By Ed Hirs, Energy Economist
Anyone who has been waiting for leadership on energy policy during this year’s tumultuous Presidential campaign may be waiting in vain. There’s little talk of energy and, even when the candidates offer a few proposals on their campaign websites or mention them during a debate, there is a dismaying lack of detail.
About the only talk of energy has come from Democratic candidate Bernie Sanders, who has called for a ban on hydraulic fracturing as the cornerstone of his energy and climate policy. Sanders’ rhetoric has forced the presumed Democratic front-runner, Hillary Clinton, to say she, too, would impose more restrictions on fracking.
This is in spite of numerous studies – by the Environmental Protection Agency and the administration’s handpicked Secretary of Energy Advisory Board Shale Gas Production Subcommittee – both finding hydraulic fracturing to be benign for the environment and drinking water supplies in particular. To be fair, studies have determined that water disposal injection wells are linked to earthquakes, but hydraulic fracturing has not been so linked. And shale gas has been an enormous benefit for Americans. In 2012, my colleagues and I demonstrated that the annual gain to natural gas consumers from hydraulic fracturing is more than $100 billion—even more today.
On the Republican side, John Kasich is happy to tout the job growth drilling has brought to Ohio during his time as governor but otherwise has said little other than “we need everything” in energy development. Donald Trump has said he would end oil imports from Saudi Arabia if Saudi Arabia fails to step up its own military commitments.
Even Ted Cruz, the candidate from Houston, the oil capital of the world, has offered little more than promises to slash regulations and approve the Keystone XL Pipeline.
None of them has released a detailed and coherent energy policy, even as the impact of the oil bust – low prices, big layoffs and concerns about the global economy – collide with questions about mitigating climate change.
But whoever is elected president in November will no longer be able to ignore the subject, from the nuts and bolts of building new pipelines to balancing the climate impact of coal with policies to retire or retrofit our remaining coal plants.
And those are just the issues related to hydrocarbons. Nuclear and renewable energy should be part of a lower-carbon future. Both pose big challenges.
Public knowledge about nuclear power is largely confined to scare stories, Three Mile Island, Fukushima and “The Simpsons.” Building support for fourth-generation reactors and safer fuels won’t be easy. Neither will decommissioning existing nuclear plants. The Nuclear Regulatory Commission appears to have underestimated the cost of decommissioning the Vermont Yankee plant by more than one-half, or $600 million-plus.
Entergy, the owner of Vermont Yankee, plans not to begin cleanup until a trust fund of about $600 million grows to be $1.2 billion in some number of decades, long after current executives and shareholders have passed away. Will the cleanup costs grow beyond today’s $1.2 billion estimate also? Are there other such shortfall surprises across the current fleet of more than 100 nuclear power plants? The solution to long-term storage or remediation of nuclear waste has been avoided both by Congress and recent administrations. Such long-term thinking is usually outside the interest and beyond the competence of politicians.
Candidate Clinton has called for 500 million solar panels. Pundits have challenged the numbers behind her rhetoric, but integrating the growing amount of solar and wind energy into the grid will require re-engineering not only the grid, but reworking energy storage, intermittency, distributed generation and transmission solutions. As Spain and Germany found out with very successful subsidy programs, the success and costs of the subsidies can overwhelm taxpayers, ratepayers and utilities. Renewable and carbon free energy is not free of costs.
None of the presidential candidates has offered a blueprint for any of these priorities, or for helping the more than 200,000 people who have lost their jobs in the U.S. oil industry since prices began dropping. Federal Reserve Chair Janet Yellen recently pointed to the economic loss due to the decline in oil prices that appears to have more than offset the consumer gain of lower prices at the pump. The U.S., as one of the largest oil producers in the world, is suffering from the low oil prices even more than any member of OPEC. How to replace the conservatively estimated $200 billion cut from the nation’s GDP due to lower revenues and less drilling activity? No one is offering suggestions.
Specific policies could help. My colleagues and I have demonstrated the costs and benefits of restricting imports, and we have called for the return to that policy to reduce the nation’s reliance on foreign crude. An import quota imposed by President Eisenhower saw U.S. crude prices persist at double the world price charged by OPEC. A return to import quotas would encourage conservation and return U.S. workers to the oil industry.
Removing the impediments to new pipelines would help, too, ensuring that people in Boston do not continue to buy LNG like the residents of Tokyo. Expanding pipelines into the Northeast will hasten the end of coal fired power plants in the Northeast and the use of dirty fuel oil for heat.
All of these issues matter. They will require leadership. Doing nothing – and the resulting environmental damage from coal-fired power plant emissions, ash ponds and mining operations, for example, and the financial and human costs of U.S. military efforts in the Middle East – will cost far more than higher gasoline prices, higher electricity rates and higher taxes.
The question is, who among the candidates can lead the nation to address these challenges? So far, no one in either party has stepped up.
Ed Hirs teaches energy economics in the University of Houston’s College of Liberal Arts and Social Sciences. In addition, Hirs is managing director for Hillhouse Resources, LLC, an independent exploration and production company. He founded and co-chairs an annual energy conference at Yale University.