No matter what Obama or Romney do, it appears that energy supply and demand in North America are coming closer in balance. The maximum demand and minimum production in North America occurred in 2005. Ever since then demand has been going down (well before the recession) and supply has been going up as new drilling technologies are taking hold. Thus we have a trend that started in the Bush administration and continued through the Obama administration, despite two very different energy policies. See http://www.eia.gov/naturalgas/crudeoilreserves/index.cfm#fnote1 , http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=mcrfpus1&f=a , http://www.eia.gov/dnav/ng/hist/n9010us2m.htm , and http://www.reuters.com/article/2012/08/17/us-usa-api-monthly-idUSBRE87G0UQ20120817 . If current trends continue in line with both parties' "all of the above" strategy, there is a possibility we could see overall North American energy supply and demand come into balance by 2020. However, this won't happen without the new mileage standards promoted by the Obama administration, and which are not supported by Romney. Romney's plan also assumes about 1 million barrels a day coming from biofuels, even though he is not a big proponent of them and they still require huge government subsidies.
Contrary to what Mr. Neider asserts, government subsidies for coal and natural gas electricity production amount to only 64 cents per MWH while solar is $765.64 per MWH and wind is $56.29 per MWH (see http://www.emailthis.clickability.com/et/emailThis?clickMap=viewThis&etMailToID=1201253705 , this link should get around the Wall Street Journal paywall for the next few days). The $4 billion per year federal subsidies the oil industry as a whole gets is derived mainly from the same capital depreciation tax laws that are available to any business. It's a tiny amount in an industry that contributes tax revenues of tens of billions a year. Solar, on the other hand, just creates black holes like Solyndra that swallow hundreds of millions without a trace (though it appears this loss will be available as tax credits to Solyndra's investors, some of whom are major Obama contributors, see http://www.emailthis.clickability.com/et/emailThis?clickMap=viewThis&etMailToID=2002391853 ).
As for carbon emissions, the actual truth is that today the US is already close to meeting the Kyoto standards (basically reducing CO2 emissions to 1990 levels). US energy related CO2 emissions (including transportation and electricity production) are the lowest since 1992 (see http://www.eia.gov/todayinenergy/detail.cfm?id=7350 ). While warmer weather played a part, as well as lower gasoline demand due to higher prices (supply and demand again), most of it has come from moving away from coal electricity production to cheaper natural gas (again driven by supply and demand). A byproduct of this is lower CO2 emissions since natural gas produces much less CO2 per MWH than coal. Who knew fracking would be the single most effective means of reducing CO2 in the last 20 years?
Radically different policies are not usually a feature of U.S. presidential campaigns, as it’s usually a small percentage of centrist swing voters who decide the winner. Normally the platforms consist of bland generalities designed for maximum appeal, with only a few small differences to distinguish them. Not so in this election, with President Obama and former Governor Romney offering virtually opposite visions of our energy future.
To be sure, the Obama and Romney energy policies have much in common on the broad outlines. Both claim to support an “all of the above” approach. Both have high hopes for biofuels, and support nuclear power. Both aim for some form of “energy independence” through expanded domestic oil and gas production.
But they differ sharply in the details.
Renewables
The 2012 Democratic National Platform, released yesterday, highlights President Obama’s goal to generate 80 percent of our electricity from clean energy sources by 2035, an ambitious upgrade from the 25 percent by 2025 goal mentioned in the 2008 party platform. Romney’s energy policy white paper, released two weeks ago, has no goals for the contribution of renewables; in fact, it scarcely mentions them at all. The word “renewable” appears just once in a favorable context, in a bland statement about its all-of-the-above strategy, while “solar” and “wind” mostly appear in negative contexts.
Obama wants to cut $40 billion over 10 years in tax breaks for oil and gas companies, but maintain tax incentives for renewables. Romney would do just the opposite, rolling back tax credits for renewables while keeping the incentives for oil and gas intact, inexplicably claiming that this would create a “level playing field.”
The two key incentives for renewables are the 2.2 cents per kilowatt-hour production tax credit, which has been responsible for the growth of the domestic wind industry, and the 30 percent investment tax credit for clean energy equipment, which has encouraged the growth of the solar industry. Both are set to expire at the end of this year. Romney is against both and would let them expire, while Obama has called on Congress to renew them.
Oil and gas
Romney’s energy policy statement isn’t a plan so much as a collection of quotes borrowing from recent oil and gas industry propaganda, with a smattering of text written by industry authors binding them together. It draws heavily on the Citigroup energy forecast I critiqued in April, and on another bullish oil forecast by Leonardo Maugeri, an oil company executive and senior fellow at a BP-funded center at Harvard, which I critiqued in July. Romney’s paper mentions “oil” 154 times and “gas” 83 times, laying out an aspirational message about drilling our way to energy independence while heaping scorn on investments in renewables.
Obama is also a vocal supporter of natural gas, touting it as a cleaner-burning domestic fuel that can give us more energy security and cut into our oil imports. Sadly, he still repeats the industry’s wild and unproven assertion that we have a 100-year supply of gas, which I debunked last December. He has also touted his administration’s actions to open more lands to drilling than the George W. Bush administration did, and noted the increase in domestic oil and gas production that has occurred during his term (although, as I detailed in March, his policies had little to do with it.)
Where Obama’s plan differs is in its repeated emphasis on conservation and eliminating “energy waste.” It sees reducing our oil consumption as a key pathway to independence, by nearly doubling the auto fuel efficiency standard by 2025. Romney’s paper does not contemplate fuel conservation or waste reduction at all, and the word “efficiency” appears just once, in a quote about GDP from the Citigroup report.
Romney’s plan would “aggressively” open all federal lands and waters to drilling, except for National Parks and a few other currently restricted areas. He would approve the contentious Keystone XL pipeline “on Day One.” In answers to questions posed by Scientific American and the grassroots organization ScienceDebate, Romney said he intends to pursue “a North American Energy Partnership so that America can benefit from the resources of its neighbors.” It’s unclear if he intends to simply annex Canada and Mexico in pursuit of U.S. “energy independence,” or how his approach would differ substantively from the existing harmonious oil and gas trade between the three countries. Obama punted the decision on the Keystone XL pipeline until after the election, saying that more time was needed to assess its environmental impact, but did approve the southern portion of the pipeline in the spring. As for exploration leases in federal waters and lands, he seems content with the existing access.
Broadly, Romney’s approach to oil and gas is exclusively supply-side, whereas Obama’s emphasizes the demand side as well.
Regulation
Although both Romney and Obama favor increased domestic oil and gas production, their views on regulation are very different.
“We will not back down from making sure an oil company can’t take the same reckless actions that led to the kind of oil spill we saw in the Gulf of Mexico two years ago,” the Democratic platform asserts. “We will not back down from protecting our kids from toxic mercury pollution, or making sure that our food is safe and our water is clean.”
But in Romney’s view, regulation is a bad word and should be avoided wherever possible in favor of market-based mechanisms, or simply turned over to the states, which historically have been far more lenient toward resource extraction. “Laws should promote a rational approach to regulation that takes cost into account,” his plan says. “Regulations should be carefully crafted to support rather than impede development.” While Romney’s rhetoric is no doubt appealing to voters in states heavily reliant on fossil fuel industry jobs, no one has asked him to explain how it would work in practice — for example, how he would have dealt with the Gulf oil spill without imposing a temporary drilling moratorium or new regulations on deepwater drilling, as Obama did.
Romney’s plan would reform “environmental statutes and regulations to strengthen environmental protection without destroying jobs, paralyzing industry, or barring the use of resources like coal.” So if your job ruins the environment, it would be safe under a Romney administration.
Climate policy
The flip side of energy policy is, of course, climate policy, and here the two candidates also have opposite views.
Romney has recently hedged his position on climate change by saying that he believes the world is getting warmer and that human activity has contributed to that, but that he also thinks “there remains a lack of scientific consensus” about its extent, its risk, and the degree to which human activity is to blame. He no longer talks about the importance of reducing greenhouse gas emissions, as he did during the GOP primaries, and he is firmly against having America take steps to reduce them without China doing so as well. Indeed, he would reverse recent U.S. progress on reducing emissions by eliminating Clean Air Act restrictions on them, citing his concern for coal industry jobs. His energy plan does not mention “climate change” or “global warming” at all. And in his speech last week at the Republican National Convention, Romney even joked about climate change: “President Obama promised to slow the rise of the oceans [pause for audience laughter] and to heal the planet. My promise is to help you and your family.”
Climate change is no joke for the Democrats, however. Their platform calls it a “real, urgent, and severe” national security threat, “an economic, environmental, and national security catastrophe in the making.” Further, the plan “affirm[s] the science of climate change” and declares that “Democrats will continue pursuing efforts to combat climate change at home. . . because reducing our emissions domestically — through regulation and market solutions — is necessary to continue being an international leader on this issue.” Responding obliquely last week to Romney’s joke, Obama quipped, “Denying climate change doesn’t make it stop.”
Apart from the rhetoric, the Obama plan remains short on details about how to address the climate change threat. It offers the tired and vague blandishments about building an international framework to address emissions, despite the obvious failure of recent international climate talks. His administration’s new standards targeting coal plant emissions mainly apply to new plants, which aren’t being built because they’re uncompetitive with cheap natural gas. The cap-and-trade approach to emissions control that Obama once supported (as did Romney) is no longer on the table after being shot down by Senate Republicans in 2010. The Democratic platform emphasizes a 10-year plan to encourage “clean coal,” but that technology is still in its infancy, with only demonstration plants under development. The available data on clean coal is not promising, because the emissions-scrubbing technology requires so much energy that the plant becomes uneconomical. As a policy strategy, clean coal seems more designed for political appeal than for actual emissions reductions.
Future implications
America still does not have an energy plan, and neither Obama nor Romney have cured that potentially fatal flaw. Both have offered general directional strategies and political fodder, not anything you could call an actual plan.
But the directions they would take us in could not be more different, and their implications will echo long into the future.
If my best guess is correct, all fossil fuels will have peaked and gone into terminal decline around 2025-2030. We will have to be well along in the transition from fossil fuels to renewables before that, because after it, building big infrastructure projects will become progressively more difficult and expensive and the rate of deployment will slow considerably. We really have less than 20 years to get most of the job done. Since non-hydro renewables currently produce only about five percent of U.S. electricity, we’ll have to be extremely aggressive about energy transition, starting right now, if we want to avoid the worst outcomes for our economy and our society as a whole.
President Obama’s strategy is clearly the better of the two choices for meeting that challenge. My reading of recent academic research suggests that generating 80 percent of our electricity from renewables by 2035 might be technically and economically possible, if not likely in our political climate. But by 2050, we’ll be grateful for every last kilowatt-hour we can produce from renewable free fuels. And the “debate” about climate change will be long gone, replaced by a frantic quest for survival and adaptation.
Governor Romney’s energy strategy is painfully regressive and utterly blind to these clear and present dangers. It sounds like an energy policy from 1970, not 2012. Not only are his claims about our current energy situation wrong — for example, citing U.S. oil production at 15 million barrels per day, according to the Washington Post, when the reality is 6.2 million barrels per day — but his expectations for the future of oil are absurd, claiming “we” (meaning North America) will be producing over 23 million barrels per day eight years from now. That’s more than the world’s top two oil producers, Saudi Arabia and Russia, combined.
This is an unfortunate U-turn for Romney, who just two years ago wrote in his book: “But whether the peak is already past or will be reached within a few years, world oil supply will decline at some point, and no one predicts a corresponding decline in demand. If we want America to remain strong and wish to ensure that future generations have secure and prosperous lives, we must consider our current energy policies in the light of how these policies will affect our grandchildren.” I could have given an enthusiastic thumbs-up to that Mitt Romney, but the current Mitt Romney has apparently surrendered to the policy wishes of his fossil-fuel industry donors completely and lost his head.
At least as far as energy policy is concerned, there isn’t really a choice between the two candidates at all. One is leading us toward a semi-realistic future, while the other would leave us in the lurch as fossil fuels decline. And while it’s true that elections are about more than energy issues, if energy becomes the biggest challenge of this century as I expect it will, then maybe that’s all you really need to know.
Photo: Austen Hufford/Flickr
