"Time for a Real Energy Plan," <i>Denver Post</i> Op-ed by Professor Squillace

August 24, 2005

Time for a real energy planFailure to develop a serious energy policy threatens the economy, the environment and America's national security.By Mark Squillace (Perspective section of the Sunday Denver Post, August 21, 2005)When he signed the Energy Policy Act of 2005 recently in New Mexico, President Bush declared that he'd been looking forward to it because the law "launches an energy strategy for the 21st century." If only it were true. However one might characterize this mammoth new legislation, it is not energy policy. To be sure, it deals largely with energy matters. But its unifying theme is not so much policy as pork. There is something here for just about everyone. Billions of dollars in "incentives" are offered to promote "clean coal," domestic oil and gas production, the nuclear power industry and other forms of both renewable and non-renewable energy. Tax credits and deductions designed to promote conservation are available to residential homeowners and hybrid car-buyers. There is money for research and new academic centers to carry out research. Some of these "incentives" are particularly striking. "To encourage the greatest ultimate recovery of oil and gas or in the interest of conservation," the secretary of the Interior can "waive, suspend, or reduce" rents or royalties paid for federal oil and gas in the National Petroleum Reserve in Alaska - a vast area with some of the largest untapped oil and gas reserves in the world. With oil and gas prices at eye-popping levels, the secretary of the Interior could decide to give away billions of gallons of your oil and trillions of cubic feet of your gas for free. This is not to say, of course, that the legislation is wholly without merit. Some of the incentives may be very sensible. Making low-income housing more energy efficient would not likely happen without government help, and if such programs help disadvantaged people keep a little more money in their pockets, all the better. But, "an energy strategy for the 21st century" is hard to find. That's too bad, because our failure to develop a sound energy policy threatens our economy, our environment and, most important, our national security. It is hard to think of any aspect of our economy not touched by energy. And as the cost of energy rises, our economy struggles to shake its effect. Energy policy impacts our environment in myriad ways. As fossil fuel supplies dwindle, we increasingly look to more remote and invariably pristine areas to satisfy our needs. The fight over developing the Alaska National Wildlife Refuge is the most visible, though certainly not the only example. Even more ominously, our energy consumption patterns threaten to change Earth's climate fundamentally, and perhaps irrevocably. Finally, our reliance on foreign energy sources forces us to support some of the very countries that threaten our national security. The new energy law promotes increased domestic production as a partial answer, though it may turn out to be a curse. As we use up our own supplies, our long- term dependence on foreign sources will become even greater. So what would a real energy policy look like? For starters, we must find ways to do more with less. Energy conservation is the only strategy that addresses so completely the damage to our economy, our environment and our national security from current consumption patterns. And we must look to government to push conservation because our markets have not yet learned to capture the substantial economic, environmental and national security costs of consumption. The new legislation makes a nod in the direction of conservation by setting modest standards for more efficient lighting and more efficient government buildings and by offering incentives for conservation in commercial and residential buildings. And it pays lip service to the need for more efficient vehicles. But it does little to ensure that it will happen. Tragically, at a time when energy efficiency should have been a cornerstone of federal policy, the average fuel economy of our vehicles has gotten worse over the past 20 years. If we fail to take concrete action now, our vehicles will be no more efficient 20 years hence. Alongside our conservation program, we need an energy policy that sets long-range goals. What is our goal for total energy consumption in the United States in 2020? In 2040? In 2060? What energy sources can and should we draw on, and in what percentages, to satisfy our energy needs? How much of our energy should come from domestic sources? More specifically, how should we satisfy energy needs within individual sectors? What do we want the mix of electrical generation in this country to look like in 2040? Should coal continue to dominate? Should nuclear play a bigger (or smaller) role? How much of our electric portfolio should come from renewables? What role should increased energy efficiency play in the mix? What about goals for reducing vehicle fuel consumption? We need goals not just for fuel economy but for vehicle miles traveled as well, for if we double vehicle fuel economy while driving twice as many miles, we will realize no energy savings. Beyond goals, we need strategies to achieve them. The energy bill is loaded with strategies. But whether you agree or disagree with them, the success of any strategy that is not tied to a particular goal is virtually impossible to measure. Will we consider it a success if domestic oil production increases by 25 percent even if oil consumption increases by a larger amount? Have we achieved success if consumers buy thousands of new hybrid vehicles if average vehicle fuel economies don't improve? Beyond strategies, there must be mechanisms for periodically measuring progress and making mid-course corrections where adequate progress is not being made. Perhaps it makes sense to start with voluntary programs to see what can be achieved, but if these don't work mandatory programs must follow to assure that the goals are met. Just the prospect that a voluntary program might become mandatory provides a powerful incentive to make the voluntary program work. Our failure to establish a coherent energy policy has put us in a hole, and it is becoming apparent that the climb out of that hole will not be easy. But the longer we wait, the harder the climb will be. It is high time that we began a debate about a real energy policy. The need for such a policy is not a partisan issue. Partisans will take very different views of the goals that should be set and the strategies that should be developed for achieving those goals, but we must a least have some vision about where we are going and how we are going to get there. Only then will we have a real energy strategy for the 21st century.