By 2023, a Changed World in Energy

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IF you could close your eyes for just a moment like Rip Van Winkle, and blink them open in 2023, you might see a very different energy world.

Electric cars may be popular. Solar energy could be cheap enough that millions of households and businesses deploy solar panels to generate their power needs. Fossil fuels will probably still dominate, but most trucks and many trains could run on natural gas rather than more polluting diesel. And the United States could be a major oilexporter.

None of this is implausible. Consider the change over the last 10 years. Back in 2003, American natural gas fields were thought to be drying up and energy entrepreneurs were beginning to invest in hugely expensive terminals to import gas, not export it. American oil production continued to plummet.

An awakening Rip today would see a miraculous change: a country on the path to becoming energy independent, a hopelessly quixotic quest only a decade ago. Newly prolific oil fields in North Dakota and Texas are expanding domestic production to levels not seen in a generation. The United States has suddenly become a net exporter of gasoline and diesel fuel. And it is looking for new markets for natural gas as well: new drilling technologies have allowed domestic production to soar over the last five years, causing a glut and price slump.

“When it comes to energy, the rule of the game is to expect the unexpected,” said Daniel Yergin, the energy historian. “So much effort is going into research, development and innovation all across the energy spectrum, 10 years from now we may well see the next game changer.”

Possibly profound changes are taking shape right now. Newly mandated corporate average fuel economy standards are expected to double the number of miles that the average car travels per gallon by 2025. Scientists are working to develop better ways to store electricity to make wind turbines and solar power systems more practical when the wind does not blow and the sun does not shine. Energy-poor Japan has just found a way to extract natural gas from frozen methane hydrate at the bottom of the sea, a development that could open the door to a giant new gas source around the world.

Development of advanced biofuels, made of nonfood materials like algae and switch grass, has been disappointingly slow over the last decade. But breakthroughs are still possible. The first United States commercial advanced biofuels plant opened last fall in Mississippi, and a handful more are expected to start producing 200 million gallons this year. Tesoro, the Texas-based refiner, has agreed to begin buying algae-derived fuel to produce diesel.

A handful of power plants designed to convert coal into combustible gas, which could emit half the carbon dioxide of conventional coal-fired plants, are in the planning stages. Bill Gates is investing heavily in a company called TerraPower, which is working on a fission reactor that, unlike reactors that use enriched uranium and need to be refueled, could run on its own nuclear waste — thus reducing the threat of proliferation and extending the life of available uranium supplies.

“The room for innovation is simply mind-blowing,” Mr. Gates told executives at a recent conference in Houston held by IHS Cera, the energy consulting firm. “Frankly, we need hundreds of ideas because many of them won’t succeed.”

Some changes are fairly easy to predict, given the momentum of the current transformations, especially the emergence of natural gas as a dominant fuel both in the United States and abroad. It is entirely possible, if not likely, that American truck fleets, and perhaps even trains, will replace diesel with cleaner-burning natural gas. The rail freight giant Burlington Northern Santa Fe, the country’s biggest diesel consumer, plans to test liquefied natural gas in its engines. Plans are afoot to convert idle natural gas import terminals into export terminals that could make the United States a major gas exporter by the early 2020s.

Modular gas-to-liquids plants will probably emerge next to oil fields, to exploit natural gas that is now being released and wastefully flared; the gas can instead be converted into a diesel fuel to power rigs and trucks. Government regulations will force energy companies to adopt safeguards against air and water pollution from hydraulic fracturing. And just as the exploitation of shale gas and oil production has taken off in the United States over the last decade, the next chapter of this revolution will see its expansion across much of the globe over the next decade, from Argentina and Mexico to China and North Africa.

ENVIRONMENTALISTS and fossil fuel producers have different wish lists for the future, of course, but many in both groups see the potential for big and somewhat similar energy changes over the next decade.

Hal Harvey, chief executive of Energy Innovation, an environmental consulting firm based in San Francisco, conceded that transportation fuels “are not going to change that much in the next 10 years.” But he said the new auto fuel standards would produce a striking improvement in mileage efficiency as carmakers design far lighter vehicles of new or improved materials that provide strength and safety without mass.

He also foresees “explosive growth” in renewable energy sources for electricity, with wind generation systems now running at a cost below that of many older power plants, and costs of solar energy panels coming down by 70 percent over the last three years. “We are going to see a lot of change in power generation over the next 10 years,” he said. “You start to give homeowners the opportunity to self-generate and control their energy costs, and they take that option.”

He noted that California utilities had already signed contracts to comply with a state mandate to produce one-third of their power from renewables by 2020, from roughly 20 percent today. “The forces are inexorable,” he concluded.

William Colton, Exxon Mobil’s vice president for corporate strategic planning, similarly said that “oil is going to continue to be dominant in transportation” over the next 10 years at least.

Nevertheless, he said there should be many more hybrid vehicles on the road by 2023. “They will be more popular for one reason: Governments are mandating higher economy standards,” Mr. Colton said. “The industry will be pushed in that direction.”

Mr. Colton said natural gas would become increasingly important in the power sector, replacing much coal-burning both in the United States and abroad. He also foresees possible scientific breakthroughs for building lighter, cheaper and faster-charging batteries for cars; biological breakthroughs to make biofuel production more economical; and even advances in the development of hydrogen fuel cells to run electric motors on cars, resulting in emissions of only water vapor. But he added that commercialization of any of the possible breakthroughs would take at least another decade.

Much of the future of energy will depend on government policy, of course, and several major decisions in the United States are coming soon.

http://www.nytimes.com/2013/04/25/business/energy-environment/by-2023-a-changed-world-in-energy.html?pagewanted=all&_r=0