President Obama’s “all of the above energy policy” now lies in tatters. Despite the fact that nuclear and coal-fired plants account for nearly 60% of domestic electricity production, both now seem forgotten (Remember the much heralded Blue Ribbon Commission?) or relegated to diminishing roles in our national debate. As a consequence, the President is proposing new regulations that will throw thousands of Americans out of work and do little to address coal’s continuing worldwide growth as a cheap, but dirty fuel source. Indeed, the International Energy Agency predicts that between now and 2035 coal will be the world’s fastest growing energy resource. Such growth will be spurred by the combination of an explosion in demand in emerging market countries such as China, India, and Indonesia, and the development of new world class coal mining facilities in Mozambique, Indonesia, Mongolia, and Kazakhstan. But this coal-laden reality is not reflected in the Administration’s approach to energy or climate policy.
Many of the President’s proposed initiatives are sound and will help reduce the carbon intensity of our economy, albeit at great economic and human cost in many regions of this country. But his plan misses the central point; namely, that if we want to truly address global climate change we must be in the forefront of (1) developing small scale modular nuclear reactors appropriate for our own and smaller scale emerging market electricity grids and (2) leading the world in proving that within a decade or less, carbon capture and sequestration of coal is both technically and commercially viable. The United States is up to this challenge only if this Administration will lead the charge and make this a cornerstone of their domestic policy.
President Obama clearly believes in climate change and has been working to make combating its effects part of his legacy, yet he fails to consider the abundant supplies of cheap, reliable energy on which this country depends. One needs only to look at Germany, which has made a serious commitment to phase out non-carbon emitting nuclear power by developing solar and wind resources to question the wisdom of policies which have (1) raised domestic electricity prices for households to over $.30 per Kwh (more than three times the price paid by the average American household); (2) increased the construction of dirty coal lignite plants; (3) increased imports of coal, including from the United Sates and (4) imported maligned nuclear generated electricity from France and the Czech Republic when renewable sources are not available.
These points are not made to denigrate the President’s new initiatives, but rather to ask for some coherence in our national approach to energy and to urge that new policies not be parochial and short-sighted. The unconventional oil and natural gas revolution has the potential to be truly transformative for our economy, leading to an industrial renaissance and thousands of good paying jobs. As we argued in our Brookings’s Presidential Briefing book, “Big Bets and Black Swans” (January 2013) the United States should be fully utilizing the taxes and royalties from these resources and use them to finance our transition toward a less carbon intensive economy.
We should not think it prudent to move our growing electricity-based economy overwhelmingly toward total reliance on natural gas or renewables. Replacing existing coal-fired plants with natural gas units results in a roughly 50%, but not total, reduction in CO2 emissions. Substituting the emissions-free generation capacity of nuclear power with natural gas will therefore represent a partial, but not complete victory against harmful emissions. For example, by 2035, if our coal plants have all been replaced by natural gas units and our existing nuclear fleet is retired on schedule, replacing that generation capacity with natural gas plants will actually cause our emissions of CO2 and other greenhouse gases to resume their upward track. If this were to occur, we would look back and wonder what might have been different if we had led in deploying carbon capture and sequestration and small scale modular reactors around the globe, helping those dependent on the use of fossil fuels to have a different economic future. Renewables will need to be a growing part of our energy future and President Obama’s policy initiatives will make a contribution toward our energy transition. But on a global basis, and given the scale of energy resources that need to be developed over the next 25 years, the administration’s current policies will be found to be sorely wanting and a truly transformative legacy for the world economy will be left behind.