Stephens: The Illusion of an American Energy Policy


If you look up “policy” in the dictionary, you will get several options: “A policy is a deliberate system of principles to guide decisions and achieve rational outcomes.” And that’s where US energy policy comes off the rails. We are not achieving rational outcomes, and we do not have a deliberate system of principles. Energy policy has been distorted and twisted by too many special interests, and too many political agendas that have confused the conversation.

The biggest hurdle to achieving good outcomes is a complete lack of consensus on what US energy policy should be trying to achieve. There are so many players at the table with so many agendas that it is nearly impossible to reach a clear set of principles to guide policy decisions.

At the moment the conversation is dominated by completely irrational thinking, such as the idea that we can eliminate fossil fuels from our energy needs in the near future without significant costs to society both domestically, and internationally. The irrational belief that solar and wind will make this possible is a pipe dream, and the evidence is mounting to expose the immense scope of investments needed and the astronomical costs of getting to fully “sustainable” energy production. Not to mention the problem of what to do when the wind doesn’t blow and the sun doesn’t shine.

Another hurdle to reaching sound decisions and reasonable goals for a national energy policy is the rampant cronyism in the energy sector. This is especially true in the green energy sector. Scare tactics, perverse incentives, and outright deceptions make it all but impossible to develop a clear and responsible energy policy.

In the energy generation industry, the markets have been seriously distorted with incentives, tax credits and tariffs. The wind folks have been massively subsidized (at least until recently when the tax credits for wind expired), and this is evident in their refusal to discuss the actual cost of generating a kilowatt of electricity.

Whereas the carbon-based generation industry is subject to accounting for all costs, such as embodied energy, life-cycle costs, health impact costs, and environmental impacts…… the wind industry gets a pass on all these factors. Those blades are made with epoxy resin, which is made from oil. Those generators are made from steel, copper…. all materials that were mined, which is an environmental nightmare! Wind turbines kill thousands of birds, many of them protected species. Trees are cleared from the top of pristine mountain ranges to make way for towers. And we need to account for the massive land fills for those huge blades and generators when they are de-commissioned. (That’s right, they don’t last forever).

Solar has some of the same issues. They last fifteen to twenty-five years, and then must be recycled or landfilled. They are NOT compostable!
In the energy efficiency realm, there is also rampant distortion of markets. There is a growing realization that the broadly implemented weatherization programs are a very poor use of funding. The percentage of the funding for these programs that actually makes it in to and on to homes and results in energy reductions is marginal. The lion’s share of those “investments” go to the contractors, third party verifiers and program administrators. Most of those organizations have offices in Washington, DC, and for good reason. These programs were put on steroids with ARRA Bucks. The American Recovery and Reinvestment Act funded billions of dollars for these programs, and the amount of your tax dollars wasted would shock you. The ARRA Bucks are running out, and you can find millions of dollars worth of testing and energy auditing equipment that was literally given to contractors across the country being sold at fire sale prices today.

There is a better way forward. First, we can focus on long-term goals for a US energy policy agenda. Let’s start with making sure that we have stable, reliable and affordable energy for the long term. This will underpin a growing economy, and help to support both business development and job growth. Price shocks from short term market disruptions are not helpful in achieving these goals. Once this is established, we can focus on developing a sustainable, environmentally friendly, and diverse energy economy. The two objectives are not mutually exclusive, and they are both in the best interests of the country and the world.

At the moment, energy policy is a mess. We cannot afford to allow special interests to control the conversation anymore. America needs to articulate a clear, unified energy policy with rational, achievable goals. Only then can we eliminate cronyism and produce a market with efficient, affordable, and dependable energy.


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