What’s the Reasonable Balance of Renewables Vs. Fossil Fuels to Power U.S. Manufacturing?

Also, the NAM, Boston Consulting Group and other economists predict an overall strong manufacturing sector through 2020. In fact, the 2016 Global Manufacturing Competitiveness Index projects the U.S. will surpass China as the most competitive ranking nation in manufacturing by 2020.

This outlook is exciting for the significant impact it could have on the U.S. economy as well as the global economy. But, this level of growth also comes with challenges. One glaring challenge is with energy. While the abundance of energy in the U.S. has been one of the primary attractions for manufacturers both for expansions and reshoring purposes, it also opens an unwelcome topic.

Historically, manufacturing relied on fossil fuels, primarily coal. While abundant and cheap, coal has grown to have a negative image due to carbon emissions. This and stricter air emissions’ regulations in the U.S. and Europe have greatly reduced the demand for coal as an energy source.

Domestic natural gas, on the other hand, has emerged as the energy source to fuel plants in the future, but it too has its own set of challenges. The largest issue with natural gas is new pipeline infrastructure is necessary for higher demand.

The NAM and IHS recently released a report on the natural gas infrastructure challenge. Here are some of the highlights from the report:

• Expanded energy access—1.9 million jobs economy-wide in 2015.
• Shale gas put an extra $1,337 back into the pocket of the average American family.
• New pipelines created more than 347,000 jobs, with 60,000 in manufacturing.
• Total natural gas demand is poised to increase by 40 percent over the next decade. Key drivers will be manufacturing and power generation. U.S. supply is expected to increase by 48 percent over the next decade to meet new demand.

What about the renewables of wind, solar and water as energy resources? While these do serve as supplementary energy sources, it is unlikely that they will be more than 50 percent of the total energy supply. The total load on the U.S. energy system is too large and is growing too fast to be 100 percent renewable. The renewables do not have the density to fully power the U.S. However, it is reasonable that we arrive at a good balance between renewables, fossil fuels and nuclear options, which is what Energy Secretary Ernest Moniz indicated at the recent annual gathering of the Western Governors’ Association.

“Fossil fuel use, nuclear, along with renewables and efficiency, will all remain prominent in our portfolio,” he said.

By finding this balance, energy supply will continue as a distinct advantage to U.S. manufacturing.