Cross-posted from the American Security Project's 'Flash Point'
On Tuesday, May 24, I participated in an ASP-sponsored event called “America’s Future Energy Choices.” This blog post is a summary of my presentation.
The United States is facing a series of choices over the next decade that will determine how its economy is powered to meet the needs of the 21st Century. By 2035, the total energy demand of the United States will rise by 20%, including a 30% increase in electricity demand. In addition, much of the aging power infrastructure will have to be retrofitted or replaced. All of this will happen in a world where total energy demand is expected to have risen by 50%. Inevitably, energy prices will rise because of the increased demand, and constrained supply. However, decision-makers in government and the private sector can not make decisions based on price alone. Depleting global resources, worries about climate change, and the impact of energy choices on national security will make the decisions about how the United States gets its energy much more difficult than the choices of the 20th Century. The government, utilities, and private sector of the United States should consider these decisions in lights of three concerns: (1) Energy Security, (2) Economic Stability, and (3) Environmental Sustainability. Sometimes these terms are simply buzzwords, so it is important that we specifically define each.
Energy Security
Energy Security is the ability for a country to act in its foreign and security policy independently of how it uses energy domestically. This should not be confused with the political term of ‘energy independence.’ In a world of globally traded commodities, it is neither possible nor even desirable to be energy independent. Instead, energy independence comes from energy flexibility and redundancy – so that the impact of supply shocks do not affect national security decisions. The United States’ foreign policy should be determined by its interests, not by its dependence.
An important caveat to this is that sometimes in Washington, talking about ‘Energy Security' has often been seen as way to sell climate change and environmental issues; the perception is that 'security' sells better than 'green'. However, that does a disservice to both. Considering Environmental Sustainability is important, but the decisions made could be completely different. For example, if you only considered Energy Security important, and ignored economic stability and environmental sustainability, it would make sense for the US to invest heavily in liquefying coal to drive our cars.
Economic Stability
It seems clear that all decisions about energy policy must consider price. The United States is one of the most energy intensive developed economies, which makes its economy vulnerable to supply-shocks. The unstated policy of the US government has clearly been to promote low prices, but the unintended result of that is there is little buffer against fluctuations in price – both up and down. Upward price shocks harm consumers by acting as a tax, but downward price shocks can harm producers as well by harming long-term investments. Overall, it is more important for an energy choice to be made that will provide long-term economic stability rather than providing only for low-prices, especially if those prices tend to be volatile. Volatile prices encourage dependency when the price is low, leaving consumers harmed when the price spikes. Today, American drivers are feeling the pain of gasoline-dependency that years of low prices created.
Environmental Sustainability
Although there remains a deep and frustrating political divide in this country (and few others) about whether man-made emissions are causing the climate to change, the debate in the scientific community is no longer about whether humans are causing climate change, but how much those emissions are hurting. The most controversial debates among scientists are about the sensitivity of the climate to increased concentrations of greenhouse gases. Unfortunately, as much as the computer models try to quantify sensitivity, they are unable to.
Climate change has deep implications for energy policy/ The fossil fuels we us to produce 92% of America’s energy are the main driver of climate change. As the world’s second largest emitter, with about 25% of global greenhouse gas emissions, US reductions are important.
Local environmental changes are as important – or more – than global climate change. How energy production affects local water supplies and local air quality will determine how the public accepts new energy developments.
In conclusion, how America chooses to replace and expand its energy supply will affect the health of the world’s environment, America’s national security, and the well-being of the United States economy. The decisions made by government and the private sector over the next decade will set the path on the way to 2035. With those parameters in mind, I will be putting together a series of blog posts, both on ASP’s Flashpoint Blog and my own blog, which can be found on my blog at Andrew-Holland.com. I hope that it will draw some good comments.
