U.S. energy policy as a teenage boy
With all the media frenzy around the Japanese nuclear situation, one topic hasn’t been covered much : Why don’t the Japanese love fossil fuels? Not only have they pushed hard into nuke but they’re also world-beaters in photovoltaics, electric vehicles, and energy efficiency. How come?
The economic incentives are pretty obvious: Japan doesn’t have any domestic fossil fuel reserves, but its industrialization required massive growth in energy supply, so Japanese leaders had to figure out how to avoid spending all their money on fuel imports. As an added bonus, every time there’s an energy crisis, they win the future. (The Honda CVCC kicked Detroit’s ass long before the Prius did, after all.)
Japan isn’t unique. Those same economic incentives are found in any country that isn’t blessed with an abundance of natural resources. And they aren’t limited to energy: Japan’s embrace of fossil-efficiency differs only in kind from the Nepal’s embrace of terraced agriculture.
The incentives work in reverse as well. Japan is no more likely to replace its nuke fleet with natural gas than Saudi Arabia is to invent a breakthrough fuel efficient car. OPEC’s views on energy efficiency — like Sierra Leone’s views on conflict diamonds — are, shall we say, “nuanced.”
But here’s the rub: natural resources are finite, and the economic self-interest of a nation necessarily changes as those resources are depleted. The U.S. is living through that kind of political and economic transition right now.
Substantial portions of U.S. energy and industrial policy were enacted at a time when we had way more than we needed: More land, more timber, more topsoil, more fossil reserves. Our economic interests lay in maximizing resource extraction and we lived accordingly, approaching the world the way my 6 year old daughter approaches a desert menu. As a result we ended up richer, smarter, healthier, and more adventurous than our peers.
That era is over; our needs have outgrown our resources. Yet we haven’t come to grips with it. The freedom we want and the responsibility we have to assume are incompatible, but we still carry the legacy of those earlier rules, creating all sorts of conflict. We provide tax breaks to domestic oil production and to deployment of technologies that will wean us off of that oil. We allow regulated utilities to enact tariffs that penalize conservation and mandate that utilities oversee customer-efficiency programs. We sing the praises of conservation, efficiency, and domestic renewables, but we also cry to drill baby drill, curse those who are trying to foist responsibility upon us, and storm back to Congress where we can slam the door shut, crank up the Fox News, and say mean things.
In short, we act with the consistency and intellectual maturity of a teenage boy. The rest of the world, meanwhile, shakes their head and tries to limit our access to the car keys, gun cabinet, and multilateral negotiations.
This is a real problem for our international credibility. It’s hard to be taken seriously as a participant in climate change negotiations when we keep whining about how unfair it is that we have to go to this stupid meeting anyway.
It’s an even bigger problem domestically. Teenagers make lousy CEOs. Not only do they not know how to work with suppliers and customers, they’re also lousy bosses. We have a wealth of entrepreneurs in this country who have the skills and desire to build world-beating clean energy companies. But the lack of maturity at the helm is increasingly encouraging those people to deploy their talents elsewhere.
I recently met with the CEO of a multinational energy company who put it bluntly: “In the rest of the world, if they want clean energy, they pay me to produce clean energy. In the U.S., they make me compete against subsidized dirty energy and expect me to thank them for a tax break that I can’t use that’s likely to go away in next political cycle.” He had concluded that his access to capital was substantially constrained by his U.S. operations and was making plans to divest accordingly.
That’s a big deal. But it’s a natural consequence of our inconsistent policies. It’s time to decide who we want to be when we grow up.
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