The Failure of Energy Policy (Book Review and Discussion)

Nearly forty years after the first energy crisis, the United States is more dependent on foreign oil than ever: we now import 3.5 billion barrels of oil per year versus less than half a billion in 1970. This is the case despite grand pronouncements from a succession of presidents about our need for energy independence. Why? Michael Graetz summarized it succinctly at a recent Center for American Progress forum: “Solving energy problems requires long time horizons, but our politics are horribly short term.”

This captures it, although there are more details: a variety of interests have sabotaged our politics. An aversion to spending has limited our programs. Carbon taxes and cap and trade are anathema, leading to less efficient policies. We’ve never had to pay the true costs of energy, and indeed have subsidized inefficient and environmentally destructive production.

Our failure to enact rational energy policy is the subject of Graetz’s The End of Energy: The Unmaking of America's Environment, Security, and Independence (MIT Press, 2011), which tells the story of our failures in vivid detail. Opening with the energy crises of the 1970s, the book proceeds through oil, nuclear, coal, natural gas, and alternative energy. It explains how special interests have made energy legislation far more complex than necessary, as in the recent federal cap-and-trade bill, with its numerous goodies to placate various lobbies, which passed the House but failed in the Senate. (Graetz doesn’t say so, but it brings to mind the process for passing healthcare, in which satisfying numerous interests makes for an absurdly complicated bill of thousands of pages.) Graetz prefers the far simpler Cantwell-Collins bill, essentially a carbon tax with most of the money returned to the taxpayers, which got nowhere in the legislative process. The failures of the Obama period recapitulate those of Jimmy Carter (who did get a major, if insufficient, energy bill passed). With higher stakes, the more recent failure is grander, illustrating the disaster our political process has become.

Looked at in political terms, The End of Energy presents a coherent narrative of missed opportunities and increasing dysfunction. In terms of energy, however, the careful reader might notice some changes in the narrative, as our goals are contested and modified. The 1970s crises were largely due to shut-offs of oil from the Middle East. One means of fighting this, which we’ve successfully done, was to shut down oil-based electricity generation; however, this still leaves us dependent on faraway governments for transportation fuel. Carter also suggested creating synthetic fuel out of coal to power our automobiles. All of this makes perfect sense if the crisis is just about oil and its availability; coal is a cheap, abundant, domestic power source. In the 1970s, climate change was merely an esoteric theory, so why not move to coal (other than its rather horrendous local environmental effects)?

Graetz soon alters the story, however, with a discussion of the 1970s environmental movement. It quickly becomes apparent that the book’s author considers many environmentalists soft-headed utopians (although he avoids such rhetoric), whose visions of a locally based economy and opposition to every form of energy aside from local renewable are out of step with the modern world: “American environmentalism, after all, had always been about limits, having originated in isolated acts of resistance to unbridled growth.” Graetz decries the environmental movement’s faith in local solar and wind: “The goal to replace oil, coal, and nuclear power with solar power residence by residence and business by business is hopelessly utopian.” As a tale of our failure, however, The End of Energy does not discuss the potential large-scale renewable projects, such as giant solar thermal and geothermal plants connected to a rebuilt national smart grid, that might provide another model for solving our energy problems.

Graetz, however, is in total agreement with environmentalists regarding climate change, which he calls a “game changer.” Our energy policy now must be based on limiting greenhouse-gas emissions. So, for instance, he laments our failure to develop nuclear energy—a source long opposed by much of the environmental movement (with some important exceptions, such as Stewart Brand and George Monbiot). And it’s undeniable that, had we built more nuclear plants, we would have emitted fewer greenhouse gases. It would be interesting to see Graetz’s reaction to the Fukushima disaster, which apparently happened after the book was completed. The problem is that, while nuclear plants have extremely few accidents, not all circumstances can be anticipated—a meteor strike, a terrorist attack, a tsunami, for instance. In the extremely rare event that nuclear plants do fail, the results can be devastating.

As a proponent of large energy projects and centralized policy, Graetz presents a challenge to those who place their stock in small-scale energy and sustainable consumption. Local renewables do have the advantage of functioning during blackouts and put some power in the hands of individuals. However, they can never achieve the economies of scale of larger projects. Unlike some advocates of sustainable consumption, Graetz argues that economic growth and reduced energy use can occur simultaneously. For instance, “in the period following the 1973 oil embargo, using 10 percent less energy had no adverse effect on U.S. economic growth.” However, given the entry of the Chinese and Indian middle classes onto the world scene, and the need to drastically cut carbon emissions, it seems impossible to continue our current assumptions about growth. True, we need the large-scale renewable projects and the increased energy efficiency that Graetz calls for, but we also need local renewables and a drastic pruning of the more lavish aspects of our lifestyle. We need it all—more of less, more renewables, more local changes, more national and international action. In this sense, both Graetz and the environmentalists are right.