Steven Chu discusses 'all of the above' U.S. energy strategy

President Obama has called for an "all of the above" energy strategy, ranging from taxpayer funding for electric vehicles to more drilling for oil and natural gas. The goal is to get a greater contribution from domestic renewable-energy sources, such as the sun and wind, yet maintain cheap domestic energy from traditional fossil fuels.

"We're not going to be able to just drill our way out of the problem of high gas prices," Obama told a North Carolina crowd on March 7. "If we are going to control our energy future, then we've got to have an all-of-the-above strategy. We've got to develop every source of American energy--not just oil and gas, but wind power and solar power, nuclear power, biofuels."

The man in charge of actually implementing that all-of-the-above strategy is Secretary of Energy Steven Chu. Scientific American spoke with Chu in Austin, Texas, by telephone on March 7, the same day the Obama administration launched its new effort to make electric cars "more affordable and convenient to own and drive than today's gasoline-powered vehicles within the next 10 years."

[An edited transcript of the interview follows.]

Is domestic energy independence a useful goal?
Steven Chu: It's certainly a useful goal to strive toward energy independence. It's analogous to striving for a zero-energy building [which produces as much energy as it uses]. The good news is that three and a half years ago we were importing about 60 percent of our oil; now it's around 45 percent and we see the trend going forward decreasing even more. Different people have different estimates. We are already largely energy independent in terms of electricity generation, although some electricity comes from Canada.

It's mostly transportation fuel I'm thinking about. That's a big cost driver, especially if you're importing 45 percent of it, spending $300 billion to $400 billion a year on petroleum. We have increased oil and gas production [in the U.S.]; we think it's already increased by 500,000 barrels per day. We think there's another million-barrel-per-day increase in production possible because of new technologies.

We also see a moderation, a flattening, perhaps even a decrease, in the use of transportation fuels as we go to more efficient automobiles. We see more diversification of transportation energy. Liquified natural gas for long-haul trucks has already been shown to make sense. The payback period [for the extra cost of the natural gas technology] is just four years if you drive 100,000 miles a year. Private companies are investing hundreds of millions of dollars to build natural gas infrastructure. If you build it every 200 miles on the highway, you can capture a significant market, perhaps even half the market.

Does that mean we've given up on combating climate change?
Chu: No, absolutely not. This is all very consistent with climate change. Natural gas as a transition fuel is great. It's half the [carbon dioxide emissions]. We still need to figure out how to capture its carbon, which we need by mid-century no matter what the large source is [whether coal, oil or natural gas].

Renewable energy is getting cheaper and cheaper. Perhaps within this decade, wind and solar will be as inexpensive as any form of new energy. Wind is now pegged at 7.2 to 7.5 cents per kilowatt-hour at a levelized cost of energy according to Bloomberg New Energy Finance. [A leveled cost of energy is a measure of all the costs of a given energy source, from construction to fuel costs.] Natural gas is about 6 cents. A new coal plant is actually more money. Levelized wind is cheaper than coal.

Solar is more expensive; it's twice as expensive. We believe it will come down twofold in the next decade. It's already come down threefold in the last four years. We see the electricity mix going to less and less carbon.

In transportation, there will be a mix of electrification and next-generation biofuels and efficiency. If we get breakthroughs, it can be game-changing.

Where do you think such breakthroughs might come from?
Chu: Breakthroughs on the physics side will be in materials. The battery manufacturer Envia, which both [the U.S. Department of Energy's (DoE) Office of Energy Efficiency and Renewable Energy and its Advanced Research Projects Agency-Energy] supported just announced a 400-kilowatt-hour-per-kilogram battery. That's at least a factor of two more than the previous best. It still has to go through some more stages of bulletproofing, testing. It will reduce the cost of batteries at least twofold and the company is a little more optimistic--they think fourfold.

We are investing in other battery companies that will go another factor of two beyond that. If we see those types of batteries, once you're down to around $150 to $200 per kilogram within a decade, which is the DoE goal, then you have $20,000 to $25,000 cars going 150 miles that will pay for themselves in five years with lower fuel costs. That compares to $18,000 for a regular five-passenger car. It's not a $50,000 to $100,000 car; it's something all Americans can afford. If we get those prices, that will occur--though I don't know how long it will be before we get that. The feeling of driving past a gas station forever is priceless.

Biofuels are a little bit further out only because your competition is oil. We would like to develop an industry without any subsidies whatsoever and with very low other carbon inputs so you get a five-to-one reduction in the amount of CO2. Early-stage research sponsored by DoE has microbes where you feed it simple sugars and out pops diesel fuel. It's been piloted in Brazil because sugar is inexpensive there but they are looking for a plant in the U.S. to use corn starches instead. Ultimately, their goal is to feed it complex sugars like cellulose and hemicellulose and out pops diesel, gasoline or jet fuel.

Another company is using photosynthetic bacteria and swapping whole genomes and metabolic pathways. It generates long alkane chains that are the immediate precursors to diesel fuel. It's 5 to 10 percent energy efficient where a typical plant is only 1 percent efficient. Eighty percent of the metabolism of this poor cyanobacteria has to be generating fuel. It's already worked. Now we have to get the metabolism up further and many synthetic biologists feel they can do that. They know how to ratchet down metabolic energy used in things like reproduction. They want to just keep those systems alive that do self-repair and make the fuel. This is a little weird bacteria or yeast. In the last 15 years or so, I've gotten into biology like this. I follow this with avid interest. It's really almost science fiction.

Now, with biofuels you do have to build an infrastructure whereas with electrification we do have electric plugs already.

What lessons have been learned during the Obama administration about how the government should fund new energy companies like these, or companies of any type?
Chu: The sweet spot at DoE has been on the front side, research and development. Then, as you go to helping deployment and how to finance deployment, there is an important role for government. At least other countries feel that it is a very important role, to help deployment by funding first-of-their-kind plants. You can help fund deployment through whatever means: finance, feed-in tariffs, clean energy standards or renewable portfolio standards. It's a combination of things to make a market draw.

A market draw helps you walk down the learning curve. The more you produce, the better you get at it. You need the market draw in addition to research. If you don't have it, and people don't think there will be a market, it will be a chicken-and-egg problem. It's a combination of research and industry saying, "Yes, I can make a business of this."

In areas of rapidly moving technology, you have to be increasingly careful when assisting in deployment. Some things happened so rapidly that nobody anticipated them. For example, the price of photovoltaics dropped 80 percent in one year, 40 percent in another year. Those prices have now stabilized.

It's very important that the U.S. remain a player in this technology [photovoltaics]. We invented a lot of this stuff, from silicon to cadmium telluride [solar cells], you name it. We still have the capability of outcompeting. Other countries may give more assistance, look at Germany and it's high-tech auto industry. But our auto manufacturing is coming back strong. They are building very high quality cars now that they believe they can market worldwide but build in the U.S.

Things happen. I really didn't learn that here, I knew full well coming in that unexpected things can happen. [Technology] leads can be lost. It's a very competitive world out there. For example, we invented the airplane, lost the lead and then came back.

We are still highly competitive in all areas of high-tech manufacturing, including most new energy. We need to choose our battles, but a lot of them we can--and should--win.

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