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The Agenda

NRO’s domestic-policy blog, by Reihan Salam.

A ‘Most-of-the-Above’ Energy Strategy



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Robert Bryce, author of Power Hungry and a senior fellow at the Manhattan Institute, has a new report on innovation in oil and gas production. The release of the report coincides with the publication of The Power Surge, a new book by Michael Levi of the Council on Foreign Relations. Both Bryce and Levi document the technological advances that have greatly increased the supply of recoverable hydrocarbons in the United States, a development they celebrate. But while Bryce is somewhat skeptical about clean energy technologies (with the exception of nuclear power, which he sees as promising, despite its high capital costs), particularly when contrasted against the “miraculous substance” that is oil.

Levi’s book, meanwhile, stakes out the middle ground, arguing that supporting the growth of hydrocarbon as well as renewable energy sources can be an entirely coherent and attractive strategy. Provided government takes demand-side measures to deter dangerous activities, like excessive carbon emissions, a less restrictive approach to permitting and access to land can constructively co-exist with efforts to foster zero-carbon technology development. The goal, according to Levi, is to build a more resilient energy portfolio.

Though Levi’s “most-of-the-above” strategy is appealing in many respects, my sense is that he is too sanguine about government intervention to support downstream consumer technologies, like new low-emission automobiles. (Investing in infrastructure designed to facilitate the adoption of autonomous vehicles, in contrast, is an option worth pursuing, but that’s a separate matter.) While the case for supporting upstream research and development efforts centered on carbon capture and solar radiation management, etc., is rock-solid, the case for supporting downstream innovation is much less so. Moreover, Levi is careful to call for “careful carbon pricing.” As Oren Cass argued last month in National Review, however, carefulness is in a sense the heart of the problem: to mitigate the regressive impact of carbon pricing and its tendency to encourage the offshoring of carbon-intensive activities, carbon pricing in practice “would quickly become a big-government labyrinth of new agencies, rules, and handouts.” This isn’t to suggest that a well-designed oil tax, a policy Levi has advocated with co-author Daniel Ahn, couldn’t do some good. And Levi has many other constructive suggestions as well, e.g., calling on state and local governments to embrace “smart zoning,” which I take to mean denser development. Recommendations aside, Levi also offers an illuminating account of the recent history of U.S. energy development, which establishes, among other things, that the private and the public sectors had much to do with recent breakthroughs in accessing tight oil and gas. 

The enthusiasm of both Bryce and Levi for shale gas development brought to mind the disruptive or empowering potential of distributed energy resources, as one avenue through which natural gas might impact energy use is through the adoption of home fuel cells. I wouldn’t bet that home fuel cells will spread like wildfire, as they remain fairly expensive and electric utilities are already taking advantage of low natural gas prices. But it’s not impossible to imagine some wedge opening up between grid electricity and a more do-it-yourself approach, particularly for energy-intensive manufacturers that might also take advantage of waste heat, etc. 



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