Shifting Public Sentiment on U.S. Energy Policy

The results of the November U.S. elections have been interpreted thousands of ways by now, but one undeniable mood shift in the American public regarding energy and the environment is a retreat from unquestioning support of government programs and policy initiatives that collectively amount to a costly and disruptive national industrial policy for the energy sector.

This demographic is not a temporary mood but a structural feature of the American psyche that will determine the long term path of national energy policy.  However, while there has been a retreat from supporting large new tax and regulatory based energy and environmental programs such as “Cap-and-Trade”, it would be incorrect to presume that Congress is not still strongly committed to the development of a vibrant and domestic clean energy sector that is capable of decreasing imported energy, reducing carbon emissions and increasing “green collar” job growth. The Congress should and must pursue these goals. The electorate still wants cleaner and more secure sources of energy.  And today and going forward, the US can and will realize this  goal, but through the cultivation of a balanced energy portfolio that promotes renewable energy, clean coal technologies, energy efficiency, expanded inclusion of clean burning natural gas and nuclear through reliance on the private sector and public and private sector partnerships.

For those of us in the energy and environmental markets who are deeply committed to energy security and strong environmental protection, this change is a harbinger of good things to come because we know that programs which  are economically viable are sustainable.  And, we know too that programs that are regulatory driven have a shelf life consistent with the mood of Congress or an Administration.  The importance of energy security and environmental protection is too important for this and demands sustainability.

My company, Pace Global (an energy consulting and management company), evaluates the possible future courses of global energy markets by reference to the relative dominance of one of three primary energy policy objectives:

• Cheap and plentiful energy supplies,
• Reasonably secure energy supplies, and
• Environmentally benign energy production and consumption.

Cheap, secure and environmentally benign energy sources make a perfect combination that has proven difficult to wrap into coherent policy for one obvious reason:  that which is cheap and secure is typically not clean by today’s standards, that which is clean and secure may not be cheap, and so on.

In truth, homogenizing these three vectors into a coherent energy policy reflecting broad political consensus has proven challenging.  As shown in Figure One, U.S. energy policy in 1998 overemphasized “cheap and abundant” over security and environmental issues.  Ten years later, the emergent political consensus put great weight on carbon emission reductions as a primary goal of national energy policy.

Figure One:  Shifting Priorities in Energy Policy

By 2010, however, after two years of grinding recession and an alarming increase in the national debt, the American electorate in my view continues to stress the goal of reducing carbon emissions but seeks a solution that is not driven by regulatory mandate. Cognitive dissonance is a psychological term for holding two conflicting ideas simultaneously and its one way of describing the behavior of U.S. National Energy Policy—do we want it cheap, secure or clean.  Today, as we grapple with these seemingly conflicting goals, we are in a unique position that holds promise for a balanced solution in which cleaner domestic and secure gas coupled with vastly growing clean energy technology solutions hold promise for forging a partnership that will drive the development of a rational energy supply portfolio that is indeed secure, clean and economically efficient.

The U.N. Climate Change Conference recently held in Cancun, Mexico validated the sensibility of promoting climate change management within the context of economic prudence.  Attainable, more modular, near-term steps to reducing human contributions to climate change remain important and can and should be realized.

The U.S. and the world will continue pursuit of ever-cleaner energy technologies at ever-lower costs, but do so in a manner that is economic and sustainable, and in my view just as fast, because fast but not durable is not fast at all.  Energy supplies and environmental protections are too important for programs that give false illusions of progress.