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Analysis: Energy report, fact or fantasy?

disclaimer: image is for illustration purposes only
by Rosalie Westenskow
The Dalles, Ore. (UPI) Dec 3, 2007
A few months after the release of a prominent energy report, some experts say its recommendations possess minimal potential for solving the world's energy woes, while others wish Congress would adopt its comprehensive approach.

The National Petroleum Council, an advisory committee for the U.S. Department of Energy, released its 380-page report, "Facing the Hard Truths about Energy," in late July. The report received applause from diverse sectors, including many in industry, government and the media, for its recommendations on how to quench the world's insatiable thirst for energy as demand continues to rise.

Previous studies presented in the report project a global increase in energy demand somewhere between 32 percent and 58 percent by 2030, as energy consumption in developing countries grows and world population blooms to an estimated 8 billion. The report's recommendations suggest methods of averting an energy crisis, while addressing environmental, security and economic concerns.

The five main strategies the report suggests the United States adopt includes a call to increase efficiency, particularly in the transportation sector, and increase research and development of energy technologies.

Upon receiving the report, Samuel Bodman, U.S. secretary of energy and commissioner of the report, assured its authors it would be implemented in the development of the nation's energy policy.

"It usefully identifies strategies for consideration by policy and decision makers at all levels of government and industry," he said.

However, some experts say the report pushes proposals that will lead to harmful outcomes, not positive results. Included in this group is Jerry Taylor, a senior fellow at the Cato Institute, a libertarian think tank that hosted a panel discussion and analysis of the report this week.

"This is a call for government subsidies of the oil and gas industry," Taylor told United Press International. "There is zero case for subsidies (in that industry)."

Many of the report's recommendations, though vague in the sense that no specific policy action is favored, suggest government should step in to ensure certain goals, such as efficiency, are achieved. But those who favor free-market fixes see a problem with forking money over to the oil and gas industries.

"There's enough money sloshing around to invest in research and development -- they don't need government help," Taylor said.

The most efficient way to increase efficiency, say Taylor and other free-market enthusiasts, is to let prices rise. Consumers will respond by either demanding more efficient products or by curbing their consumption, said Richard Gordon, professor emeritus of mineral economics at Pennsylvania State University and an adjunct scholar at the Cato Institute.

"It appears that the whole report buys these dubious arguments that the consumer of energy is somehow stupid about energy," Gordon said during the discussion at Cato.

However, consumers don't always make choices based on the rationale of lowest price and efficiency over the lifetime of a product, said John Guy, deputy executive director of the National Petroleum Council.

"Often the decisions that are made for residential equipment żż are made by a builder who's looking to get the lowest upfront cost, not the lowest operating cost," Guy told UPI. "Clearly, the government has a role in setting the ground rules on how markets are going to work."

One of the other key issues raised by the report lies in exactly what type of energy sources the United States, and the world, should pin their hopes on. The NPC report responds: all of them.

"You need every kind of energy you can get your hands on," Guy said.

This outlook has precipitated critiques from the peak oil community, whose members project an end to the oil supply in the near future, and environmental concerns over promoting increased use of greenhouse-gas emitting energy sources like coal.

But the study only attempts to forecast energy problems and solutions for the next two decades, Guy said, and a future without coal will never satisfy growing energy demand.

"You cannot meet future energy needs on a global (scale) without using coal," he said.

If the suggestions laid out in the report are to be integrated into policy, though, it is vital all five suggestions find equal footing in the resulting legislation, not just fragments, said Joseph Caggiano, senior consultant for Chevron Energy Technology Co. and a contributor to the NPC report.

"It's not a matter of 'my favorite thing,'" Caggiano said. "There is no single easy solution."

That means acting on all five recommendations: moderate demand by increasing energy efficiency, expand and diversify the U.S. energy supply, strengthen global and U.S. energy security, increase capacity to meet new energy challenges and address environmental concerns of carbon emissions.

Unfortunately, getting legislators on the Hill to accept the entire package is proving difficult, said Frank Verrastro, director of the energy and national security program at the Center for Strategic & International Studies, a non-profit, non-partisan think tank that worked on the report with the NPC.

"The problem is, they're not being taken in their totality," Verrastro told UPI.

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