POWER June 2012 - 53

Power Views
Appeals may end up at the Supreme
Court regarding the latest EPA air
regulations (Mercury and Air Toxics
Standards and Cross-State Air Pollution
Rule) and greenhouse gas rules for
power plants. What are your views of
these rules passing judicial scrutiny?
Yergin: This is a question that will be
decided in the judicial process and politically.
As rules have come down, they
would effectively remove coal as a contributor
to new power supplies in the United
States, unless there is some stunning
advance in carbon capture and sequestration.
In The Quest, I quote Congressman
Markey of Waxman-Markey talking about
" carrots versus sticks " on carbon policy-
and then cite a CEO of one major utility
who added a third category- " bayonet. "
The North American Electric Reliability
Corp., in its annual report, suggested
that the new EPA rules would
significantly impact the nation's system
reliability. The EPA says " no " but has
no grid expertise on staff, nor has the
EPA cooperated with industry in such
an evaluation. The Federal Energy Regulatory
Commission may become the
agency to reconcile the conflict. What is
your opinion about the quick release of
so many new EPA regulations on system
grid reliability?
Yergin: Grid reliability is an essential
part of fundamental energy security. As a
nation, a society, and an economy, we are
more and more dependent every day on
the reliability of our electric power system.
I think that it's a big risk to implement
a lot of regulations without careful
analysis of system reliability and that the
issue has to be examined very thoughtfully-and
not just waved aside. There are
enough dangers out there without inadvertently
adding to them. In terms of bureaucratic
perspectives, we have to remember
the adage " You stand where you sit, " and
system reliability is not something that is
obviously in the wheelhouse of EPA. At
least, Washington has to demonstrate that
it has seriously considered this risk-and
its ramifications.
DOE Secretary Chu and President
Obama constantly tell the public that
we must regain our national lead in
manufacturing renewable technologies.
Of course, China has such a lead that
accelerating production to retake that
lead doesn't seem possible, particularly
with today's $1/watt panel prices. In
what areas of the power generation
business should the U.S. exert its muscle
June 2012 | POWER
our electricity, as it was a couple of decades
ago, when our electricity demand
was smaller. But we haven't built any new
plants. The reason is going from 58% operating
levels to high 90s. It's as though
we've doubled our nuclear fleet without
actually building any new plants. But if we
don't start building new plants in the next
decade, nuclear will decline as baseload,
and we will lose an important component
in diversity of power sources. Whether
they are plants as we know them today, or
small modular plants, nuclear is one of the
foundations of baseload power.
The Quest is a lesson book on history
and geography, and many of the lessons
relate to oil. Will these same lessons be
played out again as natural gas becomes
more of an internationally transported
commodity?
Yergin: One big difference between
to maintain a world lead?
Yergin: A few years ago, China decided
to promote wind and solar industries for
two reasons. One, to help meet its rapidly
growing electricity demand-which is
growing as fast as ours did in the 1950s-
and has now made China the biggest power
system in the world. The other is to gain
a leading position in global markets and
in what the Chinese Five Year Plan calls
" new industries. " The Chinese have moved
very fast and have a major manufacturing
advantage at least in solar panels. Wind
is different, as it is not the same kind of
manufacturing commodity business. The
Obama administration has made a strong
commitment to having the U.S. be a leader
for the electric car. Certainly, electricity
storage is one of the most important frontiers.
I headed a task for the DOE on energy
research and development, and one
of the most significant lessons is the need
to maintain a consistent commitment to
appropriate levels of R&D spending.
Plant Vogtle just received the first license
to construct a new nuclear plant
in the U.S. in about 34 years. What
are your predictions for the U.S. nuclear
industry?
Yergin: Plant Vogtle is going ahead, and
at least one other as well. But shale gas
is reshaping the marketplace for electric
power. That makes it harder for nuclear to
compete, along with renewables. One of
the striking things I point out in The Quest
that is not generally well recognized is
that nuclear power is still about 20% of
www.powermag.com
The Quest and The Prize is that in The
Quest, I seek to cover the entire energy
spectrum, including a long section on electric
power and the critical challenges of
" fuel choice " for utility management. Oil,
of course, is the global commodity. Until
2008, it looked like natural gas was headed
in the same direction, and there was
an expectation that increasing amounts
of electricity in the United States would
be generated with gas imported from
the Middle East or West Africa or even
Asia. But the huge growth in shale gas
has abruptly terminated that vision. Once
again, there are three distinct natural gas
markets: North America, where gas is very
cheap and abundant; Europe; and Asia,
which has prices as much as seven or eight
times higher than the United States. With
Japan's nuclear fleet shut down, imported
LNG has become the vital default fuel for
Japan, and that has further tightened the
Asian gas market.
This whole shale gas story is an amazing
saga of innovation. It is, in scale, the
biggest energy innovation of the last two
decades. I wanted to explain in The Quest
how it came about. Its advent was generally
recognized only around 2008. By
that time, it had been 25 years in development.
And it came about as it did because
of the conviction, even obsession, of one
man, George P. Mitchell. It's very interesting
to see the impact one person can
have on an industry as huge and complex
as energy-and, specifically, on the electric
power business. ■
-Mark Axford, president of Axford
Turbine Consultants LLC and a contributing
editor to POWER, conducted and
edited this interview.
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POWER June 2012

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