A Report from the Bureaucracy
January 24th, 2007Posted by: Roger Pielke, Jr.
A report titled “Key Challenges Remain for Developing and Deploying Advanced Energy Technologies to Meet Future Needs”(PDF) from the Government Accountability Office, released last week, should be required reading for anything wanting to understand the challenges of transforming energy policy. Here is the bottom line (p. 53):
It is unlikely that DOE’s current level of R&D funding or the nation’s current energy policies will be sufficient to deploy alternative energy sources in the next 25 years that will reverse our growing dependence on imported oil or the adverse environmental effects of using conventional fossil energy. The United States has generally relied on market forces to determine the nation’s energy portfolio, primarily conventional supplies of oil, natural gas, coal, and nuclear energy. In contrast, advanced energy technologies have higher up-front capital costs that make them less cost competitive than conventional technologies. As a result, despite periodic energy price spikes caused by disruptive world events and about $50 billion (in real terms) in energy R&D funding since 1978, the United States has made only steady incremental progress in developing and deploying advanced renewable, coal, and nuclear technologies that can compete with conventional energy technologies. However, continued reliance on conventional technologies leaves the United States vulnerable to crude oil supply disruptions, with economic, energy security, and national security consequences.
And here is what the report recommends to the Congress (p. 54):
To meet the nation’s rising demand for energy, reduce its economic and national security vulnerability to crude oil supply disruptions, and minimize adverse environmental effects, the Congress should consider further stimulating the development and deployment of a diversified energy portfolio by focusing R&D funding on advanced energy technologies.
January 25th, 2007 at 7:52 pm
Roger, do really endorse the goals and conclusions of this report? While I care about the environment and somewhat about energy security, the best way to deal with both is through making users/polluters directly bear enevironmental costs, and then letting the demand, supply and investments markets work to reflect real costs that are presently shifted to the general public.
The government cannot do a wise job of picking technologies, so spending on alternative technologies is essentially an excuse for pork barrel projects for special interests, a waste of taxpayer funds and a counterproductive diversion of investment dollars otherwise available to the private economy.
“Energy security” is for the foreseeable illusory an unachievable mirage and also a vague catch-phrase, similarly used to provide political cover for counterproductive policies – such as the $1 trillion and counting enduring “war on terror”, and our bloated and ubiquitous defense establishment and overseas deployments, which in fact generate much of the cited “insecurity”. Oil and gas are rather fungible commodities and are supplied in an international market. High spending to encourage “security” and alternative supplies simply hobbles our economy competititvely, and to the extent effective leaves prices lower for our competitors.
In other words, unless we are careful, government action tends more to create problems rather than to solve them, and care must be taken to guard the national treasury from being fleeced.
Environmental concerns are of course warranted, but these are more efficiently addressed through proper regulation/ liability rules and through globally coordinated anti-AGW programs.
January 25th, 2007 at 8:30 pm
Tom- Thanks. I do think that there is a role for government investments in research and development. I also find compelling the Hoffert et al. argument that significantly reducing GHG emissions (i.e., on a path to zero) requires new technologies. Both of these points are of course contested. For this reason I think that a portfolio of approaches, including investments in energy R&D and a carbon tax and a focus on efficiency all should be part of our policy smörgåsbord. The pursuit of efficiency is admirable, but it is often not how the messy political system actually gets things done.
Energy R&D in particular has been neglected, as this report indicates.
Thanks.
January 26th, 2007 at 1:19 am
Roger, thanks for the response.
I appreciate that the world is a messy place, and that politics tends to deliver programs that respond to clashing interests – including the interests of bureaucracies and the interests of politicians to secure votes for reelection – rather than responses that most efficiently-target the actual problem. But we should not forget that that in itself can be a very big problem, and should be advocating for the best solutions, even as we may have to settle for second- or third-best.
Yes, of course significantly reducing GHG emissions will require new technologies – but this is what markets do best, and governments do very poorly. The government should be trying to tinker with the market by changing incentives, rather than to take the place of the market by taking on research and development work itself (other than clearly identified public goods, such as basic data on the climate system).
January 26th, 2007 at 3:12 am
Government can also invest in energy efficient infrastructure such as electrically-powered local public transportation and electrification of our mainline intercity freight and passenger railroads.
January 26th, 2007 at 8:16 am
In the Jan. 25 NY Times is an article about stop-and-start federal funding for renewable energy. I think it is significant that Chevron thinks the Golden lab’s expertise is worth partnering with. Unless and until the externalities of fossil fuels are reflected in their cost (via a carbon tax of some sort), the market *can’t* respond to a signal it isn’t getting. My poster child of energy R&D investment is the really first-rate hybrid propulsion system developed by an EPA lab for medium-duty trucks (like the garbage truck that just stopped and started its way down my block.) The funding for the lab has been shrinking, and the prototypes were built with parts from junkyards, because that is all the project funding could afford. In a public-private partnership, now Eaton has built some for UPS to try. (By the way, ask your local waste hauler to buy one or two of the garbage truck ones.)