To a Point
24 Pages Posted: 19 Oct 2007
For over a century, the United States has operated under a consistent energy policy that has served the country well. Our Traditional Energy policy is based on three economic assumptions: private capital and markets create wealth and stimulate innovation; there is a direct and positive correlation between energy production and economic productivity; and economies of scale will enable us to produce more energy at lower cost. Events over the last four decades, however, have given cause to question that Traditional Energy policy. The damage from Hurricanes Katrina and Rita helped focus that questioning. Increasingly over that period, national and international policymakers have recognized that energy policy does not and cannot stand alone and apart from the environmental consequences of energy exploration, production, distribution, and use. The new path, or soft path, would substitute small-scale, clean, renewable energy production for large-scale, dirty, fossil-fuel energy-and nuclear-generated electricity. The soft path would open new markets, capitalize on new technologies, and create a more flexible, as well as a more efficient, structure for energy production, distribution, and use. The new path would rely on new technologies and market mechanisms to facilitate competition, economic growth, energy efficiency, and would provide resource, including environmental, protections. Unfortunately, the federal government has failed to take these developments seriously over the last several presidential administrations. Funding is where the rubber meets the proverbial road, and the playing field is still tilted heavily in favor of Traditional Energy despite the calls for new initiatives favoring new energy sources. This Article challenges the economic assumptions of the Traditional Energy policy and concludes that diversity, new technologies, and innovation are necessary for a future responsive to the new thinking.
Keywords: Energy policy, environment, Katrina, resources
JEL Classification: K32
Suggested Citation: Suggested Citation