This has been originally written for dKos, but I expect it could interest you guys here as well. Jerome
There have been various diaries outlining plans for the Democrats to recapture power (the most recent and remarkable one being georgia10’s recent effort this week-end). All these plans focus, rightly, on the Dems being the party of responsibility and competence, there hardly ever is even a mention of energy policy.
I frankly don’t understand this.This is a vital topic, at the heart of many of the failures of the Bush administration, and which will remain in the headlines all the time in the coming months and years (if only via higher gasoline, heating oil and electricity prices).
This is a subject that begs to be reclaimed by the Democrats, and is an easiy way to show what separates us from the bushistas. Remember that the current White House is chock full of people coming from the energy business, and I think that today’s crises have something to do with that.
Let me write again why energy is fundamental, what the issues are, and what needs to be done. I thank all those that have provided some input in my thread yesterday and I will try to credit all of your good ideas below as appropriate.
Cheap energy defines our civilisation
Energy supply, and energy prices have a direct impact on most aspects of how the US economy runs, and of US diplomacy:
- cheap oil has allowed the whole US civilisation to be built around the car. Suburbs, McMansions, exurbs have been made possible by the ubiquity of roads and cars, and make sense ONLY with cheap individual transport available;
- the car industry, despite the emergence of new industries and technologies, is still the biggest engine of economic growth, occupying millions of workers and shaping the needs – and prosperity – of whole sectors (metallurgy, electronics, textile, road construction, hospitals, police, all the services for each), and of course the oil industry that feeds it;
- globalisation has been made possible because it is so cheap to transport goods around (by truck or boat, mostly) and to specialise factories for specific tasks in production chains that span the world and take advantage of local resources (whether commodities, cheap or conversely specialised labor or access to markets);
- US diplomacy nowadays is mostly concerned with pushing that globalisation that US corporates lead, and with protecting the supply of the energy that underpins it. Look at the countries in the news – they pretty much all have to do with energy. The Middle East obviously, China, as the biggest global factory and the second largest consumer of oil, Venezuela. Canada – all you hear about Canada is when there is a trade dispute;
- A final point to note in that diagnosis (as pointed out by Devilstower) is that the US energy system is really two totally separate systems: a transportation system, mostly based on oil, and an electricity network powered, in that order, by coal, natural gas and nuclear. Electricity can be produced by many different sources, and needs to play a bigger role in transport; instead, we are currently busy bringing the oil world (and problems) into the grid through a massive increase in gas-fired generation capacity).
Crunch time is coming
The timetable for peak oil is a small number of years. The timetable for peak gas, which will trigger similar spikes in electricity prices until we have found a way to produce more than a smallish fraction of it from renewables, is not much longer. In fact, I would not be surprised if the inevitable energy crisis will come from the natural gas/electricity side before, or jointly with, the oil side.. (I explain why in my first comment in the thread below as it requires too much detail this summary, but it does need to be explained – so see below for further details).
Instead of bringing the network into out transportation policy, we have brought peak oil (in the form of “peak gas”) into the electricity sector. Power prices will be set by the high natural gas prices (see why in my comment below). So the market will balance by having demand pay the higher price, or going down significantly to get to lower prices. Thus, demand destruction. It will happen. “Markets” (i.e. physical reality, here) will prevail: the poor will go without heat and without electricity, while others will see their budgets stretched. This is the INEVITABLE outcome of today’s trends, and it could come as soon as this winter on both the power side (with a pretty strong probability) and the oil side (with a more uncertain chance – but as you know, I am betting on it).
One aspect of the need for a comprehensive energy policy is the awareness that we are going towards a wall at high speed. If you do not believe this, and think that “we’ll find ways”, I suppose that all that I will write below makes little sense to you, and may appear unduly catastrophist and counter-productive. But even the NYT does not really subscribe to this view anymore:
I wish I had the confidence to make my own forecast, but in this case, I don’t. What I do know – what we all know – is that oil is a finite resource. Surely, the peakists are right about that. What I also know is historically, the economists have generally been right about how the price of oil has wound up fixing the problem.
As Gary N. Ross, the chief executive of the PIRA Energy Group, puts it: “Price is the only thing that matters. The new threshold of price will do its magic on the supply-and-demand side.”
After all, it always has before. And it will again. Until it doesn’t.
My suggestion is that Democrats must bring this message forcefully. And what a better opportunity than the time when all energy prices are at record highs and a Republican administration drawn heavily from the ranks of the “business as usual” energy sector is in full control?
Of course, it’s not just the Bush administration, but half a century of policies to which the Dems have contributed a lot. But when will there ever be a better occasion to break ranks with the status quo?
Cheap energy is largely an illusion
The fundamental problem is that oil (and natural gas, thus power, is the same) is cheap only because we have decided that we would only consider as its cost the actual cost of digging it out of the ground, plus whatever the locals forced us to add as taxes or royalties. Other costs were not considered:
- the pollution generated when we burn it, and the corresponding healthcare costs, and the harder to quantify impact on the delicate ecosystems around us;
- the even harder to quantify cost of using up a non renewable source. The planet has provided us with this treasure, a highly concentrated and convenient form of stored chemical energy, and we’ve burnt almost half of it (and the easier to find half) to run around, without making any significant effort to find substitutes for the future; How will we keep on functioning when that amazing resource becomes harder to find, scarcer – and a lot more expensive?
- the newer threat of global warming, and its unpredictable consequences on our weather and our ability for us to tolerate it (and Katrina shows that we seems to be poorly prepared even for predictable phenomena). The likelihood that our crops and our environment will adapt to the coming changes is unknown;
- the transformation of our agriculture into a petroleum-based industry, where crops matter less and less and where food is but a by-product of subsidies on top of strange industrial processes (involving millions of animals “living” in horrible conditions) whereby oil-calories are transformed (very inefficiently) into edible products. The additional side effects on our health (obesity, pollution by pesticides and the like) and our landscapes (the wholesale destruction of arable land, whether by filling it with petroleum-based products or by building on it more buildings, roads and other artefacts of our oil-fuelled civilisation) are shamefully ignored by most.
Energy is not cheap, because we are already paying a very high indirect price. Some of it can be expressed indirectly in monetary terms (good chunks of the healthcare system, the military), but a lot of it cannot be “monetised” – or only when it is too late (all the oil that we waste now and which would be incredibly valuable in post- peak prices). But essentially, we are enjoying our cheap “high” now, and leaving the consequences to our children or their children. As individuals, that may barely make sense, but as a society, it is incredibly short sighted.
The worst part of it is that we have built a world which can function ONLY with cheap oil. Who would live 50 miles form work when oil is scarce and expensive and public transport is inexistent? Who would drive 4 tone vehicles around to go to school, or grocery shopping or visit friends? Would we rely on fertiliser and pesticides to artificially boost crop yields? Would we get our food only from the nearest non-built land 30 miles away – or from even further away? Would we rely on components coming from many different places, sometimes oceans away, to manufacture the goods we need?
And yet this is the world we live in, and will have to keep on living in even when energy gets more expensive, because you cannot undo in a few years the result of 50 years of distorted incentives on our infrastructrure and living habits.
Why leadership, and a public policy is needed
Cheaper energy is not the solution to today’s energy “crisis”, it is its cause.
That’s the first part of the message that needs to get out. Energy is not cheap, simply we pay for it today in indirect – but very real – ways. Making these costs visible is not putting a new burden on us, it is making visible an existing burden in order to better react to it.
We do not have a lot of time to make that clear to everybody. Oh sure, market mechanisms will function. When oil becomes scarce, it will get expensive, and we will accordingly, reducing our consumption and finding alternatives. That’ll work, but the consumption “reduction” will come from death or abject poverty – and it’s the weakest members of society that will bear the brunt.
You can expect less disruption and pain if you have to find an alternative to 500$ oil in 5 years than if you have to find an alternative to 500$ oil right now. 500$ oil will come, and it should be the role of government to anticipate it and make the transition as easy as possible.
The timetable for peak oil and peak gas is a small number of years. Again, this is the INEVITABLE outcome of today’s trends.
When that crisis comes, the Democrats need to be ready with the arguments to blame the Bush administration and with serious alternative solutions. Otherwise, the outcome is likely to be, in the worst case, another “war of choice” by America against the “profiteering” from nearby shores like Venezuela or further ones like Iran or, in the best case, calls to relax environmental “shackles” against coal mining and coal-fired plants and against drilling in various places within the US.
Price signals do work, and market mechanisms do work, so you have to give the markets the right signals – steadily and predictably increasing energy prices (via, yes, taxes or other regulatory constraints). That will give everybody the incentives needed to reduce demand and find alternatives, and it will provide government with the necessary resources to encourage R&D and to make the transition easier on the weakest members of society.
So, finally, some proposals
The goals must be as follows:
- we must focus on demand reduction. any energy policy focusing only on providing new supplies (even of the renewable kind) will only lead to protecting the status quo;
- we must focus on diversity: there is no single miracle solution. We need all options and partial solutions to be used, both on the supply and the demand side of the equation. Diversity means also fewer risks of disruption and fits in the narrative of energy security;
- indeed, an energy policy is an essential part of a security policy; security from want and security from abject entanglements in unpleasant areas of the world;
- finally, a smart energy policy is an investment in the future, for a cleaner world, a safer world where our children work in local, high tech, jobs in a preserved environment.
With that in mind, here are some more concrete proposals:
- conservation must become the new mantra and must be encouraged and incentivised. This will come from regulation (tougher CAFE standards, new building codes making it compulsory to use energy saving techniques in construction) and from targeted tax policies (subsidise local power production with solar panels and the like, tax gas guzzlers). Meteor Blades has long written about this and I explicitly put it as the first point here. Conservation saves money.
- environmental rules should not be relaxed, quite the opposite, they should be tightened. Weak environmental rules and lack of planning for the future is what is killing us (link it to Katrina, it’s easy enough and true enough). Carbon emission quotas should be set – this will make the coal industry (which would otherwise make a killing form the higher prices) really improve its lot or pay for the renewable investments. Ideally, the USA should join the Kyoto Treaty and push to make it tougher. This could bring Wall Street on board as the markets for carbon are now mostly based in Europe. This would be a chance to bring them back (partly) to the US, thus creating more job opportunities in a high paying sector. Another argument here is “Drill America last” whereby environmental considerations should be reinforced by long term security considerations. (as proposed by TomB);
- a massive public investment programme in renewable energy – starting with wind, which is already cheaper than gas-fired power, but focusing also on R&D for future sources like solar or tidal. Governments should either build or tender large scale wind power plants, or guarantee income for projects meeting certain guidelines. In all likelihood, long term power purchase agreements at reasonable guaranteed prices (say 6 cents/kWh would be enough, and would actually allow the government to make money on the power markets which could be used to finance the investments in less mature technologies. I am much less keen on biofuels (the ag sector is already distorted by too many subsidies), but on a reasonable scale it should be part of the mix. But encourage research, provide grants to universities, stipends to students coming into the sector. Reestablish America’s technological and industrial leadership in a vital sector.
- Give targeted encouragements (subsidies, tax breaks, or more innocuous funding for R&D or guaranteed purchases of their output) to manufacturers in the renewable energy sector. This should be justified by two simple arguments: security (energy independence) and jobs (renewable create more jobs per kWh than other energy sources):
- The government should show the example and commit to lower its own energy consumption in measurable ways. It should also switch its complete vehicle fleet to plug in vehicles. Make it a highly public competitive bid with a deadline that makes it possible for Detroit to compete – and win.
- the poor will suffer the most from the higher energy prices. They must be helped. That means tax breaks for cheap and fuel efficient cars, and a real effort to provide public transportation to them. A massive investment programme in light rail transportation – together will an equally massive plan to rehabilitate run down city centers (but keeping them accessible to low income people by helping them gain access to decent housing). Otherwise, other programmes supporting the weaker members of society should be reinforced – and made part of the energy plan.
- Getting transportation on the grid should be a general theme. Light rail is ideal in that respect, but individual transport should move that way, via the encouragement (if necessary by regulatory fiat) to switch to plug-in hybrids (another Devilstower suggestion). Similarly, telecommuting should be encouraged and facilitated explicitly (a suggestion by George);
- throughout, the message should be that energy policy is vital and cannot be let in the hands only of the energy lobby led by Cheney & co. They are enjoying the windfall profits; they have not planned for the future, they are the cause for today’s situation, and only a real break from the past, making them pay, can have a chance of success.
- ideally, the plan should come as a steadily increasing gasoline tax, but I know that this is a politically sensitive topic. As part of a “Marshall Plan” for energy, including real help for the most affected, and asking all to sacrifice for a better future, it might be sold. Remember the argument: prices will increase – better have the money go the federal (or local) governments than to Halliburton or to the Saudis. The likely degradation of the federal budget deficit following Katrina and then the inevitable economic slowdown will make tax hikes appear more reasonable and necessary. As red clay dem posted, the “grander” the plan, the more chances it has to work and to be taken seriously.
This fits with the theme that Democrats propose RESPONSIBLE policies, and that they care for all Americans, and for the future, not just for a select few today.. The political conditions for such a message, with a discredited administration internally and externally, the coming price hikes, and the likelihood of economic and financial difficulties for many, could not be better. Fate favors the bold – and the prepared.
Further credits to mateosf, Catriana, Knut Wicksell, LondonYank, moonfall, Doolittle Sothere, ignorant bystander, and to all the regulat contributors to my energy threads who have provided materials and ideas which I have tried to absorb and bring out. If you feel forgotten, please tell me and I will correct it. This is not the work of one person, and we should certainly work together to make something ambitious out of it.
Great work Jerome. You amaze me. WE must become responsible citizens of this planet and conserve in any way we can.
It will be “interesting” to see how the parties on the left respond to your proposal. Until now, at least, they are no better–and possibly worse–than the right on this issue. With one exception, the Green Party.
The Democratic party in the U.S., on their official web site, calls for lower fuel prices as an essential part of the strategy FOR THE ENVIRONMENT. That is, the party is going in entirely in the opposite direction you propose!
http://www.dnc.org/a/national/clean_environment/
In France, the latest news on this front is that major suppliers BP and Total have been pressured by Finance Minister Thierry Breton to reduce fuel prices in order to avoid a proposed tax penalty based on the windfall profits theory–NOT on a basis of encouraging conservation.
In Britain, Chancellor Gordon Brown blames the high price of fuel on OPEC, saying that they simply need to increase production. Meanwhile, Liberal Democrat shadow chancellor Vince Cable said that “The government has done the one thing it can do to deal with the short term effects of Hurricane Katrina on petrol prices, which is to release stocks from the strategic reserves.”
Poland has just cut fuel taxes.
What organized political parties support the proposal for a “serious energy policy?” I suspect only one: The Green Party.
http://www.greenparty.org.uk/news/1448
I checked out your link to the DNC webpage, and my take on it is that the call for lower energy prices is more of a populist effort to tap into widespread anger over profiteering by the energy industry (which they tie to the Bush administration), rather than a call to “screw tomorrow, let the good times roll,” as you get from the Republican energy package.
Having said that, however, I find the Democratic failure to use the total lack of a responsible energy policy, environmental exploitation for the profits of megacorporations, and environmental health issues – all good populist cannon fodder – as major issues to be mystifying. It’s as if energy and the environment as issues are toxic due to their association with Al Gore’s failed campaign or something.
Personally, I’m really getting over it. Come 2006 we better see energy and the environment moving up the priority list of issues for the Democrats (Hint: Hey, DNC, go talk to a scientist about the link between global warming and increased hurricane ferocity), or I will be changing my pseudonym to “GreenInKnoxville.” I’m getting really close to my tipping point…
…it weren’t true that too many modern Americans fail to have the stomach for sacrifice, and conservation has been framed by the right and the energy industry as something that will lower their energy standards, which, of course, makes proposing conservation without some fancy marketing footwork the kiss of death.
Whatever you call it, however, conservation makes sense, not just environmentally, but economically. The cheapest energy there is comes from the kind you don’t have to produce. THAT is a message we need to get across, whether you call it efficiency or something else.
The second thing Ronald Reagan did in energy policy – after ordering the solar panels taken off the White House roof – in 1981, was eviscerate the budget at the Solar Energy Research Institute (now the National Renewable Energy Laboratory). The biggest cut – and the one which took away my job – was made on the “soft” side of the institute, which included programs directed toward using existing technology so that people could save energy or produce it themselves.
One of these was the federal SUN program, four regional outreach centers around the nation that provided information to homeowners, renters and small businesses regarding how they could better conserve energy.
These days, many states – though definitely not all – have fairly extensive energy departments that could (or already) provide consumer assistance in obtaining green energy, administering subsidies (for installing solar panels and the like) and teaching people a whole range of techniques in how best to conserve energy.
A solid federal energy program should rejuvenate the SUN program – working together with state energy departments to build on what they have learned – to establish active consumer-oriented outreach programs. Thus, whether you live in Fargo, N.D, Atlanta or San Diego, you’d have a local resource that could assist you in determining how best to reduce the amount of energy you consume, whether that’s putting PVs on your roof, choosing an energy-stingy air conditioner or siting a new house to take best advantage of natural conditions that enhance conservation.
well, 3 comments and 10 recommends, so I suppose there is some acknowledgement of the seriousness of the issue (and of the dryness of the diary)…
Thanks for crossposting your comment all around! Local initiatives seem like a smart way to go round the inertia of Washington on this topic.
The other option is the dkos thread which devolved into a my bullet has higher grade silver than yours.
I hate to say it, but I am convinced that we need to overhaul campaign finance for these types of proposals to move prior to massive economic shocks.
There are too many entrenched interests on both sides with their toungue in the ears of the powers that be.
Think global, act local may be able to work around the fringes, but I don’t see the concept really making a dent.
Cheers, great work!
Think global, act local may be able to work around the fringes, but I don’t see the concept really making a dent.
Ooooh, you’re whacking a sacred cow with a stick, my friend! You might want to expand on that thought in a diary, as some around here might see those as fighting words without some additional explanation.
As far as energy use and energy policy goes, I’m afraid the concept of individual local actions, even statewide actions are ineffective on a national scale. Not to say they aren’t good on a local level, but they will do very little to combat rising consumption and reduced supply on a national scale. This will in turn affect prices at the local level creating the impression the policy failed. Another good program bites the dust.
“Fringes” was probably a word to be avoided, I’ll grant that. “Think Global, Act Local” has always been my motivation, yet I don’t believe it can affect the changes jerome suggests.
Without strong central leadership, a National Movement, any significant change in energy policy before it smacks us even harder upside the head is doomed to obscurity. Most, if not all, of the good programs started during the last oil shocks disappeared. Not because of technical merit, but because the political impetus to follow through evaporated as oil prices fell.
In the current political and media environment, I believe massive structural changes need to be in place before any effective energy policy can be implemented.
Get the entrenched interests out of the ears of the pols, let them listen to their constituents and make the right policy decisions.
Meteor, what’s your take on the situation in California with the solar energy legislation that’s become a political football between Ahnuld and the legislature? Where do we go next now that it appears to be dead for this session?
…an ass. He’s screwed himself with so many unions that if he runs again, he’s just about guaranteed to lose.
What I’d like to see is for California – the world’s 5th, 6th or 7th largest economy, depending on whose stats you believe – adopt a plan like Denmark’s. And I plan to blog on that soon. This would make for a good state example in contrast to the federal example. Obviously, we NEED a good federal plan, and Jerome has done excellent work in moving us toward one – better than any of the mostly boilerplate green plans out there, and I include Apollo Alliance’s in this assessment, although theirs is a good one.
But, of course, we need a Democratic governor to push through such a plan.
I am sorry to say– I have been ranting about this since 1976 and let me say also that my elderly depression era parents and relatives would not give me the time of day on this issue.
They were happy to be warm.
This will not ‘come home’ to people until they are cold and standing in line at the gas station.
Which appears to be happening sooner than later.
Americans need to be kicked in the face ,or the nuts,or even more realistically, the wallet,before they wake up. And then ,there is going to be riots in the streets.
Much worse than 1976.
I can come off as all self-righteous and all- but the fact is-I SAW THIS COMING long ago– it doesn’t take a rocket scientist or even a Jerome a Paris (valuable as he is)to tell us we are on the downslope.
We left CA because I saw there was going to be a water crisis, we now are almost self-sufficient. This is not paranoia,this is reality.
Oh come on shycat, you should at least grab the opportunity to have the satisfaction of saying, “I told you SO!” (For my little effort see here.)
Since 1980, when Jimmy Carter was defeated by Reagan, the country seems to have been on an ever increasing orgy of energy gluttony. Democrat Carter was unsuccessful in getting the country to bite the energy bullet. We have spent the last 25 years trying to prove him wrong; but the harder we try, the righter he becomes.
How are the Democrats going to be able to sell conservation to the most selfish country on the planet without committing political suicide?
Will the price increases change the public mindset?
I agree with Jerome and many others here, but am confused about how to do this in a way that is politically successful.
I certainly agree with you on this nation’s course since Carter. The only Democratic president since then, Clinton, didn’t manage to force the issue. We on our side of the aisle blame Republican opposition, especially after the congress went (R), as forestalling any effort, but I didn’t see Clinton taking leadership on this issue the way I had hoped, the way he did on fiscal responsibility or welfare reform, for example. Face it, this kind of “nerdy” issue didn’t resonate with Bill’s personality – that’s why he needed Gore (He gets credit for recognizing that in himself).
In 2000, we may have had our last chance, with Gore’s campaign. Now, energy efficiency is tarred with the losses of both Carter and Gore, and it seems that the “mainstream democrats” that manage to obtain the nomination won’t propose the kinds of radical changes needed. Just like the loss of Mondale has them petrified of mentioning tax increases.
“How are the Democrats going to be able to sell conservation to the most selfish country on the planet without committing political suicide?”
They may not be able to do so. They may think it’s suicidal to do so. Either way the effect is the same, and I’ll be pleasantly surprised if a Democratic candidate takes this bull by the horns. There is still a chance if a candidate manages to explain to the American people how a plan for energy conservation and new energy sources is in their self-interest (for the American people today are nothing if not in tune with their self-interest), but the hour grows late and I do not see candidates stepping to the plate on this issue.
This is the way empires collapse, folks. There is a fundamental problem with the way business-as-usual is being conducted, and no one will or can address it, until it is a crisis. Then, if they manage to grapple successfully with the problem, they go on a while longer until the next crisis hits. As more often happens, they fail to successfully address the problem, and go the way of the Soviet Union.
Beliefs on the right to the contrary, we do not have a divine mandate that protects us from our own folly; the rules of physics and economics apply equally to all.
It can happen here, and we are well on the way down that road.
We had an off-ramp in the 1980 election, and another in the 2000 election. The American people took neither. If we have to wait another 20 years for the next off-ramp the odds are excellent it will be too late for America; we’ll be out of gas by the side of the road, thumb out for a lift, as Europe and others pass us by.
And this is just one of the crises we face: add in a budget out of control, festering racial problems, problems with the educational system resulting in a populace less able to deal with any of our problems, growing economic stratification, environmental degradation, and the question becomes “Will all the wheels stay on the car long enough for it to run out of gas first?”
The situation is a lot worse than you say. The traditional Democratic coalition includes liberals, minorities, and union workers. Of these three groups, only the first is a “natural” constituency for higher fuel prices in the name of conservation.
That, in a nutshell, is why the current Democratic platform is the way it is. To raise fuel prices (either by increasing taxes, by not pressuring OPEC, or whatever) is painful for minorities who strongly tend to be in lower financial strata, and is also painful for union workers whose living depends on the automotive, transportation, or extractive industries.
I strongly suspect that the Republicans will take the lead on this entire part of the political discussion, based on the “we can’t screw up God’s creation” argument as has already been made in conservative evangelical quarters.