Are We Becoming the USSR?

Artificial Sun" nuclear fusion reactor
Artificial Sun” nuclear fusion reactor

1.5% wind and solar, 2.6% Hydro, and 1.7% nuclear are the amounts of the world’s energy consumption these sources provided in 2019. The other 94% came from fossil fuels. Yet, much of the advanced world is setting limits and goals for certain products and actions for the future. Japan plans to stop the sale of new gasoline-powered cars by 2035. This plan is similar to moves by California and several European nations. By the mid-2030s, if you want a new car, you’ll only be able to buy an electric one.

This program sounds like part of a government 15-year plan. A significant industry will have to revamp its products in a specific time frame or else. Wow, a time-specific government-directed industrial plan. Can we all sing a chorus of “Back in the USSR?” In my series “The Long Journey To More,” I expressed the feeling capitalistic countries would out-perform China or any other totalitarian state. Greater flexibility would fuel a growing efficiency-innovation gap. A totalitarian government would double down on planning until it ended up as a closed society such as North Korea or collapse like the Soviet Union.

This assertion assumed we would avoid top-down planning. The actions we are doing in climate change move us away from a supportive government allowing competing solutions. Ordering us to buy only electric new autos sets up a bias towards existing technologies. The objective is less carbon. Most people agree excess carbon in the atmosphere is contributing to global warming. All things being equal, people choose cleaner carbon-free energy sources. At present, Wind or Solar have it politically over carbon-emitting production. Unfortunately, the wind doesn’t always blow, and the sun doesn’t always shine. Nuclear is reliable but under cost and regulatory constraints. With the new administration, new fossil fuel use will be difficult and discouraged.

Now we are looking forward to millions upon millions of motor vehicles needing a plugin. The additional electricity will have to come from somewhere. Irrational fear raising costs blocks nuclear. Governments are increasingly are limiting or making it difficult to increase fossil fuel use.With realities after 2035, industries have no choice but to make significant capital spending plans utilizing Solar and wind.

The problem with these sources is a low density. They need a lot of space. We’ve found some areas to build that aren’t disruptive and not too expensive. However, with the required massive scale-up to keep the transport moving and the economy alive, where to locate will become a more significant problem. We’re bound to see more wind turbines off Martha’s Vineyard knockdown battles. Can these sources provide cheap, reliable, and safe energy while not producing carbon dioxide? Batteries alone are at best breakeven. At present, without subsidies, natural gas is still cheaper and more reliable. Under the 15yr Electric Car Plan, trillions will have to be committed to solar, wind-power, and needed batteries. What could go wrong?

Rather than Communist-style planning, we should let the market determine the solutions. If the alternatives are close in cost, the more environmentally friendly will prevail. Remember, the previous energy crisis was a dependency on foreign oil. We all knew the problem, but no government program provided a solution. Private industry found an economical way to get oil and gas out of rocks. Now we’re the world’s largest producer.

Some people say we need to save the planet with what we have now. Only the government can accomplish this massive energy change. They ask, what else is out there?

I don’t have a pat solution, but I realize otherideas are evolving, as Matt Ridley would say. One morning we might wake up and find one of these like fracking works and changes everything. Take much-maligned nuclear energy. Our atomic plants still reliably produce 20% of our electricity without carbon emissions. Many of the plants face planned early dismantling. This fact would only add to the problem. Some imaginative people have suggested using the plant’s excess heat and electricity to produce hydrogen. That gas, beyond its uses in chemicals, can power things like cars and trucks carbon-free. After all, using hydrogen results only in water vapor. New plants are on the drawing boards use higher heat, making them even more efficient in producing hydrogen.

These newer designs are smaller, modular, and safer. Molten salt reactors are said to be even safer and more efficient. Just behind them are fusion reactors. These could even be better. All of them produce electricity and hydrogen cheaper.

It’s hard to build nuclear plants in the U.S. today. Because of safety requirements, people say they need government involvement. Just too difficult to get off the ground. They said the same thing about private business in outer space. Yet we see Space X delivering astronauts and supplies to the space station at a fraction of the government space shuttle’s cost.

An Elon Musk may look at one of these plants and see it’s safe and could be very profitable. Rather than looking to the government, Warren Buffet types might run the numbers and agree. They ensure the plants.

Commercial nuclear success would leave us with trillions of dollars of stranded solar and wind costs. Those facing huge losses will look to the government to protect and save them. What do you do with solar panels, windmills, and batteries when everything runs on nuclear electricity and hydrogen? The misallocation of resources is complete, just like in the USSR.

Can’t happen? Even totalitarian China is keeping some options open. Remember, China isn’t committed to much of anything till 2060, if even then. Do you trust them on anything? They aren’t wedded to today’s wind and solar. While joining in the electric car frenzy, they are open to other ways to generate electricity. Early December, it turned on its “Artificial Sun” nuclear fusion reactor. (see top illustration)

Even if we don’t adopt new technology, someone will. Cheap, clean energy is just too attractive. For all our massive investment, we will be at a competitive disadvantage and on the decline.

Better to remain flexible capitalists. Do I know the nuclear-hydrogen solution is best? Of course not. There are all sorts of fixes floating around. The best we can do is have a level playing field and see what rises to the top. While I don’t see the need, as a compromise, using a refundable carbon tax could “level the field.” The tradeoff is streamlined regulation. If we can do it for the vaccines, we can do it for energy. What’s the mistake is governments picking winners and losers. When we do that, I can tell you who the real losers will be.

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