Monday, June 23, 2008

Less is more

Vice President Dick Cheney famously declared in 2001 that “Conservation may be a sign of personal virtue, but it is not a sufficient basis for a sound, comprehensive energy policy”*. This remark belittles the obvious economic and strategic importance of conservation. Earlier this month, Secretary Bodman (US Department of Energy) said, "All nations must be better at conservation, and the U.S. is at the top of that list." Unfortunately, I don’t imagine this about-face is indicative of some grand enlightenment that has taken place among our elected leaders, but is simply the result of public ire about gas prices.
Despite the reasons for this change, forward-thinking Americans must take this opportunity to move toward a sustainable energy economy. A sustainable energy economy would reduce the burden on family budgets and the threat to public health and safety that stems from our fundamental reliance on fossil fuels. A sustainable energy economy would make the most effective use of widely available, low-cost energy.
The first step in the journey toward sustainability is energy independence. Energy independence does not simply mean trading one energy source for another and expecting government and business to realize an invisible transition. Instead, energy independence must be built at every scale, spanning personal, local, regional, and national levels.
The national and regional levels are familiar to many people insofar as they receive attention during campaign seasons. The personal and local levels are perhaps not as widely understood and are built on a change in thinking. Personal choices such as where to live, how to get around, and what to eat all weigh on energy independence. Local choices, like community planning, public transportation, and building codes are also major factors. I’ll begin to address these in greater detail in future posts.

*It’s often overlooked that in the same speech, Cheney actually called for some measure of conservation. However, his core message was to provide resources to petroleum companies.

9 comments:

Chris McClure aka Panhandle Poet said...

"A sustainable energy economy would reduce the burden on family budgets...."

ERD: This one needs some elaboration. I am a firm believer in allowing the market to allocate resources. It tends to do so efficiently when allowed to work. Most new energy technologies require significant subsidies. So, help me out a little on this one.

Sue said...
This comment has been removed by the author.
Sue said...

Chris - we're already providing far greater subsidies for established forms of fossil fuel energy. Two-thirds of federal subsidies go to oil, gas and coal, and other fossil fuels (more than $49Billion a year). That doesn't sound like a free market to me. Seems to me the best idea would be to stop, tomorrow every penny of subsidy to all energy industries and then see what the competitive market would produce.
(having trouble with format/trying again)
Distribution of Federal Fiscal Subsidies to Energy,
2006 Preliminary Estimates
Energy type--$Billions/Year--%Share
Oil and Gas----$39B ---------52.4%
Coal-----------$ 8B ---------10.5%
Fossil, mixed--$ 2B --------- 3.3%
Total Fossil---$49B ---------66.2%
Nuclear--------$ 9B ---------12.4%
Ethanol--------$ 6B --------- 7.6%
Other Renew----$ 6B --------- 7.5%
Conservation---$ 2B --------- 2.1%
Mixed Resources/Other
---------------$ 3B --------- 4.2%
Total subsidies
---------------$74B ------- 100.0%
Source: Subsidies in the US Energy Sector See the full article for a detailed discussion of the various types of subsidies.

E. R. Dunhill said...

Chris,
I'll get into this a little more in future posts, but the quick answer is that are many mature energy-related technologies. Some of them are producing-technologies. More to my point is that there are many mature energy-conserving technologies, some of them quite cheap. Another hallmark of a sustainable energy economy is a lifestyle that obviates or reduces certain energy needs.
I'm also a believer in the market. For the most part, I think that people should pay for things they use. If we ever create an economy that internalizes and reveals the externalities and hidden costs of energy, the kinds of changes I describe will become commonplace. This would be a natural, market result. I don't see that happening without some intermediate steps, and that's a big "if", though.

Chris McClure aka Panhandle Poet said...

Sue: That was an interesting article. It deserves some deeper investigation. It seems that the authors count a few items as subsidies that might not be considered so by others. Some examples: They appear to include normal business expenses for exploration and development of leases as a "tax break subsidy" because they show as a special expense on their tax filings. They also appear to include the "oil depletion allowance" which is similar to depreciation claimed by any business on producing assets (in a way this just accelerates their expensing of the asset -- they will eventually pay the tax on that amount from the tax on future year's revenues). [For example: If I sell pecans from an orchard which I purchased, I can depreciate the value of the trees even though they continue to produce pecans. It offsets early years revenue with an allocation of my acquisition cost over time.] They also appear to count reduced sales tax revenue to states because the sales tax on gasoline and other oil-based products is typically below the sales tax rate on other consumer items. Most states do this because of the heavy burden of other taxes on gasoline (road and other infrastructure taxes). The real beneficiary of this tax difference is the consumer -- not the oil companies. [It could be argued that it encourages higher consumption of gasoline than would be expected if the tax were higher.] They also appear to include R&D funds for development of clean-burning technologies for coal and other enviro-friendly technologies. One of the biggest subsidies they include is the waiver of royalties on Gulf of Mexico leases that occurred prior to 1999. It seems that in 1998 and 1999, someone in the Clinton administration saw fit to remove a standard clause from the lease contract that said that any waivers granted would be null when oil prices reached $34/bbl. They calculate the lost revenue from those contracts. The original waivers were granted when oil was well below $34/bbl as incentive to encourage development of oil resources in the Gulf. From 1983-2003, the revenue from those leases exceeded $127 billion -- none of which would have occurred because it was deemed too risky at the time without the waivers.

I guess what I'm trying to say is that the numbers need to be investigated a bit. I know my biases are showing but when I see a name like "EarthTrack.net" as the source I become skeptical.

Pat Jenkins said...

erd how much energy use do you believe is recreational? do not most use energy for need? i think you are falling prey to the idea people blatantly use resources.... whether heating our homes, or driving to work we do so out of need.... if we do find ourselves without certain resources we will not be saving a planet, but instead losing the sustainability, in some cases, of our livelyhood.... so let's hope the doomsayers who believe using the "earth" is a "sin" are themselves found to be false prophets... my guess is that will be the case!!

E. R. Dunhill said...

PJ,
Where did I say anything about recreational energy use? Like a great many people, I don’t see anything at all wrong with using energy for recreational purposes. If I take a vacation this summer, I'll use energy to travel and use energy wherever I stay. There's a difference between use and waste.
Who are your "doomsayers"?

Pat Jenkins said...

erd i sense a tone with you of belief we as mankind use resources for pleasure instead of survival when we have our discussions, or you let your beliefs known. and if we are running out of resources our concern should be more about the existence of mankind then about a "dying" planet!!!

E. R. Dunhill said...

PJ,
Humans should use resources to enjoy themselves. With admittedly only a moment’s consideration, I can’t think of any environmentalists or environmental groups who advocate doing away with recreation.
It seems that the “dying planet” issue has gotten a little confused. I personally hate the expression, because it’s vague, alarmist, and not entirely accurate. For the most part, when people speak of a dying planet, what they’re actually talking about is conditions becoming inhospitable to humans or to human activities like agriculture. Even if humans were to warm the planet to the point that they caused their own extinction (which I think is very unlikely), we could damage natural systems that we depend on to support our present way of life, which could easily result in increased poverty and loss of life. Most of the actions that environmental groups talk about are measures to improve peoples’ lives.