Energy Policy Analysis: A Conceptual Framework

A Conceptual Framework

Michael S Hamilton

• Publisher: Routledge
• Year: 2014
• ISBN:
  9781317471462
• Edition: 1
• Topic: Politics & International Relations
• Subtopic: Politics
• Index: Politics & International Relations

Presented in nontechnical terms, this book offers a unique and powerful conceptual framework for analysis of energy technologies (standard and alternative) in terms of their respective dollar costs, environmental costs, and national security costs. Energy technologies examined include coal, nuclear, oil, natural gas, solar, wind, geothermal, hydropower, biomass and biogas, energy conservation and efficiency, ocean power, hydrogen, electric power and transmission, and transportation. This three-point framework allows examination of issues and problems associated with implementation of U.S. energy policies in the context of major social goals (such as growth and equity), with treatment of conflicts and trade-offs between energy development and other social values (such as health and safety, cultural, historical, and aesthetic values). These are the key political issues for policy makers formulating national energy policy and decisions makers implementing it.

1

A Framework for Analysis of Energy Choices

No president since Jimmy Carter in the late 1970s has advanced a coherent national energy policy (USDOE 1979; Executive Office of the President 1977), and Congress failed to approve most of his proposals. What should our national energy policy be? This book provides an analytical framework for answering this important and timely question. With energy prices higher now than in the 1970s, and with the nuclear industry vigorously promoting nuclear electric generation as a panacea for global climate change, even in the absence of a viable technology for permanent high-level radioactive waste management, this seems like an auspicious time for a new look at energy policy analysis. Historically there have been three approaches evident in the development of proposals for national energy policy in the United States: supply expansion, demand suppression, and cost analysis.

SUPPLY EXPANSION

Proponents of supply expansion have focused on energy conversion and distribution for the answers to the energy problem. This approach is based on the observation that there is no physical shortage of energy in the world. It advances the proposition that there is more energy in the world than we could ever possibly use, so the problem is not really a shortage, but barriers between us and the use of various energy sources.

Identification of these barriers usually has centered on one or more of the following: technical, geographical, economic, political, or environmental barriers to energy resource conversion and distribution.

Technical Barriers

Engineering feasibility of a technology defines technical barriers to use of various sources of energy. For example, we have created thermonuclear weapons based on nuclear fusion processes, but have as yet been unable to engineer adequate control over such processes and sustain them for sufficient periods of time to make fusion useful for generating electricity. Such technology might provide very substantial energy supplies and has been researched for some time, at considerable expense, but holds little promise for utilization in the foreseeable future due to technical difficulties. Expenditure of funds by government for continued basic research will be necessary to overcome these technical barriers, as there is no near-term prospect of profits from commercialization of fusion technology to encourage such investments by the private sector. Overcoming technical barriers may require large investments that ultimately increase the market price of some technologies if and when they become commercially available. Also, the lack of a proven technology for permanent management of high-level radioactive waste has not prevented increased use of nuclear fission to generate electricity, and such waste continues to accumulate in temporary storage. Apparently conversion and distribution are more sensitive to technical barriers than is waste management in the nuclear fuel cycle.

Geographical Barriers

Energy resources are not evenly distributed throughout the world; they are often found at considerable distances from large population concentrations where their utilization is most desirable. The location where energy resources are found is often a barrier to their use. North Sea British oil and North Slope Alaskan oil could not be used before new pipeline and drilling technologies were developed, illustrating a common association between geographical and technical barriers. Tidal power and ocean thermal gradient technology may eventually provide energy supplies to some coastal and island areas, but not to interior areas of large continents (e.g., South Dakota). High-temperature geothermal resources are relatively rare and local in nature, although development of low-temperature geothermal resources using chemical technology is becoming more common with engineering advances. Overcoming geographical barriers may involve substantial expenditures to develop new technology or to move an energy resource from its origins to where it is utilized.

Economic Barriers

Market prices of some energy technologies are sometimes too expensive to compete effectively with resources in use at a particular point in time. Technologies have long been available to extract liquid hydrocarbons from oil shale and coal, but at greater expense than importing petroleum to the United States from the Middle East. Electricity can be generated using nuclear fission processes, but at much greater total expense than with coal or oil. Economic barriers may be particularly sensitive to technological developments, decreasing as new inventions in nuclear reactor technology become available, for example, or increasing with policy changes such as more stringent requirements for reactor safety.

Political Barriers

Policy changes are produced by political behavior of individuals and groups affecting both international relations and domestic activities, which may increase or decrease access to some energy supplies. U.S. support for Israel led to reduced access to imports of Middle Eastern oil during the oil embargo of 1973. Combative relations with Libya and Iraq have at other times impeded imports of oil from those countries. Political barriers are partly emotional in nature and may in some cases be more intractable and difficult to overcome than some technical barriers.

Environmental Barriers

Development, transportation, or use of some energy resources in some locations may entail unacceptable disruption of the environment, contrary to widely held values of the populace. The combustion of coal without stringent air pollution controls has stimulated several national policy changes in the United States, and its continued use without some associated carbon sequestration may stimulate more changes out of concern for global climate change. Development of hydroelectric facilities has been excluded from some unique scenic areas, and the use of nuclear fission from others. Environmental barriers are political in nature, and their erection or modification may affect the market price of an energy technology, so they are often related to economic barriers and may be quite difficult to overcome without technological change.

These five barriers to supply expansion sometimes work in combination, with complex interrelationships that may be cumulative. For example, environmental, political, and economic barriers may combine to make oil shale development undesirable. Alternatively, these barriers may sometimes conflict with each other, necessitating trade-offs of one for another. Technical barriers to use of a potentially environmentally benign nuclear fusion technology may be most difficult to overcome. Or an economically attractive coal combustion technology may be environmentally undesirable.

The current so-called energy crisis seems to be due to a flaw in the armor of a great nation. Actually it is not a one-time crisis, but a recurring problem. After all, the first American “energy crisis” was the subject of a White House Conference in 1908 (White 1908) due to the perceived profligate waste of coal and natural gas resources that were then being used faster than new reserves were being found. High oil prices in early 2008 were reason for concern, but did not threaten the demise of the nation. In the short term, the U.S. energy policy problem appears to be principally a foreign policy problem, political in nature, based on U.S. relationships with Israel and several other Middle Eastern nations. Failure of the United States to balance its support for Israel with its need for Middle Eastern oil has created a host of difficulties for national energy policy. The energy policy problem in the United States is secondarily an economic problem, because our appetite for imported oil has made our economy vulnerable to disruption. Americans are not used to paying the full price for energy production and utilization, and do not care for rapid price increases for anything. Thirdly, the U.S. energy policy problem is an environmental problem, because many of the least expensive and most used resources have significant detrimental effects on the human environment.

Thus, those who approach energy policy from the supply side of the problem see it as policy designed to remove or overcome these barriers to expanded energy conversion and distribution. They seek to remove political, economic, and environmental barriers to increased energy consumption, rather than to suppress demand or make decisions based on cost analysis. Presidents Nixon, Reagan, and George W. Bush emphasized supply expansion. Recent proposals to open the Arctic National Wildlife Refuge and the outer continental shelf to increase drilling for oil and natural gas and to reduce safety requirements for new nuclear plants are manifestations of this approach. Significant barriers inhibiting the use of various energy sources will be identified in the course of this book.

DEMAND SUPPRESSION

Persons emphasizing demand suppression have focused on reducing energy consumption in their energy policy proposals. This approach is critical of consumerism and advances the proposition that our energy problems are attributable to human nature, which is viewed as inherently self-centered. Those who favor demand suppression maintain most people crave an ever higher standard of living, no matter how well off they may be. They suggest human beings have an insatiable appetite for material goods: cars, homes, boats, expensive clothing, and restaurant meals.

Most goods and services are produced through expenditure of energy during production and transportation to point of sale. Even the few notable exceptions are vulnerable: a scenic view is an aesthetic enjoyment, yet manufacture of a camera and transportation to a scenic location require use of energy; knowledge for the sake of knowledge entails travel to a library or use of the Internet for research, which also requires use of energy.

To most people in the United States and the world, America means more: affluence, expansion of frontiers, a rising gross domestic product (GDP), and a higher standard of living; that is, the United States is associated with growth, and growth is perceived as inherently good. Thorstein Veblen characterized the American spirit as one of “conspicuous consumption” (1953), and his theory seems more applicable today than ever before. Among most Americans, forced change of lifestyles is perceived as categorically un-American. Consequently, the use of coercion to force lifestyle changes is not considered an acceptable policy solution in the United States. It would be easier to harness the sun than to change American lifestyles drastically, although small changes do occur, if slowly and noisily. When oil prices increase rapidly, many complaints are heard, Congressional investigations are initiated, hearings are held, and emergency measures are considered. Yet when prices decline even a bit, Americans get back into their SUVs and drive to the shopping mall.

Those who approach energy policy from the demand side maintain we must either cope with materialism by increasing supplies—the feasibility of which they view with great skepticism—or else change our lifestyles in order to reduce demand and conserve domestic energy resources for use in future periods. They tend to propose that people should make individual sacrifices, like putting on a sweater and turning down the thermostat, using less lighting, riding a bicycle, bus, or train to work instead of driving a car, staying at home on vacations and driving less generally, and refraining from purchase of energy-wasting home appliances and gadgets. President Jimmy Carter emphasized demand suppression measures in two major energy policy proposals (1977; USDOE 1979), neither of which was embraced with much enthusiasm by the U.S. Congress.

Many of these proposals are strikingly similar to wartime rationing of goods, and might have significant impacts on manufacturing, utility, and tourism portions of the national economy. Growth in consumption of energy-saving devices since the late 1970s has to some extent reduced these effects. More significantly, many Americans simply refuse to cut back or will do so only temporarily while demanding relief in the form of policy change. U.S. energy policy proposals since the 1970s have included a bewildering mixture of proposals to both remove barriers and change lifestyles. Perhaps this explains why we have such a shambles of energy policy: the choices are too numerous, demanding, and unpleasant to be considered legitimate by many citizens.

COST ANALYSIS

In a seminal article shortly after the oil embargo of 1973, Robert M. Lawrence suggested that national energy policy choices in the United States were constrained by three primary costs of continued high energy use: higher energy prices, greater environmental degradation, and increased security risk (1975). Seldom explicit but nonetheless implicit in previous energy policy proposals have been unsystematic comparisons of the costs of each available energy alternative. Unsystematic comparisons of the mix of different kinds of costs for each available energy resource have determined, and perhaps will continue to determine, policy choices in the United States about which energy technologies will be used and which deemphasized in the future.

A conceptual framework is presented here for analysis of various conventional and renewable energy fuel technologies in terms of their respective dollar costs, environmental costs, and national security costs to the nation. The objective of this analysis is to examine alternative national energy policy choices in a systematic fashion and specify the outlines of a coherent national energy policy. This conceptual framework may be used to evaluate energy policy choic...