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On Thin Ice: America Needs a New Energy Game Plan

by REP Policy Director Jim DiPeso
delivered to the Odyssey Days alternative fuels and sustainable energy fair at Shoreline Community College, Shoreline, Washington; October 14, 2006

Good afternoon, it’s a pleasure to be here. I’m Jim DiPeso, the policy director of Republicans for Environmental Protection, a national non-profit citizens organization dedicated to restoring a conservation tradition to the Republican Party.

We make a conservative case for conservation, based on traditional conservative principles. And by conservative tradition, I don’t mean the radicalism you hear from Rush Limbaugh. I mean conservatism as an intellectual tradition developed over the past two centuries.

Those principles include our duty to our posterity. Edmund Burke, an 18th century British statesman, was widely regarded as the father of modern conservatism. He described society as an intergenerational contract, covering past, present and future. We, of the present, have a duty pass on our common societal inheritance, intact, to future generations.

Theodore Roosevelt said, "Conservation is a great moral issue, for it involves the patriotic duty of ensuring the safety and continuance of the nation."

I am honored to be on the speaking bill with Dr. Richard Gammon from the UW Climate Impacts Group. There is nothing that I could tell you about global warming that he couldn’t say more effectively or with greater authority, so I’m going to defer to him to give you the latest scoop on the most profound issue facing humanity today.

What I will do is give you some good reasons why we as a nation need to rewrite our energy script – to deal with climate change and to deal with other serious problems related to the ways that we use energy.

As the title of my talk indicates, we are on thin ice, and in more ways than one. Here’s my bottom line: Energy is the story of our lives. It touches on how we live, how we eat, how we move around, and how we relate to other countries.

If we get energy policy wrong, we’ll get a lot of things wrong. We will endanger our security, put our economy at risk, and ultimately, undermine the natural life support systems upon which we depend.

If we get energy policy, right, we’ll get a lot of things right. We will be safer, we will have a foundation on which to build sustainable prosperity, and we will be better stewards of the natural capital that underpins our civilization.

So, let’s get started. First, since we’re on a college campus, let’s start off with a pop quiz, just to get the mental juices flowing. For those who answer correctly, I have rewards – Newman’s Own candy.

In percentage terms, how much of the world’s oil production originates in the United States?

In percentage terms, how much of the world’s oil production does the United States use every day?

In percentage terms, how much of the world’s proven reserves of conventional oil are found in the United States?

There you have our energy security problem in a nutshell. We use three times the oil we produce, yet we hold 2 percent of the worl's remaining conventional oil reserves. Today, about 60 percent of the oil we use is imported. By 2025, about 70 percent of the oil we use will be imported.

In short, as long as we’re dependent on oil, we will be dependent on foreign oil.

Let me give you a little context. Oil is bought and sold in a global market. Anything that happens anywhere in the world that affects that market will show up in pump prices here in Shoreline.

And today, that oil market is twitchy and vulnerable to price spikes. Global oil demand has risen rapidly and stretched the market very tight.

So, if you have a hurricane on the Gulf Coast, civil unrest in Nigeria, or a pipeline problem in Alaska, or a pipeline bombing in the Middle East, anything that takes oil off the market or even threatens to take oil off the market, the market will shudder and prices will go up.

Earlier this year, we dodged a bullet. A group of car bombers tried to break into Saudi Arabia’s largest oil processing facility.

The bombers were repulsed, but had they succeeded, the oil market would have been plunged into a supply deficit, causing oil prices to rise to very high levels.

Even if we can avoid a dramatic incident that disrupts the oil market, we are still vulnerable to the use of energy as a weapon. Last winter, Russia used its control over a gas pipeline to "persuade" Ukraine to pay more for natural gas.

Even if can avoid a dramatic incident, and even if we can avoid being targeted by a rancid regime wielding energy as a weapon, our money is rewarding bad behavior in oil exporting nations.

Shifting around our oil suppliers won’t help. We don’t buy one drop of oil from Iran, but that doesn’t matter. Our demand helps put upward pressure on oil prices, which provides Iran funds to the tune of an additional $125 million per day.

In a sense, oil wealth and bad behavior go together. There’s even a phrase for the phenomenon: Oil is the devil’s excrement, a term coined by a Venezuelan government minister years ago to describe the corruption, mismanagement, and social conflict that seem to follow oil bonanzas in the developing world.

Lastly, of course, we’re conducting an uncontrolled science experiment on the only atmosphere that we have. The longer we wait to deal forthrightly with this problem, the harder it will get. And the longer we wait, the more risk we’re taking that atmospheric systems will be pushed across a tipping point that would be very dangerous for us and our civilization.

All of which argue for making new and better energy choices.

This hasn’t been easy. We’ve seen this oil dependence coming since the 1950s. Yet through a succession of administrations and Congresses, we haven’t dealt with the problem effectively.

Congress is still stuck in the mind set that if we just increase domestic supplies of oil, all our oil dependence problems will be solved. Wrong. Remember how little of the world’s oil reserves are within our borders.

As Senator Richard Lugar, the chairman of the Senate Foreign Relations Committee, said in a speech earlier this year: “An energy policy that relies on a finite resource concentrated in a few countries is doomed to failure. ”

And don’t forget peak oil. At some point within our lifetimes, possibly quite soon, conventional oil production will peak and begin an inevitable decline.

Let’s say we continue with business as usual and tie our future to oil. Between now and 2030, global oil demand is projected by the International Energy Agency to rise by another 30 million barrels per day. Assuming that such increased production is possible, much of it will have to come from the Middle East, home of the last big oil reserves.

The International Energy Agency projects that by 2030, nearly half the world’s oil will come from the Middle East.

By 2030, China will be importing as much oil as we will be importing. From the standpoint of international stability, the U.S. and China competing to grab the last pots of black gold in the Middle East is not a pretty picture.

So, where do we go from here? First, there is no way to wall ourselves off from the global oil market through increased domestic production. We import nearly 14 million barrels of petroleum and petroleum products every day today.

To replace all that foreign oil – and to accommodate increased demand – we’d have to find and produce an additional 19 million barrels per day here at home. It won't happen. U.S. oil production peaked 30 years ago. Even if the Arctic National Wildlife Refuge is the oil bonanza that Ted Stevens and Don Young claim it is in their vivid imaginations, it could only yield 1 million to 1.5 million barrels per day. Same with the oilfield recently discovered off the Louisiana coast.

What about oil shale? Boosters say there are 1.5 trillion barrels of oil shale in the central Rockies. First thing to remember is that oil shale is neither oil nor shale. It’s a low-grade hydrocarbon that has to be processed at great expense of money and energy to produce usable fuel.

Here’s what I mean. To produce energy, you must put in energy. Energy in yields energy out. In U.S. oil production today, one unit of energy input yields 11 to 18 units of energy output. With shale, for every unit of energy you put in, you only get 2 to 2.5 units of energy output.

To extract a million barrels of oil a day from shale, you’d need about 12,000 megawatts of energy input. That’s almost half the electrical energy used by the entire Pacific Northwest.

So let’s start talking about real solutions. To make a significant reduction in oil dependence and to reduce carbon emissions, we’ll need a basket of solutions, not one magic bullet.

An interesting approach is the “wedges strategy” developed by two Princeton scientists for dealing with climate change. The wedges strategy tackles this problem by breaking greenhouse gas emissions reductions into relatively manageable bites.

Seven technology wedges, each avoiding 1 billion tons of carbon emissions per year, could stabilize emissions at today's level by 2056 while allowing for economic growth.

Now, there are some rules. One of the rules of the wedges strategy is – you have to use technology that could be scaled up today. No pie in the sky, no magic wands. Another rule – and deficit-spending politicians take note: the global carbon budget could never, ever slip out of balance. If one wedge doesn’t work, we need another to replace it.

So, where do we start?

Fix up buildings with shell design, lighting, windows, and appliance improvements, that cut electricity use in half, that yields two wedges. It can be done. Go to architecture2030.org and see how.

Only five to go. Double the mileage of 2 billion cars from 30 to 60 mpg and that's another wedge.

Four to go. Where would the fuel for the cars of tomorrow will come from.

How about coal? We have a lot of coal in this country and you can produce liquid fuel from coal. There’s a lot of talk about that. The governor of Montana has big plans to develop coal-based liquid fuels as an economic development strategy.

But, we’ll have to find a place to safely and reliably store billions of tons of carbon for centuries to millennia. There is apparently plenty of storage capacity, but there are many cost and technical issues to work through.

If we don't use coal for liquid fuels, what about biofuels? How much biofuel creates one wedge? Worldwide, we would need about 100 times current U.S. ethanol production.

So, we have three wedges from efficiency and an additional wedge from biofuels. Three to go.

What about nukes? Double today's nuclear capacity and use the new nukes to replace coal. That’s another wedge.

Don’t like nukes? Expand wind energy by a factor of 50 and solar by a factor of 700. That gives you two wedges. Still one more to go.

There are other possibilities. Storing carbon in soil through improved farm and forestry practices yields a wedge.

What the wedges strategy tells us is that we our oil dependence and carbon emissions problems are manageable. It will create business opportunities.

But none of this is likely to take place unless a price tag is attached to carbon emissions, either through a cap-and-trade program or carbon taxes.

To jump-start investment in low- and zero-carbon technologies, our Princeton scientists estimate that the cost of carbon disposal would have to range between $100 and $200 per ton. That would raise the price of gasoline by 25 to 50 cents per gallon and the cost of electricity by 2.5 to 3 cents per kilowatt-hour. It's manageable.

Let me close with another idea from the old conservative tradition. Let me quote from a book called "Crunch Cons" that was written by Rod Dreher, a Dallas commentator:

"It's not easy being a green conservative, but if we conservatives want to be true to our principles, we have to move in that direction. It is morally right. It is religiously correct. It is economically prudent. It strengthens national defense. And it makes a better world for our children and our children's children."