April 2008
Energy Independence: Good Goal or Muddled Myth?
Energy independence is a popular recent catchphrase, but it is remarkably undefined. What does "energy independence" really mean? Is it independence from the use of certain kinds of energy altogether? Is it independence from price fluctuations? From supply disruptions? From certain suppliers in particular? Is it independence from foreign entanglements, such as our continuing involvement in the Middle East? Or is it just a fanciful term for wishful thinking?
At an AEI event on April 17, 2008, Robert Bryce, author of Gusher of Lies (PublicAffairs, March 2008), was joined by AEI scholars Steven F. Hayward and Kenneth P. Green to discuss the realities, liabilities, and possibilities of energy independence.
Robert Bryce
Energy Tribune
The world is interdependent, and energy is a global business. The idea of energy independence is broadly appealing because of four issues: the second Iraq war, global warming, peak oil, and terrorism. These concerns, combined with free-floating anxiety among Americans and soaring debt, contribute to the feeling that energy independence is the answer. The key issue among these, however, is terrorism. The sound bite from both parties is that if the United States stopped buying oil, the terrorists would not have any money, and terrorism would go away. But this does not make sense.
If the United States stops importing oil, the price of oil may fall to $20 a barrel. Say the Saudis are then able to export only 5 million barrels a day. This is not going to bankrupt them: they can still do whatever it is they are being blamed for by energy isolationists. And just because the United States stops buying energy on the global market does not mean anyone else will. There are 172 other countries that import oil, and they will buy it at the lowest price possible, no matter who the seller is. Say we do bankrupt the petrostates: terrorism is cheap, and it can be funded by the drug trade, organized crime, or the weapons trade.
Energy independence is not feasible. If the United States turned all of its corn and soybeans into ethanol and biodiesel, it would meet 7.5 percent of all of its oil needs. Exxon estimates that renewables and biodiesel will increase at rapid rates through 2030. By 2030, even at a rapid growth rate, those sources will only account for 2 percent of global energy use. These are all projections, but even if they hit 20 percent by 2030, we will still be relying on fossil fuels for most of our energy. So we need to be honest and realistic about our energy future.
The ethanol scam is one of the biggest robberies of taxpayers in this country's history. We are heavily subsidizing ethanol, and a third of corn is going to ethanol. As a result, over the past two years, the price of corn has doubled, and the price of soybeans has tripled. What we are doing with ethanol mandates is immoral: we are converting food to fuel. And when accounting for land use change, replacing gasoline with biofuels from corn or switchgrass creates net greenhouse gas production. Biofuels made from food are not the solution to our energy problems.
There is reason for optimism, though. We hear a lot about peak oil and global warming and not much about decarbonization--the increasing trend toward cleaner fuels. From prehistory until the 1800s, wood was the prevalent fuel. Coal was an improvement over wood: it is a denser source of energy with a lower carbon to hydrogen ratio. Now we are seeing a trend toward natural gas, which is the cleanest of the fossil fuels. Consumers like clean, dense energy. This trend may briefly waver as some countries industrialize, but it is a definite trend, and it is good news. Environmental groups should be advocates of natural gas. If Congress were serious about importing less oil, they would be talking about natural gas.
Rising living standards and increasing energy consumption in poor areas of the world are good things. About 40 percent of the world's population is still using wood, dung, or other biomass to meet their energy needs. Indoor air pollution from this is a major health threat. This move toward decarbonization is a good thing, but the notion of energy independence is not productive.
Steven F. Hayward
AEI
It may make sense to talk about energy security, but the United States is actually much more secure than it was in the 1970s. The oil price shocks of this decade had much smaller effects on the economy than the oil shocks of the 1970s.
The large flows of revenue to certain petrostates have intensified bad governance. If the United States stopped buying oil from those Arab states, however, it would not defund them, because other states would still buy oil from them. To actually defund these states, other sources of energy need to be found.
The problem with reducing CO2 emissions in the United States and reducing energy dependence is that the prevalent fuel in the United States is coal. And even if all of the coal were replaced with natural gas, Americans would still be significantly above the goals they have to reach to reduce CO2 emissions by 80 percent, based on reports from the Intergovernmental Panel on Climate Change. In order to reach that target, the United States needs to be emitting no more than 2.5 tons of CO2 per capita per year by 2050. France and Switzerland, which use significant amounts of nuclear energy and hydropower, emit between 6 and 6.5 tons of CO2 per capita per year. Driving ten thousand miles in a Toyota Prius emits 1.8 tons of CO2. Among environmentalists, there is too much credulity about possible alternatives to fossil fuels.
AEI research assistant Abigail Haddad prepared this summary.
