Review of “Mad Like Tesla: Underdog Inventors and their Relentless Pursuit of Clean Energy” by Tyler Hamilton ( ECW Press, 2011)

Review by Tom Adams

An unprecedented energy revolution is underway destroying energy economics as we know it. So says Tyler Hamilton in “Mad Like Tesla”. To support his thesis, he surveys a wide range of energy innovations under development that he considers wholesome. The innovations he reviews include liquid biofuels from algae, an ultra capacitor concept, a proposed mechanical means of inducing nuclear fusion, space based solar power, an energy conserving pump impeller design, and an unexplained perpetual motion scheme. Whether it is one or more of the specific technologies he reviews or not, Hamilton wants you to know that the era of fossil fuels is over.

Hamilton is a prominent energy journalist in Ontario. “Mad Like Tesla” has received favourable reviews and garnered other laudatory attention from among others Bob McDonald on the venerable CBC national science show “Quirks and Quarks”. Ben Chin, former provincial Liberal candidate who worked in the Premier’s office and then moved to a senior position at the Ontario Power Authority has described Hamilton’s journalism as part of the intellectual foundation for Ontario’s Green Energy Act.

For Hamilton, energy markets are a failure. (pp. 135, 229-230) He argues that “there is no sign…that green energy is some kind of a fad.” For proof he points to the high growth rates for various renewable energy options with no recognition of the role of subsidies in driving that growth. (p. 231) For Hamilton, “success” can be measured by megawatts installed, irrespective of whether those investments yield real net benefits.

Hamilton’s writing is energized by a higher calling to bring about the salvation of human and economic relations from the what he sees as the immediate likelihood of human induced climate catastrophe and fossil resource exhaustion.

Like many sharing Hamilton’s catastrophist outlook, he believes that continued fossil fuel usage is about to cause a climate catastrophe. At the same time, he also believes that fossil fuels supplies are about to be exhausted. The book is silent on how to square the apparent inconsistency of both too much and too little fossil energy. Neither is Hamilton clear on how much wealth he thinks we should sacrifice to abate what quantity of carbon emissions.

Without any recognition of their limitations, Hamilton calls for “aggressive” deployment of existing wind and solar technologies. Hamilton raises no concern for the obsolescence of investments in existing wind and solar technologies in the event that the power generation technology breakthroughs he expects actually materialized. Instead, his concern is that existing technologies, which he apparently sees as beneficial in every respect, are an insufficient response to the twin crisis of too much and too little fossil fuel that he foresees.

To explain why renewable and fusion energy technologies have not already taken over much greater market share, Hamilton’s points repeatedly to conspiracies. Corporations, particularly energy and financial companies, are reported to be monolithic and actively blocking wholesome energy innovation. (p. 17) As Hamilton sees it, the primary challenge for wholesome energy innovators is overcoming the dark forces wishing the innovators to fail. (p. 22, 229 – 230) Hamilton’s claims of conspiracy suffer from pervasive subjectivity. Astoundingly for a science journalist, Hamilton baldly claims, “what is possible or not is in the eye of the beholder.” (p. 169)

Hamilton advocates for energy utilities to take on more risky technological adventures. (p. 109) There is no hint in the book that Hamilton has weighed this proposal against the track record of energy innovation in the utility sector or the unfavourable impact this approach would have for the utility sector’s cost of capital.

Hamilton hopes to ward off climate and economic catastrophe with rapid deployment of non-fossil energy supplies and energy conservation technology. However, Hamilton finds hope by ignoring the failures of wholesome energy options he prefers.

If comment is from some energy claimants he regards as right thinking, wired.com, or gizmo.com, then Hamilton makes no effort to cross-check. For example, to support his belief in “peak oil” (p. 107), Hamilton points to the Canadian geologist David Hughes. Hamilton quotes Hughes approvingly, stating “The party’s coming to an end.” (p. 25) By this, Hughes means that supplies of fossil fuels are on the verge of exhaustion.

But how reliable is the track record of David Hughes? In May 2007, at an energy conference sponsored by Queen’s University’s Institute for Energy and Environmental Policy, Hughes forecast that North America’s production of gas would peak in 2009 and that consumers would start suffering a growing shortage of natural gas by 2012 despite massive importation of liquified natural gas (LNG) and a sharp drop in consumption. He anticipated that North America would not be able to build capacity fast enough to receive all the LNG we would require. He calculated that the extracting shale gas would require almost as much energy as it yielded, presumably making shale gas expensive.

The trajectory of North America’s gas market since 2007 has featured plunging prices, rising demand, a collapse of LNG imports, and a proliferation of proposals to start exporting LNG.

The recent work of Hughes now looks wildly off base.

Hamilton’s reliance on Hughes is particularly important in light of Hamilton’s emphasis on the coming catastrophe of fuel exhaustion. Hamilton’s warmth towards catastrophism replaces his journalistic duty to check the record on Hughes.

Hamilton’s investigations of the technologies he profiles stay at the information depth typical of press releases. One technology he profiles is an impeller design by an Australian inventor Jay Harman that mimics the swirling shape of a lily. Hamilton reports the lily impeller to be a dramatic improvement over all available alternatives.

Objective third party reviews or scientific papers examining the lily impeller are difficult to find. Searches on Google Scholar, Engineering Village, Web of Knowledge, or HWilson Web
libraries, which together cover a large portion of all science and engineering scientific papers, come up dry. This is a bit surprising, given Harman’s claims that the lily impeller solves troubling problems with cavitation, has a 25% efficiency advantage, and a 15-30% drag reduction. There does appear to be some basis for Harman’s claims. Impeller designs similar to Harman’s lily impeller are available commercially and the concept does appear to have advantages. However, Hamilton’s reporting does little to put Harman’s achievements in context, let alone substantiate his claims of dramatic performance breakthroughs.

Hamilton’s knowledge of energy history in his home province is wanting. In profiling a company pursuing an algal fuel option, he discusses the history of the founder as previously starting a successful energy company in Ontario called Alliance Gas Management. Hamilton claims that the success of Alliance arose from an arbitrage based volume buying. (pp. 146-7)  In fact, the arbitrage Alliance successfully parlayed into a substantial commercial venture was using cheaper market priced gas purchased in the early days of deregulation to undercut the cost of utility gas, which was burdened with high cost, pre-deregulation supply contracts. Alliance Gas became valuable, not through fundamental value creation, but because utilities were sitting ducks, having engaged in risky long range energy contracting. Outperforming regulated utilities in newly deregulated markets, though highly profitable for some, is not in an of itself evidence of especially profound ability.

Hamilton sees a mass shift to electric vehicles as a certainty. The question for him is when, not if, we switch to electric vehicles. (p. 203) He claims that “The global transition to electrified transportation is gaining momentum.” (p. 16)

The market evidence for this assertion appears thin at best. Electric vehicle makers and their parts suppliers have drawn on rich subsidies in Korea, Japan, the United States, Ontario, Canada, China and Europe. Not withstanding prices far below cost, the sales of electric vehicles are not doing well. For example, the Nissan Leaf and GM Volt are far both behind their official North America sales forecasts. The GM Volt has showed up on at least one prominent list of worst product flops of 2011. There is a proliferation of electric motor cycles happening but it appears that many of these devices are replacements for pedal bicycles. When the weak U.S. economy turns around, electric vehicle sales there may pick up, but the immediate future for electric cars does no appear to support Hamilton’s forecast.

Hamilton’s comments on the physics and economics of energy are frequently poorly supported and are sometimes obviously incorrect. For example, he claims that photovoltaic (PV) cells capture solar electrons (p. 68) whereas PV cells are converting energy from photons into electrical potential.

Hamilton argues that the high economic and environmental costs of oil create a need for new electricity generating technology. (p.89) This logic is tenuous at best. In developed parts of the world, almost no electricity is now generated from oil. For example, in the U.S. the fraction of total power generation attributable to oil has declined almost monotonically from 3.2% in 1999 to less than 0.9% in 2010. The little oil used to generate power in the U.S. is almost exclusively used off grid or for supplying power during peak demand periods. Neither of these niches are attractive markets for renewables. World over, electricity and oil products are likely to remain rarely substitutes one for the other unless electric vehicles start to gain meaningful market share. Oil’s use to supply substantial amounts of grid power is generally limited to regions where the cost of capital is too high to afford more efficient generation options. This creates a barrier to oil’s displacement with capital intensive renewables, even where the long run cost of delivered power from renewables is lower than the expected cost of oil-fired power.

Hamilton assumes that the outlook for power prices in North America is rising (p. 89). This is certainly the case in Ontario, where the provincial government appears to have been influenced by Hamilton’s green energy proscriptions. In other Canadian province, particularly those with careless green power subsidies and megaproject promotion policies, power rates are also trending upward . However, in the U.S., the federal government’s well regarded Energy Information Administration’s most recent long term energy outlook anticipates declining inflation-adjusted electricity costs for U.S. consumers.

With Hamilton’s arguments so frequently and obviously littered with flaws, one wonders what important questions he didn’t know to ask of those he interviews in the book.

Hamilton betrays no doubts about the overall benefits of the energy options he surveys. In his hope-oriented view, the energy options he profiles can only produce positive social and economic results. Could the radical genetic alteration of algae, one of the primary life forms on earth, have negative consequences? Could viral interactions with algae, so basic to their natural ecology, represent a challenge to algae’s potential to provide liquid fuel at a reasonable cost? Would not space based solar power require frequent flights to geostationary orbit, a vastly more energy intensive process than merely getting to altitudes the shuttle once flew at, and result in negative environmental impacts? None of these questions interest Hamilton.

Energy consumers are at best an afterthought in Hamilton’s field of vision. Hamilton’s book, like too many energy technology and policy discussions, operates within a clouded energy theory of value where the meaning of energy systems is tied to some specific mechanistic objective rather than in some way improving the lives of consumers. Without recognizing that the sole purpose of production is consumption, there is no way to weigh the trade-offs that energy systems inherently impose on us.

Explicitly following the model that created the nuclear industry, the U.S. government started pouring billions of tax dollars into renewable energy, initially under Jimmy Carter in the 1970s. This history is carefully summarized in Daniel Yergin excellent new book “The Quest”. Governments in developed countries around the world followed the lead of the U.S. with further billions. More recently, governments have been directing not just billions but hundreds of billions of dollars from captive ratepayers into renewables. Despite this prodigious pump priming, only a few elements of the renewable energy industry can today deliver energy to consumers at a competitive cost once the fog of subsidies is lifted. Could it be that subsidies have impaired the process of innovation?

We are not on the cusp of unprecedented change in the world of energy. The rules of energy economics are not about to be replaced by some recently discovered, brand new rationality. Technology innovation is one key to our energy future but so is keeping the cost of capital to the energy sector low. Environmental costs need to be counted and minimized but not at the expense of destroying the wealth generation that fuels the capacities of society to prioritize environmental protection. The long established patterns of economic change in the energy sector will continue with new technologies supplanting less efficient alternatives. Existing infrastructure will continue to be a precious asset. Government meddling in the energy sector is not about to become wise.

Hamilton’s book is little more than a collection of press releases, spiced with a few human interest details then shaped with pretty editing into an information marshmallow — soft, sweet, and unhealthy.