Thirty years of energy policy in Illinois
Santayana and all that jazz. Having lived and worked during the nation’s great energy crises of the 1970s, I was fascinated (and discouraged) to watch Illinois go through the whole thing again in the 2000s as if the 1970s had never happened.
Unrest in the Middle East. Skyrocketing oil prices. Pollution from coal-fired power plants. Politicians offering solutions.
Welcome to the great Illinois energy debate—of 1976. President Jimmy Carter was only a few months away from declaring that the U.S. fight for energy independence was the "moral equivalent of war." It was a war the United States would lose. After three decades of determined and often expensive muddle, another U.S president, George W. Bush, was compelled to warn again that "America is addicted to oil, which is often imported from unstable parts of the world."
Has anything been learned? Does Illinois risk making the same mistakes it did 30 years ago?
Politicians have always been good at promising bright new futures. Gov. Rod Blagojevich described his energy Utopia in August in a plan to meet half the state's energy demand by 2017 with ethanol, biodiesel and other fuels produced in Illinois. It differs only in detail from plans proposed by former Govs. Dan Walker and James R. Thompson.
The goal of self-sufficiency appealed to people 30 years ago, too. The push to develop "homegrown energy" evolved into millions for research, for purchase incentives and for subsidies to ethanol and other plant-based fuels, solar and wind. This frontier fantasy even imagined Illinois forests and woodlots as a significant source of energy. Yet today locally produced renewables supply less than 1 percent of Illinois's energy.
Why did homegrown energy go the way of home-cooked meals? Consider solar power. Solar was the future technology that promised endless free and clean energy. Solar solar seemed like deliverance to Illinois, then wracked as it was by debates about dirty coal and nuclear power plants so costly it would have been cheaper to burn money to make power. The official Illinois Energy Conservation Plan aimed to identify salable technologies and institutionalize solar, making rooftop hot water systems, for example, as familiar a contraption as gas-fired water heaters.
Is that long-forecast sunny energy future about to dawn at last? Not in Stephen Brick's view. "The cost horizon"—meaning the time at which an investment pays back its cost in savings on conventional energy—"continues to advance 75 yards from wherever we are standing," says Brick, who is the Joyce Foundation's environment program manager. Yet the State of Illinois is still boosting solar.
The showpiece of Illinois solar these days is the "world's largest laundromat" in Berwyn, which uses 36 rooftop solar panels to capture the energy of the sun to heat waterier the facility's 153 washers. A state grant paid for 50 percent of the cost of the $150,000 system; the owner figures it saves him enough money in energy costs annually that his share will be paid for in five years, meaning he gets free hot water for the rest of its expected 20-year life span. If this is commercialized solar, it is the taxpayers who are being hung out to dry.
Brick, who has been involved in energy issues for more than 30 years, thinks wind energy is a better bet than solar this time around. "Wind is the more nearly market-ready of the two," he says, "and it looks like a serious alternative to a new generation of coal plants."
When Gov. Blagojevich announced his administration's Sustainable Energy Plan in 2005, he proposed that utilities and other suppliers boost production of renewable energy delivered to Illinois customers to eight percent by 2012, with 75 percent of that—3,000 megawatts—to be wind-generated.
The technology of generating electricity from wind has improved by leaps and bounds—perhaps one should say gusts—in the past three decades. And Illinois has plenty of wind, even on days when governors aren't announcing energy plans. Several parts of downstate have long been known to have "utility grade" winds. (Indeed, McLean County could legitimately advertise itself as Illinois's Windy County.) The very latest wind resource maps suggest that the state could generate 9,000 megawatts of electricity, which is enough to power 2 million homes.
Entrepreneurs have been quick to seize on this potential. More than a dozen wind farms have been built or are being talked about. The lingering questions about wind are no longer technological but economic. The winds in Illinois blow most dependably at night, when power is needed least. Worse, it costs more to produce than power from plants fired by coal, gas or nuclear energy.
"Wind farms" are aptly named, as they make economic sense only because of substantial federal subsidies. Wind farms in effect generate energy by mining taxpayers—the original renewable resource. For every kilowatt generated, the producer gets a credit against his or her federal tax liabilities worth 1.9 cents per kilowatt.
This ill wind blows the way of wealthy investors eager to reduce their taxes. Sadly for them, Congress' commitment is less than wholehearted. Tax credits have been granted on an annual basis; an investor relying on them is just as foolish as the nation is when it relies on a volatile Middle East for oil. Congress, by refusing to make a long-term commitment to subsidies, left U.S. wind turbine equipment makers unsure whether they would have a future market. The result is that most of the wind turbines being installed in the United States are built by companies based abroad. So much for energy independence.
Congress has been kinder to another of the alternative energies that Illinois has been amply designed by nature to provide: ethanol. Energy crises come and go, but U.S. agriculture has been in a state of more-or-less constant crisis. Ethanol from the start has been a farm-support program masquerading as energy innovation. In 1978, the federal Energy Tax Act was supposed to temporarily exempt biofuels from the excise tax on motor fuels. Since then, the ethanol that was supposed to rescue the nation's drivers from perfidious oil states has rescued only our corn farmers. Ethanol plants produce the energy equivalent of about five billion gallons of gasoline a year. The energy spent by critics trying to kill the program would probably run the U.S. fleet longer. And ethanol offers little, if any, real clean-air benefit.
Illinois lawmakers, nonetheless, continue to boost ethanol as a magic elixir for the nation's energy ills. Illinois pols dare not speak against it; indeed, they want more of it. In August, candidate Blagojevich called for construction of as many as 20 new ethanol facilities in the state that already produces most of the ethanol made in the United States. When Rich Whitney, Green Party candidate for Illinois governor, earlier this year wondered aloud whether the incumbent governor's enthusiasm for ethanol in August might just reflect the $50,000 campaign contribution he received from Archer Daniels Midland in May, he asked a question that should be directed at many an Illinois politician.
Ethanol from corn, of course, was described in the 1970s as a bridge technology, necessary only until fuel alcohol could be made economically from such biomass as crop wastes or easy-to-grow grasses. (Four of the new ethanol plants that the governor proposed in August are to use corn husks or other plant waste.)
Some experts—who can expect no invitations to the Executive Mansion any time soon—have been telling people that while "cellulosic ethanol" may yet deliver on its now rather moldy promise, the technology is still as many as 20 years away from commercialization. As Robert Bradley, an astute historian of the issue, has noted about the past 30 years of U.S. energy policy, "the lesson has been learned the hard way that government invariably picks losers, the market picks winners and 'infant industries' requiring government favor have trouble growing up."
Illinois is a state whose electricity sector has already made more progress toward a carbonless future than any other. Nuclear plants, which don't burden the atmosphere with CO2, account for half of the electricity generated in Illinois (as compared to 22 percent by the nation as a whole). Yet, few today talk about expanding nuclear plants.
True, nukes had a problematic history in Illinois. Commonwealth Edison had trouble running them, and Illinois Power had trouble building them. The debate, or rather the non-debate, about nukes seems stuck in that past. One of the reasons ComEd never bothered to run its plants very well is that it had scant reason under the old regulated price scheme; deregulation gave the utility reasons to learn how to run its old plants efficiently, and they have become models of their kind.
"Nuclear has been off the table for economic and social reasons for a long time," says Brick of the Joyce Foundation. "Serious people are starting to look at it again." New kinds of nuclear plants promise to be cheaper to build and safer to run, and such technologies are less pie-in-the-sky than some of the advanced clean-coal technologies that are being championed in Illinois. Such machines are a-building in places like Finland and France, and Britain is seriously considering the technology. Exelon, corporate parent of Commonwealth Edison, plans to build a new plant in Clinton. That would be consistent with the advice of sensible economists who argue that Illinois should maintain a mix of power-generating sources—coal, gas, and nuclear—as protection against future disruptions or price hikes in any one fuel source.
Several lessons from the '70s are pertinent to today's policy debates. One is that the future is unknowable. "All the work we did 25 years ago was done in anticipation of a future—growing shortages and thus higher costs for energy—that didn't occur," says Frank Beal, founding director of the old Illinois Institute of Energy and Natural Resources and later the director of the department by that name. "All you can do is draw up plausible scenarios and draft policies that are robust enough to adapt to a different future than the one you expect."
In the '70s, experts predicted a future of scarce energy resources and permanently high prices, and policymakers made policies to fit it. Carter in his 1977 national energy address predicted that sometime in the early '80s the world would be demanding more oil than it could produce. (Wrong, or at least not right yet.) He also was confident that the United States would "never again import as much oil as we do now." (Imports began to climb again during the tenure of former President Ronald Reagan, and today constitute about 60 percent of our supply.) Experts assumed that natural gas would be so scarce that burning it to run power plants would be like running a tractor on champagne. (Natural gas became the fuel of choice for new electric generating facilities; in Illinois, power generation from gas was negligible in the '70s, but today provides some 25 percent of the state's electricity.)
Another great truth to emerge from the '70s is that everything is connected. Energy technologies cannot be considered separately from regulatory policy, which can't be separated from environmental issues. None of this is unaffected by politics. Nothing demonstrates these truths more vividly than the history of coal-fired generating plants in Illinois.
Thirty years ago, coal-fired plants designed to make lots of power as cheaply as possible—which they did admirably—proved to be the wrong kinds of machines for making electricity in a newly environmentally conscious Illinois, where how power was produced mattered as much as its cost. That set off three decades of furious research into ways to burn coal so it would not make coal companies sick.
Perhaps the lushest fruit of those many years of work at such places as the Coal Research Center at Southern Illinois University Carbondale was the perfection of "fluidized bed combustion," a process to burn even Illinois's sulfurous coal without violating clean air standards. Pilot or field projects using the technology began to be tested in Illinois in the late '70s. By the mid-'80s, several true commercial projects were up and running, and by the early 1990s the technology was, in the words of John Mead, the longtime director of the Coal Research Center, "proven and in wide use across the country."
The availability of such clean-coal technologies solved the "energy problem" as it was conceived in Illinois in the '80s and '90s—that not enough of the power plants being built to supply it used Illinois coal. The General Assembly made money available to anyone wanting to build one through a $3.5 billion revenue bond authorization, the largest incentive program of its kind in the nation.
Unfortunately, by the time these coal-burning "technologies of tomorrow" finally got online, they solved yesterday's problem. The then-new environmental standards in the '70s aimed at sulfurous and nitrous emissions and particulates; those now being talked about seek to curb emissions of greenhouse gases, principally CO: (carbon dioxide). Illinois's coal and power generation industries thus find themselves in 2006 in a situation not very different from the one they faced in 1976, when current coal-burning technology also was revealed to be inadequate to meet a new generation of environmental standards. Those industries again need a technology that burns coal more cleanly than plants currently planned or in use can do.
The obvious candidate is so-called "ultraclean" gasification. This process truly would be the miracle that for decades existed only in the dreams of coal company officials—a way to burn coal with essentially no emissions, period, save for the sighs of relief from coal company stockholders. The CO2 produced during combustion, for example, can be captured and sold or shipped by pipeline to be injected into wells to push more oil out of old wells (as the governor somewhat quixotically proposed in August). Or it can be "sequestered," basically entombed underground in—the probable locale in Illinois's case—abandoned coal mines.
Mead notes that ultraclean coal technologies also are some years from commercial deployment. Which brings us to FutureGen. This is the $1 billion public-private emissions-free coal-fired CO2-sequestering 275-megawatt power plant that, it is hoped, will prove the viability of ultraclean coal technology. Its private investors include some of the world's largest coal companies and electric utilities. That international consortium of coal companies, in partnership with the U.S. Department of Energy, is charged with scouting locations for the wonder plant. Among the four finalists announced in July by the FutureGen Industrial Alliance are two in Illinois: Mattoon and Tuscola.
But FutureGen will not even start up until 2012, and it will be longer before the kinks are worked out. No one knows what the global energy market will be like in a world that is volatile in economic and climatological terms. Again, the '70s offer cautionary lessons. The FutureGen of that day was a federally subsidized $1 billion synthetic fuel or "synfuel" plant authorized by Congress in 1976 to demonstrate how to turn coal into what could be called unnatural gas. Illinois was in the running for that demonstration plant, too, but the winner was a plant in North Dakota that converted lignite coal into methane. By the time that facility opened in 1984, government price controls on natural gas had been lifted. Natural gas was available at prices lower than that of the plant's synthesized version. The consortium in charge abandoned the plant as uneconomical in 1985, and the U.S. Department of Energy assumed ownership in 1986.
"Crisis is a stimulant for fundamental system change," insists Beal. "Global warming may be a crisis-level phenomenon of that kind." But history suggests that Congress will shrink from imposing draconian limits on carbon emissions unless there is a perceived crisis. What happens in the next few summers will determine that. Moderating weather will have the same effect on our good intentions that the breaking of the OPEC embargo had in 1974. Global warming may prove to be a "crisis" that can be solved not by spending a billion bucks on a miracle coal plant but by consumers spending a couple of hundred on more efficient air conditioners.
However, if a future longer than five years is hard for people to imagine, so, apparently, is a past that is longer than that.
One example of this truth is energy efficiency, or what was usually called conservation in the '70s. That era sparked a spate of federally funded conservation programs aimed at spreading the efficiency gospel through weatherization assistance to homeowners and energy-saving tips for small businesses, schools, hospitals, local governments, and public care institutions. The state also compelled energy utilities to offer their customers home energy audits and assistance in purchasing, installing, and financing efficiency improvements or such gizmos as solar hot water heaters or greenhouses.
Lower energy costs during the '90s meant that people who had learned to be careful with nickels became careless with dollars. The average household forgot much of what had been learned about efficiency in the '70s and perfected in the '80s. The advocacy group Environment Illinois's current energy program urges public education, low-cost or free weatherization assistance, and distribution of compact fluorescent light bulbs, low-flow showerheads, pipe wraps, water heater blankets, and the like. Excellent ideas—and all tried back then at a cost of millions in a futile attempt to inculcate a new energy ethic.
Of course, the only way to make efficiency stick would have been to build it not into the heads of consumers, but into their houses and the machines they use to run them. Efforts to adopt mandatory efficiency codes for residential buildings and appliances were made in the '70s and failed. The result is that Illinois is one of only four states in the nation that doesn't have a statewide energy efficiency code for new home construction.
As for appliances, Environment Illinois calculates that if Illinois were to adopt up-to-date efficiency standards for furnaces and appliances, Illinoisans would save more than $344 million in energy costs. While sensible, such measures are not popular. Energy utilities avoid them because efficiency cheats them of sales, and municipalities resist them because mandatory codes mean a surrender of sovereignty to Springfield. Homebuilders are hesitant because efficiency means building better products than their market demands.
We have gradually unlearned the lessons from the first great energy crisis—not only how to ease one, but even that energy crises can happen. Senior state agency heads are shoved out the door with each new gubernatorial administration, for example, and with them go whatever wisdom they accumulated during their tenures; lower-level staff have retired and been replaced in many cases by people who were in diapers in 1973. Nor are there many members left in the General Assembly who grappled with Illinois's energy problems in the '70s and early '80s. Not making the same mistakes today that were made then is harder to do when the people making decisions don't know what the old mistakes were. ●