Wednesday, July 27, 2005

The Missing Framework
As the pending Energy Bill gets closer to the final House/Senate conference version that will presumably be enacted, it is shedding provisions like an old jalopy racing down a bumpy road. This shouldn't come as a surprise, being in the nature of our democratic processes, but it is still a disappointment for many. I see it somewhat differently. The way individual proposals such as requirements for a set percentage of renewable energy or the goal of reducing oil consumption by a million barrels per day have gone in and out of the mix merely reflects a lack of consensus on the underlying problems we face. Energy security is an inadequate lens through which to view national energy policy, and the result has been a grab-bag of programs, rather than a coherent plan.

Consider the basic issues that need to be addressed:

  1. Despite a reduction in the energy input required for incremental GDP growth, an expanding US economy still relies on steady increases in both electricity and liquid fuels supply.
  2. Without fundamental changes in our energy mix, this results in a lock-step increase in greenhouse gas emissions.
  3. Improvements in the fuel economy of the US car fleet have stalled as a result of consumer preferences for larger, heavier vehicles with more horsepower and more power-consuming accessories.
  4. Demand for petroleum products continues to grow, at the same time that domestic oil production is in steady decline.
  5. Domestic natural gas suffers from underinvestment in infrastructure, environmental ring-fencing of resources, and knee-jerk opposition to import facilities.
  6. Any expansion of nuclear power hinges on a permanent solution to nuclear waste that has been delayed for decades by largely political concerns.
  7. The growth of wind power has been impeded by inconsistent subsidies and local opposition.
  8. Our largest alternative energy program, fuel ethanol, objectively contributes little to the overall energy balance of the country and may actually have been not only a financial drain, but an energy drain, as well.
  9. The resulting increased reliance on coal shifts more of the burden to our least-efficient, most environmentally-challenging fuel.

At the highest level, then, we see a picture of a multi-trillion dollar energy system on an unguided, unsustainable path. However, without a clear definition of the problem and a clear set of goals and objectives--with accompanying timetables and investment plans--the likelihood of a change in direction is low, and any improvements are likely to occur only around the edges. Focusing on fuzzy notions of energy security doesn't help matters, particularly when relatively benign proposals to inventory the country's remaining unexploited oil and gas resources prove more controversial than an increased emphasis on nuclear power.

Even though a comprehensive approach to climate change has been a bitter pill for this country to swallow, it has the compelling advantage of providing a consistent, all-encompassing way of viewing our energy system and guiding its future development. The introduction of emissions trading in Europe--doubly ironic, considering our market orientation and the idea's US provenance--shows that limiting greenhouse gas emissions need not require the iron fist of command-and-control regulation, or a centrally-planned energy economy with bureaucrats choosing technology winners and losers. Even better, emissions caps based on rigorous analysis of all energy pathways would weed out ineffective measures and enhance energy security as a byproduct. Thus the most effective energy bill I can imagine would not carry that title at all, but rather the designation of Comprehensive Climate Change Legislation.

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