Thursday, August 14, 2008

Treating Fossil Fuels with Foresight (Facing the Energy Crisis: Part 2)

In the spirit of making sense, it's time we started thinking long-term about energy and the environment. Even if you discount the arguments of various global warming/climate change doomsday prophets, you're going to have a hard time sounding intelligent arguing that wastefulness and air pollution are good things.

But even if the environment were in pristine condition (it's not), we'd still be headed for trouble. Why? Because nearly 80% of U.S. electricity comes from non-renewable resources and nearly 100% of U.S. transportation systems are dependent on non-renewable resources. "Non-renewable" means "incapable of being replaced by natural ecological cycles or sound management practices." Let me break it down: sooner or later these resources will run out completely. Thanks to population growth and the rise of the developing world, that'll probably happen sooner rather than later. So, to prepare for the future, we need to start doing things differently today.

Here's what we do:

Force Big Oil to Develop Its Land. The fact is, it'll be quite a long time (if ever) before we can completely eradicate oil use in the U.S., so if we're truly going to be energy independent, we'll eventually need to drill for more oil on our own turf. Here's where we start drilling: on the land Big Oil companies already lease from the federal government. Right now they have about 68 million acres of oil-rich land stockpiled, and they've left it unexplored and undeveloped. So ... what were you saying about supply and demand? C'mon, Big Oil, you're not fooling anybody. Be honest, remember?

Permit Offshore Drilling. But do so only after Big Oil starts producing on the land it already leases. If executed responsibly, it's not the worst idea ever. And if we absolutely need more oil, drilling for it off our own coasts is better than importing it from foreign war zones and hostile nations. Even then, I have a few caveats: even as a short-term solution, offshore drilling is far from ideal. Yes, it helps move us (just a tiny, tiny step) toward energy independence, but it does nothing to address environmental concerns and long-term sustainability. Even worse, it only serves to perpetuate our dependence on oil. It also runs the unnecessary risk of damaging the tourism industry and local economies for some of our shoreline destinations. That said, if local and state governments support drilling in certain regions, the Federal government should let them — and charge Big Oil big money for the lease.

Save the ANWR Coastal Plain ... For Now. Despite what you hear, there aren't any good environmental reasons not to drill in ANWR. This oil-rich region is little more than a barren wasteland and developing 2000 acres out of over 500,000 square miles wouldn't come close to disrupting the ecosystem or damaging its natural beauty. The piping infrastructure is already in place from the nearby Prudhoe Bay oil field, so development in this area would be (relatively) inexpensive. However, as I mentioned above, drilling in ANWR now will only serve to perpetuate our dependence on oil. Catering to our dependence on oil today, while it might bring a temporary spike in supply and short-term relief from skyrocketing prices, could fatally delay overdue innovation and speed the inevitable day when the earth runs dry ... leaving us with a nonfunctioning transit system and the surface temperature of Venus. As bad as price increases hurt now, it's better to use the cost of oil as a disincentive for overuse and a catalyst for innovative and radical change. Now is the time to transition to renewable energy and, perhaps more importantly, a sustainable American lifestyle. If innovations come slowly or the transition to renewable energy doesn't go as smoothly as we hope, it'll be better in the long run if we've saved our precious ANWR oil reserve for when we truly need it. Bonus: if it turns out we don't need it, we can export it at a premium to the other oil-starved countries.

Preserve the National Oil Reserve. Our reserve is for emergency use only. Needless to say, it astonished me when Barack Obama suggested handling the energy crisis by tapping into our national reserve. Dear fellow Americans (and Senator Obama), this is reality talking: $4 for a gallon of gas isn't the end of the world (to put things in perspective, gas costs about double that in Germany). Certainly, rising gas costs are putting a squeeze on some people. But high oil use is putting a squeeze on the entire country, the environment, and the world's resources. There are other, better, but sure-to-be-politically-unpopular solutions to high prices at the pump (keep reading). Catering to our dependence on oil and artificially lowering prices by depleting our national reserve is short-sighted and foolish. See above.

Phase Out Fossil Fuel Power Plants. Do away with fossil fuel subsidies and use the money to subsidize sustainable energy development and production instead. Currently, fossil fuel-fired plants account for nearly 80% of U.S. electricity production, burn non-renewable resources, and aren't doing the environment any favors. Still, even if the need for coal and petroleum is eliminated completely, we should continue to harvest and store these natural resources for a rainy day (if anything, our national reserves should be expanding). Also, as we phase out many of these plants, we should investigate ways to repurpose and/or recycle the existing infrastructure. And, of course, we need to be careful to replace the jobs lost when scaling back these energy sectors.

Make Fossil Fuel Use Unattractive. In direct contrast to McCain's ill-advised suggestion that we suspend the gas tax and Obama's equally short-sighted and potentially more damaging plans to provide relief at the pump, we phase in a revenue-neutral carbon tax. The plan outlined by the Carbon Tax Center is brilliant.

Yes, this is one of those sure-to-be-politically-unpopular solutions I spoke of earlier. But hear me out: taxation always acts as a disincentive. Therefore, the Federal government can use taxes to indirectly influence citizens' behavior — most people will alter their lifestyle to avoid higher taxes. Since we're trying to decrease our national dependence on oil and fossil fuels, it makes sense to create or increase taxes on these items to discourage consumers from overusing them.

Also note that I'm suggesting a revenue-neutral carbon tax. That means the government wouldn't be allowed to take any more money from the American people than it already does by heaping a carbon tax on top of everything else. Rather, they'd have to scale back other taxes to offset the tax on carbon (this is called tax-shifting) or implement some sort of rebate/dividend program. Personally, I'm a huge fan of scaling back the Federal income tax or significantly shifting the tax brackets. This would lessen existing disincentives for earning more and let Americans keep more of their paychecks, a desirable scenario with the possible pleasant side-effect of stimulating the economy.

Lastly, bear in mind that this tax would be phased in. That is, it would start off on the lower end of the scale, and then increase some percentage annually to give individuals and businesses the opportunity to adjust. Commitment to keep raising the tax is important to ensure that long-term, energy-critical decisions are made with the increasing cost of a large carbon footprint in mind. With the appropriate disincentives, it shouldn't be long before Americans change their personal habits and adopt emerging carbon-neutral innovations.

Either way, the oil-guzzling lifestyles we Americans have grown so accustomed to needs to change. The sooner we start, the easier it'll be in the long run. In the end, it's all about foresight.

Additional Reading:
Part 1 — Making Sense
Part 3 — Creating a Sustainable Future