The Fifth Risk(12)
John MacWilliams had enjoyed success in the free market that the employees of the Heritage Foundation might only fantasize about, but he had a far less Panglossian view of its inner workings. “Government has always played a major role in innovation,” he said. “All the way back to the founding of the country. Early-stage innovation in most industries would not have been possible without government support in a variety of ways, and it’s especially true in energy. So the notion that we are just going to privatize early-stage innovation is ridiculous. Other countries are outspending us in R&D, and we are going to pay a price.”
Politically, the loan program had been nothing but downside. No one had paid any attention to its successes, and its one failure—Solyndra—had allowed the right-wing friends of Big Oil to bang on relentlessly about government waste and fraud and stupidity. A single bad loan had turned a valuable program into a political liability. As he dug into the portfolio, MacWilliams feared it might contain other Solyndras. It didn’t, but what he did find still disturbed him. The DOE had built a loan portfolio that, as MacWilliams put it, “JPMorgan would have been happy to own.” The whole point was to take big risks the market would not take, and they were making money! “We weren’t taking nearly enough risk,” said MacWilliams. The fear of losses that might in turn be twisted into antigovernment propaganda was threatening the mission.
In late June 2017 I went for a long drive in hopes of getting a clearer picture of risks four and five, which MacWilliams had gone on to describe for me at greater length—urgent threats to American life that might just then have been keeping the leadership of Trump’s DOE awake at night, if there had been any leadership. I started out in Portland, Oregon, heading east, along the Columbia River.
An hour or so into the drive, the forests vanish and are replaced by desolate scrubland. It’s a startling sight: a great river flowing through a desert. Every so often I pass a dam so massive it’s as if full-scale replicas of the Department of Energy’s building in Washington, DC, had been dropped into the river. The Columbia is postcard lovely, but it is also an illustration of MacWilliams’s fourth risk: the electrical grid. The river and its tributaries generate more than 40 percent of the hydroelectric power for the United States; were the dams to fail, the effects would be catastrophic.
The safety of the electrical grid sat at or near the top of the list of concerns of everyone I spoke with inside the DOE. Life in America has become, increasingly, reliant on it. “Food and water has become food and water and electricity,” as one DOE career staffer put it. Back in 2013 there had been an incident in California that got everyone’s attention. Late one night, just southeast of San Jose, at Pacific Gas and Electric’s Metcalf substation, a well-informed sniper, using a .30-caliber rifle, had taken out seventeen transformers. Someone had also cut the cables that enabled communication to and from the substation. “They knew exactly what lines to cut,” said Tarak Shah, who studied the incident for the DOE. “They knew exactly where to shoot. They knew exactly which manhole covers were relevant—where the communication lines were. These were feeder stations to Apple and Google.” There had been enough backup power in the area that no one noticed the outage, and the incident came and went quickly from the news. But, Shah said, “for us it was a wake-up call.” In 2016 the DOE counted half a million cyber-intrusions into various parts of the U.S. electrical grid. “It’s one thing to put your head in the sand for climate change—it’s like ma?ana,” says Ali Zaidi, who served in the White House as Obama’s senior adviser on energy policy. “This is here and now. We actually don’t have a transformer reserve. They’re like these million-dollar things. Seventeen transformers getting shot up in California is not like,” Oh, we’ll just fix the problem.’ Our electric-grid assets are growing vulnerable.”
In his briefings on the electrical grid, MacWilliams made a specific point and a more general one. The specific point was that we don’t actually have a national grid. Our electricity is supplied by a patchwork of not terribly innovative or imaginatively managed regional utilities. The federal government offers the only hope of a coordinated, intelligent response to threats to the system: there is no private-sector mechanism. To that end the DOE had begun to gather the executives of the utility companies, to educate them about the threats they face. “They all sort of said,” But is this really real?’” said MacWilliams. “You get them security clearance for a day and tell them about the attacks and all of a sudden you see their eyes go really wide.”
His more general point was that managing risks was an act of the imagination. And the human imagination is a poor tool for judging risk. People are really good at responding to the crisis that just happened, as they naturally imagine that whatever just happened is most likely to happen again. They are less good at imagining a crisis before it happens—and taking action to prevent it. For just this reason the DOE under Secretary Moniz had set out to imagine disasters that had never happened before. One scenario was a massive attack on the grid on the Eastern Seaboard that forced millions of Americans to be relocated to the Midwest. Another was a Category 3 hurricane hitting Galveston, Texas; a third was a major earthquake in the Pacific Northwest that, among other things, shut off the power. Yet, even then, the disasters they imagined were the sort of disasters that a Hollywood screenwriter might imagine: vivid, dramatic events. MacWilliams thought that, while such things did happen, they were not the sole or even the usual source of catastrophe. What was most easily imagined was not what was most probable. It wasn’t the things you think of when you try to think of bad things happening that got you killed, he said. “It is the less detectable, systemic risks.” Another way of putting this is: the risk we should most fear is not the risk we easily imagine. It is the risk that we don’t. Which brought us to the fifth risk.