It came as little surprise this week when Pickens announced he would have to cut back plans for what was to be the world’s largest wind farm, a 4 GW plantation in Texas. With capital costs high and financiers jittery, Pickens was having a hard time getting the new transmission built that the farm would require. And, ironically, with natural gas prices sharply down and utilities relying more on gas to generate electricity, demand for additional wind capacity has drifted into the doldrums. But although this week's announcement may have been a foregone conclusion, it’s a suitable time to take stock of the Pickens Plan, the idea of ramping up wind generation to produce electricity and use the natural gas freed up by the additional wind capacity to power motor vehicles.
Obviously the Pickens Plan is highly self-interested--the Texan owns the nation’s biggest network of natural gas filling stations and has huge stakes in gas distribution generally. Nevertheless, when the plan was first unveiled last year, I advised readers that if they had to choose between just it and Al Gore’s latest ideas, they should go with the T Boone. The estimable Vaclav Smil, writing more recently, agrees: at least, as the University of Manitoba environmental scientist and energy expert observes, the Pickens plan is doable in principle. (Gore’s plan is “utterly unrealistic.”)
Taking stock in the pages of a Yale University environmental website, Smil likes the Pickens Plan’s “cascading simplicity" but worries about it "sheer grandiosity." Taken literally, it would require the country in very short order to go from having perhaps 200,000 vehicles fueled by natural gas to having tens of millions, with all that implies. At the same time, the country would have to build maybe 40,000 miles of new transmission lines to carry electricity from the Dakotas, Nebraska, Kansas, Oklahoma, and Texas to its industrial heartlands, though in each of the two most recent decades we have added less than 10,000 miles.
My fundamental concern is different. Though I agree with Pickens that we can and should sharply increase wind generation, I believe we should also ramp up natural gas production and imports and use the extra gas to replace coal generation of electricity, not primarily to power motor vehicles. Per unit energy, replacing coal with gas produces much larger dividends in terms of carbon reduction than replacing oil with gas.
Broadly speaking, If our fundamental objective is to reduce dependence on unreliable foreign oil suppliers, then the Pickens approach makes sense. But in fact, contrary to widely held preconceptions, though the United States imports most of its oil, only a small fraction comes from the volatile Middle East. As I see it, climate change--not oil dependence--is the most urgent problem facing us and the world. Though volatile oil prices have been a very serious problem, the answer to that is simple, clear, and not new: tax up the oil price to some predetermined level, and keep it there.