Energy, Regulation, and Your Future

Posted by Allen Wilson On October - 9 - 2008

Americans have learned in the past months how inextricably linked our energy and our economy have become. A disturbing indication of how poor regulation may push the technology and production of alternative fuels off shore has emerged. If we don’t pay attention now we may find ourselves being held hostage to foreign alternative energy sources, much as were are to foreign oil.

On October 17, 1973, the members of the Organization of Arab Petroleum Exporting Countries announced that they would no longer ship oil to nations that had supported Israel. The effects of the embargo were felt immediately. The global effects were profound but perhaps not well understood. For instance, the turn in Russia’s economy had its roots in this event. Japan shifted to industries such as electronics, Western nation’s central banks sharply cut interest rates, and political allegiances started to shift between allies.

On March 28, 1979 an accident occurred at the Three Mile Island Nuclear Generating Station near Harrisburg, PA. The event was largely publicized even though the leak was contained and no injuries or deaths resulted. Eleven years and one month after Three Mile Island, April 26, 1986, a serious accident occurred at the Chernobyl Nuclear Power Plant in the Soviet Union. Unlike TMI, the Chernobyl accident resulted in both direct deaths and long term death and illness. These two accidents essentially ended the growth of the nuclear power industry.

Even before the United Nations Conference on Environment and Development, known as the Rio Summit held from June 13 to June 14, 1992, concern was developing over air quality. More studies and more discoveries relating to emissions from burning fossil fuels led to the beginnings of efforts to reduce emissions addressed by the Kyoto Protocol.

Reams of analysis of the cause and effects of these seemly unrelated events and their consequences have been written. Most focus on the economic importance of the fuels and the potential hazards of converting fuels to energy. The net result of this focus has been regulation of the extraction and conversion of fuels. What has been mentioned but not explored is the shift of global development based on the energy effects.

In the dawning of the “Energy Age” regulation has exploded. Regulation itself is not a bad thing. We might even be inclined to suggest that it is better to err on the side of conservatism in an effort to safeguard the future. Along with this abundance of caution comes a responsibility to constantly review the result of the actions taken. A case in point is a disturbing indication of the negative impact of regulation on the development of alternative fuels.

There is dynamic development and growth in the biofuel industry. We have already found that the use of food products such as corn to make ethanol has a detrimental effect on food prices and availability. Biofuel developers are responding to this by seeking other sources. One of these, the Direct to EthanolTM process links photosynthesis with the natural enzymes to produce ethanol from inside a tiny algae cell, is particularly promising. This process uses sea water, CO2 from power plant emissions, sunlight, and algae to produce ethanol in large quantities. Yet even with the emphasis on development of alternative energy and the need to become less dependent on foreign oil this American idea has been pushed off shore. Regulations on land use and government wrangling over subsidies have resulted in a missed opportunity for the USA.

A large financial investment by a foreign nation has enticed the initial development of the first plant of its kind away from America. With it go jobs, tax revenue, and CO2 reduction credits.

Just this summer we narrowly escaped losing a large solar power plant development due to regulation of government land in the desert southwest. Again, Solar One and Solar Two’s advanced design for alternative energy was in jeopardy from regulation and special interest intervention.

What we are going to have to come to terms with is that we cannot have it both ways. Regulation is good only if it is good regulation. Pandering to special interests will only result in a further degradation of this nation’s economy and self sufficiency.

Your future is more and more dependent on energy. Energy is the currency of the twenty-first century. We have, in this country, the domestic reserves, land, human resources, and innovation to achieve a bright future. What we need to realize in that future is leadership. Making America strong through the investment in our energy future will likely require our leaders to make political sacrifices. We have to ask ourselves who among them is willing to take that path.