National Energy Policy Development Group: Continue the Status Quo

Just as the intended progress of the first Clinton Administration toward universal health care was terminated by reactions to plans developed behind closed doors, a similar fate befell similar efforts regarding energy policy by the first (G.W.) Bush Administration. The effort in question, the “National Energy Policy” Report of the National Energy Policy Development (NEPD) Group, was produced in May 2001. Under the Chairmanship of Vice President Dick Cheney, who personally signed the cover letter transmitting the report to the President, the NEPD Group consisted largely of cabinet and cabinet level officers: Secretary of State Colin Powell, Secretary of the Treasury Paul O'Neill, Secretary of the Interior Gale Norton, Secretary of Agriculture Ann Veneman, Secretary of Commerce Donald Evans, Secretary of Transportation Norman Mineta, Secretary of Energy Spencer Abraham, Federal Emergency Management Agency Joe Allbaugh, Environmental Protection Agency Administrator Christine Todd Whitman, and Director of the Office of Management and Budget Mitchell Daniels, also Presidential Assistants and Deputy Assistants Joshua Bolten, Lawrence Lindsey, and Ruben Barrales. The Executive Director was Andrew Lundquist, but the style of the report is such that the reader can hear the Vice President reading it aloud.

The report, whose full title is Reliable, Affordable, and Environmentally Sound Energy for America's Future, is divided into eight chapters: 1) “Taking Stock: Energy Challenges Facing the United States”; 2) “Striking Home: The Impacts of High Energy Prices on Families, Communities, and Businesses”; 3) “Protecting America's Environment: Sustaining the Nation's Health and Environment”; 4) “Using Energy Wisely: Increasing Energy Conservation and Efficiency”; 5) “Energy for a New Century: Increasing Domestic Energy Supplies”; 6) “Nature's Power: Increasing America's Use of Renewable and Alternative Energy”; 7) “America's Energy Infrastructure: A Comprehensive Delivery System”; 8) “Strengthening Global Alliances: Enhancing National Energy Security and International Relationships.”

The government is acknowledged to have the dual responsibility of providing energy and protecting the environment (p. 3-8), but the conflicting nature of these responsibilities is not recognized. Those responsibilities acknowledged, the text of the first three chapters of this report seems to be largely a catalog of what has happened in the past, with anecdotal examples of how energy provision and environmental protection have worked hand in hand. The only red flags waved regarding the current energy picture are blackouts in California (not known at the time to be due to Enron) and inadequacies in our energy infrastructure -- for distributing natural gas, for refining petroleum and distributing its products, and for generating electricity (attributed to lack of energy planning rather than the operation of free markets). Though achievements in energy efficiency are lauded, new goals for them are not set forth as a way to reduce fossil fuel use in the future. Rather, the need for 32% more energy by 2020 is cited, and along with it 1300 to 1900 new power plants, though 32% more than our present 2700 plants plus 200 (to replace retired plants) is only 1064.

The fourth chapter, however, makes some very positive and needed recommendations for “Using Energy [More] Wisely”: 1) Requiring Energy Guide labels on a wider variety of appliances and expanding the Energy Star program to a wider variety of appliances as well. 2) Providing additional incentives for Combined Heating and Power. 3) Improving the Corporate Average Fuel Economy (CAFE) standards, but “without negatively impacting the U.S. automotive industry.” 4) Adding incentives for hybrid and fuel cell vehicles. One wonders, in fact, why these recommendations aren't already being carried out.

The fifth chapter acknowledges that the U.S. is expected to be able to produce only two thirds of its anticipated energy demand in 2020. “That shortfall can be made up in only three ways,” the report says: “import more energy; improve energy efficiency even more than expected; and increase domestic energy supply. The challenge for our nation is to use technology to maintain and enhance the diversity of our supplies . . . while maintaining our commitment to environmental protection.” (p. 5-3) For oil and gas more imports are seen as the solution, but in other cases technology is clearly the key: technology to allow access to a greater underground area with a smaller amount of surface drilling (the case to allow oil extraction from the Arctic National Wildlife Refuge (ANWR)), “clean coal” technology to generate more electricity from coal without violating clean air standards, and advanced nuclear reactor technologies (in addition to increasing the capacity factors, uprating, and relicensing present nuclear reactors). All these technologies, however, are geared to increasing energy supply rather than energy efficiency.

Technology is also recognized as key to developing renewable and alternative energy sources, although the latter includes “alternative” uses of nonrenewable fuels like natural gas and liquid propane. While the virtue of these “alternative” fuels seems to be solely reduced reliance on imported oil, it is also recognized that the convenience of gasoline continues to favor continued oil dependence. However, much of the discussion continues in the vein of the first three chapters by focusing on what has or could be done rather than what should be done, and – except for one – the recommendations are largely administrative. That exception “directs” the Secretary of Energy “to develop next generation technology, including hydrogen and fusion” – seen variously as “alternative” and “future” energy sources. Moreover, the “research into alternative and renewable energy source” is to be funded by “an estimated $1.2 billion of bid bonuses from the environmentally responsible leasing of the ANWR” – another example of “revenue neutrality” like the recommendation in chapter two that energy education programs should be funded by the energy industry. Also discussed in the sixth chapter are the need to integrate renewable and alternative energy sources into our existing energy distribution system and the efficiencies that can be obtained by transforming energy sources into their desired forms at their point of use – what this report calls “distributed energy” and what Amory Lovins would call a “soft energy path.”

Our present dependence on fossil fuels depends not only on the fuels themselves but also on the infrastructure needed to transport, transmit, and transform them – oil and gas pipelines, oil tankers, coal trains, refineries, power plants, and transmission lines. The seventh chapter is devoted to whatever infrastructure improvements are needed to feed our growing appetite for fossil fuels – as if we were never going to run out of them – and to transmit greater amounts of electrical energy over greater distances in today's deregulated market – in spite of the greater efficiencies cited in the preceding chapter for “distributed energy” system. Chapter five notes the need for more oil and gas imports.

The last chapter acknowledges that even now “we are self-sufficient in virtually all our energy resources except oil, of which we import 52 percent of our net requirements, and natural gas, of which we import 15 to 16 percent of our net requirements. . . .” (p. 8-3) This statement sets the scene for the energy related part of our foreign policy. We should increase our present dependence on Canada, Saudi Arabia, Venezuela, and Mexico for over half our oil imports, and on Canada for most of our gas imports (because they can be delivered by pipeline), and seek other sources as well, principally Africa and nations bordering the Caspian Sea. Energy efficiency technologies are cited, primarily to be exported to developing countries, as measures to enhance the U.S. economy and to reduce demand for oil on the world market. Saddam Hussein’s Iraq is not listed on p. 8-5 as opening its “energy sectors to international investment,” yet it is listed on p. 8-4 as the sixth largest exporter of oil to the U.S. in 2000.

While paying lip service to environmental protection and more efficient use of energy, the NEPD Group's vision of “Reliable, Affordable, and Environmentally Sound Energy for America's Future” seems largely to be a continuation of the reliance on fossil fuels which have marked the convenience of our past -- doing whatever is needed to increase their supply both at home and abroad. There is, however, one recommendation that recognizes that this “business as usual” approach can not go on forever: “. . . that the President seek to increase international cooperation on finding alternatives to oil, especially for the transportation sector.” The more solid Republican Congressional majorities accompanying the second (G.W.) Bush Administration are now paving the way toward implementing the recommendations of the NEPD Group, particularly drilling in the Arctic National Wildlife Refuge. Also being implemented is the addition of mercury as a target pollutant from power plant emissions. The NEPD Group’s Report is available on-line at www.whitehouse.gov/energy/.