April 20, 2024: Geothermal
Good afternoon. This has been an eventful week for geothermal power, and so this would be a good time to review where things are with geothermal and where they could be later on. Specifically, I want to take a look at the permitting reform that recently came out of the Bureau of Land Management.
Geothermal (literally, hot Earth) energy derives from the heat gradient within the Earth’s surface, which in turn is driven by radioactive decay. Despite its long history, geothermal electricity is still such a small portion of overall electricity that the Energy Institute Statistical Review of World Energy only presents geothermal as lumped with other categories: “Geothermal, Biomass, and Other”. At least it’s doing better than ocean energy, which is confined to that “Other” category; that would be a good subject for another day. World geothermal production was about 92 billion kilowatt-hours in 2021, which according to the Statistical Review was just over 0.3% of world electricity that year.
Nevertheless, the use of geothermal energy goes back to Paleolithic times, especially with baths throughout the Roman empire. Today, geothermal is still used for hot springs and also for district heating systems, and the world’s largest district heating system, in Reykjavík, Iceland, is powered by geothermal energy. There are also geothermal heat pumps, which take advantage of the near-constant temperature in the near-surface (~30 feet below ground) to operate very efficiently, though are quite expensive.
The Geysers, which started operation in 1960 in California, is the first geothermal electricity plant in the United States and still the largest in the world and, at 1.776 ¢/kWh, is quite cheap. Although geothermal works very well in Iceland, The Geysers, and elsewhere, geothermal remains a niche energy source because it is very dependent on geography. Only in certain areas, which tend to be seismically active, is there sufficient hot water near the surface to make hydrothermal power (the most conventional form of geothermal energy) feasible.
But all this could change. An enhanced geothermal system (EGS, also known as hot dry rock) is a system uses hydraulic stimulation and fluid injection to produce geothermal energy from sources that are deeper, or are not hydrothermal (hot water deposits) and naturally porous, which could expand the feasible range of geothermal energy to almost everywhere. EGS is not a new idea, but recent advances in drilling technology, driven in significant part to shale oil, have put much greater resources into the realm of feasibility.
A recent report from the U.S. Department of Energy finds that the cost of EGS might fall to 6-7¢/kWh in 2030 and 4.5¢/kWh by 2035, which is the goal of DoE’s Enhanced Geoshot program. Especially considering that geothermal is a baseload power source, such prices would make it competitive with other technologies. Depending on how technology develops, DoE also projects that the United States would see 90-300 GW of EGS deployment by 2050. At a 90% capacity factor, that would be around 16-52% of U.S. electricity consumption in 2022, according to the Statistical Review. An older estimate by Tester et al. found that the United States could have 266,000 exajoules of EGS resources, which is about 400 years of world primary energy demand. The potential is definitely there.
For now, though, we are mainly at the level of demonstration projects. Last year, Fervo Energy and Google partnered to launch a commercial EGS project in Nevada. This was not the first commercial EGS project, but it demonstrates several major technological advancements over past endeavors and is one the most promising ventures going on now, such as being the first to demonstrate horizontal drilling.
As with all things, there are tradeoffs associated with EGS, and the biggest tradeoff is induced seismicity. Similar to hydraulic fracturing (indeed, the two technologies are similar in many ways), EGS involves pumping fluid into a drilled hole, which can cause small earthquakes. A magnitude 5.5 earthquake in Korea a few years back, which caused 70 injuries and significant damage, has been attributed to a nearby EGS project. In 2009, an EGS project in Basel, Switzerland was cancelled because of induced seismicity concerns. This problem can be mitigated with a closed-loop design.
As with most kinds of development, permitting is a major challenge. In the United States, most of the most promising EGS sources are on federally-owned lands in the Western states, which are administered by the Bureau of Land Management. Geothermal exploration and production on public lands requires an environmental impact statement under the National Environmental Policy Act (NEPA), a process that can take seven to ten years.
Oil and gas projects on public lands benefit from a categorical exclusion, which greatly expedites the permitting process. This exclusion is statutory and goes back to the Energy Policy Act of 2005. Advocates of geothermal energy argue that geothermal is a lot like oil and gas, except less environmentally impactful, so geothermal should get a categorical exclusion as well. This is not a trivial matter. In 2019, the DoE’s GeoVision study estimated that with a categorical exclusion, the potential deployment of EGS by 2050 would be 12.5 GW, while without any kind of permitting reform, deployment would be less than half of that (it is worth noting that even the high value is significantly less than the estimated EGS potential of more recent reports; it looks like modelers have become much more bullish quickly).
This week, BLM took a step by introducing a categorical exclusion for geothermal exploration on public lands. My understanding is that this applies only to exploration, and not production, and also that it is a statutory decision rather than a legislative decision. That means that in theory, a future administration that is less friendly to geothermal could reverse the ruling, though given the political momentum, I don’t see this as being likely in the foreseeable future. On the legislative side, there is a bipartisan Senate bill called the Geothermal Energy Optimization Act, introduced last month, that would streamline geothermal development, and there is also a more limited bill in the House. See also, this article by Carlo Cariaga provides a good explanation of the bills, and this article by the same author reviews some recent state legislation.
The categorical exclusion is a major priority of the industry and enhanced geothermal advocates, of which many have appeared in recent years, but not everyone is on board. An editorial in the Hill last year by Laura Fox argues against the categorical exclusion, though not necessarily against EGS, on the grounds that it would undermine NEPA. Advocates of the categorical exclusion argue that that since oil and gas get the exclusion, and geothermal is more benign than oil and gas, then geothermal should get the exclusion too. This argument presupposes that the oil and gas categorical exclusion is sound policy, which Fox rejects, and it is not something I’m sure that advocates of the geothermal exclusion would be hasty to endorse as well.
Laura Fox is arguing from a pro-NEPA perspective, but skepticism about a categorical exclusion can be made from a NEPA-skeptical perspective as well. I don’t have a link for the following argument, as it is based on a Twitter exchange, but the main problem is that a proliferation of categorical exclusions could undermine the coalition for broad NEPA reform, as geothermal advocates can now say, “I’ve got mine”. There is also a danger that we move toward a situation where the level of regulatory burden for a project depends on its political charisma rather than objective criteria or actual environmental risk.
The situation reminds me of a similar problem that is rampant with municipal zoning. Many cities use density bonuses, which are policies that grant developers more lenient treatment on open space rules, parking requirements, height limitations, etc. if they designate a certain percentage of the units as “affordable”. These rules have all sorts of problems. For one thing, if the rules can be relaxed in exchange for something that has nothing to do with parking or density, then it raises obvious questions about whether the rules are needed in the first place. Second, it creates an irresistible incentive for low-income housing developers to advocate for strict zoning regulations, because they are exempt and it keeps away their market-rate competition. The problem becomes even worse with community benefit agreements, which are not based on objective criteria at all and can easily degenerate into a kind of bribery of project opponents who are empowered by complex regulation.
For these reasons, I am not too enthusiastic about the use of categorical exclusion for geothermal projects or in general, but I am enthusiastic about enhanced geothermal. EGS might well be the most promising emerging energy technology today.
Quick Hits
Yesterday, we marked the 29th anniversary of the Oklahoma City bombing, which occurred on April 19, 1995, and was the deadliest terrorist attack in U.S. history up to that point. The attack was perpetrated by anti-government extremists and killed 168 people. In 2005, the Boston Globe reported that in the decade after the bombing, the number of antigovernment militia groups in the United States fell by more than 80%. I don’t want to downplay the prevalence of political extremism at the present time, but it is important to keep it in historical context. The two convicted perpetrators, Timothy McVeigh and Terry Nichols, were interred at a cell block known as Bombers Row at the ADX Florence prison in Colorado, along with Ted Kaczynski (the Unabomber), Eric Rudolph (1996 Centennial Olympic Park bombing), and Ramzi Yousef (1993 World Trade Center bombing), and evidently these people became friends despite their differing ideologies.
Following an Israeli airstrike on an Iranian consulate in Syria earlier this month, there were two exchanges of attacks between the two countries: an Iranian attack on Israel on April 13 and Israeli retaliation on April 19. Both attacks look to have been more performative than substantive, as neither country has much interest in a full-scale war. Israel claims that more than 99% of the missiles and drones were intercepted by Israel’s Arrow missile defense system and with assistance from the United States and other partners, a much better performance that critics of missile defense would lead one to expect. Shortly thereafter, Noah Smith wrote a piece on wrongheaded criticism of missile defense and the F-35 program. This episode should underscore how important investments in missile defense are, and so it is distressing to see that the Fiscal Year 2025 budget calls for cuts in the Missile Defense Agency. Here is a Congressional hearing on how current spending on the MDA is inadequate.
I am most pleased today to see that, after months of dithering, the U.S. House has finally passed aid for Ukraine, Israel, and Taiwan. House Speaker Mike Johnson described Russia, China, and Iran as comprising an “axis of evil”, a phrase that should sound familiar. Earlier I wondered why Congressional approval was needed at all, and I might also wonder why this wasn’t taken care of months ago with a discharge petition. Better late than never, but Johnson’s delays cost lives and endangered the security of the United States and other free nations.
Over the last few weeks, I’ve done a fellowship called Pathways to Progress. I would have written much more about this if most of the fellowship didn’t happen in Lent. One of the last readings we did was this piece on cultivating a frame of mind for work. The author warns against working too closely with other people, such as in coworking spaces, since these environments smother the creative process that leads to great ideas. I’m not sure this is good advice. People can get off course in two ways—by groupthink, and by getting disconnected from reality—and in my experience, the latter problem is generally a greater threat. There is the concept of tarpit ideas, which are ideas that sound good at first glance, but in reality they are fraught with difficulty. These are ideas like “Kayak for medical tourism”. A half hour conversation can save months of fruitless work.
Finally, not only is it 4/20, but (written in some formats), it is a palindrome day: 4/20/2024.