Tuesday, December 21, 2004

Energy Independence?
Yesterday's Wall Street Journal carried a guest editorial (subscription required) by Robert MacFarlane, former national security advisor to President Reagan, on the theme of energy independence. Citing Amory Lovins' latest book, "Winning the Oil Endgame," (see my posting of September 29) he indicated that not only greater energy security, but actual energy independence could be achieved within 35 years. Is this possible or even desirable?

The idea of energy independence grew out of the two oil shocks of the 1970s. Technology has advanced sufficiently since then for us at least to paint a picture of what an energy-independent US might look like, and the changes this would require. Dr. Lovins' view is as good an attempt at that as any, though it is not the only possible version of independence. But having the technology and making it happen are two different things. We have the technology to return to the moon, even if that meant using the same methods as the first time, but does that mean we will go anytime soon? If $50 oil doesn't galvanize an effort for a radical change in our approach to energy, then we are probably looking at the entire problem the wrong way.

Further, even if Dr. Lovins' figures are correct in terms of the amount of investment required to replace key portions of our energy and automotive infrastructure, is this the best use of that capital? The market alone will not deliver such a change on anything like the timetable suggested by Mr. MacFarlane. Although this may well be one of those areas in which the market doesn't send the right signals far enough in advance, going against it requires some caution. Pushing ahead to have these conversions in place by 2040 requires choosing technology winners and losers now or in the near future. Our track record in that area is not very good.

Finally, we need a genuine consensus on the criteria for making these choices. For example, is it only a question of energy independence, which might be met entirely with coal, or rather of clean energy independence? If the latter, is clean limited to local pollutants, or does it include greenhouse gases? No consensus on these issues exists today, and these distinctions have major practical implications for the path we would choose. The debate highlights the need for a real energy policy for the country, and for a different way to go about arriving at one.

I've never thought that energy independence was the right goal, as appealing as it might sound, any more than we should be textile-independent or knowledge-independent. Energy independence is a 20th century notion that translates poorly into an increasingly globalized 21st century. Instead, being smarter about energy--whether foreign or domestic--has a higher chance of leading us down the right path and improving not just our energy security, but our entire economic well-being. That means reexamining and reengineering our entire energy ruleset, for starters, and giving businesses the right incentives and tools to provide reliable, safe and clean energy, with less disruptive price volatility.

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