Demand for energy resources in the rest of the world, and especially developing nations, is growing rapidly. Like Willie Sutton robbing banks because “that’s where the money is,” emerging economic powers like China and India are racing to secure the oil, coal, and natural gas they use because that’s where the economic growth is. But as this competition for limited fossil fuel resources heats up, the media and conservative politicians are increasingly questioning federal investments in clean energy. Using selective facts and a very narrow definition of national interest, they argue that public incentives for clean energy are a bad bet.
The criticisms of investing in clean energy ignore that our nation is on an unsustainable energy path and that for our economy, national security, public health and, yes, environmental interests, we must diversify our energy portfolio. Our nation’s energy infrastructure today is essentially reliant on coal, oil and natural gas — three natural resources that are in dramatically increasing demand around the world. This has nothing to do with peak oil. The world is racing headlong into a bidding war for energy. The only entity both able and empowered to halt the march is the federal government.
Today, the United States relies on coal and natural gas to generate over 69% of our electricity and oil for almost 100% of our transportation fuels. Hopefully, the energy crunch in electricity will be mitigated by the massive natural gas deposits the US can now extract from shale rock. But relying on any one energy source is a risky bet to play, especially in a global economy where other markets already pay three times as much as we do for the same commodity. Recent data by AT Kearney, an energy consulting firm, suggests that world natural gas prices will increase by 40% by 2014. The Energy Information Administration projects coal use to increase 30% over the next twenty years.
A New York Times article warns that our national energy projects “will also require ratepayers to pay billions of dollars more for electricity for as long as two decades.” But what it fails to mention is that, thanks to global energy demand and commodity prices, the growth curve of our electricity prices will dwarf the costs of these projects. Put simply, if we do nothing, the hardworking American population is going to be paying more to turn on lights, air conditioning, and their cars — potentially much more than if those clean energy projects are built.
There is another option. Instead of continuing to over-leverage fossil fuels, we can diversify our portfolio by investing in innovations that will bring down the price of clean energy technologies so that American businesses and consumers have more options. This is where those tax dollars come into play. We cannot allow our economic, security, and environmental interests to remain hinged to energy products that are in high demand and necessitate a price premium to remain tethered to them. Perhaps paying now for the research that could result in technologies that reduce our reliance on the commodities market is not such a bad idea after all.