Is There an Energy Policy in Our Future?

Abstract: As the U.S. Senate prepares to take up the Omnibus Energy Bill, there is a growing feeling that a real Energy Policy will again prove elusive. But in the U.S. and Britain bright signs are coming forward in the form of organizations aiming to emerge with something concrete.

Analysis: It's now mid-July and there's still no certain schedule for taking up the Omnibus Energy Bill, S14. The measure was tabled June 12 to get on with Medicare and prescription drug legislation. Whether the Senate gets back to the bill before the August recess is anybody's guess. If it does, plenty of contention exists regarding whether or not to include several complex issues:
  • CAFÉ--corporate average fuel economy--standards for automobiles, trucks, and SUVs.

  • Climate change.

  • Electricity industry restructuring and renewable energy use requirements.

  • Tax incentives.

  • Loan guarantees for nuclear power plant construction.

  • Resources survey of the outer continental shelf (OCS).

  • Opening the Arctic National Wildlife Refuge (ANWR) to drilling.

  • While some of these issues do not directly impinge on oil and gas exploration and production, most at least have an indirect effect. And ANWR and the OCS resources survey are hot topics. The OCS resources survey is raising hackles on the East and West Coasts and both Florida coasts where offshore drilling moratoriums have been in effect since the 1980s. Proponents say the survey is needed to help complete an estimate of the oil and gas reserves of the outer continental shelf. "How can we have a comprehensive energy policy without knowing how much oil and gas we have?" Oklahoma senator James Inhofe asked the San Francisco Chronicle.

    Opponents see the measure as a foot-in-the-door gambit aimed at overturning the federal ban on offshore drilling (except, of course, for the GOM). "Inventorying these areas doesn't make sense unless you want to overturn the moratorium," California senator Dianne Feinstein told the Chronicle.

    Independent Approaches

    Perhaps there'll be a Senate vote this year followed by resolution with the House bill and the President's signature. Perhaps not. Even with a vote we may not actually get something that amounts to a policy. This has been the chief frustration of proponents for years.

    Indications are, however, that this very frustration has helped create some independent approaches.

    Nonpolitical or bipartisan bodies on both sides of the Atlantic have recently begun to weigh in looking for ways to make policy progress. One of these bodies is the Energy Future Coalition (EFC) in the U.S. First mentioned in the June 27, issue of Oil and Gas Advisory, by Ian McKinnon, the EFC is a bipartisan group formed in 2001 by C. Boyden Gray, a counselor to former President George H.W. Bush; John Podesta, chief of staff to former President Bill Clinton on climate change; Tim Wirth, a former senator from Colorado and an advisor to Clinton on climate change; and several financial partners.

    The EFC's first report invokes the years of frustration which it calls the pattern of policy failure: "U.S. energy policy for the past 30 years has failed to adequately address the clear risk to our economy and national security of our dependence on oil. It has also neglected the threat of climate change and the need to bring electricity and modern fuels to the earth's 2 billion people who lack them--in effect guaranteeing their continued poverty."

    The EFC first asked its members "Why has this failure happened? Why have the many groups who have attempted to affect U.S. energy policy, met with almost no success?" A study of these failures convinced the EFC that the efforts were "too academic, too narrow, too sectoral and for the most part uninformed by practical political experience."

    In exploratory meetings the EFC team concluded that if it could focus on political coalition building, it could then aim at breaking the gridlock that that has prevented substantive advances in energy policy for the past three decades and find consensus targets for action to improve our energy situation. That meant the EFC had to somehow bring together people from labor, business, academe, and politics--the strange bedfellows that make politics. When these members met, what surfaced was a "surprising willingness to avoid reenacting battles that have been fought in the past"--the usual sharp divide along partisan lines. This willingness held throughout the creation of working groups and their deliberation and has been the key to progress.

    Practical Politics

    To build practical political consensuses, the EFC assembled more than 150 people into teams which participated in policy roundtables where they listened to ideas from such heavy-hitters as Amory Lovins of the Rocky Mountain Institute; Sir Mark Moody-Stuart, former chairman of Royal Dutch Shell; John Holdren of Harvard; Robert Socolow of Princeton; and Ferdinand Panik, head of fuel cell vehicle development for Diamler Chrysler.

    Along with the idea of achieving actual political influence, the EFC identified issues, which fell into "three overarching challenges":

  • Reduce the world's dependence on oil.

  • Take steps to control emissions from coal, oil, and natural gas that are affecting the world's climate.

  • Help developing nations grow by extending access to modern energy services to poor people around the world, creating new markets at the same time.

  • In addition, the EFC charted two "ambitious but achievable goals":

  • Reduce US oil consumption and carbon emissions by one-third over the next 25 years.

  • Sharply increase access to modern energy services in the developing world.

  • Coalition members then identified two first targets for action.

    Transportation. The EFC recommends tax incentives for technologies that increase fuel economy, a competition to convert biomass to fuels and other products on a commercial scale, and accelerating R&D programs on fuel cells and hydrogen.

    Utilities. The EFC proposes a two-pronged strategy. First, capture and sequester carbon dioxide emissions from coal-fired plants. including long-term disposal of emissions in deep underground repositories, along with construction of new power plants using advanced gasification technologies encouraged by incentives for their use.

    Second, fund state and utility energy efficiency programs, many of which have already developed innovative, cost-effective ways to save energy--and have verifiable results.

    Global Development Bonds The EFC recommends bringing private sector investment and know-how to bear to extend modern energy services to developing countries. Included in this is the concept of a Global Development Bond that would secure investments in clean energy projects in developing countries. Another innovation is a Council on Energy and Development involving energy companies, labor, and NGO partners to lend expertise to developing countries. And new guidelines are suggested for national and multinational lending.

    Finally, the EFC advises that several steps be taken now to better align government policies so they stimulate innovation by the private sector. Market-based incentives, they say, should be added and policies that are counterproductive should be removed. Regulatory and financial incentives should be devised to encourage production of ethanol and other bio-derived petroleum substitutes. Export subsidies should be replaced. Such a step, the EFC says, would make more money for farmers who hurry the energy future and avoid flooding world markets with surpluses, which would eliminate a key barrier to the current Doha round of international trade negotiations, according to the EFC.

    The EFC recommends that the EPA should study changes in fuel regulations to see if the greater use of biofuels might reduce the level of toxic air emissions in transportation fuels.

    The coalition says its recommendations so far are strategic, not comprehensive, and focus on what's important and what we can say "yes" to now. They reflect a commitment to collaboration on an energy policy that will continue and an understanding of how to do it. The EFC wants to stimulate a debate on its vision of what the energy economy can become.

    You'll find its complete report on the website at, and there is an address for email queries.

    The U.K. Version

    Another approach to generating an energy policy is that of blunt confrontation. The prestigious Institution of Civil Engineers (ICE) of the U.K. has just published a report saying that within a generation British power generation will become completely dependent on energy supplied via pipelines from politically unstable countries thousands of miles away.

    Though Britain is not now dependent on imports as the U.S. is, it is headed in that direction. In The State of The Nation 2003, ICE reports a potential shortfall of 80 percent in meeting the country's power demands from current supplies and points to possibly "cataclysmic effects of becoming reliant upon unsecured, imported fuel supplies."

    ICE director general Tom Foulkes said, "This country has been largely self-sufficient in electricity generation for the last 100 years." Foulkes pointed to the oil crisis of 1973, coal in the early 1980s, and what he called the "self-inflicted" petrol crisis of 2000. All these had the potential to do economic damage, which was largely averted by the diverse fuels available.

    The problem is that the current mix for electricity generation--32 percent coal, 23 percent nuclear, 38 percent gas, 4 percent oil, and 3 percent others--is about to change. Emission constraints will force coal-powered generating plants to close shortly after 2016, and only one nuclear power station will operate after 2020. ICE places the blame directly with the British government for its failure to maintain and upgrade Britain's nuclear power program.

    Under current plans, the shortfall will have to come from gas-fired power plants importing 90 percent of their fuel. Though supplies can come initially from Norway, demand across Europe will exhaust this source by the 2020s, ICE says. This will force Britain to source supplies from West Africa, the Middle East, and the former Soviet republics. This is a picture with no diversity or security of supply.

    ICE calls for a sustainable solution to be developed at once and recommends a mix of all types of fuel, including renewables, wind and wave power, nuclear, cleaner coal, and gas-fired power stations. Nuclear power will also have to be part of any sustainable solution, and ICE called on the government to inform the public of that fact and address concerns over waste and safety. As civil engineers, ICE deals with fixed facilities, but warns that similar attention is needed to the future of British transportation and gas/oil heating as well.

    You can find the ICE report at

    So--two different approaches from two countries that need a real energy policy so they can work toward energy security. We should all wish them well: We'd all benefit from energy policies we can rely on.


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