United States Energy Policy 2001:
A Balanced Initiative for Prosperity and Sustainability
THIRD PLANET
Dr. Ing. David Benjamin
with the assistance of Thomas Blood
revised September 24, 2001
copyright 2001 David Benjamin
Executive
Summary
This statement on U.S. energy policy aims to deal with the issues of prosperity and sustainability for the 21st Century. Prosperity concerns the different forms of the good for the community, while sustainability concerns the objectives, mechanisms, and tools that are used to sustain the good while taking into account the complex interactions of the economy, the environment, and politics.
Two key issues present federal policymakers in the United States with a challenge that apparently reaches beyond the confines of simple energy production, and affects the future of the American economy, international politics, and perhaps even the characteristics of the world that we are leaving to our children. These two issues are as follows: How the relationship between the production of energy and the global climate will develop in the future, and how the American power system will progress from a protected monopoly system to an open and fair market system, albeit regulated by federal and state law. It is apparent that these two challenges lead decision makers and program administrators to a series of challenging issues: Stakeholder buy-in and feedback between policymakers and administrators, bureaucratic inertia, public attitudes, and historical traditions of outmoded environmental and energy sector law and federal/state priorities.
The capacity necessary to meet and succeed at these challenges that the United States does not already possess, we have the ability to develop. In fact, our financial resources, know-how, innovation, coupled together with both our business acumen and our research and development/deployment resources, put the U.S. in the position of being that country that can best advance toward an efficient market for sustainable energy, and exploit this opportunity for a significant financial gain for the nation. Progress toward this end will be assisted by international cooperation with our allies and aggressive engagement with the process of international agreements concerning energy and global warming. The U.S. has a long and successful tradition of such exploitation of international agreements for the benefit of economic prosperity and employment growth, as these agreements create open, fair, and stable markets where the United States can dominate.
There is reason for optimism in this regard: Federal program successes at outreach to communities and states, private sector pro-active initiatives ahead of regulation, religious institution action and commitments, and the financial sector’s innovations to move money into investment in progressive energy technology, are all happening already. Thus, renewables already constitute 5% of the energy production of the Stationary Generation sector in the U.S.
Costs and benefits analysis of investment scenarios to deal with both of the key issues, climate change and market change, show that there are likely greater costs associated with the business as usual future, than with the investment for climate change scenario. Several authors in the fields of physics and economics have recently remarked that the opportunity to be first and best among nations with technologies that take advantage of these developing world trends is now, and it will not only save us money, but we will profit in the long run. As sheik Yamani, oil Minister of Saudia Arabia, recently remarked: “The stone age did not end for a lack of stones, and the oil age will not end for a lack of oil.”
Investments by leading accounting firms (for example, Deloitte Touche Tohmatsu, Price Waterhouse Coopers), and manufacturing companies in knowledge and technical skills for dealing with Global Climate Change, are an important resource for federal policymaking and legislation. These skills and know-how are developed in the ‘real world,’ have been pilot tested, and are therefore becoming components of the standard risk assessment and equity valuation of companies. Finally, U.S. government involvement with the financial sector in the form of membership in the World Bank and other instruments allows the United States to play an even larger role on the world stage in furthering prosperity and sustainability; in this case, often for the very poorest of the world. Subsidies for conventional and inefficient technologies through these multi-lateral and unilateral instruments should be analyzed carefully for their impacts on local economies, democratic capacity building, and the local and global environment.
Finally, several interesting programs are already occurring with federal support which need to be strengthened or continued: These include the renewable Energy Production Incentive and the wind production credits, RD & D on new energy and building technologies, new propulsion sources and support for market penetration of the transport industry, assisting greater mode choice in transport, RD & D in super efficient combustion technology, fuel cell market penetration, assisting communities in dealing with methane production from landfills, and above all else, carefully assisting the stationary power production market in transitioning from a protected monopoly system to an open and fair market. Several significant actors in the financial, insurance, manufacturing, and even energy sectors have expressed support for a transition to a true power market.
Table
of Contents
1.
Introduction 5
2.
Factors, Issues, Priorities, Implementation, and Timing
The Factors and Issues Affecting Policy Formulation in Detail 11
Prioritizing the Issues affecting Energy Policy 14
The Implementation Options 16
Why Energy
is Important Now 17
3.
The Vision for U.S. Energy Policy
Premises for the Overarching Vision
of U.S. Energy Policy 18
Attributes of the Vision 19
The Vision of the Energy Future 20
4.
The Energy Policy Goals
Criteria for the Energy Goals 21
Policy Goals 21
5.
Energy Sector Goals
Energy for Transport 24
Energy for Industrial Use 26
Energy for Agriculture 27
Energy in Waste Disposal 29
Stationary Power Generation Facilities 30
References 37
Appendix
Pollution begins in the Mind
-Wallace Black Elk
Saving fuel is generally cheaper than buying it.
-Amory Lovins
1. Introduction
It is important to set out from the beginning what this policy should achieve. Prosperity is generally about ensuring that more of the good accrues to society, while sustainability is about how such goals as prosperity might be sustained, when taking into account how economic, environmental, and political factors interact in the world system. Policy should attempt to address both prosperity and sustainability. The first term is relevant here because it signifies the goals of economic vitality, secure supplies, and environmental quality. (Lovins 2001). The second term relates to objectives and policy tools, and is the systems analytical view of how we deal with the above goals and factors in the face of complexity, the presence and changing status of allies and opponents, the existence of unknown but important facts, and unpredictable events within known trends.
Yet, our collective and private notions of prosperity, and in general the good, are changing, as we take into account how all of us are affected by events around the globe. Sustainability therefore becomes a central policy objective as it provides both an analytical model for understanding the interactions of the world system, and sub-goals, methods, and tools for society to keep the world within agreed upon parameters that define equilibrium.
Thus, one central question for policymakers is what shall be the response to this challenge? The United States can respond with either goals and strategies to resist the situation, or it can decide to change with the situation. (Funtowicz, et al., 1992). Relevant to this policy are the two key issues of energy policy in the present: The first is the relationship between energy and the planetary climate, as the energy-climate system. Second is society’s transition from protected monopoly power production to open, regulated market based production of power.
The energy-climate situation is, more than usual, complex and challenging, because it is changing over a period of years. Unlike the political crisis of the USSR that Eastern European politicians faced in 1989, with immediate shortages and tanks in the streets, the globe faces changing climate patterns and other trends that only gradually become evident. Thus, even though scientists have called attention to this issue, “…special efforts are needed to enhance public awareness and understanding of these risks in order to spur dialogue and debate about opportunities for addressing them.” (Transportation Research Board 1997, 12).
The transition to a market for energy is still at an immature stage in the United States, complicated by the presence of 50 state jurisdictions. Up until now, relevant U.S. regulations governing monopoly utilities have retarded the continual improvement of efficiency and environmental sensitivity, while it has encouraged complacency among customers concerning the need to reduce load demand. (Casten 1998, 148-197). However, economic actors in the U.S. with significant resources have recently begun to call for reforms to this system, or ideally, advocate the turn to a fair and open market made by federal regulation, in concert with the states. Continued efforts at transitioning the U.S. power industry toward a market environment will very likely pay off in a stabilization of prices, continued renewal of technologies, efficiency gains, greater supply reliability, and a reduction of greenhouse gas and toxics emissions to the environment.
Legislators must therefore think of not only how to solve the pertinent problem, but also how the populace and the private sector will respond to this, since there is substantial, but still not consensual, agreement on both of these key issues: The need to get started on serious policy implementation concerning Global Climate Change, and the market for power.
Thus, there exists a dual imperative to both act on the issue and to interact in an intelligent and respectful way with all stakeholders. Serious communication, and the demonstration of the ability for large institutions and technology deployments to react to feedback from stakeholders, becomes a key element in the effort at sustainability. And in the energy-climate situation we are all literally stakeholders, (and custodians for the world we will hand over to our children). Already, the 20,000 member strong Physicians for Social Responsibility has cautioned us that Florida residents are, “…at unusually high risk for increased illness, injury and mortality due to changes in temperature and weather…” because of global warming. (Brecher 2001). In other words, National policymakers must find ways to make all stakeholders welcome in the discussion, and someone must begin to speak for the children.
U.S. federal, state, and local programs have already made progress toward building these communication feedback channels between stakeholders. Further, the voluntary efforts of the private sector and the initiatives of private citizens all over the country show that there exists the capacity among Americans for teamwork, sacrifice when necessary, persistence, and the ability to focus on the goal. These attributes and efforts of the populace and the private sector are essential, and should be a signal to policymakers at all levels of government that the U.S. is gradually choosing the option to change with and adapt to the situation.
Optimistic signs are growing, including interfaith action on global warming across the country. Episcopal Power and Light is a national organization to convert churches to clean power, while the multi-denominational California Power and Light numbers almost 24 organizations among it’s members, including the California Council of Churches, Southern California Ecumenical Council, Lutheran Office of Public Policy, Los Angeles Coalition on the Environment and Jewish Life, and the Omar Ibn al Khattab Foundation. (Environmental Media Services 2001). Further, Business executives are calling upon the government to get started on this policy, while they have already instituted programs to reduce their own emissions, including Royal Dutch Shell, BP, Cinergy, AEP, Entergy, Dupont, Ford Motor, and Enron. As Jeffrey Keeler of Enron has stated, “…its been proven that voluntary programs don’t work well; that’s why we are where we are today. We can have limits form the top down and not endanger the economy.” (Revkin, et al. 2001). Further, August 27, 2001, the Governors of New England, three Republicans, two Democrats, an Independent, and two Canadian Provincial Premiers, signed a commitment to reduce greenhouse gas emissions, which also provides a blueprint for carrying out the goals practically and affordably. (Graham 2001). The City of Seattle has committed to it’s own Greenhouse Gas emission target reductions this year. (Nor Cal ADPSR. 2001). Finally, financial institutions are innovating new instruments for sustainability, such as transit friendly mortgages in large cities, and the establishment of the emissions credit trading house in Chicago.
In reference to the resistance response, Funtowicz and Ravetz claim that, “…when a party finds it’s interests threatened, it can always find a methodological issue with which to challenge unwelcome results. This is particularly easy in the case of research on risks or the environment. Thus the forum for decision becomes enlarged from that of the technical experts, to include more of those with a strong stake in the outcome.” (Funtowicz, et al. 1992). It is of course true that there will be some adverse but temporary adjustments in employment, business ownership, and GNP growth from serious efforts to move toward a sustainable energy-climate system. However, now scientists have shown us, to the best of their ability, that there are even more comprehensive and dramatic consequences to the economy, our lives, and the lives of the unborn, if we do not make these serious efforts. Economists Dr. Samuel Fankhauser and Dr. William Cline have calculated the annual damage costs due to global warming to the American economy range anywhere between $ 70 Billion to $ 336 Billion. The greatest liabilities are occurring in the area of agricultural production, the provision of potable water, loss of commercial species and wetland habitats, human illnesses and deaths, sea level rise, and forest loss. (Ekins 1996).
The foregoing list of costs, taken together with certain disutilities of labor, the disruption of community, and greater congestion in transport and settlement, all reflect the increasing marginal cost of growth. Since it is also apparent that the marginal benefits to growth are declining (we satisfy our most important wants first, so that each additional unit of income is used to satisfy a perceived less important want), eventually we reach a point where rising marginal costs are equal to decreasing marginal benefits. This is the optimal level of the GNP. With annual marginal costs of growth estimated to be between $70 to 336 Billion, it is possible that we have surpassed this point, and are now at the stage where any more growth in the inefficient activities of the economy is uneconomic. (Daly 1999, 74-78). However, if we continue the ongoing policies of renewable energy and conservation, and strengthen the deployment of efficient energy technologies, we can reduce the annual marginal costs of growth and spur investment in capital and consumer goods. It would seem that this may be a viable economic policy in light of the recent dramatic events of early September.
In practical terms, energy conservation, efficiency technology, and renewable energy deployments with reasonable payback periods (around 5 to 8 years, depending on the place and application), mean that once the payback point has arrived, the original amount of money invested is available again. This can be put to use in even higher efficiencies or reinvestment in other sectors of the economy. Savings to the consumer and therefore also to the general economy may be greater if we take into account the present value of money saved by these deployments, the inflation rate, and the conventional rising cost of fuel and energy in general. (Clark 1997, viii – xii). These three types of energy management strategies are thus simply good economics in practice.
As the physicist Amory Lovins has written,
“Protecting the climate is not costly but profitable, because saving fuel is generally cheaper than buying it… Uncertainties about climate are irrelevant: we should buy energy efficiency anyway simply to save money. It does not matter who goes first – but those who do will gain the greatest and earliest rewards. Buying efficiency, far from competing with development needs, frees up vast sums to finance them. The debate shifts from prices and pain to markets, enterprise, innovation, competitive advantage and economic opportunity.”
(Lovins 1997).
Apparently, the progressive, pro-business policy for the federal government would be to get started working on climate change investments now. The rational citizen will choose the option to adapt to change, and so the stakeholders must sit down to the table and come up with answers to what exactly it is that we shall do, and what to do first?
In fact, people all over the United States are starting the local level discussions to decide what to do, and how to do it. State planning initiatives in Maryland, New Jersey, and Oregon, and other local programs, bring together all stakeholders to discuss how development will occur toward the purpose of making more sustainable neighborhoods. These initiatives are helped along by pervasive federal programs such as Energy Star, Rebuild America, and the Clean Cities Coalition for alternative fuel vehicles, among others.
Federal policy should play the role of:
1. focusing incentives, taxes, regulation, and symbolic policy signals on helping these transitional activities along,
2. removing any remaining, or cease to create any new, barriers to innovation and risk taking toward sustainability, through legislation revisions, and bureaucracy and paper reductions,
3. making sure that new technology initiatives do a minimum of harm to humans and the environment,
4. strengthening channels and opportunities for feedback, and communication concerning these new technologies to ensure the buy-in of stakeholders,
5. prioritizing federal and private training programs for all employees to learn the skills necessary for progressive, sustainable energy economy and infrastructure planning,
6. incorporating all of these energy policy goals into our foreign investment and investment guarantee policies with the World Bank, the IMF, OPIC, the Ex-Im Bank, and other financial instruments of the federal government, and finally,
7. start planning for the future now.
In federal energy policy and the drafting of legislation, it is important to develop policy and policy mechanisms that further the achievement of success as close to 100% as possible. This is challenging because state and local governments, private companies, and private citizens do not work for the federal government, and are therefore not subject to the same sort of sanctions and punishment mechanisms as found in for-profit companies. However, the difference between government management of programs and those of the private sector is one of degree, not of kind.
Indeed, private companies are now feeling the pressure to become more attuned to the social and environmental goals of their shareholders and the public in general. They are, ahead of regulation, developing sector wide and cross-sector environmental management systems in order to satisfy this external demand, and in order to save money. These systems are already,
1. reducing waste,
2. improving efficiency,
3. reducing the damage to the environment caused by their products,
4. changing the company to sustainable business practices to eliminate processes that pollute,
5. informing the public about their operations,
6. seriously working together with all stakeholders to solve all the issues on the table, and
7. incorporating reporting on the energy and environmental consequences of their operations in company reporting procedures.
Thus, many for-profit companies have for years been meeting the challenge to change over to sustainable practices pro-actively. (Parker, et al. 1999). With the advent of ISO 14001 (originally developed by engineers at IBM), there is now a standard for the content of, and how, these policy and implementation standards for the environment should be written. (Cascio 1996, 96-105). These efforts of the private sector are all complementary to federal programs, such as the EPA’s 33/50, Green Lights, and the Environmental Leadership Program, in addition to other USDA, DOE, Commerce, and state initiatives. (Ibid., 270-272).
Further, the world’s major accounting firms have already introduced sustainability reporting guidelines and the International Corporate Protocol for greenhouse gas emissions. (Price Waterhouse Coopers 2001; Deloitte Touche Tohmatsu 2001). Over 24 companies have already pilot tested these management protocols and they are now being used as standard management practice. Many companies are seeing sustainability management and GHG reduction management as an element of both prudent risk management and part of the acquisition valuation of companies. (Jorgensen 2001; Deloitte Touche Tohmatsu 2001). These initiatives have achieved success because they have built on existing knowledge, shared their experience, and converged on a consistent and practical approach, developed through a collaborative, open, voluntary, and multi-stakeholder process. Indeed, “A constructive solution, based on partnerships and stakeholder interaction is fundamental to gaining widespread adoption of the protocol by organizations, policy makers and other key users…” (Price Waterhouse Coopers 2001).
The concepts, collaborative processes, and implementation tools developed by companies, trade groups, and accounting firms represents a vital resource for ongoing federal policymaking and policy improvement. These private sector organizations are investing in the knowledge and technical skill base that is necessary now to deal with global warming in such a way that it is an economic opportunity, not a cost burden. United States policy should be encouraging this development in both domestic legislation, appropriations, our participation in international and unilateral agreements, and all multi- and unilateral international aid and investment initiatives.
Most stakeholders in the United States agree that energy is certainly one area where planning is necessary and welcomed. Despite our capitalist economy, “...the free market can’t plan very far ahead; it simply reacts to current supplies and demands.” (Roskin et al. 1991, 365). Thus, since we cannot allow the future of industry, commerce, and general daily life in the United States to be so easily subject to the whims of the market, we simply must plan ahead, and in this, plan for innovation, prosperity, fairness, and sustainability.
2. Factors, Issues, Priorities,
Implementation, and Timing
The Factors and Issues Affecting Policy Formulation in
Detail
Since the Second World War, a myriad of important issues must be dealt with in any balanced U.S. energy policy, namely:
1. the structural relationship between energy and economic policy,
2. unilateral relations with other international sovereign actors,
3. the relative power relations of allies and opponents on the world stage,
4. the domestic political reality of the relative importance of other non-energy issues,
5. the domestic imperative for legislators to bargain for the greatest benefit to the individual constituents, (the general voter, for-profit corporations, non-profit advocacy organizations, and lobbyists),
6. the prudent use of available fuel, land, and water resources,
7. the imperative to be fully engaged with the international community in determining the course of policy that will affect all sovereign state actors, and
8. the imperative to formulate flexible policy that can change with national goals, and as trends and unforeseen events occur.
Energy and economic policy in the United States are deeply related as virtually every economic activity requires some form of energy. Further, since WWII, relatively low prices for fossil fuels, rising demand for fossil fuels, and the actions of independent actors in the private sector and other sovereign states have contributed to price and supply fluctuations, sometimes quite drastic. As in 1973, even a reduction in supply of less than 5% can lead to public panic and severe economic downturns. And yet, after these downturns, the 100 year history of rising consumer demand inevitably leads to rising prices. These cycles in the energy sector are thus essential factors in the economic cycles of recession and stagflation that the U.S. has experienced since WWII. While these cycles produce perhaps ‘manageable’ losses to human life and property, they must be questioned as to whether they can be part of a statement on future policy goals.
Second, the U.S. is an integrated part of the economic and political arena of the world. Our energy policy has consequences for not only our ability to ensure our own energy (and economic), security, but indirectly the energy security of our allies. Indeed, the energy security of our opponents and allies is relevant, as insecurity there can lead to regional or worldwide economic downturns or loss of regional bargaining power, upsetting strategic balances of power, which can lead to conflict. Concerning our opponents and trivial states, such as the Ivory Coast and Jamaica, their energy insecurity can lead to mass emigration, war, and general instability of the region. The U.S. should certainly examine the question of what benefits accrue to the nation from assisting our allies in their efforts to retain dominant regional power relations, through energy security, natural resource conservation, and economic stability, so that they can help us to advance the general political goals of peace, stability, and rising prosperity.
Indeed, Richard White of the Institute for Defense Analyses has stated that in many cases, it is a failure when troops have to be sent in to do battle in a conflict. Apparently, it is cheaper and more efficient to settle disputes through policy, development, and negotiation. It would seem that the equitable distribution of fuel amounts, fuel types, and technologies, based on trading in a fair market, could go a long way to assisting the world in remaining in a state of more or less peace.
U.S. policy includes a myriad of other issues, but energy is certainly one of the policy sectors that cuts across all sector boundaries and affects almost every aspect of daily public and private life. Thus, other sectors such as health care and justice have an affect on people’s lives, yet crises in energy supply since 1973 have shown that also energy has an immediate affect on American life. Second, other sectors must have energy to do their work, so that energy policy must become a part of the general policy thinking on the part of the legislative and executive branches.
In spite of the fact that legislators are obligated to serve their regional constituents, energy is one of the areas where U.S. lawmakers must work together to formulate policy that is good for the entire nation, and hopefully for the entire world. The U.S. economy and American life is regionally integrated, so that the zero sum game of winners and losers between districts or states in the U.S. is no longer a reasonable option for energy policy formulation. Because of regional differences in natural resources, labor supply, money supply, geographical proximity to other sovereign actors and to regions of the U.S., and historical traditions, it is possible to formulate strategies for intra-national energy trade for win-win outcomes. This is because what one state or district has, other jurisdictions have other advantages, and these differential advantages can be traded upon to their mutual advantage. U.S. policy should seek to foster this sort of cooperation and fair competition.
The prudent use of domestic fuel, land, and water resources is an economic imperative, lest the U.S. remain dependent on both foreign resources and on fossil fuels. This entails detailed analyses of the carrying capacity of our natural resources, measured against our projected demands, and planning for the intelligent and efficient use of the resources into the future. Thus, non-renewable sources of energy, together with our finite resources of land and water, must be looked upon as quantities to be carefully husbanded. If these resources are not planned for and husbanded carefully now, there will likely be drastic price shocks in the future for all three of them. In other words, price rises on a gradual basis, based on including the marginal increasing cost of resource extraction, environmental degradation, etc. is a more accurate gauge of the cost of economic activity, and is therefore a better policy option than accepting dramatic price rises and possible complete unavailability in the future, due to a lack of realistic information. (Daly 1999, 74).
The world political arena is constantly moving forward with international agreements that affect the state of the economy and daily life in the U.S. The United States should seriously consider reinvigorating our engagement at every level with the international community. Not doing so may decrease our stature and influence on the world stage, decrease our standing with our own allies, disrupt our ability to assist our allies in promoting agreed upon goals of the G7, disrupt our ability to provide trading opportunities for our own private sector, thus decreasing revenue and employment potential, possibly decreasing our ability in the future to attract investment capital, and realistically decreasing the ability of the U.S. to demand decreases in environmentally damaging pollution from other countries, especially from the developing world.
Policy flexibility to allow for change in response to the evolving goals of the American citizenry and in response to unforeseen events and the actions of other sovereign actors and stakeholders in the private sector is a challenge that all policymakers face. Thus, the policy tools used to implement energy policy must be only constraining enough to set in motion programs that express the goals of the citizenry, that give a direction to how these programs should evolve over time, and toward what planned for
result. This is not done so that the exact planned for result will every be perfectly attained, but rather so that:
1. our stated goals are focussed on by the appropriation of money,
2. the energy of the American citizen is concentrated on helping to achieve these goals,
3. U.S. citizens can actively participate in the formulation of the policy evolution, and
4. U.S. citizens can themselves become the champions of these goals and policies, so that they work for their implementation and improvement through both the democratic process of government, through the capitalist process of business innovation, and through participation as consumers.
In addition to the above, energy policy has also recently been severely complicated by the pervasive realization that technological development and deployment in the energy sector has significant and perhaps even lasting impacts on the global and local environment. Several other sovereign states have apparently also recognized that now their own energy policy directly affects the state of the planet’s climate and ecology, the actions of allies and opponents, the resilience and flexibility of their national economies, and perhaps even the very ability for the world community to hold to a course of order and peace for the foreseeable future.
The United States has a long and successful tradition of engagement with the world community and international, multi-lateral organizations, going back to the American drive to establish the League of Nations. American economic success in the last hundred years is due in part to our engagement in this process of setting standards, regulations, and sanctions, whereby the business community has a stable and fair playing field within which to operate internationally. As in every other business sector of the Twentieth Century, so also American success in the international energy business of the Twenty-first Century will require that the U.S. Government remain fully engaged and to negotiate in good faith, for the following reasons:
1. Common standards, regulations, and sanctions are vital to a fair, predictable, and stable business environment.
2. Engagement allows for the U.S. Government to remain fully informed of all development trends and strategies of other sovereign national actors.
3. Engagement helps the U.S. Government to remain informed of new, innovative, and economic technologies, processes, and projects.
4. Involvement with the negotiations allows the U.S. Government to not forfeit any stature and prestige on the world stage of sovereign states, so that even an isolationist Administration may at some time in the future decide to re-enter with full force the negotiations.
5. Engagement allows the U.S. Government to support it’s allies on the world stage of sovereign states, and defend it’s own interests against the forces of monopoly and corruption, and environmental degradation.
Prioritizing the Issues
Affecting Energy Policy
In order to provide an alternative to several issues vying for primacy in energy policy, it will be more helpful to formulate these priorities as a balance between some chosen issues. At the highest level of hierarchy, the relationship between domestic U.S. and international energy policy is the best organizing principle. This organization allows us to focus on satisfying the needs of American citizens, industry, and government, vis a vis the world community, that the nation is an integrated component of.
There are two imperatives that connect domestic and international energy policy:
1. the imperative to deal with Global Climate Change, and
2. the imperative to make ongoing improvements to policy as a policy formulation
technique, by concentrating on flexibility and stakeholder involvement. Essentially, this is the discussion of how to deal with the sometimes conflicting interests of present actors in the monopoly power market in transition to an open power market.
The choices that the United States makes in the very near term regarding how to deal with Global Climate Change will have an ever increasing effect on both the domestic and world economy. If energy production techniques and fuel type use continue the world over in their conventional outdated modes, for the next 50 years, even with adjustments to decrease end of pipe pollution production, carbon and other climate gas emissions will continue to rise due to increasing production to meet rising demand in developing as well as developed nations.
Economists and insurance companies have predicted that with this scenario, the descending curve of total world GDP and the ascending curve of total replacement costs for all private and public infrastructure, damaged by global warming, will meet sometime before the year 2050. This is apparently an unacceptable burden on the
world financial sector. These insurance costs, and others, have already begun to exert pressure on markets. These include:
1. increased costs associated with treatment for illnesses and disease caused by global warming related pollution and toxic pollution,
2. costs associated with decreased productivity due to worker disease, illness, and death,
3. costs associated with the invasion of microbial and macro–floral/faunal pests, leading to higher rates of human illness, disease, and death, and concomitant natural resource destruction,
4. higher insurance premiums to pay for replacing infrastructure destroyed or damaged due to GCC weather events, flooding, and ocean level rise,
5. costs associated with the outright de-insuring of regions of the United States, and finally,
6. costs associated with general dissatisfaction with the quality of life of the United States and other nations, leading to mass emigrations, conflicts, and possible lawsuits over environmental destruction.
Apparently, Global Climate Change is a liability, and so the U.S. must seek out alternative scenarios and implementation policies that deal with this threat to the economy and human survival as an investment in our future prosperity, and not as a cost liability.
Between these two interrelated issues is also the ongoing development of the process of policy formulation. Here, the techniques of policy flexibility and stakeholder involvement are used to allow for:
1. modifications to existing policies, to fine tune them,
2. making changes to redirect policy to new or previously under-prioritized issues,
3. a strengthening of commitment to the success of energy policy among all stakeholder groups, including private sector actors, the general citizenry, local governments, and federal regulators, and
4. efficient mechanisms of feedback between federal and state policymakers and all other stakeholders.
American tradition has recently been called upon to strengthen the feedback connections between citizens and policymaker/legislators. These include the town hall meeting tradition. Other programs of citizen involvement, information programs, and training/educational programs for citizens, local governments, and small businesses are being used to institutionalize these connections. This will help to ensure that policy is made and modified in concert with the society that will ultimately carry it out, and will utilize the resources of creativity, enthusiasm, and integrity of the American populace. It is posited that when the American people are well enough informed on how we can achieve a sustainable economy through efficiency and de-carbonization, they will take it upon themselves to solve the difficult issues concerned with acting locally for the good of all.
Once the relationship between U.S. and international energy policy is established, it seems that American energy policy becomes one of the key components of American economic policy as it is one of the essential drivers of economic growth and quality of life opportunities. Further, the use of energy is dependent on two, more or less, objective kinds of policymaking:
1. that of the prudent use of renewable and non-renewable resources, and
2. the imperative for legislators to negotiate their way to the maximum number of win-win solutions in the use of these resources between the federal government, regions, states, local governments, industry, and ultimately the general consumer him/herself.
By the use of prudent resources, I mean the intelligent and careful use of the resource, and it’s conscious prioritization. For example, we may question the use of crude oil as the base for gasoline, since,
1.there are presently available economic, domestic resources that are a replacement fuel, such as ethanol, biogas, etc., yet there are no economic replacements for plastic medical bio-filters, heart valves, or the like,
2. the conventional burning of gasoline causes toxic and global warming pollution, and
3.gasoline is dangerous and a human toxin.
Rather, we should move toward transitional technologies that allow us to husband the resource for truly life enriching and life saving tasks, rather than increasing it’s entropy through inefficient combustion methods.
Second, the attitude of winner take all between the states to compete for business will be disadvantageous for the country as a whole, and certainly for the quality of life of American citizens. Thus, we should question the efficacy of producing power from large groups of inefficient coal combustion plants for regional consumption when that means two thirds of the original fuel literally goes up the smokestack as waste, and also entails Americans having to breathe large quantities of toxins, greenhouse gases, and mercury. This is a win for a declining number of economic actors, and a lose in terms of quality of life and resource protection for many others.
On the other hand, the construction of clean energy wind farms in the windy states to produce power for regional consumption is providing farmers and other property owners with much needed cash revenue, while producing power that does not carry with it the burden of toxic pollution, landscape destruction, and costly efforts at end of pipe pollution control measures, burdensome to both industry and government regulators. In other words, clean energy will not only save industry money in meeting regulations and in using less fuel for the same amount of work, but it will also save the taxpayer money in funding regulatory personnel.
Concerning both example solutions, the husbanding of the resource through fuel switching and creating win-win solutions through technology replacement, what about job losses and the sunk costs of 100 years of fossil fuel investment? Briefly: industry leaders and economists have over the last 20 years devised general strategies to mitigate these unwanted consequences, and indeed, turn them to the advantage of society. These include models for realistically evaluating the savings from energy conservation and efficiency investments, providing tradable pollution credits to power plants, to be given or auctioned off, training programs for workers made redundant to enter other professions, and investment programs in partnership with local/state governments and industry, in order to transition the broad energy economy away from inefficiency and carbon saturation, toward efficiency, security, economic resilience, carbon neutrality, environmental husbandry, and local community relevance.
The Implementation Options
It is ultimately up to all citizens, whether in their capacity as industry workers, elected officials or staff of local governments, or other private citizens, to implement energy policy. Government policy in turn, however, affects consumer demand by setting the economic, scientific, and political stage through material and symbolic policy action. Indeed, the Office of Energy Efficiency and Renewable Energy has learned that, “government policies and market factors significantly affect which technologies are purchased by consumers”. (D.O.E. 2001.)
Thus, the formal mechanisms to ensure the accurate, useful, timely, and representative transmission of information between policymakers and the public is a policy mechanism in itself. This interaction has two components:
1.providing information feedback between consumers and policymakers so that each party is well informed about their opportunities and the options for assisting in the success of the policy, and
2.providing education and training to local governments, industry, and the general citizenry to assist in their:
a. efforts at implementing Federal policy locally,
b. to help them make decisions within the purview of local, state, and regional laws and regulations, such as zoning, building codes, land use planning, general regional land planning, and state/regional infrastructure plans, for the sustainable supply of power, and
c. to encourage public innovation and enthusiasm to improve federal policy and make it more relevant to their regional conditions through interpretation, within the spirit of the policy.
Other policy mechanisms include Regulatory schemes, incentive based schemes, or symbolic policy measures.
Why Energy Policy is
Important Now
It seems that several trends have come together at this point in history that direct our attention to the issue of energy. These include:
1. Changes to the Earth’s climate,
2. major transitions in the political landscape of many sovereign states,
3. burgeoning economic growth and concomitant growth in energy demand,
4. economic volatility at home and abroad, and
5. rising demands among the peoples of all democracies for greater relevance in policymaking toward tangible results in human and ecological well-being represent in the collective an opportunity to change the way the world operates for the better.
This process can also be helped along by working in the area of energy policy and expenditures, as energy is such an integral component of both the world economic system and the global ecology. In fact, these two are deeply interrelated. First, the planet’s natural systems provide a conservatively estimated 33 trillion dollars (U.S.) in services every year to the global population. Further, the destruction or use of non-replenishable natural capital removes an ever increasing amount of material from the market, while also becoming a cost, in terms of human illness, resource destruction, infrastructure replacement, and rising insurance premiums.
Because of this rising demand among citizens in general for greater relevance, and with our knowledge of new technologies and community involvement strategies, the outlook can be very positive if certain choices are made. The U.S. can choose the path of intelligent change, by carefully encouraging the economy to transition from inefficiency and the profligate use of non-renewable resources toward efficiency and the appropriate use of these precious materials.
3. The Vision for U.S. Energy Policy
Premises for the
Overarching Vision of Energy Policy
It is important to set out the premises for energy policy from the beginning. They are the following:
1. Societal survival has primacy in policy making. The public benefit of general human survival outweighs the financial costs of preventing massive loss of life, the financial costs to economic growth, or the momentary luxury benefits to any set of individuals.
2. The precautionary principle ensures survival in high risk situations. Because
the risks associated with Global Climate Change are so all-encompassing and very likely catastrophic, it is prudent to begin policy formulation and deployment of actions now, based on the best current science. This, in spite of any remaining objections from certain business sectors or trades unions, as these objectors do not represent the total set of all economic actors and do not speak for all voting constituents. Further, these objectors may only be reacting to models of rational economic decision making based on purely short term financial gain, and not thinking of the long term benefits from action on Global Climate Change.
Further, the effects of Global Climate Change are already occurring within our own borders, but have not yet gained broad media attention in the U.S. The increase in extreme weather events, flooding, and invasions of new pest species, over the past 10 years in the continental U.S., should however give serious pause to all constituencies. Further, more and more American firms are purchasing weather insurance, predicated on the actuality of global warming increasing in the future. Extreme weather patterns such as El Nino and year round evaporation of the Great Lakes due to warm winters has caused reductions in water levels over the past three years. Thus, cargo ships cannot pull up to their docks to unload, which has caused shipping companies to lose thousands of tons of carrying capacity last year. This is one example of an impending crisis, as “...Industry and scientists fear global warming could cause long-term water loss – predicted to be as much as four feet by the end of the century – that would require far more expensive dredging and could even threaten the U.S. steel industry with crippling transportation costs.” (Schneider 2001).
3. Choices in the arena of energy policy exist. These choices run the gamut from
the extremes of profligate use of fossil fuel resources and the frivolous combustion of these fuels, all the way to the harvesting of renewable and publicly accessible resources, utilized in efficient ways appropriate to the particular demand for high, medium, or low grade energy types.
4. The United States has the resources to do the job. The American economy has
the requisite diversity, resilience, financial capital, natural resource base, and intellectual resources to implement the goals of a comprehensive energy policy that seeks to deal with a complex and long-standing issue, and that will have long-lasting and positive impacts.
Attributes of the Vision
The vision for energy policy, as a component of a general vision for the nation, rejects a dystopian, depressing, or negative scenario of the future and the role of America in this future. Rather the vision of the energy future proposed here is one that posits:
1.The appropriate use and production of energy:
a. scaled to the application and the geographical location
b. produced with that fuel source that suits the level of high or low grade energy required to perform the task well, from electricity to hot water
2. The democratic control of the energy systems of the country, in ways that are appropriate to the complexity and size of the production – consumption – waste system:
a. through agents of the public to control regional grid maintenance, as in Regional Transmission Organizations
b. through local level town hall meetings and referendums to control public health, safety, and welfare, as well as efforts to increase efficiency, increase price fairness, public benefits, environmental goals of the community, and the financial goals of the community
3.The encouragement and acceptance of choice that market actors have, including the energy producers, energy transmitters/retailers, energy consumers, and waste disposers/recyclers. There are a range of choices within each one of these sectors, which therefore engenders:
a. innovation in how energy and fuel passes through the system on the way to the sink, encouraging economic development through new business creation and employment growth
b. energy and price efficiency in the entire cycle of fuel extraction to waste recycling, as products efficiently produced are usually the best and most popular products
c. general public involvement in deciding on and implementing the energy future of the country, which is a non-reducible public good in itself
d. the production and demand for information concerning the energy system of the country, which in turn positively affects innovation and public involvement.
In other words, the vision proposed here is optimistic, exciting, progressive, and forward thinking. This policy represents the opportunity to explore a new frontier for the American citizen and the government, an opportunity to stake our claim of being a society of high quality, thoughtfulness, craftsmanship, team work, and intelligence. This is not a call to reject the high-tech future, or a return to an unexciting energy future that involves no challenges worthy of the American citizen, or that ask us to accept a less prosperous lifestyle. Rather, these challenges to make an efficient and fair energy future at a global scale will demand of the American people hard work on exciting and interesting issues from the realms of science, politics, dispute resolution, law, and even interpersonal relationships.
This work will definitely impress upon the nation the importance of our efforts and will thus re-invigorate our pride in being American citizens, our determination to do the job well, and our participation in civic affairs. This is reminiscent of the effort to engineer the Apollo moon landing in 1969 within a remarkably brief six year time schedule. We claim that the United States can certainly achieve a 7% reduction in CO2 emissions under the 1990 national emissions level by the year 2010. To ask anything less of our people is an insult to our abilities, our determination, and our honor.
The Vision of the Energy
Future
The world system of the future is in a continual process of achieving dynamic equilibrium between the level of human extraction from the planet’s resources and the ability of the planet and the sun to both replenish these resources and restore the ecological viability of life of the environment, humans included. Further, this equilibrium also involves a balance between the development of human potential and ability of the planet to retain it’s beauty, as beauty is a necessary ingredient in human life, even prized by the world’s religions as worthy, a sign of sacredness.
The human component of this world system is thus always in the process of becoming a better learning organization, ever more efficient, determined, and responsive to both internal and external feedback signals. Recent work by management researchers
(Senge 1990; 1999), have shown that when companies consciously become learning organizations, they increase the efficiency of their information throughput, so that signals reach their appropriate destination and are acted upon in the most prudent and expeditious fashion. Indeed, such learning organizations not only use information feedback efficiently, they learn how to continuously optimize this efficiency, and yet further, they learn how to improve their learning about these efficiency gains.
The conception of the American energy system as a learning organization is important as this system is complex and large enough to represent a true challenge to the capacity of the U.S. government and private citizens to conceptualize the issues, formulate policy, and implement the necessary mechanisms and deployment tools. Seeing the interaction of the American populace in the energy grid as part of a learning organization with feedback loops, helps planners and policymakers to conceive of the interactions between actors that are otherwise not connected. Further, this conception shows us that strengthening the relationship between the stakeholders in the energy system will allow us to make the system more efficient. This can be done through the use of a range of traditional and new techniques, ranging from town hall meetings, referendums, training courses for technical and management capacity building, dispute resolution, consensus building, and financing opportunities, and finally, information campaigns that promote the two way exchange of information between citizens and federal policymakers.
4. The Energy Policy Goals
Criteria for Energy
Policy Goals
The following are the suggested criteria for U.S. energy policy goals:
1. They are an expression of the United States citizenry and the broad goals of the nation,
2. they are forward looking and progressive enough to be guideposts to stability, prosperity, peaceful coexistence with other nations, and care for the environment,
3. they utilize either known or likely technologies or implementation tools to attain the desired vision, and
4. they are comprehensive and integrated enough to deal with challenging domestic and international issues impacting energy policy.
Policy Goals
The following are
the general goals of U.S. energy policy:
1. Energy
policy must be based on the following general directives: promoting
technological improvements, new technology development and commercialization,
promoting and funding the involvement and education/training of local
stakeholders in the decision making process on energy, and developing and
implementing the integration of U.S. standards and regulations concerning
mobile and stationary emissions to air and water “sinks.”
9. The
United States should aggressively enter into the international negotiating process
concerning the reduction and eventual phasing out of greenhouse gas emissions
in order to have influence over global treaties that will affect international
cooperation for many generations to come.
This U.S. involvement will promote the use of new technologies markets
that the U.S. can very likely dominate, so that future wealth creation in
the United States is effectively based on harvesting natural resource income,
rather than harvesting an ever decreasing supply of natural resource capital
that can never be replaced.
10. Federal programs, and those in coordination with state programs, should promote the use of power production technology and demand/supply side management installations in order so that the private sector and public sector achieve the highest available efficiency in energy.
11 Federal programs should strengthen capacity-building and technical training for local governments in the United States within the general area of energy infrastructure assessment and infrastructure design and commissioning. Ideally, this should be a pervasive program, i.e., the program should systematically train every local jurisdiction so that they have enough knowledge to make informed decisions about the future of their local power infrastructure, and how these decisions will impact their wider region.
12. The federal government should assist indigenous peoples and minorities in the United States, to monitor the effects of global climate change, and promote mitigation measures that minorities and indigenous peoples can do in their local areas. This program will encourage locally acceptable mitigation measures, which will thus harvest the greatest resource the U.S. has, the creativity and work ethic of it’s people. Such a program has already been started by the U.N. International Institute for Sustainable Development in Canada.
13.The federal government should strengthen existing, and promote new research programs at the university level and through research institutions, on better utilization of renewable resources and how to implement the utilization of renewable resources at the local level. Such research will help U.S. universities and R & D institutions to remain the leaders in their field on the world stage.
14. The federal government should start a program to institute the Local Agenda 21 program at the community level across the United States or to, within one year, develop an equivalent program to Local Agenda 21 for the implementation of those programs that concern renewable energy, sustainable water use, pollution control, the design and construction of human urban habitat, and the preservation and restoration of ecological biodiversity. This program will assist in the effort to document local and regional scale issues of settlement and the natural environment, and to intensively involve the local citizenry, government staff, and other stakeholders in finding acceptable and effective solutions, as well as helping in the effort to document issues and solutions based on international reporting standards.
15. The federal government should encourage local public/private partnerships between governments, academia, non-profit organizations and the private sector for the development of local sustainable energy systems. Many citizens groups, local NGO’s, and governments have a great deal of creativity, energy, and local knowledge that would benefit from increased avenues for their participation in determining the use of resources to solve the issues of sustainable settlement and economic development. In turn, the solution process concerning these issues would benefit from a concerted and systematic effort to channel the energy and knowledge of the local population. Such programs as Rebuild America are already an important step in this direction.
5. Energy Sector Goals
Energy for Transport
The U.S. transportation
sector produces approximately 5% of worldwide CO2 emissions. Thus, “…no other energy use sector in
the…world accounts for a significantly larger portion of global CO2
emissions. Changes in U.S.
transportation policies, technologies, and practices may be necessary,
therefore, to influence long-term emission trends.” (Transportation Research Board 1997, 4).
As in other sectors,
public participation in the solution is also key here. The authors of the above report claim: “A
real challenge in addressing climate change and the other long-term
environmental risks…will be to build the understanding and attention that can
generate such effective responses.
(Ibid., 3).
Further, beyond the
environmental effects of burning 150 billion gallons of gasoline and diesel
fuel every year in engines of only 15 to 20 % efficiency, the construction of
and maintenance of roadways in the U.S. has continual impacts on the
energy-climate system from the damage to forests, one of our essential carbon
sinks.
The Transportation
Research Board claims that the two approaches for reducing environmental
effects of transportation, reducing motor vehicle use and fuel switching and
technology replacement, are indeed complementary. (Ibid., 6). Behavioral
strategies include:
1. tax incentives for
fuel and technology replacement,
2. financial incentives
and instruments for transforming land use policies that increase the
desirability of denser urban living,
3. investments in
urban/suburban transit, and,
4. work at home
programs.
Since the U.S.
population seems to be averse to increased fuel taxes, these options seem to be
the most realistic for the near term policy tool kit.
Many communities across
the United States have shown marked improvement and innovation in their land
use policies since the era of uncontained sprawl in the 1960’s. Indeed, in most studies of customer
preference, moderate density, walkable communities with transit connections and
proximity to work and recreation are valued over other options by the
majority. Nelessen’s Visual Preference
Survey tool has shown how community members can express this valuation and
participate in designing their own neighborhoods, certainly a democratic
ideal. (Nelessen 1994, 83).
The technology
replacement option is also necessary and has gained many allies in industry and
government. Small independent companies
such as Hypercar and the Big 3 manufacturers are all involved in developing new
cleaner and higher efficiency propulsion systems, new batteries, and
flywheel-regenerative braking systems.
Further, Texaco and other fuel producers are working on storage and
transformer technology for hydrogen and fuel cell fuels. Cars with these new motors will, because of
their efficiency and replacement fuel, reduce the cost of transportation in the
U.S. Since less money will be going to extract
fossil resources overseas, more money can go to innovation, small business
development, employment growth, and lifestyle quality improvements at
home. “The development and widespread
introduction of radically different transportation vehicles will take decades. Significant early support for technology
research and development may prove beneficial…” (TRB, 9)
And, “A varied research
and development (R & D) program is important. It is essential, however, that sufficient attention be given to
developing a portfolio of high-risk and potentially high-benefit (e.g. low emission),
technological opportunities.”
(Ibid., 11). The Transportation Research Board authors
point to policy tool options such as:
1. varied and
aggressive federal R & D programs,
2. targeted tax credits
for industry and commuters,
3. inducements for
companies to accelerate the introduction of new propulsion systems, such as a
California type system requiring super-ultra-low or no-emission vehicles as
proportional replacements in manufacturers fleet sales figures. (Ibid. 11).
This option seems to have had success with some manufacturers, and has
not driven companies away from locating their R & D centers in California,
4. federal planning
initiatives, such as the High Speed Rail planning and technology program within
TEA-21, and the Transportation and Community and System Preservation Pilot
Program, and finally, and
5. coordination with
and encouragement for statewide sustainable planning initiatives such as New
Jersey and Maryland have enacted.
Because of the amount
of annual U.S. emissions from the auto, truck, and aviation transportation
sectors, it is important to develop rail transport as one more viable option
for passengers. Rail freight has
already proven it’s economic viability in America. U.S. light rail and high speed rail, under the right circumstances
can do the same. Rail transport
provides:
1. transport
alternatives in times of adverse weather conditions,
2. is often more
economical than buses,
3. reduces auto and
aviation/airport congestion,
4. emits less pollution
per person-mile traveled than autos or airplanes, especially true in
electrified corridors, and
5. alternative
transport modes to ensure the ability of the economy to remain active in the
face of dramatic threats to other transport modes.
All of these advantages
point to the imperative to reduce the barriers to greater use of rail travel in
the U.S. The option of selling
concessions for the operation of passenger and commuter rail on a fee and
performance basis should be examined for long-term policy, since improvements
now will increase the income and equity valuation of the system; i.e. the
excess carbon credits of Amtrak will be worth money in a global trading
system. Such an operational alternative
may produce greater convenience for passengers and for security, although corridor
ownership between the government and private interests should be worked out to
their mutual benefit prior to any sale. The congestion mitigating effects of
passenger rail are significant in heavily traveled corridors, such as the
northeast where Amtrak was able to open the skies by putting 3,800 flight loads
of passengers on high speed rail in the last year. (Further, reducing, or narrowing the criteria, for subsidies to
commuter airlines, whose flights are not counted the same in airport slot
counts as the major airlines, should be considered.) In FY 2001, federal airport spending was over 6,300 % more than
rail passenger and rail retirement funding combined. (Dukakis 2001). Such an
imbalance in federal spending priorities should be re-considered because of the
above imperatives.
Energy for Industrial
Use
Industry accounts for
over a third of the energy consumption in the United States. Investments in this sector would therefore
have significant impacts on Greenhouse Gas emissions and cost savings to the
industry as well as the nation as a whole.
Not only will efficiency improvements here reduce the money spent per
product unit produced, but should also reduce the Metric Tonnes of Carbon
Equivalent per dollar spent and per product made.
This will allow:
1. product prices to
come down,
2. the retention of
more money within the borders of the United States through less foreign fuels
used, and
3.help businesses to
grow and stabilize employment figures through these targeted investments in domestic
industries.
Energy intensive
industries in the U.S., such as steel, aluminum, and petroleum have an obvious
imperative to enhance efficiency and reduce emissions. Fully 85% of the energy for aluminum
production comes from electricity uses and losses, which is 33% of the cost of
the aluminum. (DOE aluminum 2001). With steel making, 15% of the cost of the
product goes to energy, which is produced mainly by coal combustion, the same
as with aluminum. (DOE steel
2001). Petroleum refining is fully 7%
of the total of domestic energy consumption and represents an annual cost to
the industry of $9 Billion. (DOE
petroleum 2001).
Efficiency enhancements
and GHG emissions reductions are being pursued through improvements, RD &
D, new processes, and the continuous monitoring of plant operations. There is here an opportunity to achieve even
further cost savings, efficiencies, and emission reductions through greater
integration of:
1. the process energy
demand and the general power demand,
2. strengthened
opportunities and the elimination of regulatory barriers for industries to sell
or barter electricity, steam, and waste heat and material between them, and
3.the elimination of
regulatory barriers and laws that prohibit industries’ collaboration on the integration
of their operations and location.
These two goals can be
helped along by different private sector initiatives, such as:
1.the Coalition for
Environmentally Responsible Economies principles,
2.the Public
Environmental Reporting Initiative guidelines,
3.the Chemical
Manufacturers Association’s Responsible CARE Program, and
4.environmental
auditing and GHG emissions management protocols based on ISO 14001 standards.
Through the adoption of
these standards, American industry will be able to spur investments in new
technologies and processes that can be sold internationally, such as:
1. innovative motor
upgrade technology and new designs,
2. new combustion
technologies,
3.combined heat and
power and dual cycle turbine technologies,
4.new, real-time,
multi-gas monitoring equipment, pioneered by the National Industrial
Competitiveness Program, through collaboration with Advanced Fuel Research of
Connecticut.
This NICE federal
program has spurred the development of technologies for industries with successful
projects, and the DOE Office of Power Technologies and the Office of Industrial
Technology has also collaborated with private partners and those in other DOE
offices to implement these technologies in a broad range of applications in
industry and building/appliances.
Energy for Agriculture
Despite the fact that
agriculture accounts for a smaller portion of energy demand and GHG emissions
than some other major economic sectors, it is still important to energy
policy. This is so because:
1. agriculture is a
fundamental national security interest, so that energy supply to the sector is
vital,
2. agricultural
products may, in the future, provide significant amounts of fuel to the general
U.S. energy demand, along with supplying energy to the demands of agriculture
itself, reducing reliance on foreign sources of fossil fuels, increasing
thereby security and reliability of supply while stabilizing prices,
3. agricultural
products may also in the future provide new energy products for export,
4. energy policy in
this sector has dramatic impacts on small businesses and families, and
5. energy policy here
will influence crop rotation cycles, and market demand, along with price
fluctuation in this sector, thus affecting the total amounts of herbicide, pesticide,
fertilizer, antibiotics, and transgenics used, along with the extent of future
forest, prairie, and wetlands destruction, which has a direct impact on the
total capacity of these carbon sinks.
There is thus a complex
of issues that presents a challenge to formulate goals, strategies, and
implementation options to balance the above interests. Up until the present, there has been a
long-term commitment in the federal government to plan with a holistic viewpoint
to take all these perspectives into account.
The establishment of the USDA Council on Sustainable Development in
1996, along with the federal policy of the Ecosystem Approach to natural
resources management from 1995, constitute an important institutional basis for
our future efforts to balance the needs of the environment, farmers/foresters,
the consumer, and the energy sector of the economy. (FHWA 1995; Secretary of Agriculture 1996).
However, new market
demand from the energy, transport, and manufacturing industries is not the only
challenge facing the agricultural sector.
These include:
1. increased drought in
some areas and increased precipitation in other areas,
2. increasing removal
of aquifer water for sale to municipalities and coal slurry transport, causing
water shortages and seismic activity,
3.Global Climate Change
effects, including increased UV radiation, warmer average temperatures,
increased storminess, and new invasive pest species of flora and fauna,
5. burgeoning
population growth in the South and West of the United States in areas of scarce
water, fragile landscape ecologies, and underdeveloped transport and municipal
infrastructure, now encroaching on forest and farmland,
6..new transgenic
species placed onto the land near non-modified species, and
7. outmoded tax
policies of some states that tax farmland at the highest and best use rate,
encouraging land use changes to more intense urban development.
Federal policy has an
interest in the agricultural sector having strengthened opportunities for
sustainability in economic and ecological terms as this both reduces petroleum
resource use and ensures the ability of our farms to meet new demands for
bio-based fuels and products. Holistic
planning in this sector is already beginning to achieve these goals by
encouraging urban growth to remain near centers with in-place, comprehensive
infrastructure or in well-designed new towns rather than spread out over prime
farmland. This policy therefore
dramatically increases the marginal costs of growth. In other words, when we urbanize prime farmland, we are gradually
taking the most productive and accessible factors of the agricultural sector
out of production, rather than to conventionally urbanize the least productive
farmland, so that food production remains on the more productive earth. Since agriculture is the primary productive
sector of any economy, tax and incentives policy should be examined for
opportunities for reform so that a viable farming community can remain on the
land in order to implement sustainable energy and agriculture production.
As with other sectors,
the collaborative approach to policy formulation and implementation is vital
also here. The USDA committed itself to
the “…enhancement of the vitality of rural communities…” in their policy statement
of 1996. (Secretary of Agriculture
1996). Also, the Ecosystem Management
Task Force, from 1995, committed itself to building partnerships with all
stakeholders on the land and to improve it’s communication with the general
public. (FHWA 1995). These three commitments, along with the use
of the best available science and management skills, form the basic core of
successful future American agricultural policy development. The government should direct the Department
to make renewed efforts at using the ecosystem management approach within all
USDA planning activities, including innovative techniques such as full-cost
accounting for projects and financial assistance.
Increased use of
biofuels from crop and manure production should play a positive role in the
energy policy of the near and long-term.
This thinking is a good example of putting holistic systems modeling to
work, as it involves seeing all agriculture sector outputs as potential
products in a cradle-to-cradle cycle.
Thus, waste is minimized, efficiency is increased, the hard pressed farm
community is presented with new markets and product ideas, and GHG emissions
may be effectively reduced.
Collaboration between
the agriculture sector and both the energy and manufacturing sectors on new
products is also a positive situation.
Here, the government should continue to foster these contacts and assist
in the development of multi-stakeholder discussions on this business
development. Biomass for energy and
other products, to start the carbohydrate economy, should thus become part of
an integrated strategy in sector planning.
This should be done to continuously work toward balance between the
double imperatives of increasing production and the sustainable management of
lands and wetlands to sustain both it’s economic capacity and it’s general
ecological viability. The definition of
balance is so complex here that it cannot easily be defined in a policy
statement such as this, but must become part of a process of a continual
dialogue and negotiation with the stakeholders: The federal land managers, the states, local governments, land
owners, private citizens, for-profit organizations such as farmers, and other
interested parties.
Several useful and
exciting developments in the area of collaborative land management have
occurred since the Dust Bowl migrations and the development of Western water
law of the last century. Government,
tribal, and private initiatives have over the intervening years sought to find
ways to satisfy the varied interests of the complex of stakeholders:
Pennsylvania farm preservation programs, tribal land management training, state
planning initiatives such as those in Maryland and New Jersey, and privately
initiated charrette planning initiatives concerning new communities are all
adding to the body of knowledge and skills that can be used to implement the
goals enumerated in the Ecosystem Approach and the USDA Council on Sustainable
Development principles.
Energy in Waste Disposal
The waste disposal
sector in the U.S. accounts for approximately 4% of greenhouse gas emissions,
mostly from methane release from landfills.
In addition, some power plants burn solid waste, but this is included in
the Stationary Generation sector contributions. Methane is a fuel resource and a potent greenhouse gas, and thus
federal programs for landfill methane represent a win-win opportunity for local
communities, as EPA regulations under the Clean Air Act conventionally require
this gas to be flared off, which is thus an unnecessary contribution to global
warming.
The EPA Landfill
Methane Outreach Program helps communities to recover this gas and use if for
energy demands or to sell it on the market.
This gas recovery can be used to not only power stationary power plants. Also trucks and cars can be converted to
accept methane fuel, including the municipal garbage trucks themselves.
This program produces
other benefits, including:
1.the creation of
employment from the design, construction, and operation of the program, most
sourced locally,
2. sales of equipment
from national manufacturers,
3.the elimination of
over 4 million metric tonnes carbon equivalent greenhouse gas emission in 2000,
the equivalent of removing 2.8 million cars from the roads, and
4.greenhouse gas
contributions removed from the atmosphere by these community projects can be
traded on an eventual carbon trading market, providing another revenue stream
for communities. (EPA 2001).
Because this resource
is so easily available, it represents a significant amount of fuel, and
contributes to the economic gain of local communities, federal policy should
recognize the municipal and farm related sources of methane as the preferred
source of the fuel. Further, the use of
unsorted solid waste in incinerators should be regulated out of use over a
period of years as it is a contributor to air pollution toxics. Finally, other federal programs for methane
extraction directly from nature, such as from the ocean, should not receive
funding. They represent a higher risk
investment, are costlier, and have potentially devastating effects on the
climate system, as it has the potential of putting large amounts of the
greenhouse gas methane into the lower atmosphere.
The DOE should
collaborate with the EPA on developing a plan for the phasing out of municipal
waste incineration, and the mainstreaming of landfill methane recovery. The methane fuel recovered from landfills
will help to offset the energy contribution of the solid waste to the energy
producing incinerators, and at the same lessen the toxic air pollution
burden. However, a parallel, national
program for toxics recycling should also be developed at the same time, so that
water and land resources are not threatened by the toxics in the added solid
waste in those communities that formerly burned municipal solid waste.
Stationary Power
Generation Facilities
This sector covers all
stationary sources of power generation and transmission for general
consumption, including electricity and natural gas for buildings and appliances. The industrial generation of electricity is
related to all other general consumption retail electrical power in that many
areas of the country have grids interconnected between utilities and these
so-called distributed generators. The
general power generation sector of consumption, excluding industrial generation
for in-house use, accounts for 35% of the U.S. energy production.
Because this sector is
so heavily dependent on fossil and nuclear fuels, making up 90% of the
generating capacity of the sector, stationary power is a major contributor to
environmental degradation, air emissions, price volatility in some states, and
the lack of especially local stakeholder involvement in determining local and
national policy. The sector thus
accounts for 47% of SO2, 22% of NOx, and 35% of CO2 total U.S. emissions. (DOE 2001)
This domination of the
stationary generation market by fossil and nuclear fuels in large plants is due
in part to a long term history of large federal government subsidies. The Energy Information Administration at the
DOE has recently estimated the annual value of these subsidies to be $2.8
Billion, while a 1998 study by the private sector Management Information
Services, Inc. places the total of 50 years of subsidies at $564 Billion, in
1997 dollars. (Stronberg 2001). Such subsidies constitute a fundamental
structural distortion of the market.
The sunk costs of these subsidies should therefore be dealt with very
carefully.
Early Twentieth Century
policy to encourage the pervasive electrification of the United States through
these subsidies and the regulatory protection of utilities as monopolies has
achieved these desired outcomes. More
recent legislation, such as the Public Utility Regulatory Policies Act of 1978,
and the Energy Policy Act of 1992, have gone some way to allow more competition
in the wholesale power market. Despite
this, Individual state legislation still controls the interaction of all
producers, transmitters, and consumers in the state. This legal complex of 50 jurisdictions complicates all
transactions and opportunities for companies, government agencies, and
consumers that purchase or sell power, and for the regional grid networks that
transmit power.
The objectives of
increasing efficiency, reductions in air emissions, reduction of total power
charges, as opposed to electric rates, supply reliability, and fuel resource
security, require concerted and careful revisions to federal law, as the
monopoly system and the 1978 and 1992 laws do not seem to have fully corrected
all the shortcomings of the Public Utility Holding Act of 1935 and other
acts. These revisions should allow for
an open and fair power market that promotes the general energy policy goals. Further, because of federal investment in
the grid infrastructure, it is certainly correct for federal policymakers to
rewrite the rules for the stationary power market, and to influence the
selection of technologies, fuel sources, methods of accounting for financial
transactions and pollution emissions, and the pricing rules for the wholesale
and retail markets.
Thus, the stationary
generation sector, including industrial and small distributed generators, is
characterized by complexity, several stakeholders with significant societal and
financial resources, and voluminous law and legal precedent going back to the
early Twentieth Century.
Despite the recent
surge in some California market wholesale electricity prices, rates for
electricity are relatively low, compared to the 100 year history of the industry. (Norgaard 2001). The energy bills that consumers pay seem to be high due to:
1. increased demand,
which makes the total charge on the bill higher, not the rate itself,
2. tariffs and
surcharges for power delivery,
3.connection,
de-connection, and applicable guarantee of service fees for distributed
generators,
4.extra surcharges and
tariffs on steam sales from distributed generators, based on some state laws,
and the compliance with these laws,
5.complicated laws to
comply with concerning district hot or cool water sales.
6. fuel price increases
to the utility company generator can be passed directly along to the consumer,
and
7. hidden costs
associated with power generation to society because of:
a. federal and local government expenses for environmental clean-ups,
b. extra defense spending to ensure foreign supplies,
c. the different costs associated with global warming, and
d. the tax consequences associated with the above mentioned federal
subsidies.
One primary principle
to develop a policy concerning how to create an open and fair market, is that
demand should be treated as, “…a choice, not fate.” (Lovins 2001). In other
words, private consumers, businesses, and governments should have a broader
scope of choice in:
1. the amount of power
they will demand from the system,
2. who will supply this
power, between utilities, independent power producers, municipal power
producers, community collectives, on-site generation, or a combination of all
of these,
3. what sorts of
technologies and fuels are used to produce this power, and
4. whether local major
generating plants should be municipally owned, community collectives, or in
private hands.
Further, the details of
the policy goals that the U.S. should pursue are:
1. stabilization of
prices in the face of changes in business ownership, technology, and world
markets,
2. the promotion of
renewable technologies deployment and pervasive market penetration, as the
price of these fuels always remains the same, is zero or nil with solar and
wind energy, in contrast with regulated utility’s use of fuel, which is passed
along to the consumer,
3. power generation and
transmission reliability, despite fuel price volatility, warmer summers,
continuously increasing demand, and the challenging distances and geography of
the United States,
4. fuel supply
security, despite a still significant foreign component of fuels,
5. reducing built-in
investment costs, such as high insurance costs for environmental clean-ups,
weather and supply insurance, and climate change insurance,
6. reducing
infrastructure replacement costs due to global warming, including:
a. rising sea levels,
b. fresh water contamination,
c. alien pest species invasions,
d. extreme weather events,
e. disease and deaths from pests and higher temperatures, and
f. human migrations seeking refuge from the effects of Global Climate
Change.
7. not passing along
large costs for nuclear waste disposal to future generations,
8. reducing the local
environmental effects of fossil and nuclear pollution, including
lowered property values
and reduced productivity due to diseases and deaths from radiation,
9. increasing
investment in innovative demand and supply side management technologies,
processes, and vendor-customer models, including fuels, power generation,
transmission, and building/appliance design,
10. increasing
investment in RD & D and greater market penetration for innovative and cost
effective clean energy production systems, including solar thermal,
photovoltaic, geothermal, wave/tidal action, and wind systems,
11.increasing
investment in RD & D and greater market penetration for ultra-low or zero
emission and highly efficient power production technologies where appropriate,
including fuel cells and dual cycle/combined heat and power turbines,
12. renewed efforts at
integrating federal energy policymaking with federal legislation in an effort
to continuously improve the integrated energy planning of North America and
Hawaii,
13. enhanced innovative
processes of stakeholder involvement from the federal to the regional, state,
county, and city levels to gain the benefit of public interest, knowledge,
skills, and acceptance of preferred policy options,
14. continued and
enhanced training opportunities for public and private sector employees to build
decision making knowledge and skills at all levels of government, and
15. enhanced training
opportunities for present and former conventional power system employees that
seek to build their personal skill capacity within the area of energy priority
categories enumerated in this policy.
These broad policy
goals for the stationary generation sector can be furthered by the following
policy objectives:
1. In general, all
relevant mechanisms and incentives should allow for the inclusion of renewable
technologies and fuels as a component of the default choices for the energy mix
in the coming restructured power market.
2.Minimum,
non-discriminatory federal interconnection standards and rules for all
distributed power suppliers, to ensure their safe and fair access directly to
customers, suppliers, the grid (eventually the RTO grid), and aggregators,
based on a fair and limited time frame formula determination of compensation to
the relevant utilities, should be promulgated.
These standards should be reviewed on a regular basis by a coordinating
group made up of the DOE, the FERC, and the FERC ombudsman, and are themselves
subject to the review of Congress and the Administration. Any potential supplier, aggregator, or
customer should be allowed to address this review board in writing concerning
issues relevant to the review.
(Stronberg 2001). (See
below).
3.Aggregation of
customers with particular resource preferences or geographical proximity should
be allowed for, but must be bound by the public benefits charge for new
investment. (See 4. below.) The city or county government shall
individually or collectively be the default aggregator of residential and small
business customers in their jurisdictions, unless otherwise prevented for by
state law or RTO charter.
4. The limited time
frame and non by-passable public benefits fund charge is for the exclusive use
of new investment or renovation in either renewables generation, other best
available high efficiency electric power, steam, or district heat/cool
generation or demand/supply side management installation (i.e., so that the
facility meets or exceeds all environmental standards and achieves atleast best
available thermal efficiency compared to any other combustion technology). This charge shall be calculated for each
market area covered by the RTO, or in
lieu of the existence of an RTO, shall be calculated based on the current ratio
of wholesale to retail price, for the present utility market area, and shall
last for a limited time frame. (Casten 1998, 156-157).
5.All federal incentive
programs to encourage the purchase of renewable technologies and the production
of power from such technologies should continue, and these programs, along with
new programs that encourage the further market penetration of these
technologies, should be funded. These
programs include the re-authorization of the renewable Energy Production
Incentive and the wind production credit until 2010.
6. There should be
funded direct, limited grants for a selection of projects to use renewables in
housing, commercial buildings, industrial buildings, industrial process energy,
and transportation, such as grants for installations based on purchase price,
or for power produced over a period of the life of the installation.
7. There should be
funded incentives and direct, limited grants for supply and demand side
management installations in producer plants and customer installations.
8. There should be
funded incentives and direct, limited grants for the installation of highest
available efficiency combustion technology, where this is appropriate to the
task.
9. There should be fuel
and technology disclosure to customers on a regular basis, or as technology
permits, in real time. In the future,
as technology permits, real time cost disclosure should be encouraged to help
customers make demand side decisions.
10.There should be
ongoing coordination of energy policy and relevant law with environmental
policy and relevant law, in order to reduce pollution and increase efficiency
in the most expeditious and cost-effective manner, and should remove all
barriers to the consumer-producer system to achieve this. This imperative should include coordination
with international environmental, energy, and climate change goals, including
showing support for the G8 Renewable Energy Task Force Report of 2001. Further, the federal government should begin
a program of phasing out all subsidies, international loan and insurance
guarantees, and tax abatements for fossil and nuclear energy developments
outside the United States. A portion of
this money shall accrue to other projects promoting renewable energy
production, demand/supply side management, and best available high efficiency
combustion technology using alternative fuels, including natural gas, and the
necessary technical training and capacity building to ensure the success of
these international programs. Indeed,
the World Bank itself has expressed doubts about continuing the policy of
support for conventional technologies
11. There should be a
range of incentives or grants available to private sector businesses that
produce or install renewables technologies for business start-up, or for the
renovation or purchase of equipment for installation or manufacture.
12. The federal
government should encourage commercial banks, the CRA system, Fannie Mae,
Freddie Mac, and the SBA to provide low interest loans or other appropriate
financial instruments, with long-term amortization periods, for renewable
energy, and demand/supply side management installations in housing and small
businesses, and to provide incentives to manufacturers and installers to do the
same.
13. To enhance the
creditability of the sector, federal and state licensing and standard setting
should be coordinated for the renewables industry. This should include the provision to customers certification of
the range of expected energy savings, the training of the installers, dealer
support, the warranty options, and with recommended maintenance, the expected
performance of the installation.
Further, coordination should include the acceptance of standards IEEE
929-2000, UL1741, and NEC article 690 for photovoltaics. Similar standards should be so coordinated
for other renewable technologies, where necessary.
14. Federal law should
allow, in the case of domestic or international carbon credit trading, the
ability to pass back and forth, from producer to grid manager to consumer, any
carbon credits that any one of these earns because of emissions mitigated. (Starrs 2000).
15. Needs determination
of power demand, should be retained by each state.
16. There should be
established, within the offices of the FERC, a National Regional Transmission
Organization ombudsman. This ombudsman
shall hear all queries and complaints concerning those activities of power
transmission under the purview of the RTOs, in order to expedite necessary
feedback between customers, suppliers, and transmitters. The ombudsman shall report to the RTO his
findings, and shall make regular reports to the FERC concerning trends and any
special cases. Any actor in the market
may query the ombudsman by written request.
17. Any demand side
management installation, that does not deliver power to the grid, such as also
a distributed generation technology, shall be treated by the RTOs and utilities
as any other demand side equipment, with no surcharges, tariffs, or fees.
18. In order to
expedite the adoption of higher efficiency technology in the U.S., there should
be a gradual phasing out of outright subsidies, tax credits, and royalty
payment exemptions for coal and nuclear fuel or technology investments, and for
the clean coal technology program. This
will assist in the effort to eliminate subsidizing out of date coal
technologies, as the time period from grant award to installation is too
long. By the time that the grant is
awarded, much higher efficiency and cheaper technology has already become
available. (Casten 1998, in toto; Jehl 2001).
19. All utilities,
Independent Power Producers, and major distributed generators shall be obliged
to meet the same EPA regulations for criteria air pollutants. The definition of air pollutants for these
purposes include SO2, NOx, CO2, and CH4.
These criteria pollutant standards shall be measured based on pollutants
per megawatt-hour of heat and power produced.
There should be a definite schedule between 2002 and 2022 that requires
the above power producers to reduce
their CO2 and CH4 emissions to atleast a level 7% below 1990 emission levels,
by the year 2010.
20. Finally, non-utility
electric power, steam, heat and cool, and natural gas producers, should have
the right to purchase backup power from vendors of their choice, without prior
prejudice of area utilities, and sign long-term contracts for these purchases. As well, new power sales companies, and any
power supplier, grid operator, or power customer should have the right to sign
long term contracts for the purchase of base power from vendors of their
choice.
21. The
Price-Anderson Act should be revised to take account of the new realities of
the 21st Century: This
should entail revising the act, or repealing the act, to phase out the nuclear
industry in the United States as it now stands, and to retain only enough money
in appropriations for the nuclear industry to cover the operation of present
nuclear power production plants, and insurance for clean ups and disposal of
nuclear waste.
22. New Program: Local Government Capacity
Building Program –
The purpose of this
program is to provide know-how, knowledge, and skills to local communities
concerning the sustainable provision and management of energy. The target audience includes local
politicians, staff of cities, counties, and states, and local agency board
members and staff, such as the MPO’s, Regional Planning Commissions, Regional Transit Authorities, etc. and other
members of the private sector. Further,
this program will introduce these technologies and processes to the communities
through a grant program for matching funds for building sustainable power
supplies using solar and renewable power generation and proven techniques of
energy conservation and the reduction of waste, including demand/supply side
management, best available combustion, fuel cell, battery and flywheel
technologies, and the recovery of economically viable fuels from waste.
Phase I: Train the
Trainer program for the local capacity building program on sustainable energy
production and management.
Phase II:
Deployment of Trainers to the communities with materials and tools across the
US, in first case to pilot program communities based on a grant application
procedure.
Phase III: Training
will cover comprehensively the provision of sustainable energy, and its demand
and supply management, and will produce communities that will as their main outcome,
produce Sustainable Energy Technology and Process Plans, that will be reviewed
and revised every two years. These
deployment plans will be the basis for a community wide evaluation and
reporting procedure on the use and management of energy used by the community
for the past year, and these reports will be made according to standards that
are congruent with United Nations Local Agenda 21 Standards.
Phase IV: This phase will begin in 2003, after the completion of the first set of communities completing the training program. Graduating communities will then have the opportunity to seek matching grant funds from the Federal Government to implement technological and process solutions to build or renovate projects in their communities in order to make them produce zero-pollution, to produce zero-pollution power, and to produce facilities that drastically improve the efficiency and reduce the waste of facilities.
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