An Apollo Program for Alternative Energy Is Not the Answer

by Richard T. Stuebi

Last week, Al Gore (see video) challenged the U.S. to achieve a zero-carbon electricity supply within 10 years. Gore's talk generated a lot of press coverage, mostly positive. Going somewhat against the grain, my colleague Neal Dikeman wrote a very thorough and thoughtful critique of Gore's speech.

As was widely reported (see article), Gore invoked the memory of JFK, who in 1961 (see speech to Congress) prompted the no-holds-barred Apollo program by declaring the big hairy audacious goal of sending a man to the moon and returning him safely to earth by the end of the decade.

Gore is by no means the first to use the Apollo analogy - or the analogy of the Manhattan Project for developing the atomic bomb during World War II -- to muster public urgency for alternative energy. Unfortunately, I think the premise underlying the analogy is flawed, leading the conclusion to be false.

While I agree that far more emphasis and expenditures on alternative energy would be a good thing, and that the government has a valid role in stimulating efforts in that aim, I have long believed that a project like Apollo/Manhattan for alternative energy simply wouldn't work.

This is because there are two major differences between solving our energy/environmental challenges and either building an atomic bomb or landing a man on the moon.

First, the atomic bomb and moon-shot challenges were "cost-no-object" propositions issued by one "command-and-control" customer (the Feds), seeking to overcome fundamental scientific and engineering unknowns, within a small separable slice of the technical world operating largely outside the global economy. In contrast, it is known today how to supply energy without any carbon emissions - but energy supply is at the very root of a global economy involving billions of independent actors, and cost is very definitely the object.

There is simply no will - by citizens, businesses, or politicians - to pay much of an economic premium for a lower-carbon energy supply. Reverting to the Apollo analogy, it would almost be as if NASA was tasked with consistently achieving a $/mile cost target for space travel that was reasonably close to the cost of conventional travel. (And, by the way, what arbitrary cost target could be set that would generate both enthusiasm and commitment?)

Second, it's hard to see how a major alternative energy effort led by the government wouldn't lead to nationalization of all subsequent energy industrial activity - a potentially miserable outcome. The previous analogues are instructive: in both atomic weapons and space travel, stemming from their respective mega-projects, the government is the only buyer of the resulting product. There are essentially no markets, and hence no pricing mechanism to allocate economic resources. Entrepreneurial activity is limited to vendors in the supply chain - most of whom are members of the vaunted military/industrial complex.

You think you hate ExxonMobil and Halliburton and your local regulated monopoly utility today? You think they lobby too much now? You think they're too powerful? You think too much corruption derives from them? Imagine a world after an alternative energy program that has been driven by the government, where these companies and their peers negotiate contracts through bidding programs with government agencies for sole-source public supply of energy. As important as it is to dramatically advance alternative energy, I don't want to see any $900 toilet seats coming to the energy sector.

With An Inconvenient Truth, I credit Al Gore for spurring a tremendous and necessary shift in public awareness and acceptance of climate change as a critical issue. I only regret that, in his widely-noted speech last week, he has seemingly fallen prey to promoting a populist notion that is, at bottom, absurd.

Instead, I submit that we need to think of more creative ways for the government to spur on the massive increase in alternative energy that Gore and I agree that we badly need. Perhaps it's through well-funded grant programs, competitively selected by unbiased expert panels, to tackle clearly-defined technical/economic challenges, similar to what is being proposed by Senator Sherrod Brown (D-OH) in S-2940.

Being an economist, I lean a somewhat different direction. A better way would be an appropriately high carbon tax or sufficiently tight cap-and-trade carbon policy, to drive fossil fuel prices faced by customers to levels sufficiently high to motivate more alternative energy adoption and accelerated energy R&D. With thousands of inventors/entrepreneurs, millions of companies in the private sector, billions of energy customers and trillions of dollars in the global capital markets, I bet we'd be amazed at what prolonged $10 gas and 50 cent/kwh electricity would bring out of the woodwork.

Of course, the common complaint is that such a policy would constitute a regressive tax, disproportionately impacting the lower-income. To make this politically acceptable, the additional revenues collected by the government associated with the carbon policy would need to be offset through lower income taxes, augmented perhaps by feebates. Seems doable to me.

Unfortunately, it's probably too logical. It's far more dramatic for politicians and pundits to grab the spotlight and ask for an Apollo/Manhattan program for alternative energy, which has no chance of coming to fruition or succeeding. No loss to them: they can always shrug their shoulders and ask their listeners to imagine what good consequences might have happened if such an implausible initiative had been launched.

Although I try and dissuade continued use of the Apollo analogy, there is one moon-shot quote from JFK - not from 1961 but from a later 1962 speech - that definitely applies to the need for radical change in our energy/environmental approach:

"We choose to go to the Moon in this decade and do the other things, not because they are easy, but because they are hard."

As we move to a lower-carbon energy future, we must acknowledge early and often that what we need to do is not going to be easy but in fact will be hard, to steel ourselves for the work ahead and to forgive ourselves for setbacks and failures that will come.

If there is an analogy to be drawn, it is that the imperative for lower-carbon energy is most akin to the so-called "war on terror". It will never be exactly clear when we've won. The objective is invisible. Most importantly, successful prosecution of the effort requires ongoing costs and sacrifices - which is unfortunately something that Americans no longer seem to be good at.