US Chamber of Commerce: More of the Same

by Joseph Tomain

January 27, 2014

Recently, the U.S. Chamber of Commerce released a report entitled Energy Works for US: Solutions for America’s Energy Future.  The data and references in the report are largely accurate, as far as they go, and the report promotes energy efficiency, which is a welcome step.  Ultimately, though, the report is unreliable because it has too narrow a vision of the energy future.  It inaccurately characterizes government regulation and neglects the environmental consequences surrounding the production, use, consumption, and disposal of our energy resources.  Instead, Energy Works is more of a political polemic rather than a useful white paper.  While it may well serve the Chamber’s political agenda, Energy Works for US fails to recognize the complexities and challenges necessary to fashion our energy future.

Our energy future is as important a policy matter as any that now confronts the United States. Any discussion of our energy future, therefore, must be conducted with openness and candor and must recognize the complexities and challenges of fashioning that future. Unfortunately, Energy Works fails on each these counts.  

Energy issues are more in the news today they have been since the crises of the mid-1970s. In the 1970s, the cause for concern was the ability of Middle East oil producers to wreak havoc on our general economy by controlling the flow of oil, which in turn, had the consequence of increasing oil prices and contributing to double-digit inflation.  Independence from foreign oil then became the major concern about our national economic and energy security.  

Today, concerns about Middle East oil are less severe than they were then. Global oil markets have been relatively stable and, as the Chamber extols, domestic oil and gas production has increased notably.  In the Chamber’s view, the more energy we produce and consume, then the healthier and more vibrant our economy will be.  This, however, it is a narrow and inaccurate view of national energy policy.

In addition to economic growth and health, today’s energy policy discussions involve environmental protection concerns and climate change as much as they do energy and national security. Energy Works for US ignores this reality and, instead, reverts to a narrow fossil fuel policy that is as unwise as it is outdated.  More problematically, however, Energy Works presents a distorted picture of a desirable and workable national energy policy and of the role of regulation in our energy future.

The report begins with the premise that optimism about domestic energy production must be tempered “by the realization that it has come about largely in spite of national policy rather than because of it.”[3] This parade of horribles is, quite frankly, nonsense. The federal government has not thrown up “roadblocks to domestic energy development;”[4] otherwise, how is it that domestic oil and gas production are on the rise?  While it is fair to discuss whether more public lands should be available for energy production, it is disingenuous to suggest that the government prevents that development altogether.  Nor, as Energy Works for US states, has government “forced existing sources to prematurely exit the system.”[5] If the reference is to coal-fired electricity, then look to natural gas as the culprit.  If the reference is to nuclear power plants, then look to plants that have reached the end of their useful lives as one cause and look to cheap natural gas and wind power as others.[6]

Often, what the Chamber does not say is as revealing, if not more so, than what it says.  Many of the issues about which the report is silent are resounding.  The most notable omissions in Energy Works for US are the phrases  “climate change,” “global warming,” “carbon emissions,” and “greenhouse gases.”  Today, no responsible conversation about our energy future can ignore the direct connections between energy and the environment.  Richard Muller, a physicist from Cal Berkeley, whose work was funded in part by the Koch Brothers, concludes his research with the observation that “[a]n excessive use of energy may be leading us into the greatest catastrophe in human history. . . .”[10] and the recent release of chemical into the Ohio River[11] occurred precisely because of lax oversight a condition known only too well by mine operators as the investigative reports cited demonstrate. 

Similarly, the report is proud to champion the virtues of increased oil and gas production from hydraulic fracturing yet remains completely silent about the water resources used in the drilling process and the threats to groundwater and aquifers that hydraulic fracturing may present.[14] Nuclear power received a range of subsidies including production tax credits, regulatory lag insurance, loan guarantees, and direct payments for research and development.  Indeed, the Southern Company that is constructing the Vogtle plant in Georgia has applied for $8.5 billion in loan guarantees and that request is under active consideration by the federal government.[15] Further, any responsible discussion of nuclear power must address the overall costs of nuclear power produced electricity including construction and operation costs as well as subsidies.[16]  

In an aligned argument, Energy Works for US criticizes the use of renewable portfolio standards as well as wind and solar subsidies because of their negative effects on nuclear power. The report states that these efforts “have distorted wholesale power markets;” make it “difficult for existing nuclear power plants to operate, [and] discourage[s] new plant construction;” and threaten to “force out nuclear power.”[18]  Additionally, Energy Works for US bemoans the morass of regulations but neglects to tell us that access to the bureaucracy, including the Obama White House, heavily tilts in favor of industry and limits participation by citizens and public interest groups.[19] And, finally, a completely legitimate claim made by the Chamber is that inconsistent regulations make planning and investment risk real and, therefore, costly. And yet it continues to harp on legislation such as the Reins Act and the Regulatory Accountability Act both of which would bring regulatory issues back to Congress, tie them up in cost-benefit analyses, and restrict judicial review.  Such proposed legislation subjects agency decisions to the biennial political process rather than have those congressionally-delegated problems address by expert agencies.  Consequently, to the extent that the Chamber wants reliability, subjecting regulations to the political whims of whichever party is in power at the time goes counter to sound planning for financial investment.

Finally, I mention one glaring inconsistency.  The Chamber has long opposed federal regulation and yet the report is replete for calls for special regulation for the projects it likes. In Chapter 5 alone, the report recommends no fewer than nine congressional or administrative actions to promote energy efficiency. These are laudable recommendations and throughout the report, the Chamber is not reluctant to promote regulations it prefers.    Any discussion of our energy future depends upon sound and reliable analyses and such analyses must be forthright in recognizing that government is not the enemy of national energy policy; it is, and has been, the chief architect.  By ignoring this reality, Energy Works for US does not advance that discussion.

Energy Works for US can be applauded for an overview of both fossil fuel and alternative resources. It can, however, be faulted for a partial and, at times, misleading analysis of the energy future.  Its promotion of a fossil fuel economy takes pride of place in the report.  As a consequence, the report neglects the most serious environmental challenges to a vibrant energy future and, its political rhetoric simply gets in the way of the report’s potential reliability and therefore, value.

 


[1] Institute for  21st Century Energy, Energy Works for US: Solutions for Securing America’s Future 3 (2013) (Energy Works) available at http://www.energyxxi.org/energy-works-for-us.

[2] Id.

[3] Id. at 4.

[4] Id. at 5.

[5] Id.

[6] Matthew L. Wald, New Energy Struggles On Its Way to Markets, N.Y. Times A11 (December 28, 2013) (“Energy companies announced this year that five nuclear reactors would be closing or not reopening, and the owners blamed competition from natural gas and wind.”).

[7] Richard A. Muller, Energy for Future Presidents 3 (2012).

[8]William Norhdaus, Climate Casino 3 (2013).

[9] Nicholas Stern, A Blueprint for a Safer Planet: How to manage Climate change and Create a New Era of Progress and Prosperity 7 (2009).

[10] Governor’s Independent Investigation Panel, Upper Big Branch: The April 5, 2010 Explosion: A Failure of Basic Coal Mine Safety Practices (May 2011) available at http://www.nttc.edu/ubb/; U.S. Department of Labor, Performance Coal Company, Upper Big Branch Mine-South, Massey Energy Company, Mine ID: 46-08436, Single Source Page available at http://www.msha.gov/PerformanceCoal/PerformanceCoal.asp.

[11] Trip Gabriel, Michael Wines, & Coral Davenport, Chemical Spill Muddies Picture Ina State Wary of Regulations, N.Y. Times 1 (January 19, 2014).

[12] See e.g. Thomas W. Merrill & David M. Schizer, The Sale Oil and Gas Revolution, Hydraulic Fracturing, Water Contamination: A Regulatory Strategy, 98 Minn. L. Rev. 145 (2013).

[13] See e.g. Kansas City Star, House Panel to Review Kansas Fracking Industry, Earthquakes (January 21, 2014) available at http://www.kansascity.com/2014/01/21/4765726/house-panel-to-review-kansas-fracking.html; State Impact, How Oil and Gas Disposal Wells Can Cause Earthquakes (January 2014) available at http://stateimpact.npr.org/texas/tag/earthquake/.

[14] Energy Policy  Act 2005, Pub. L. No. 109-58 (August 8, 2005).

[15] See e.g. Henry J. Pulizzi & Christine Buurma, Obama Unveils Loan Guarantee for Nuclear Plant, Wall St. J. (February 16, 2010) available at http://online.wsj.com/news/articles/SB10001424052748704804204575069301926799046; Platts, US DOE Extends Southern Company Nuke Loan Guarantee Deadline by One Month (December 31, 2013) available at http://www.platts.com/latest-news/electric-power/philadelphia/us-doe-extends-southern-company-nuke-loan-guarantee-21014263.

[16] Doug Kaplow, Nuclear Power: Still Not Viable Without Subsidies (2011) (a report for the Union of Concerned Scientists) available at http://www.ucsusa.org/nuclear_power/nuclear-power-and-our-energy-choices/nuclear-power-costs/nuclear-power-subsidies-report.html; see also Amory B. Lovins, The Economics of a US Civilian Nuclear Phase-Out, 69 Bulletin of the Atomic Scientists, (march 2013) available at http://www.thebulletin.org/2013/march/economics-us-civilian-nuclear-phase-out.

[17] Energy Works at 29.

[18] Sidney A. Shapiro, Ruth Ruttenberg & James Goodwin, Setting the Record Straight: The Crain and Crain Report on Regulatory Costs (February 2011) available at http://progressivereform.org/search-results.cfm?q=crain+and+crain.

[19] See e.g. Rena Steinzor, Michael Patoka & James Goodwin, Behind Closed Doors at the White House: How Politics Trumps Protection of Public health, Worker Safety and the Environment (November 2011) available at http://www.progressivereform.org/OIRASpecInterests.cfm

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