A federal energy policy: Can it happen here? Part I

Of all the issue areas that Congress dives into from time to time, none reveals the inability of our legislative branch to fashion an internally-consistent national policy quite like energy. The usual items in an energy bill—tax credit extensions, fuel subsidies, fresh regulatory requirements (and loopholes), new rules on offshore drilling, etc.—are designed to reward specific industries and influential constituencies. This year’s energy bill promises to follow that time-worn path left by Congresses of yesteryear.

But an energy bill has to be more than the sum of its subsidies to constitute effective policy. This is especially true as we enter a time of growing resource and environmental limits that threaten to bite us in the collective behind if we don’t curb our profligate consumption of energy.

Now is not the time to continue subsidizing every form of energy that can be produced in the United States, as the current Congress seems intent on doing. In previous bills, Congress has taken great pains to make sure that every energy constituency—coal, oil, nuclear or renewables—gets its fair share of the federal pie, regardless of need or environmental impact. This is the cheap energy paradigm at work—promoting economic growth by artificially lowering energy prices.

But while this paradigm may have been defensible before U.S. oil output reached its maximum in 1970, it has no place in today’s energy-constrained world. Artificially lowering the cost of all energy sources will not only encourage waste and overconsumption, it will hasten the arrival of that traumatic day when the flow of cheap oil and natural gas cannot meet the demands of a hypermobile society.

It’s no secret that Congress lacks the stomach for offending powerful energy lobbies like Big Coal. But it’s simply not possible to institute policy changes, especially those intended to reduce carbon dioxide discharges into the atmosphere, without picking a fight with the coal industry, the electric utilities, and what’s left of the U.S. automotive industry. Therefore, if Big Coal pronounces itself satisfied with the energy bill’s contents when it is passed, you can be certain that Congress declined to incorporate any provisions that would cause coal’s share of the energy pie to shrink, such as a carbon tax or renewable feed-in tariffs.

What makes the United States singularly incapable of producing a coherent energy policy aimed at cutting energy consumption and using low-carbon alternatives to fossil fuels? I believe there are three factors explaining this lamentable state of affairs. The first is that your average American citizen has the energy IQ of beach sand, and, in this regard, your average member of Congress is the mirror image of his or her constituents. For proof, I would direct your attention to Sen. Chuck Schumer of New York, who regularly appears on news programs to suggest that gasoline is overpriced at $3 per gallon and that motorists are being fleeced by dastardly oil companies.

Actually, at that price, gasoline is a steal, and it would be so even at $4—the amount Canadians pay—or $5. Packing 125,000 Btu’s of energy, a gallon of gas will power the average car 25 miles, yet it costs less on a volumetric basis than milk, apple juice, Evian, coffee from Starbucks, Mountain Dew, Listerine and Red Bull. Try getting that performance with a gallon of Gatorade in your tank. It will set you back $10, and you still wouldn’t be able to back your car out of the garage.

It should be noted that retail gasoline prices in Germany are the equivalent of $7 per gallon, yet its economy remains healthy. Why is that? Because Germany, unlike the underachieving U.S., has a national energy policy designed to transition the nation smoothly into a post-fossil fuel energy environment. By taxing fossil energy and providing long-term price support for wind and solar electricity production, the Germans are plowing today’s wealth into building up a sustainable energy system that can withstand the future economic dislocations resulting from Peak Oil and climate change.

Indeed, no other country has made as much progress as Germany in building up a renewable energy infrastructure for delivering low-carbon electricity to homes, businesses and rail networks. But other countries that lack domestic supplies of fossil energy, like Spain, the Netherlands and Denmark, are also moving aggressively to harness their renewable resource base. They, too, are light years ahead of the United States in this regard.

RENEW Wisconsin is a nonprofit organization that acts as a catalyst to advance a sustainable energy future through public policy and private sector initiatives. Michael Vickerman’s commentaries are also posted on RENEW’s web site: http://www.renewwisconsin.org, RENEW’s blog: http://www.zmetro.com/community/us/wi/madison/renew and Madison Peak Oil Group’s blog: http://www.madisonpeakoil-blog.blogspot.com.

from the Aug 1-7, 2007, issue

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