The lack of a consistent, strategically integrated energy policy impairs the United States’ productivity and competitive edge, concludes a study by the Industrial College of the Armed Forces.
In order to protect its interest, the ICAF study says, the nation should develop a cogent energy policy that should:
• Focus the nation on creating and encouraging energy efficiencies.
• Diversify the U.S. energy portfolio to ensure security of supply and price stability.
• Promote sustained, increased development of nuclear power, along with long-term waste disposal procedures and facilities.
• Create incentives aimed at transformative research, developing new, renewable environmentally-friendly energy sources.
• Accelerate available technologies for controlling greenhouse gas emissions that come from fossil fuels.
• Upgrade the U.S. transmission and distribution infrastructure to meet future demand.
The study notes that more than 85 percent of the nation’s energy comes from fossil fuels, 60 percent of which are imported. Further, toxic emissions from burning fossil fuels are contributing to a global environmental crisis that could result in horrendous diseases, mass migrations and economic upheaval.
The five primary energy commodities are petroleum, coal, natural gas, nuclear power and renewable products. The greatest market demands for energy consumables are electrical power generation, transportation, industrial use, and residential consumption and commercial applications. The dominant suppliers for this energy are petroleum and coal, collectively providing more than 63 percent of the nation’s energy while natural gas, nuclear electric power and renewables contribute only 37 percent.
Petroleum, like the other four commodities, has its pros and cons. It is relatively cheap to transport and has a relatively high energy density. Its major drawbacks are U.S. reliance on imports from unstable regions and also petroleum’s greenhouse gas emissions.
The last refinery built in the United States was in 1976. From 1981 to 2005, the total number of refineries fell from 324 to 132, while total refining capacity fell more than 20 percent. To compensate, companies have increased efficiency and capacity of existing refineries. The refinery industry produces more than 50 different fuel blends to meet unique emissions requirements.
Coal is the most abundant fossil fuel in the United States, and its price has been historically stable. It has, however, substantial environmental impacts because it is a dirty fuel, is capital intensive, and is tied to an aging transportation system. Coal mining is a profitable business because demand is strong — most electricity is generated by coal-fired plants. There are more than 250 companies, operating 1,400 mines in 26 states, employing more than 80,000 people, and the industry predicts the need for an additional 35,000 workers by 2030 to meet growing demand. Transporting coal is a continuing problem partly because U.S. rail infrastructure is weakening. To continue to prosper, coal will have to become cleaner and greener.
Natural gas is relatively affordable, abundant and clean. Demand for it has increased partly because of environmental problems with other energy commodities and relatively cheap prices. Natural gas accounts for a quarter of energy market and that is expected to grow during the next 20 years. Growth has sparked increased exploration and also put a strain on infrastructure. The United States now imports about a fifth of its needs, most of which comes from Canada. The ICAF study group recommends that the federal government expand natural gas infrastructure to tap the sources now closed for regulatory reasons.
Nuclear power has low operating costs. Because it has no carbon footprint it will become even more price competitive once carbon emissions are taxed adequately to discourage dirty emitters.
Nuclear power has been generating electricity in this country for 45 years. Today there are 103 nuclear reactors at 65 plants in 31 states, providing more than 20 percent of the nation’s electricity. No new nuclear reactors, however, have been built in the United States for more than 30 years. Public concerns about operational safety and waste disposal have discouraged investment in new nuclear power plants. The industry is nearly dormant in the United States, and the nuclear power generation infrastructure is aging, with most of its nuclear power plants nearing the end of their expected life.
Renewables have promise because they have low greenhouse gas emissions. They also suffer from high cost and are still technologically immature. Their use have led to unintended consequences such as increased food prices and windmill bird strikes. Today renewables supply slightly more than 6 percent of the country’s energy requirements, and the mature hydropower source produces much of that. Solar energy provides less than one percent of U.S. demand.
Alan L. Gropman is a distinguished professor of national security policy at the Industrial College of the Armed Forces, National Defense University. This article has been derived from an ICAF student/faculty Industry Study report.
To download a PDF copy of this report please click here.
The views expressed in this article are those of the author and do not reflect the official policy or position of the National Defense University, the Department of Defense, or the U.S. government.