e d t o t h e i r t e c h n o l o g i e s and c l a i m t h a t l a r g e economic s u b s i d i e s would be r e q u i r e d t o make s o f t e n e r g y s y s t e m s e c o n o m i c a l l y attractive. Such s u b s i d i e s , t h e y c l a i m , would be t o t h e d i s a d v a n t a g e of t h e o v e r a l l economy i f i t r e s u l t e d i n t h e c u r t a i l m e n t of t h e development of conv e n t i o n a l energy sources, l e a d i n g t o energy i n s u f f i c i e n c y . Such a s c e n a r i o , t h e y f e e l , would l a r g e l y c a n c e l t h e major b e n e f i t s a t t r i b u t e d t o t h e s o f t t e c h nologies, i n p a r t i c u l a r t h e b e n e f i t s of s e l f - d e t e r m i n a t i o n , i n d i v i d u a l indepen- dence, d e c e n t r a l i z a t i o n of s o c i a l power and a more d e m o c r a t i c p o l i t i c a l m i l i e u . To t h e e x t e n t t h a t t h e c e n t r a l argument i s one of a p p r o p r i a t e s o c i e t a l s u b s i d i z a t i o n , t h e i s s u e needs t o be more f u l l y e x p l o r e d . are: Important questions How were t h e p r e s e n t t e c h n o l o g i e s s u b s i d i z e d i n t h e i r i n i t i a l s t a g e s , CRS- 2 6 including RCD funding, tax advantages, subsidies, and other financial mechanisms? What explicit and effective subsidies are now in effect? What kinds of initial and continuing subsidies might be applied to soft technologies to make them financially competitive and what would this cost? What would be the impacts on conventional technologies? Alternatively, what would be the impacts of withdrawing any existing subsidies for conventional energy systems? To the exent that the central arguments are not economic, another group of questions needs to be addressed. These include explorations of the puta- tive long-term social hazards of centralized hard technologies and of the putative long-term benefits of soft technologies, the potential for conservation, the adequacy of present systems over the transition period and to meet residual long-term needs, the acceptability to society of the greater individual responsibility required to decide upon and maintain multiple dispersed systems, the materials needs, the R&D requirements, and the adequacy of the industrial infrastructure to support the production of soft energy systems. In the final analysis, there is a multitude of possible paths between the hard and soft extremes. Which energy path the Nation will adopt will depend to a significant extent on congressional decisions as to the social requirement for a given option, the economic viability of supporting it, and the adequacy of the support mechanisms selected. Therefore, it may become extremely important to be able to weigh the relative costs and benefits of many alternative mixes of energy technologies in order to select one that best meets the Nation's perceived social needs at an acceptable cost.