The long term view on energyPosted: 03/28/2011
We have an energy problem in this country. Our government, like our businesses, looks to the next political quarter instead of the long term. A few weeks ago, President Obama spoke to reporters about the need to create a long-term energy strategy, and reduce our dependence on oil. Unfortunately, each of the last seven Presidents has said exactly the same thing. I personally defended Persian Gulf Oil in the Middle East, enforcing United Nations sanctions against Iraq, which amounted to an oil embargo. I saw the United States Fifth Fleet, based in Bahrain, up close. I can say that maintaining a base in Bahrain does not come cheap. Why do I bring this up? Our government spends a substantial amount of money subsidizing energy. Additionally, the government does not regulate carbon, which means the external costs of the greenhouse gas emissions are borne by the general public. Finally, fossil fuels have significant health impacts. Over 10,000 people a year die from the particles emitted by coal-fired plants. Additionally, hundreds of miners die quietly around the world. As we watch the nuclear calamity that is taking place in Japan, it would be wise for us to consider the role of the Federal Government in creating this energy policy, and the failure of President after President to chart a new course for the United States with regards to energy policy.
We have an elaborate electricity grid, an infrastructure that badly needs modernized. Consumers are ignorant for the most part about where their electricity comes from, they just want to be able to flip the switch and power their gear, without having to pay too much. Unfortunately, the myth of cheap energy has Americans convinced that it is our divine right to $.99/gallon gasoline and cheap electricity. Our development in sprawled across the country, and people still pine for that isolated lot with two acres and a great view. Unfortunately, without cheap energy, our house of cards will fall apart.
The Federal Government is positioned to help bring our country into the 21st Century. First of all, our electricity infrastructure needs updated. One agency that has a big role in the energy sector is the Federal Energy Regulatory Commission (FERC). FERC has jurisdiction over interstate electricity transmission, through the Public Utilities Regulatory Policy Act (PURPA). FERC is attempting to build new, modernized high power transmission lines for renewable energy; however, they face opposition at both the state level as well as from utility trade groups like the Coalition for Fair Transmission Policy. The commission represents utilities that want to make sure the costs of those lines are borne by the folks getting the power. Ultimately, between NIMBY concerns over siting new lines, and fights over who will pay, these are many obstacles to creating a new infrastructure capable of empowering large-scale clean energy production. The Federal Government can also nurture decentralized, local renewable power generation through policies like Feed-in Tariffs.
With energy consumption in transportation, our sprawled development is problematic. Government needs to encourage smart growth, as it will pay dividends on lowering per capita energy consumption. For example, in Southeastern Massachusetts, a commuter rail line is being designed to consider smart growth when planning station locations. However, transportation consumption revolves around the automobile. The Obama administration did a good job of getting automobile manufacturers to support a significant increase in CAFE standards. While it is not as progressive as Europe or Asia’s standards, it is still a significant improvement over Bush policies, and the rare effort that is supported by all stakeholders. One long-term issue for our transportation sector is what fuel will be used, and the infrastructure to use it. Right now we are invested in a gasoline infrastructure. Electricity is a more sensible step, but the authors here advocate for hydrogen. Hydrogen would require a significant investment in infrastructure; additionally, as a fuel, to provide the range expected of modern consumers, it must be highly pressurized – making it very difficult to use as a transportation fuel, especially in automobiles. Whatever route we go, it will be incumbent on the Federal Government to work with stakeholders to build the infrastructure necessary to support whatever becomes the ‘new’ fuel.
Ultimately, the main hurdle to the Federal Government charting a long-term energy policy is political will. President Clinton hit the third rail when he proposed a Carbon tax early in his first term. Both parties define prosperity around energy consumption. The Democrats frame clean energy development as “Green Jobs” but haven’t challenged the Republican Party, or the American people, to seriously confront climate change, peak oil, or the various external costs of fossil fuels. The myth of cheap energy goes on. As it does, so does the piecemeal Federal energy policy, from President to President.