Two hazards of energy policy-making fell victim to common sense last week in the US Senate. A plan to toughen corporate average fuel economy (CAFE) standards for US vehicles stalled. And an effort to double a proposed mandate for renewable energy in utility power generation failed.
These are body blows to a doctrine strongly opposed to growth of conventional energy supply. The doctrine asserts that suppressed consumption and increased supply from renewable sources can seriously reduce the need for fossil energy and nuclear power. It argues, for example, that the magic combination of conservation and renewable energy precludes the need for oil and gas leasing of areas now off-limits, such as the Arctic National Wildlife Refuge coastal plain. Indeed, when the Bush administration proposed an energy plan emphasizing supply and supporting ANWR leasing, opponents objected on grounds that the proposal included not enough conservation and not enough renewable energy.
Growing factors
Conservation and renewable energy are, in fact, important parts of any energy plan. They're legitimate and growing factors of the energy market. There's nothing wrong with encouraging the growth. But contributions to the energy balance from conservation and renewable sources are proportionally tiny and destined to stay that way. The only ways to significantly expand their shares of the mix are to heavily subsidize renewables and punish consumption of cheaper conventional fuels. The costs of doing so would be huge, the benefits negligible. So why incur the costs?
Apparently, senators in significant numbers are placing the conservation-renewables doctrine in useful perspective.
The failed CAFE initiative would have increased by 50% the fuel-efficiency standards for cars, sport utility vehicles (SUVs), and minivans. Sens. John F. Kerry (D-Mass.) and John McCain (R-Ariz.) planned to offer it as an amendment to the Senate energy bill. They gave up when the Senate passed by a vote of 62-38 a rival amendment calling on the Department of Transportation to study the CAFE issue without ignoring safety and economic effects. Sens. Carl M. Levin (D-Mich.) and Christopher S. Bond (R-Mo.) sponsored the more sensible measure.
Since the introduction of CAFE standards in 1975, the fuel-consumption efficiency of automobiles has greatly improved. Some improvement would have occurred naturally in response to increases in fuel prices and taxes. But the CAFE standards certainly helped.
They also stimulated markets for SUVs and minivans. Congress set stricter fuel-economy standards for passenger vehicles than for light trucks—now 27.5 mpg vs. 20.7 mpg. To meet the tougher standard for passenger vehicles, US automakers made cars smaller. To satisfy demand for larger vehicles, they created SUVs and minivans as light-truck subcategories.
The Kerry-McCain initiative ran into trouble when automakers warned that those popular models would shrink as cars have done to meet the new standards. Supporters of the plan complained that the auto lobby killed it. That's partly true. More important is what persistent demand for large vehicles says about popular will, which 62 senators wisely chose not to ignore.
Common sense triumphed only partially in the failed mandate for utility use of renewable energy. Sen. James Jeffords (I-Vt.) proposed that 20% of electricity from utilities come from renewable energy other than hydropower by 2020. Senators rejected the measure 70-29. They recognized that increasing the renewable share of the power-generation market more than tenfold in 20 years would have been too ambitious and expensive.
But trouble survived the Jeffords folly. A 10% mandate for renewable energy in power generation remained in the Senate energy bill. The problem isn't the target share, although 10% is still too ambitious; it's the misguided approach. Mandating sales of energy more expensive than what it's supposed to replace is economically perverse. And enforcing the strategy through energy providers, turning them into the economic equivalent of tax collectors, is unfair. An effort was under way last week to scuttle the 10% mandate.
False dichotomy
That senators saw flaws in these initiatives is encouraging. Even more encouraging would be dismantling of the false dichotomy that distorts debate over energy policy: conservation and renewable sources on one side opposed to conventional supply on the other.
Dimensions of an energy market destined to grow should not, as a matter of policy, displace one another. US prosperity demands maximum, economically reasonable contributions from them all.
