05/24/2012 12:53 pm ET Updated Jul 24, 2012

Energy: Who Cares?

It's Memorial Day weekend, the official start of the U.S. summer driving season, when, in an annual rite, Americans get mad as hell about energy.

The seasonal one-two punch of a surge in road trips and, typically, a rise in gasoline prices invariably gets Americans griping about an energy system they see as stacked against them. But as the righteous indignation rises along with the pain at the pump, it's worth taking a deep breath and remembering that today's energy dilemma isn't beyond Americans' control. Plenty of places around the globe have made big changes in their energy systems -- when they have decided they have no other choice.

The U.S. itself has embarked on an energy shift, and now the question is how far the shift will go. President Obama today is scheduled to visit a wind-turbine-blade factory in Iowa, a stop where he no doubt will tout the goal of a more sweeping American energy revolution. But America's energy challenge is in important ways unique, and so an American energy revolution would require a particular kind of strategy -- one that's ruthlessly economically efficient.

On this holiday weekend of frequent fill-ups, it helps first to appreciate how much the U.S. energy system is changing already. There really are two energy markets -- one for electricity, the other for transportation fuels -- and both are being transformed by a jump in U.S. energy production. Technological breakthroughs in pulling hydrocarbons out of the ground -- breakthroughs known as hydraulic fracturing, or "fracking," and horizontal drilling -- have unlocked vast supplies of previously tough-to-get American natural gas and oil. The gas is burned to make electricity, which powers everything from lights to toasters to beer fridges, a Memorial Day plus. The oil is burned to move planes, trains and automobiles. Thanks to all this new supply, Wall Street analysts and Washington politicians alike are talking about the possibility of American energy independence.

That claim may be a bit too cute, because the U.S. still imports about 45% of the petroleum it consumes. And even energy independence wouldn't be an energy panacea, because America still would have to reckon with the environmental downsides of that domestic production: potential water contamination from natural-gas drilling, air pollution from power plants' smokestacks and cars' and trucks' tailpipes, and greenhouse-gas emissions from the burning of all kinds of fossil fuels.

That raises the question of the prospects for an even bigger U.S. energy revolution. Most green boosters want a world radically different from today's in two ways. It would be more energy-efficient, with buildings, machines and vehicles that require less energy of any sort. And its energy would come from solar panels, wind turbines and other forms of renewable energy, which, the boosters hope, would replace fossil fuels.

In this vision, renewable energy wouldn't replace just the coal and natural gas that today generates the bulk of the nation's electricity. It also would replace the petroleum that powers cars and trucks. Vehicles would run on liquid fuels derived from algae and other crops and on electricity generated from the wind and sun.

How plausible is this vision? No one knows, because the answer depends on how technologies play out. And experts' predictions are all over the map.

The map, though, is highly instructive about another, crucial, aspect of energy revolutions: what makes them happen. Around the world, the places that have achieved major energy shifts haven't done so because of environmental altruism or even, fundamentally, because of technological luck. They've done so because they've been hit with shocks to their fossil-fuel-based economies so jarring that they've concluded they needed to change in a big way. Crises, in other words, count.

Following the 1970s oil shocks, France shifted its electricity production largely from oil to nuclear power; Denmark improved its energy efficiency and then boosted development of wind power; and Brazil became a world leader in fueling a sizable number of its cars with ethanol. After the 1986 Chernobyl accident, which generated widespread fear in Germany about nuclear power, Germany began rolling out some of the world's most generous subsidies to for the solar industry. Today China, faced with a surging population and with urban air pollution often so thick you can taste it, is scrambling to diversify its energy mix.

The U.S. today doesn't face those acute types of energy shocks. Its energy demand is widely projected to remain essentially flat; much of its most severe air pollution has been brought under control; and its domestic oil-and-gas production is on the rise.

What's so hard about the U.S. energy situation is that the drivers for a major shift are so soft: concerns about climate change, about continued reliance on Mideast oil, about losing out to China and other developing economies in a global race to corner a new technology market. As I argue in an essay in the current issue of Foreign Affairs magazine, "Tough Love for Renewable Energy," the softness of those drivers means that renewable-energy technologies, and the generous U.S. subsidies that have supported them in recent years, will need to get much more economically efficient if the technologies are to have a real chance of scaling up. The essay outlines a more-efficient approach.

This holiday weekend, many Americans will feel what seems a powerful pain at the pump. But an American energy revolution that shifted meaningfully away from fossil fuels would require something more than episodic financial pain. It would require ongoing economic smarts.

Jeffrey Ball is scholar-in-residence at Stanford University's Steyer-Taylor Center for Energy Policy and Finance. Before coming to Stanford last fall, he spent 14 years as a reporter, columnist and editor at The Wall Street Journal, writing for much of that time about energy and the environment and serving most recently as The Journal's environment editor. Ball also wrote the essay "Tough Love for Renewable Energy" in the May/June issue of Foreign Affairs.