There's a great line often ascribed to Yogi Berra: "If you don't know where you are going, you might wind up someplace else." This perfectly describes U.S. energy policy -- and offers a way forward that would not only create lots of social benefits, but just might make energy policy something that matters to U.S. electoral politics.
To see why, try ranking those events in political history when politicians really got it right. Declaration of Independence? Emancipation Proclamation? Man on the moon? Pick whichever ones you'd like. Here's my prediction: those great moments were all framed around goals we sought to achieve, without prejudice to the path we took to get there.
Why does this matter to energy policy? Because we've never had an energy policy that got beyond a narrow focus on the path.
This is a big deal, for two reasons. One, we are massively inefficient in the way we allocate resources when it comes to energy. All that time spent picking winners is time not spent chasing a goal.
Two, we haven't framed energy policy in a way the populace understands -- and therefore, have never had an election decided on the basis of energy policy. Good politicians know this, which explains why our best politicians generally don't understand energy policy -- after all, it's hard to get elected, and time spent learning how our energy system works is time not spent getting elected.
(To anyone who argues that energy policy is simply too big and too complicated to become a significant electoral issue, I have two words: Iraq War. Shia, Sunni, oil, terror. Really complicated, lots of moving pieces, yet I've never met anyone who doesn't consider it an electoral issue. Or for that matter, have an opinion as to a better way forward.)
Once you start thinking through the goals vs. paths dichotomy, a lot of things start to make sense. Think again about those big political successes. "We will send a man to the moon by the end of the decade." "Go west, young man." "I have a dream." "With malice toward none and charity toward all."
Inspiring words. Now ask yourself how inspired you'd be if these had instead been framed in terms of next steps. Imagine Lincoln's second inaugural not as a goal, but rather as a detailed plan for Southern reconstruction. Or recast Kennedy's plans for lunar exploration in terms of the net benefits from public/private partnerships that would result from federal R&D in Titan rockets. Who would have listened, or cared? More importantly, who would have acted?
Yet that is exactly how we frame our energy policy. Not in terms of goals, but in terms of paths. Clean coal. Nuclear. Solar. Cogen. Yawn. Who cares? Who is motivated to act? Yes, a few wonks really dig this sh*t, but it's not much of a battle cry. So our energy policy becomes various flavors of pork with no internal coherence. We throw money at coal in the name of national security and money at Iraq in the name of terror. (Or as Jim Woolsey puts it, we fund both sides of the war on terror.) And Yogi Berra keeps smiling.
It's difficult to overstate how much we could accomplish as a nation if we had a leader who clearly articulated a goal-based strategy. Heck, look at how much Churchill got done by promising nothing more than blood, sweat, and tears. Certainly more than every U.S. president who promised energy independence en route to his meeting with the Saudi ambassador.
Therein lies the key. Our leaders need not only to articulate those goals, but to behave in a manner consistent with them. This cuts both ways. Yes, we shouldn't cheer politicians who claim to care about global warming but won't bind the country to reductions in same. But we also shouldn't cheer politicians who say that global warming must be addressed but won't allow nuclear plants to earn money from carbon savings.
So what should those goals be? Here's my list:
- Reduce our CO2 emissions per dollar of capital investment. We have to get CO2 reduced now ... not when our favorite technology becomes commercially viable. Get the low-hanging fruit now and stop preferentially pushing money.
- Minimize our delivered cost of energy. Energy costs include more than just getting stuff out of a well; they also include getting it shipped, converted, distributed, and used. We must stop subsidizing one part of that system at the expense of smart investments elsewhere. Don't force new fuel technologies to compete with petroleum without first forcing consumers to pay the full price of petroleum. Don't force local power technologies to compete against wholesale power prices as if the transmission and distribution system were free.
- Minimize fossil fuel use per unit of useful energy. Virtually every problem faced by our energy system is alleviated by using less fossil fuel, from national security to global warming. Drive that ratio down and all other problems get easier.
- Be pro-market, not pro-business. Markets work, but there is no natural constituency for economic efficiency. Politicians and the media too often confuse the pursuit of profits in a competitive market (which is a good thing) with the existence of profits in a specific business (which is just a thing). There is no inherent benefit brought about by a specific business or industry making money -- but there is a lot of good brought about by making sure that businesses chase efficiency and fight for every dollar they earn. The energy industry is far too insulated from this discipline, to our great detriment.
I leave it to others to figure out how to frame those goals in a way that can inspire the masses. I can guarantee that the politician (or political body) that framed the issue simply in terms of those four goals -- crafted policies accordingly, without picking winners, and then got out of the way -- would have a transformative effect on our environment and economy, and would be remembered by history as the Lincolns, Kings, and Jeffersons of their day.
Any takers? Please?
Comments
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Kristina & Jason Makansi Posted 4:59 am
03 Oct 2007
Anyway,we have articulated our vision in the book Lights Out. The plan has six dimensions:
1. Conceptual
- Shift emphasis and money into the right side of the value chain and away from the left side--in other words don't focus as much on reducing consumption, but on managing consumption
- update the grid
- give consumers the tools to see/feel/understand/act on their consumption habits
2. Technological
- LEFT SIDE
- use nuclear to meet demand and manage CO2
- limit coal to "intelligent" coal
- fund massive development program for storage
- continue to commercialize "renewables"
- limit LNG to strategic imports for distributed power networks
- RIGHT SIDE
- enhance effectiveness of microgrids and drive that process from a market/consumer perspective
3. Regulatory/political
- the backbone of the nation's electricity infrastructure should be federalized
- unleash the power of technology and competitive consumer choices (the power of the market) on the retail side
4. Financial
- financial engineering should NEVER displace systems engineering
5. Global
- secure all of the supply lines affecting our domestic electricity infrastructure
6. Social
- make electricity visible, understandale, and part of our everyday discourse
And then, there's the Personal -- see Think: Less!
Pearl Street::Jason and Kristina Makansi
Read Lights Out reviews
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David Roberts Posted 5:20 am
03 Oct 2007
grist.org
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Jon Rynn Posted 5:28 am
03 Oct 2007
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Kristina & Jason Makansi Posted 1:06 am
04 Oct 2007
(Oh, and thanks for the comment re: Lights Out!)
Pearl Street::Jason and Kristina Makansi
Read Lights Out reviews
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Kristina & Jason Makansi Posted 7:25 am
04 Oct 2007
Almost every industry is backstopped by the federal government in some way. The entire banking system depends on the Federal Reserve. The airline industry depends on the FAA. Transportation and agriculture, health care (through medicare and medi-caid, Blue Cross, Housing with the Federal Home Mortgage Association and Fannie Mae and Freddie Mac (now quasi-governmental). Natural gas transportation. By contrast, active participation in electricity is still left to the states. Interstate electricity transfers of electricity and inter-state utility holding companies (large utilities) are regulated at the federal level, require federal permits, etc, but stay out of any active day to day operations and management of the system. The one thing that came out of the Blackout of 2003 was that NERC (North American Electric Reliability Corp) was made responsible for "grid reliability." However, enforcement and reporting is still large voluntary, as NERC has no budget to provide active enforcement,and instead develops and promulgates standards based on industry consensus.
Pearl Street::Jason and Kristina Makansi
Read Lights Out reviews
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Jon Rynn Posted 7:31 am
04 Oct 2007
In France, one of the reasons the nuclear industry works (note: I'm generally anti-nuke) is because the government owns the whole industry and can impose standards and construction specifications on all its plants, and it owns the grid. There are advantages to Federal ownership -- you might conclude after weighting the advantages of Federal vs. private that private is still better, but Federal could be better, at least for the grid. And yeah, obviously Federal oversight of the grid is a necessity.
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Sean Casten Posted 11:18 pm
04 Oct 2007
This is a 100-year old regulatory problem, but is fixable for certain parts of the grid. Competition clearly works on the upstream generation side (although we have yet to show the appetite either for letting bankrupt generators fail: see PG&E or for providing the kind of anti-trust enforcement critical for a truly competitive market: see Enron. But we can do these, and ought to.) Certain elements of the transmission system are also amenable to competition, inasmuch as T can compete with G - although I accept your point that this needs to be accompanied by the usual gov't oversight of siting, etc. Most importantly, we have massive opportunities for competition at the end of the wire, where local generation can bypass wires, use renewables & other opportunity fuels and recover waste heat. Massive opportunities for higher efficiency and lower cost power there, which to date is largely blocked from market access.
This leaves the middle of the grid (distribution). In many cases, it is too customer-specific to really be competitive, but critical for a functional grid. This part of the grid is quite amenable to "federalization" as you put it (although one could make the case that the regulatory agency may be more likely at the state level). This is like the highway system though - we need to have it, people need to have access to it, and we need rules about how it is used. But we gain NOTHING from granting a profit to the monopoly operator. I particularly like some of the suggestions from the Galvin institute on this piece, who has suggested that we regulate the D system like a police force: make sure they get enough money to cover their costs, but don't give them the billing/metering function. If the police were responsible for paying their budget with speeding tickets, we'd see really goofy behavior. This is exactly what we see from distribution utilities, who are responsible for paying their costs with monthly bills. They've done a great job of running the grid, and a horrific job of driving up efficiency. This is fixable.
Interested to hear whether you think this is consistent with your idea.
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GreenEngineer Posted 5:32 am
05 Oct 2007
I would observe that federal policy is answerable to a much larger body of constituents, and is also a much more attractive target for lobbying by interested parties seeking a marketplace advantage through legislation. (While it costs more to lobby the feds than to lobby a state, it costs less to lobby the feds than to lobby all 50 states.)
As a consequence, federal regulation is often slower to change, and less responsive to the needs of individual constituents than to the demands of industry lobbyists.
If we could assume enlightened federal leadership, then the federalizing proposals would make perfect sense. However, given the demonstrated quality of that leadership vs. the leadership of the states, especially on climate issues, I think we might be better of working this problem at the state level. The other advantage of attacking the problem at the state level is that it provides an opportunity to try different things in different places, to figure out what works well and what doesn't.
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Sean Casten Posted 5:49 am
05 Oct 2007
For those sectors of the electric system that are amenable to competitive pressures, let's let the competitors in, get the monopoly protection out (but make sure to get the anti-trust dogs on the watch to avoid another Enron), and get out of the way. And if we find through that exercise that some sectors of the grid - like the distribution grid - are simply not amenable to competition, then let's get rid of the for-profit utility that is putting a tax on our electricity, since that tax doesn't add any value.
This transformation is a federalization (or state-ization) only in the legal sense that those businesses now have shareholders and are publicly traded, so there is a pretty significant regulatory/financial transaction that would have to accompany this change. But operationally, it's simply the removal of an inefficient tax (and more importantly, the removal of shareholders who's interests are in direct conflict with utility customers). It is really simply a conversion from investor-owned utilities to coops... but only for that rather small portion of the system that cannot benefit from competition.
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GreenEngineer Posted 6:21 am
05 Oct 2007
However, I think there's a very real difference between an organization that is owned/controlled by a city government, vs. a state government, vs. the federal government, for the reasons I outlined above. As a general rule, I think public services should be provided by the smallest/most-local level of government that is able to do so effectively. Scale is absolutely critical.
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