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Energy Policy in the 21st Century

Peter Blair

The End of Oil: On the Edge of a Perilous New World.
Paul Roberts.
389 pp. Houghton Mifflin, 2004. $26.

Energy at the Crossroads: Global Perspectives and Uncertainties.
Vaclav Smil.
xvi + 427 pp. MIT Press, 2003. $34.95.

Power to the People: How the Coming Energy Revolution Will Transform an Industry, Change Our Lives, and Maybe Even Save the Planet.
Vijay V. Vaitheeswaran.
x + 358 pp. Farrar, Straus and Giroux, 2003. $25.

The Arab oil embargoes of the 1970s shook the United States and created a sense of urgency about the role of energy in U.S. and world economies that persists to this day. It is not that energy wasn't central to geopolitical events prior to the embargoes (it often was), but only in the past 30 years have concerns over the price and availability of oil spurred development of an impressive portfolio of new technologies for increasing energy supplies and reducing demands—some of which (high-efficiency natural gas–fired combustion turbines, for example) have been deployed extensively worldwide. Such technologies have reshaped the landscape of what is possible in fueling modern economies.

These changes took place throughout the 1980s and 1990s. Nowadays, policy makers are less focused on oil price and availability and instead consider a complicated combination of factors, such as the environment, economic competitiveness and national security. The attention currently being paid to such complexities is natural enough. After all, our knowledge has matured significantly since the 1970s. We now have the ability, if not necessarily the will, to make systematic, long-term decisions about the production and use of energy, and we are much more aware of how these choices will influence social, economic and environmental policy. That is, in the United States today, a comprehensive strategy for the production and consumption of energy cannot be viewed as an end in itself. (Indeed, those all-too-common references to a "national energy policy"—or to the lack of one—are overly simplistic.) Rather, the direction of energy policy must derive from the broader and more fundamental national goals of economic health, environmental quality and national security.

Since the 1970s, the literature seeking to shape the future of energy and environmental policy has exploded. The three recent additions reviewed here strike very similar themes but offer different perspectives.

In The End of Oil: On the Edge of a Perilous New World, Paul Roberts chronicles the evolution of the world's insatiable appetite for oil and the realization that at some point a switch to another type of fuel is inevitable. Roberts contrasts the views of oil optimists with those of pessimists, develops the range of economic and political issues surrounding world oil use, analyzes the problems and promise of alternatives, and concludes that unless we act to manage the transition, disruption and violent dislocation will almost certainly occur.

The pace, path and end point of this shift to a new energy era are as yet unclear, but the forces shaping it are becoming more obvious. Without a single chart or graph (most unusual for a treatise on energy policy), Roberts describes several of these influences. For example, in striking imagery, he describes climate change as "probably best understood as a gigantic accident, an unintended interruption in the billion-year-old process by which earth transformed itself from a seething, poisonous hell into a lush and hospitable cradle of life."

Roberts's concluding chapter, "How Do We Get There?," builds a case against a "defensive" energy strategy—that is, one in which the goal is to seek to extend the use of fossil fuels for as long as possible, ignoring or dismissing the global environmental implications of doing so. Instead, Roberts advocates an "optimistic" scenario that builds on his premise that energy consumers will be persuaded "that traditional U.S. energy policy has failed and that energy is too critical to be left entirely to the ‘free market.'" He opines that under such circumstances, "rather than struggling to defend the energy status quo—say, by invading some oil-rich region—U.S. lawmakers might be willing to risk a more progressive and interventionist energy policy—one intended to balance the necessary focus on increased supply with a new emphasis on energy efficiency and low- and no-carbon fuels and energy technologies." This is a challenge that he argues is as yet unmet. Certainly Roberts's views are not universally held, especially not to the degree he pushes them, but his exposition does illustrate the fundamental dilemma of energy policy today, which is echoed in the other volumes reviewed here as well.

This prototype . . .Click to Enlarge Image

Vaclav Smil, in Energy at the Crossroads: Global Perspectives and Uncertainties, zeroes in even more sharply than does Roberts on the issue of reconciling the world's accelerating demand for energy with the imperative of preserving the "integrity of the biosphere." He asserts that our dependence on fossil fuels must be reduced, not because of imminent resource shortages but because widespread burning of oil, coal and natural gas is increasingly compromising the biosphere and causing economic and security problems as the cost of those fuels and volatility in the Middle East increase. He challenges the accuracy of various models designed to forecast energy use, recounting decades of erroneous predictions. And he provides detailed descriptions of many alternative sources of energy and the technologies behind them.

Smil avoids discussing some important developments, such as economic globalization and the changing economic structure of both the industrialized and developing worlds. He chooses instead to explore the interaction of energy use and the environment, and to consider, for example, the changes that would be needed to support a hydrogen-based economy. Still, the conspicuous lack of attention to economics in his characterization of alternative futures makes those scenarios seem somewhat simplistic and renders any assessment of their relative likelihood difficult.

Economic concerns fare much better, or at least are more prominent, in Vijay V. Vaitheeswaran's Power to the People: How the Coming Energy Revolution Will Transform an Industry, Change Our Lives, and Maybe Even Save the Planet. The book is entertaining (another quality that is unusual in a book about energy policy). He paints a vivid picture of an "energy revolution" that he posits is already under way. His vision is of three major forces at work: markets, environmental pressures and new technologies.

Of special note is Vaitheeswaran's highlighting of several key topics, concentrating on electricity: the emergence of Enron and the independent power industry, the growing prospects for small-scale distributed-generation technologies, and experiments in deregulation of electric supply markets. He also playfully compares Jimmy Carter's national energy policy with that of George W. Bush, noting their similarities.

His analysis of experiments in deregulation includes section headings such as "Deep in the Heart of Darkness," "Attack of the Killer Lobbyists" and "Half British, Half Baked." Vaitheeswaran most colorfully recounts the tortured story of how the electric utilities were deregulated in California in recent years. Despite that fiasco, he ends on a note of cautious optimism, concluding that

Regulators and politicians must speed ahead—but alert and with both hands firmly on the steering wheel, not asleep behind it. Only then will the world's electricity networks be transformed into the vibrant Energy Internet worthy of the twenty-first century.

Vaitheeswaran then turns to environmental pressures—or, as he terms it, "the green dilemma." He starts with the usual suspects, namely global warming, urban air pollution and sustainable growth, which he (again being playful) terms "a new opiate for the masses." He concludes with an intriguing chapter titled "Adam Smith Meets Rachel Carson," which describes the promise and challenges of market-based environmentalism. He outlines, as an example, "The Greening of Browne," referring to the leadership of British Petroleum's CEO, Lord Browne, the first big-oil executive to engage global climate change as an important international issue.

Finally, Vaitheeswaran explores some key new developments in energy technology. For example, he speculates on the prospects of fuel cells based on proton-exchange membranes, anticipating the emergence of a robust market. In the section titled "Rocket Science Saves the Oil Industry," he describes the "entrepreneurship, ingenuity, and a dash of inspiration" accompanying many recent developments in the oil business, including robotics, seismic analysis, reservoir maintenance and others. While considering the prospects for a renaissance of nuclear power, he quips that "the industry that once boasted it would be too cheap to meter is likely to be remembered as too costly to matter." In a section titled "Micropower Meets Village Power," he pines for "a happy collision of clean energy, microfinance, and community empowerment" in developing countries.

Treatments of energy policy are usually easily identified as coming from the left or the right of the political spectrum. These books all approach energy policy mostly from the left, but Vaitheeswaran strikes a more careful balance. The concluding paragraph of his epilogue, "The Future's a Gas," is especially thoughtful:

Stopping the use of fossil fuels completely and immediately would be foolish and needlessly expensive, but a thoughtful, phased shift to hydrogen-fired micropower would not. On the contrary, the innovative technologies unleashed by market liberalization and environmental demands hold out the promise of an inexpensive, and maybe even profitable, transition to a cleaner energy world. If we grasp that opportunity, then there is every reason for hope about our planet's future. Indeed, there is every reason to think that today's nascent energy revolution will truly deliver power to the people.

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