Resource Development Council

Energy Reality

No silver bullet

With world energy demand expected to rise 50 percent in 20 years and fossil fuels to account for 80 percent of the planet’s energy needs in 2035, the U.S. must accept reality and move forward with a comprehensive energy policy, urged Karen Harbert, President of the Institute for 21st Century Energy.

Speaking before a crowd of nearly 1,000 people at the Resource Development Council’s 35th Annual Meeting in July, Harbert emphasized there is no silver bullet that will meet future energy needs. She said the transformation from fossil fuels to renewable energy will be gradual and will not occur overnight.

Harbert said the Congress must put aside partisan politics and adopt a broad policy that includes increased domestic production of fossil fuels, massive investments in renewable energy technologies, investment in transmission lines, smart grids, and continued improvement in conservation.

She said a comprehensive energy policy must also include tax incentives, clear regulations, and efficient, timely permitting that sets the stage for the nation to secure the energy it needs to sustain the economy, compete globally, and protect the environment.

Harbert said a comprehensive energy plan needs to be based on reality, not the perfect ideal world where there is a silver bullet – a completely benign, economic energy source that meets all of America’s energy needs. She noted massive investment in research will eventually usher in the day where renewable energy becomes a dominant source, but for at least the next several decades, the nation will remain heavily reliant on fossil fuels to power its economy.

With electricity demand expected to rise 75 percent over the next 20 years, $26 trillion in investment will be needed to meet global energy needs, Harbert said. “Is any of that money coming here or is it going other places to develop the energy resources and infrastructure necessary for other countries to remain competitive?” Harbert asked. “We are in need of money and capital, and capital is not coming to America.”

She also pointed out China and India will account for 40 percent of new energy demand. “They (China) are building a coalfired power plant a week and 100 nuclear plants. What are we doing sitting on the sidelines?”

Harbert noted there are 26 applications pending for new nuclear plants in the U.S. “If all of those projects were built, we would create 250,000 high-paying new jobs,” she said.

Harbert argued for transparent, honest assessment of the costs, risks, and rewards of the policy decisions impacting the development of energy sources. For example, what is the long-term impacts to the economy, jobs, lost production, and lost revenue to state and federal coffers from shutting down oil rigs in the Gulf? What are the unintended consequences on the economy of a cascade of legislation, regulation, and litigation arising from the Gulf oil spill?

“I pray the oil spill is not our Three Mile Island,” Harbert said, referring to the 1979 event that virtually killed further expansion of the nuclear industry in America. She noted the oil industry is now being locked out of highly prospective acreage across a nation that imports nearly 70 percent of the oil it consumes. Those imports account for two-thirds of the nation’s trade deficit.

Harbert warned that the oil and gas industry is facing excessive and invasive laws and regulations that could stifle future production and increase reliance on foreign imports.

The federal government’s moratorium on deepwater drilling is killing jobs and hurting local communities, she said.

“We have proposals in front of us that are shedding jobs, can potentially increase energy costs, can potentially increase imports,” Harbert said. She warned that legislation stemming from the Gulf incident could go too far and do serious economic harm.

“I’m not optimistic that without a huge outpouring of support from the business community we will be able to get the message through that Americans support oil and gas exploration,” she said. “Seventy percent of Americans still support onshore and offshore exploration. That need to get through to the people representing the peoples’ interest.”

Congress, environmentalists, and some Americans do not share this view, Harbert said. “Energy is still very, very important to the American public, second to jobs,” she said. “That could be a huge platform for policy makers to grab hold and do something sensible on energy. But instead they’re focused on what the American public is not so focused on right now – climate change.” She pointed out that “we all want to be good environmental stewards. We just don’t want to have climate change legislation, regulation, and litigation placed on us” in a way that forces businesses to close.

Harbert warned what is at stake is the nation’s business climate. “The decisions we make are going to be hard to undo, so we better make some smart ones.”

The former assistant secretary for the U.S. Department of Energy listed a number of troubling problems facing the nation and its industries, including the $13 trillion national debt, a surging trade deficit, the loss of manufacturing overseas to China and other nations, 10 percent unemployment, mounting debt of local and state governments, and the BANANA syndrome – Build Absolutely Nothing Anywhere Near Anything.

She also warned that the Environmental Protection Agency (EPA) is generating an avalanche of regulation and massive reform that will add to uncertainty, complicate the permitting process, and further chill the investment climate – all at a time when the nation is struggling to pull out of the worst recession since the Great Depression. (In brief comments before Harbert’s address, Senator Lisa Murkowski said the EPA has begun 700 separate rulemakings in the past 15 months, leaving business in general and industries in particular in a state of siege.)

Harbert noted one proposal in Congress would target the oil and gas industry with $80 billion in new taxes. “That doesn’t sound like a recipe for energy independence and economic recovery,” she said, explaining that the last time the federal government sharply hiked taxes on industry, domestic production fell, imports climbed, and prices also rose.

Harbert’s Alaska visit is part of a 30-state energy reality tour to urge business people and those who work for industries to get involved or face new laws that could hinder new growth and undermine economic recovery. The tour is also aimed at launching a national discussion about the nation’s energy future. Harbert sees opportunity for businesses, local governments, and grassroots organizations to steer the discussion.

“Really, what’s at stake here is our investment climate,” Harbert warned. “At the end of the day, your ability to invest and hire is what will return our nation to prosperity.”

While apologizing to the RDC audience for the indigestion her speech may have caused, she expressed optimism that the nation can develop a comprehensive energy policy, if for no other reason that it must.

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