Every year the National Conference of State Legislators (NCSL) holds an annual conference where legislators from all over the US gather for updates on major public policy issues facing the nation. This year the organization found that issues surrounding our country’s future energy supply were becoming of such paramount importance to state governments that it set up a task force to study the issues; produced a report on meeting the energy challenges; and devoted a whole day prior to the annual meeting to an “Energy Policy Summit” where some 15 speakers gave presentations on various aspects of energy.
Now America’s 50 state governments represent a wide spread of interests and concerns. Some such as Alaska and Louisiana are deeply involved in some aspects of oil production. Others such as Pennsylvania, West Virginia, Kentucky, Illinois, and Wyoming are large coal producers. Still others are home to increasingly controversial shale gas production. The mid-west is fertile ground for wind farms, the southwest – solar collectors. A few produce little or no energy at all.
Some states have large numbers of citizens who are deeply concerned about the threat of global warming and believe it must be stopped, even if at substantial cost. In others, the majority of people, however, seem to be far more concerned about their economic well-being and are convinced that global warming is a fantasy dreamed up by liberal environmentalists.
Sorting a pathway through this thicket of special interests and concerns to reach a consensus for action on energy is not an easy task. The common ground shared by all is electricity. All states generate, distribute, use and regulate it. They are all connected to neighboring states through power pools. If they have neighbors to the east, then any emissions they produce become a regional problem. Much of America’s electrical production and distribution infrastructure is aging and is due for replacement. The possibility of federal emissions standards has the utility industry tied in knots as the most cost-effective way of producing electricity is becoming murky. Nuclear plants are becoming incredibly expensive as are the cleaner ways to burn coal and control emissions. The best wind and solar resources are not where most consumers live. The litany of complexities runs on and on.
In a general sense, the Conference did a good job in reviewing the pros and cons, costs and emissions, and geography of the various forms of electricity generation that are currently available. The obvious conclusion is that the approach will be different in each state. To its credit, the task force studying energy latched on to energy efficiency as a source of major savings that is common to all states. The studies show that nearly 25 percent of US energy demand could be met with energy efficiency by 2020, resulting in savings of over $1 trillion. While difficult to achieve, increasing efficiency is the most cost-effective way to gain increased capacity while foregoing construction of as many new plants as would be otherwise required.
State policy can play a pivotal role in increasing energy efficiency and reducing consumer and business costs. Such policies can include stronger energy codes, requiring utilities to meetannual energy efficiency targets, and the most important: decoupling utility profits from electricity sales. To many speakers, the latter policy is the most important because electric companies should be rewarded for how efficiently whatever resource is consumed to generate electricity and produce utility for consumers, not how much is sold. What the conference’s task force, report and speakers presented and considered was well done and provided useful information and insights. However, a key unstated issue was left untouched: that is the 800- or perhaps 8000-pound gorilla standing on the fringes of the energy world that was completely ignored – resource depletion.
The Energy Summit started with a briefing by a presenter from EIA on their current reference case – the one that foresees no shortages and cheap energy prices for the next 25 years. While the EIA does see current sources of oil depleting, they claim sufficient new supplies will be discovered and produced so that, when coupled with more efficient cars, oil prices will not reach $130 a barrel until 2035.
Anyone not familiar with the research, discussions, and controversies over imminent shortages of natural resources would come away with the impression that all is fine. According to the EIA, oil will not be a problem for at least the next 25 years; the US has 140 years of coal left; thanks to the hydraulic fracking of shale, we now have 100 years of natural gas; and to top it all, we have 25 percent of world’s uranium reserves.
For those of us following the peak oil story and who are also familiar with the possibility that readily producible supplies of coal, natural gas, and uranium may in reality be only a fraction of those cited by the NCSL study, something of overwhelming importance is missing. With world oil production on a plateau for the last five years and no obvious source of large quantities of new production in sight; with rapidly increasing oil consumption in Asia and domestic consumption growing within the oil exporting nations; and with increasing problems that may limit and inhibit deep water production, it is difficult to see how any serious study of future energy policy can avoid the probability, not just the possibility, of imminent energy shortages.
Expecting that the NCSL would take on and attempt to explicate an upheaval of the magnitude that will very likely be caused by resource depletion is simply asking too much. The NCSL is a political body made up of elected politicians who represent every stripe of America’s body politic today. They seek to compromise by recognizing that their members have been elected by and represent the entire spectrum of electable political thought in the US and that all must be accommodated. Strident climate change deniers have just as much right to their beliefs as strident environmentalists. The millions whose livings depend on mining coal, drilling offshore oil wells, or building gas-guzzlers are not going to melt away on a forecast, no matter how soundly based, of catastrophes such as runaway climate change or oil shortages ahead.
Did the NCSL task force, report, and policy summit say the right things? Of course! Maintaining adequate and affordable electricity supplies will be an important function of state government in coming years no matter what the pace of resource depletion or climate change. Is energy efficiency the quickest and most cost effective way to start protecting and enhancing our electricity supplies? Again the answer is a whole-hearted yes. To move beyond these simple and understandable issues detracts from what is a practical goal.
For the NCSL to sound the alarm about the imminence of economy-threatening oil price spikes without unambiguous evidence that is clear to everyone would set off a storm of controversy in advance of its time. Such controversy would detract from their well-meaning efforts to get important policies into place. Apparently they believe it is better to let peak oil come of its own accord, unannounced and in its own time – which will be soon enough.
Tom Whipple, in addition to editing this publication, recently attended the recent NCSL Legislative Summit in Louisville, KY in the company of his wife, a member of the Virginia State Senate.