By the time the G8 ministers convene in Rome, five things will become blatantly apparent. First there is little or no chance of having serious climate change legislation passed by the U.S. Congress before the Copenhagen meeting in December.
Second, the Waxman-Markey climate change bill has been so compromised in the House of Representatives by a wide array of agricultural, coal and other special interests that the bill, even if passed, will have little or no impact in reducing CO2 emissions for many years and will make no meaningful contribution to President Obama’s original plans for generating hundreds of billions of dollars for other public priorities.
Third, if passed in its current form, and not further emasculated in the Senate, Waxman-Markey will cede the current statutory authority of the EPA to regulate CO2 emissions, placing it in the hands of the new and unknown regulators of an ill-conceived cap-and-trade system.
Fourth, despite the president’s ambitious goals to transform the American economy toward a renewable energy future, this will not begin to occur seriously until the nation, according to the Federal Energy Regulatory Commission, invests at least $220 billion dollars over 10 years in a new electricity grid that allows the country’s vast wind and energy resources to get to market.
Fifth, the president’s tax reform proposals highlighted in the Treasury Department’s “Green Book”—rather than improving the nation’s energy security by diverting tax breaks away form the domestic oil and gas industry toward renewables—will in the short run, if enacted, have the perverse effect of adversely affecting the economics of ‘independent” oil and gas production that account for the vast majority of new oil and gas discoveries leading to a likely rise in oil imports.
After Copenhagen, as energy experts rather than environmentalists hopefully take the reins of U.S. energy policy formulation, the outlines for a sound policy that will also benefit the climate until a carbon tax can be implemented are clear:
(1) an aggressive push both in the United States and Europe to develop unconventional shale gas for base load power generation. In the case of the United States, shale gas has raised U.S. natural gas reserves over the last 4 years by 35%. If prospects in Europe prove as attractive, European dependency on Russian and Central Asian gas could be altered fundamentally at least during the transition to a renewable fuel-based world;
(2) an aggressive commitment to “retrofit “ every commercial and residential building in the United States with state of the art energy efficiency technology over the next 15 years; the development under U.S. leadership of global inter-operability standards for smart grid technology, electric cars, batteries and plug-in electric vehicles;
(3) a joint international R&D effort under the International Energy Agency and other interested nations to build 15 carbon capture and storage (CCS) demonstration plants around the world by 2016 with full scale commercialization of 30 more by 2024;
(4) convening of an international conference of all nuclear power vendors to agree on three “Generation 4” reactor designs for deployment around the world in countries desiring to pursue a nuclear option; and (5) creation of an international nuclear fuel bank in a neutral country run by the international nuclear fuel industry with regulatory oversight of the IAEA.