Archive for the ‘energy’ Category

Vacation and Vacating

August 22, 2010

August is a relatively calm time to reflect before the stormy months ahead. Congress is currently in recess, the president is on vacation. By contrast, the period after Labor Day will be marked with shrill posturing in Washington and heated campaigning throughout the country ahead of the November election.

I recently had my vacation with my family (and still recovering). Besides allowing me to get reacquainted with Carolina BBQ, Krystal burgers and my kids’ uncanny ability to frustrate and amaze me at the same time, it also enabled me to ponder some of the major policy events this year so far. Among them were a very unhealthy debate over health care which resulted in inadequate legislation, a deficit of bipartisanship and truth regarding the federal budget deficit and national debt, and little energy for energy and climate reform in Washington despite of the Gulf oil spill and other developments. All the while the sure-to-be-taxing debate over extending the 2001/2003 tax cuts has been put off, despite the fact that they expire at the end of the year.

Now that it appears that any real action on climate and energy policy was capped along with the BP well, I feel it important to lament the opportunity lost. While our leaders are enjoying vacation, they need to be called on how they vacated their responsibilities on this issue.   

The inability to produce any results stems, aside from the partisanship that is crippling all action in DC, from the unwillingness of policymakers to publicly acknowledge two fundamental realities:

  1. we cannot change how we produce and consume energy overnight;
  2. one way or another, we will have to pay more for energy, at least in the near term.

 Regarding the first point, many advocates of cleaner energy are unrealistic in their demands. Yes, we should have seriously begun transitioning away from fossil fuels more than thirty years ago, but we didn’t. So it will still take time to wean ourselves off of dirtier fuels. We must develop now the comprehensive energy strategy that we have failed to devise and implement for so long. But there will be a transition period between now and a cleaner energy future. A natural and realistic compromise is to expand domestic production of oil and gas in the short term in exchange for support of comprehensive energy reform in the longer term. The Gulf spill took offshore drilling off the table just when it appeared that expanded drilling would help pave the way towards such a compromise.

Secondly, those who vociferously decry that efforts to reform our energy regime will raise the cost of energy are disingenuous since energy prices are sure to rise regardless, for a variety of reasons. First of all, prices are relatively low now because of the global economic slowdown, which is inhibiting demand. Few economists doubt that gas prices will rise significantly once the economy recovers and demand increases. The problem will become exacerbated over the long run as the U.S. competes more with growing economic powers such as China and India for dwindling oil reserves. Furthermore, energy prices will also rise due to increased legal and regulatory burdens in response to recent developments, including the Gulf oil spill and the Upper Big Branch coal mine disaster in April.

The fact is that there are costs to our dependence on fossil fuel that are not reflected in the price we pay at the gas pump or in our monthly electricity bills. All too often the discussion on negative externalities is limited to climate change. This is unfortunate because, although not without merit, the climate change claims engender heated opposition and are difficult for many Americans to fully comprehend. On the other hand, external costs such as U.S. military involvement in the oil-rich Middle East, national security vulnerabilities of relying on oil from countries like Venezuela that are openly hostile to us, environmental damage such as mountaintop removal and oil slicks in the Gulf of Mexico and Alaskan coast, and the deaths of 29 miners in West Virginia and 11 workers on the Deep Horizon oil rig transcend partisan differences and are easier to appreciate.

 All this points to a basic truth that many experts recognize, but that few politicians want to face – putting a price on carbon will be essential to achieving energy reform. Accounting for the true cost of fossil energy will make alternative sources more competitive and spur conservation and efficiency measures. Market-distorting subsidies and mandates will not get us where we need to be.

Another benefit of pricing carbon is that it would help improve the country’s fiscal situation. The increased revenues from pricing carbon could significantly reduce our national debt. While opponents of a cap-and-trade program have quite successfully stalled it in Congress by labeling it as “cap and tax,” with deficits and debt a top issue for voters, such an argument could be very persuasive.

When vacation ends, hopefully also will the vacating of action.

Friday Policy Haiku (Saturday Edition) — The Gulf

August 21, 2010

Oil is gone, or not/

Reform now; no need for change/

No answers, just blame

Friday Policy Haiku – The Drill

April 2, 2010

More drilling for oil/

A short term necessity/

Where is the long plan?

The New Environment for Climate and Energy Policy

February 7, 2010

In his recent State of the Union address, President Obama signaled the administration’s new messaging and policy strategy for climate and energy. Not once did he mention “cap and trade,” instead he referred to the need for a “comprehensive energy and climate bill.”

He discussed energy and climate policy in the context of American innovation and international competition. He specifically mentioned that China, Germany and India are making investments in clean energy technology in their pursuit of knocking the U.S. off its global pedestal.

Though he backhandedly chided “those who disagree with the overwhelming scientific evidence on climate change,” he offered another rationale for supporting energy reform, stating that “the nation that leads the clean energy economy will be the nation that leads the global economy.”

The new strategy is savvy in light of the declining public enthusiasm for combating climate change and the inability so far to get legislation passed in the Senate. The economy currently is trumping concerns over the environment. So far, opponents have been able to concentrate on the cap-and-trade provisions of the bill – labeling it “cap and tax.” Cap and trade is an easy target because it is a complex mechanism that relatively few people truly understand. Rebranding enables a discussion of how energy and climate policy affects the U.S. economy and our global standing while removing a bull’s eye for opponents. Focusing on the need to reform our energy regime can appeal to a wider segment of the population and attract broader support.

Energy and climate are intrinsically linked and have serious repercussions for our economy and security. I called for comprehensive energy reform repeatedly in another forum last year.

Americans understand that our current energy system is unsustainable and threatens our security. We recognize that fossil fuels are not replenishable and that our dependence on foreign oil leaves us vulnerable to regimes that are unfriendly to us and regions that are politically unstable. We also believe that the ingenuity and entrepreneurship of Americans can solve problems such as this.

Americans see that every time that the stock market picks up, gas prices rise as well. We also witness almost everyday new examples of hostilities from countries that provide much of our oil and our military activities in regions that are oil rich. It won’t take much of an outreach effort to make Americans realize that energy prices will go up even if no price is assigned to carbon because heightened competition with the likes of China and others for dwindling oil reserves will cause prices to skyrocket – effectively a tax. Putting a price on carbon will simply allow the proceeds to go towards developing domestic alternatives (and American jobs), instead of going to bolster another country.  

Placing a price on carbon is about accounting for externalities in our energy market – the costs that are not incorporated in the price we pay for energy. Those externalities do not simply include damage done to the environment. Even the most hardened climate skeptic can believe that our reliance on oil can cause costly U.S. militarily intervention in oil-producing regions and represents a vulnerability that our enemies would like to exploit.

Putting a price on carbon is necessary for the energy market to function properly. Alternatives will not be able to compete with fossil fuels price wise in the near term unless the externalities are priced in. And the experience with ethanol underscores how relying on government subsidies and mandates alone can be ineffective and even harmful. The market can work, but it needs some help. Announcing that proceeds would go towards investment in clean energy technologies, helping Americans in need cope with rising energy costs or pay down the federal debt, as opposed to going to general revenues, would likely help gain public approval.

In his address, the president also mentioned building new nuclear power plants and drilling offshore for oil. This was a political and policy maneuver. Many Republicans support nuclear power and expanded offshore drilling. It is also a recognition that we cannot make the transition to renewables like wind and solar overnight. There must be a bridge to this cleaner future that involves responsible domestic production of resources like oil and natural gas, And nuclear will likely be necessary for baseload energy.

There is room for a compromise that involves increased domestic production of oil, natural gas and nuclear energy while putting a price on carbon and laying the foundation for a cleaner future. We are seeing that in a promising collaboration across party lines between Senators John Kerry (D-MA), Lindsey Graham (R-SC) and Joe Lieberman (I-CT). The Gang of Ten compromise in 2008 also shows that bipartisanship is possible.

The president has set the table for a possible breakthrough. What is required now is some public engagement and bipartisanship to make it happen.

Creating a Climate for Change in 2010

January 2, 2010

The year 2009 ended on an uncertain note regarding climate change. The conclusion of the recent climate summit in Copenhagen produced an accord that fell well below the expectations that the year began with, although it saved the event from complete failure and set the stage for possible advances in the near future. As 2010 dawns the way forward for achieving concrete solutions is unclear. What is needed is a shift in the myopic focus on mitigating climate change to developing a comprehensive U.S. energy and climate strategy that entails environmental sustainability and energy resilience.

The chaos that seemed to reign during much of the proceedings in Denmark has convinced many observers such as Thomas Friedman that the current approach is not working. The Copenhagen Accord reached between countries including the U.S., China, India, and Brazil, although derided by many because it is non-binding, saved the summit from a collapse on the scale of the Seattle world trade talks in 1999. This achievement cannot be underrated, seeing as the WTO and the movement towards multilateral trade have yet to fully recover from the Seattle debacle. Shortly after the agreement was reached, President Obama spoke of the vital role of technological innovation in moving forward.

Maybe some of those combating climate change will finally have the revelation that the largest emitters of carbon are the fastest growing economies, who are all vying for global economic supremacy. Reframing the movement as creating new global markets for cleaner technologies will get these economies to compete against each other to create and adopt carbon-reducing innovations. Recasting the issue will be essential to building public support for changing energy habits, which is really what it all comes down to.   

It is no small irony that the Copenhagen climate conference ended as Washington, DC braced for a major snow storm. Many in the region paid little attention to the details of the accord as they dug out of over a foot of snow. This is the time of year when many Americans sarcastically ask “What happened to global warming?” while struggling though freezing temperatures. In order to achieve a real breakthrough, advocates must recognize the conditions that the average person/family faces and how that will color their views on the issue. This is most evident when it comes to the economy in the wake of the economic collapse that has affected everyone. For the foreseeable future, when the average American hears of “green” they will be thinking of money.

Most Americans have difficulty fathoming how a two degree increase in global temperatures will spell calamity or the urgency of reducing the parts per million of carbon dioxide in the atmosphere from 385 ppm to 350 ppm. Instead of relying so much on complex and abstract scientific calculations and disaster scenarios that strike many as melodramatic, climate activists should speak to the concepts that Americans value and understand the most, such as innovation, entrepreneurship, competition, and resilience.

With the fate of cap and trade legislation in Washington appearing bleak at this point, looking beyond the beltway will provide clues as to how to get Americans behind energy reforms. Emerging “smart grids” in Boulder, Colorado and Austin, Texas underscore how innovative technologies will vastly improve energy efficiency and facilitate greater use of renewable energy while empowering consumers and actively engaging them. The people of Greensburg, Kansas have demonstrated their resilience by not only rebuilding their town after it was devastated by a tornado in 2007, but pledging to make it a “green” town by building structures to LEED standards and using wind power. Fostering innovation and entrepreneurship to create a modern, cleaner, and more resilient energy regime that enhances U.S. security and economic competitiveness are ideas that Americans instinctively are attracted to.

Perhaps the difficulties at Copenhagen will convince more advocates that a new approach is needed.