The next US president will face weighty energy policy opportunities, risks, and challenges that will require more than a business-as-usual approach, speakers agreed at an Oct. 17 Center for a New American Strategy (CNAS) discussion. For example, Congress and the new administration could work in a bipartisan manner on ways to replace aging energy transportation systems that would produce environmental benefits, they suggested.
“A lot of ageing pipe needs to be replaced. One possibility is to have an accelerated depreciation program for segments above a certain age,” said David L. Goldwyn, who has extensive experience at the US Departments of Energy and State and presently chairs the Atlantic Council’s Energy Advisory Group.
“Second, permitting processes need to be more certain,” Goldwyn said. “We also need to depoliticize cross-border permits by moving that function from the State Department, which is not a regulatory agency, to the Federal Energy Regulatory Commission, which is.”
Another speaker warned that the next administration and Congress will have to address a resurgence of energy isolation on both sides of the political spectrum that has occurred in the past few years.
“Congress could start by reversing its decision to sell part of the Strategic Petroleum Reserve to help pay for other federal programs. That’s a poster child of bad decision-making,” said Robert McNally, a nonresident senior fellow at Columbia University’s Center on Global Energy Policy who previously was the National Security Council’s senior director for international energy.
“[The Organization of Petroleum Exporting Countries] won’t admit that it’s lost control of the world oil market,” he said. “Some people are betting we’re coming off $40/bbl oil prices and heading toward a longer norm of $70-80/bbl. But we’re making a mistake if we believe Middle East or African supplies don’t matter anymore, and we don’t need to protect crucial sea lanes.”
US energy policymakers also will need to live with more volatile crude-oil prices, which are an inevitable consequence of OPEC’s waning global market influence, he said. McNally said the next president also should prioritize and facilitate sensible energy strategies by forming a White House group to coordinate policies meaningfully.
Goldwyn said, “Most important, we need a constructive energy and environment conversation, beginning with the president. Persistent calls to keep resources in the ground won’t make this easy.”
The two spoke as CNAS released their most recent report, “Increasing Prosperity, Resource Stewardship & National Security: An Energy Policy for the Next President.” It called on the next generation of federal leaders to prioritize a sober approach to fundamental realities of the national energy system by:
• Integrating and increasing renewable energy sources and technologies into the national electricity grid.
• Recognizing that oil and gas will remain dominant fuel sources in the global economy.
• Finding the most beneficial ways to achieve economic, climatic, and security benefits from higher domestic energy production.
• Acknowledging that key oil producing regions—primarily the Middle East, Africa, and Russia—will remain a significant source of economic and energy concern for the US.
• Working to markedly improve railways, pipelines, ports, inland waterways, and other essential parts of the country’s energy transportation system, now vulnerable to critical threats.
• Continuing to address environmental and community concerns about the impacts of oil and gas development so that the industry can continue to make a considerable contribution to the economy.
• Recognizing that climate change cannot be ignored, and addressing it by focusing on research, development, and deployment of new energy technologies.
• Advancing a comprehensive view of energy security to encompass supply, trade, efficiency, transportation systems, technology development, resiliency, and emergency responses.
Other speakers said it would be a mistake to assume that energy policy gridlock is inevitable. “I think discussions like this need to be held every 7-10 days between now and the end of January. That’s how important this is,” said Elgie Holstein, a former DOE chief of staff who now is senior director for strategic planning at the Environmental Defense Fund.
Holstein said he expects environmental organizations to press for more commitments from the next administration to keep the developing world from making the same climate mistakes industrialized countries made as they grew economically. “Enormous changes can take place in the market when they are major technological changes that increase opportunity and reduce demand,” Holstein said. “We would argue that opportunities exist now to reduce carbon emissions and accelerate market change.”
But a fourth speaker said an intrinsic conflict exists between expectations of proposed policies and their actual results. “We’re essentially in a fuel fight, where different types are competition for parts of shrinking demand,” noted Kevin Book, managing director of ClearView Energy Partners LLC. “Policies which look easy today when demand is stagnant could be difficult when it revives. We should let the market lead us where it’s comfortable and occasionally use policies to nudge it in that direction.”
Goldwyn said, “One place where we could agree is replacing pipe within the city gate. This could have tremendous environmental benefits.” He said he expects further global unrest, and is concerned that the US Environmental Protection Agency could develop a more troublesome emissions control system if courts vacate the Obama administration’s Clean Power Plan.
McNally said the next administration should encourage China, India, and Chile to join the International Energy Agency. “We need to improve our global data so price volatility will be reduced,” he said.
Contact Nick Snow at [email protected].
