In July 2008, the Institute unveiled 13 pillars for “Securing America’s Energy Future” in an Open Letter to the next President and Congress, which was signed by 27 influential and experienced national leaders and supported by thousands of Americans. We committed to building specific recommendations behind each pillar. This Blueprint does just that by recommending dozens of concrete steps that the Institute believes must be taken to move our nation toward a more secure energy future.
This Blueprint is the bridge to an energy transition plan that we will provide to the next President and Congress. The transition plan will serve as a road map for a comprehensive and balanced energy strategy. This plan will have detailed programmatic recommendations for the country’s forthcoming leadership to consider and adopt.
Why is it so essential that the next American government be fully prepared to act in a swift and comprehensive way? Simply put, it is because energy underpins every aspect of our lives. Without it, we cannot build and sustain a prosperous, globally competitive American economy or secure and protect our nation in a dangerous world. Concerns over our growing dependence on imported energy, an aging energy infrastructure, and the environmental impacts of energy production and use increase the complexity of addressing our energy challenges.
It is inexcusable that for so long our nation has failed to take the necessary actions to expand, transport, and secure an affordable, abundant, diverse, and clean supply of energy. Today, our economy and our families are paying the price. Left unattended, the situation will only get worse.
It is time to end an era of complacency and division—and begin a new era where every energy stakeholder starts pulling in the same direction for the good of the country.
It is the government itself that has taken energy options off the table by placing 85% of our oil and gas reserves off limits, giving short shrift to basic and advanced research needed to bring new clean energy sources into the marketplace, and erecting unpredictable and needlessly arcane regulatory processes that have prevented new infrastructure from being built. In short, the disincentives to invest in new energy sources currently outweigh the incentives; this must be reversed. This Blueprint recognizes that government has an important role to play in securing our energy future, particularly in providing regulatory and legal certainty, military and homeland security, advanced research efforts for transformational discoveries, and select incentives and a financial backstop for major energy developments and projects.
Yet, make no mistake, it must be the private sector, and not government, that leads us into the energy future. Whenever government tries to pick winners and losers through excessive regulation, centralized planning, and open-ended subsidies, it fails—and taxpayers and consumers lose.
New technology is the cornerstone of any sensible energy policy. Today, America’s scientists, entrepreneurs, research institutions, companies, and investors are brimming with ideas and proposals to create more abundant supplies of both traditional and alternative energy. These innovations can only be successfully brought to market if an appropriate and stable legal, regulatory, and fiscal environment is maintained over the long term. When it comes to energy, we need it all. But ultimately, such ideas must stand on their own and meet the demanding tests of both consumers and the free marketplace.
Working together, we can transform our energy problem into an energy opportunity—an opportunity to unleash the power of free markets to develop new supplies, invest and apply new technologies, and create good new jobs for Americans. It can be an opportunity to lead the world to a new era of energy efficiency and truly enhance America’s energy security.
The dozens of recommendations we have now put behind the 13 energy pillars in our Open Letter can be grouped under these four critical challenges:
• Promoting greater energy efficiency • Increasing and diversifying our energy supplies • Improving environmental stewardship • Modernizing and protecting our nation’s energy infrastructure
First, we must use our energy resources more wisely and produce and use our energy more efficiently.
We have cut our energy intensity in half since 1970, but there are still many areas that we can improve upon to ensure continued economic growth while using less energy. We must foster policies that address the inherent disincentives that exist for electric utilities, homebuilders, and others to use less electricity. Existing infrastructure constitutes a significant portion of U.S. energy consumption, and new building codes should incorporate energy efficiency measures and standards. Our vehicles will become more efficient as new Corporate Average Fuel Economy (CAFE) standards are put into practice. However, we must also increase efficiency throughout the energy delivery chain through the use of new technology and policies.
Electricity generation accounts for about 40% of total U.S. energy consumption. We should explore innovative new regulatory models that reward efficiency, especially for utilities—and, ultimately, their customers—through energy savings programs and new approaches to the delivery of electricity. Moreover, utility regulatory policies that reward more efficient use of generated electricity and natural gas must be encouraged. Consumers should have the ability to moderate their own consumption through transparent real-time pricing and smart metering, and grid technologies should become the norm. Our industries, too, should recognize the benefits of improving their efficiency, making themselves more productive and thus more competitive.
Second, we must not shy away from proven sources of energy while diversifyingour energy mix.
The restrictions we have placed on the production of our own domestic oil and natural gas resources are a significant self-inflicted wound to our security and prosperity. The limitations and moratorium on exploration and production of domestic resources on our lands and on the Outer Continental Shelf must permanently end, and the states must be able to share in royalties collected from such production. Nuclear power is currently the least cost and largest source of zero-emissions baseload electricity. It must be significantly expanded. To do so, the federal government’s partnership with the private sector must be enhanced to accelerate this revival. The existing federal Loan Guarantee Program, funded by fees levied on the applicants, should be expanded to support more than just two or three plants. We must also provide a durable waste strategy once and for all. Our used fuel must be recycled before it is disposed. A new entity should be established to manage the entire back-end of the fuel cycle and be empowered with long-term contracting authority and direct access to the Nuclear Waste Fund.
We can and must use our vast domestic coal reserves in a clean and environmentally responsible manner. Much of the technology to further the advancement of clean coal is still in development or is not commercially viable. Specifically, we believe that an average of $20 billion over 10 years should be devoted to develop and demonstrate the full range of clean coal technologies, with half coming from the federal government and half from the private sector through a small fee on fossil-based utilities.
Renewable sources of energy are growing at a faster rate than traditional sources; however, they still only provide a fraction of generated electricity. We believe that the alternative and renewable tax credits provide a useful incentive to bring initially expensive technologies into the mainstream and allow these technologies to compete in the market. The tax credits should be extended for eight years and then phased out over the succeeding four years.
Technology is the cornerstone of our energy future. The billions of research and development dollars that the federal government has spent over the years have produced many of the technologies that we possess today to diversify our energy supply. However, our current funding levels are about half of what they were 30 years ago. We recommend that federal research and development funding be doubled within the next five years and concentrated in the areas that are most crucial to the nation and best suited for the size and scope of the governmental research and development enterprise.
We need to mobilize the capital that will be needed to deploy these clean energy technologies into the marketplace. Therefore, we make a very important recommendation: to create a United States Clean Energy Bank, a domestic entity modeled after the existing Overseas Private Investment Corporation (OPIC) and the Export-Import Bank. This will accelerate capital formation and provide an essential vehicle to mitigate the barriers to commercialization of innovative technologies that can truly change the world we live in.
Third, the United States must improve environmental stewardship at home and abroad without sacrificing jobs and growth.
We must address the impact of our growing energy consumption on the environment and climate. However, climate change should be addressed as part of an integrated agenda that enhances energy security, maintains economic prosperity, reduces pollution, and mitigates greenhouse gas emissions. Energy efficiency is central to our approach, and advanced technologies—for example, carbon capture and storage, advanced nuclear power, renewables, and smart grid—will be needed on a vast scale to eventually reduce emissions significantly.
In addition, we must continue to protect the air we breathe. As our understanding of the basic science related to air quality continues to progress, we must ensure that decisions about air quality keep pace with science and that our standards remain protective. Accelerating air quality improvements will be made easier by many of the measures and strategies that address concerns about greenhouse gas emissions.
The United States should also work with developed and developing countries alike to tackle the interrelated challenges of energy security, economic development, environmental quality, and climate change. We should work to promote an approach to climate change that allows each nation to find its own best path for meeting strong environmental and economic development goals, while ensuring that all economies are included in addressing global environmental challenges. Innovative clean energy technologies and processes, developed by Americans with our intellectual property fully protected, can be an indispensable part of future environmental solutions.
Fourth, we must modernize, expand, and secure our energy infrastructure because no energy source—traditional or alternative—can reach the market without a modern and vibrant infrastructure.
Significant portions of our energy and transportation infrastructure are inadequate and, in some cases, in decline. Whether it is a new wind farm or transmission lines that carry generated electricity to homes and businesses, investments are needed to modernize, protect, and upgrade these critical assets. Transitioning to smart grid technology will help improve the resiliency and efficiency of our power supply and must be a priority for the next administration.
In addition, siting and permitting issues have slowed the construction and expansion of power plants, refineries, pipelines, and electricity transmission lines. Organized opposition has resulted in delayed and cancelled projects. As a consequence, the resiliency of our entire national energy infrastructure—really a collection of many complex interdependent infrastructure networks—is at risk.
We need clear and streamlined regulatory and licensing processes at the federal and state levels to allow industry to make large capital commitments with surety. In instances where additional transmission capacity across state lines is needed, the federal government should have authority to site needed electric transmission facilities. We also need to address our talent infrastructure. Nearly half of America’s skilled energy workforce is expected to retire within the next decade. U.S. colleges and universities are attracting fewer graduates in chemical, mechanical, and nuclear engineering as well as in math and science. With expected increases in energy facility construction and operations through 2030 to meet projected energy demand, a highly skilled and technical workforce is necessary to ensure American competitiveness. New partnerships with community colleges and training programs, visa policies, and incentives must be implemented to attract young people to technical fields where they can develop and manage the energy systems of the future.
We encourage every citizen, policymaker, and office seeker to carefully review the many specific recommendations that are outlined in the ensuing chapters. Most importantly, we need strong, determined leadership. Global demand for energy will increase by more than 50% between now and 2030 and by as much as 30% here at home. Meeting this soaring demand requires swift and effective action.
It is time to unleash the real and unique power of America’s innovation to solve our energy and environmental challenges. This is a monumental calling, but it is also a historic opportunity for America to demonstrate global leadership, create new American industries and jobs, and secure the American Dream for our children and grandchildren.
If the recommendations that are outlined in this report are undertaken with urgency and adhered to over time, our nation will have the near- and long-term options necessary to remain competitive, clean, and secure. The choice is ours to make, and the public must demand that the 44th President and 111th Congress provide the leadership required, in a nonpartisan manner, for the good of our national security and our economic welfare.