Distributed Energy Systems in California's Future: A Preliminary Report Volume 2

Abstract

The construction and use of energy technologies produce environmental and social consequences that are neither desired nor, for the most part, incorporated in the economic costs charged for the energy supplied. Although it is now essentially universally recognized that these 'externalities' or (broadly defined) 'social costs' must somehow be taken into account in the processes by which society chooses among alternative energy options, it is less widely appreciated that these costs - not resource limits or narrow economics - actually define the energy dilemma in the long term. It is important to try to make clear at the outset why this is so. The energy problem resides fundamentally in the fact that the relation between energy and well-being is two-sided. The application of energy as a productive input to the economy, yielding desired goods and services, contributes to well-being; the environmental and social costs of getting and using energy subtract from it. At some level of energy use, and for a given mix of technologies of energy supply, further increases in energy supply will produce incremental social and environmental costs greater than the incremental economic benefits - that is, growth begins to do more harm than good (Holdren, 1977; Committee on Nuclear and Alternative Energy Systems, 1977). This level can be said to define a rational 'limit to growth', as distinct from a strictly physical one. That such a level, beyond which energy growth no longer pays, exists in principle for any mix of technologies of supply and end-use is easily shown from basic economics and physical science; predicting its magnitude exactly is much harder, the more so because social costs even less quantifiable than environmental ones may dominate. Lovins (1976, 1977) evidently believes that the United States is already near or beyond the point, given the 'hard' energy technologies on which it relies, where further growth hurts more than it helps. Whether he is right or wrong about exactly where we are now, however, or in specific judgments about the merits of 'hard' versus 'soft' technologies, it is clear that energy policy for the long term should be shaped by awareness that social-environmental costs, not exhaustion of resources, will limit the amount of human well-being derivable from energy. Maximizing this quantity will require striving for technologies of energy supply with low social and environmental costs per unit of energy delivered, and fostering patterns and technologies of energy end-use that squeeze from each such unit the maximum contribution to human well-being. This perspective, then, elevates environmental and social characteristics to the top of the list of criteria used to select supply technologies from the menu of genuinely long-term options - fission breeder reactors, fusion, direct and indirect harnessing of solar flows, and possibly some forms of geothermal energy. It rationalizes the possibility that society will choose to pay more (in economic terms) for a more benign energy source than for a less benign one. And it argues for using, as a criterion for selecting short-term and transition energy sources, the extent to which these promote and facilitate the transition to a longer term energy future built on more benign sources and efficient end-use. Given a perspective that places environmental and social impacts at the heart of the energy predicament rather than on the periphery, it becomes essential to compare the impacts produced by alternative energy options systematically, comprehensively, and objectively. The information needed to do this properly, even for a limited set of technologies and a limited geographic and cultural context (e.g., California), unfortunately does not exist. What is attempted here, therefore, is to outline a logical framework for such a comparison, and to hang on that framework the partial information that is available on the environmental impacts of some major conventional and nonconventional energy options for California. Although the emphasis in this study is on the latter, the most sensible yardstick to give meaning to the results is provided by the former. The objective is to permit at least some partial and preliminary conclusions about this aspect of the 'soft' energy options, and to identify those areas where additional knowledge is most badly needed. In this analysis sociopolitical impacts are mentioned from time to time for completeness, but the emphasis is on impacts on physical resources and on the physical environment; impacts on institutions and social systems per se are treated more thoroughly in other papers in this project.