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A year in which energy markets were torn apart by our species’ longstanding habit of murdering one another ended with a hopeful scientific breakthrough. In the early hours of December 5, researchers at the Lawrence Livermore National Laboratory’s National Ignition Facility created a nuclear fusion reaction that produced more energy than it absorbed from the lasers powering it. In her announcement, Energy Secretary Jennifer Granholm hailed the NIF’s work as potentially solving complex problems “like providing clean energy to combat climate change.”
After a year like this, she might have added, “And stop us once and for all from relying on Russia for energy.” Instead, she added, “and maintain a nuclear deterrent without nuclear testing.” Because aside from that, alas revived relevance of those words in 2022, the NIF was established after the end of underground nuclear weapons testing. Achieving “ignition” will no doubt influence further research into fusion energy as well, but NIF technology was not designed for this purpose. So-called tokamaks, like the (delayed) Iter project being built in France, work differently and are seen as a more likely route to realizing commercial fusion power.
We live in an era of energy breakthroughs that exist on a spectrum of different realities. They are often difficult to identify in real time. For example, in June 1998, an engineer working for Mitchell Energy & Development Corp. – now part of Devon Energy Corp. – worked successfully on hydraulic fracturing to produce natural gas from a well in the Barnett Shale Basin near Dallas. That didn’t change things overnight; US gas production took another decade to pick up again, and the shale oil boom took a few more years to get going. But by proving that shale resources could be produced economically, it sparked a real revolution that turned energy markets, economies, and geopolitics upside down. As a small but timely example, the LNG carriers crossing the Atlantic today to help European countries deal with Russia’s gas shutdowns can trace their launch back to the SH Griffin Estate #4 well in Texas.
There have been other energy breakthroughs in our lives. Australian scientist Martin Green’s innovative PERC cell architecture in the 1980s greatly improved the efficiency of solar panels, enabling their eventual breakthrough from industrial niche applications to monotonous household rooftops Exxon Mobil Corp. (!) paved the way for electric vehicles, grid-scale energy storage, and the device you’re most likely reading this on in the 1970s.
As different as they are, these revolutions have some things in common. They represented technical refinements of existing technologies and processes, as opposed to the blinding flash we usually think of. That doesn’t detract from her genius; Even the successful fusion ignition just witnessed resulted from endless iterations and will now inspire more of it.
Rather, it should be emphasized that progress in the energy sector tends to be iterative. Fracking predates this fatal source by decades; Soviet engineers had even tried nuclear weapons (readers, they were unsuccessful). Mitchell Energy’s dogged commitment to making it work — rather than inventing it per se — is legendary in slate circles today. Similarly, breakthrough solar and battery technologies have reconfigured existing technologies with new designs and chemistries, leading to transformative outcomes. Ultimately.
This latency is another commonality. All required the confluence of other factors in order to rise to true breakthroughs. Among other things, the shale revolution required: sophisticated energy futures markets, perhaps slightly less experienced investors willing to fund excessive drilling, a past bubble in gas-fired power plant construction, and an established US hydrocarbon production ecosystem. Attempts to replicate fracking’s success elsewhere have been patchy, particularly in Europe, showing that the discovery is only part of the fight and not necessarily transferrable. With solar and batteries, one could argue that advances in materials only had an impact because of another “breakthrough”: Germany’s enactment of generous subsidies for renewable energy from 2000 onwards spurred Chinese manufacturers to ramp up production and slash costs .
The last sudden energy breakthrough with a truly new form was fusion’s little sister, fission. Today’s hopes for cheap, plentiful electricity from smashing atomic nuclei together reflect similar optimism about their fission in the 1950s and 1960s. Yet here we are 65 years after the first commercial reactor turned on and still debating just how much future this once heralded energy of the future really has. Ironically, here in the US, the hopeful side of this debate focuses on small modular reactors, or in other words, refining existing technology.
If all of this sounds like a little fly in the ointment for the new year, it shouldn’t be. Consider that we’ve made great strides in expanding access to reliable energy, using shale gas to replace coal-fired power plants — and limiting Moscow’s energy supply — and deploying renewable sources at an ever-accelerating pace. Although Tesla Inc. ends the year with shares seemingly in free fall, electric vehicles are now the source of all growth in the global auto business. And all of this is happening less because of a quantum leap and more because of reasonably steady advances on familiar fronts: production efficiency, financial support, political will. There is huge untapped potential in our existing technologies, whether it’s reshaping electricity tariffs to encourage smarter consumption, updating building codes to require better insulation and heat pumps, or – more advanced but entirely feasible – harnessing the batteries in parked ones Electric vehicles as grid resources.
In addition to nuclear fusion, there is great excitement around other transformative energy sources and related technologies such as hydrogen and direct air CO2 capture. Of course, hydrogen is not new; Rather, it is the concept of producing this gas with zero emissions and using it as a substitute for coal and natural gas that is getting people excited. While hydrogen will certainly be useful where electrification doesn’t exist, such as in high-temperature industrial processes, the current hype seems overdone. For example, visions of fleets of specialized tankers shipping the stuff around the globe are clashing with the reality of hydrogen’s inherent lightness – which means lots of expensive voyages are required – as Bloomberg NEF founder Michael Liebreich points out here.
One thing all of these debated silver bullets have in common is timing, with proponents expecting them to be the next big things by mid-century, coinciding with many countries’ net-zero emissions targets. Yet they all compete for essentially the same thing. For example, if fusion power becomes cheap and ubiquitous, the addressable market for hydrogen and carbon capture of any kind will shrink tremendously. Similarly, if carbon capture ends up working well and economically, just use natural gas, which is much easier to handle and transport than hydrogen.
Meanwhile, behind the scenes, we will have been tinkering together for a few more decades on renewable energy, batteries, and other iterations of all existing clean technology. There’s a good chance some of tomorrow’s energy will be stranded the day it arrives.
More from the Bloomberg Opinion:
• Fusion Cynics reflect a century of genius and hype: Stephen Mihm
• Chile relies heavily on the hydrogen revolution: Eduardo Porter
• How to finance climate plans in the midst of a currency crisis: David Fickling
(1) PERC stands for Passivated Emitter and Rear Cell. This design enhances the top and back of a silicon solar cell to keep electrons free to move longer to generate electricity more efficiently.
This column does not necessarily represent the opinion of the editors or of Bloomberg LP and its owners.
Liam Denning is a Bloomberg Opinion columnist covering energy and commodities. A former investment banker, he was editor of the Wall Street Journal’s Heard on the Street column and a reporter for the Financial Times’ Lex column.
For more stories like this, visit bloomberg.com/opinion
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