The United States meets less than 3 percent of its electricity needs with wind, solar, and other forms of alternative energy. In contrast, Denmark meets 20 percent of its electricity needs with wind, while Spain has reached 9 percent and Germany and Portugal, 7 percent. The Philippines have tapped into geothermal for 28 percent of their power. Yet those countries do not have the resources of the United States, with the blustery expanse of the Great Plains, the clear desert skies of the Southwest, and enough heat stored in underground rock that scientists believe it could produce 2,000 times America’s annual power consumption. Alternative energy advocates broadly agree that the federal government never has provided the robust, steady support that renewable energy needs to compete with cheap coal electricity. Subsidies born of the oil shocks of the 1970s were scaled back in the 1980s. Since 1992, Congress has offered tax credits but only for a year or two at a time; industry has geared up, then fallen into a lull, undermining large-scale renewable energy projects. And the tax breaks did not benefit homeowners or farmers who wanted to install smaller wind power systems. “The French, the Germans, the Spanish, and a few others have made the decision, first of all, that they want renewable energy, and they want to pay for it,” said longtime renewable industry consultant Paul Gipe. “We haven’t made that decision yet.” In countries that do have a successful renewable energy policy, Gipe and others argue, consumers pay the price for alternatives through higher utility rates that also encourage conservation. Washington, instead, has taken the politically easier course of supporting renewable through tax breaks, leaving the programs constantly at risk over federal budgetary concerns.

Follow-up:
Although a renewable energy tariff similar to the German system was introduced in Congress for the first time in 2008, the bill signed into law by the president featured the familiar tax breaks that had been set to expire at the end of this year. Solar energy made out best, with an eight-year tax break extension that marks the longest sustained program to support the industry in the past 20 years. Geothermal, biomass (using waste wood products for electricity), and a new category, marine renewables (which includes such promising sources as tidal power) received two-year production tax credits. Wind energy only saw a one-year extension, although it was extended to small wind systems for the first time.

Photo credit: Environmental Protection Agency

In 1973, when President Richard Nixon said, “Our independence will depend on maintaining and achieving self-sufficiency in energy,” the United States imported 34.8 percent of its oil from foreign countries. In 1979, when President Jimmy Carter said the country will “never again use more foreign oil than we did in 1977,” imports were up to 45 percent of the nation’s oil supply. Dependence on foreign oil did indeed fall during a few economically troubled years when smaller, foreign-built cars gained popularity and American manufacturers reduced the weight of their vehicles. But that began to change when oil prices dropped in the mid-1980s, and by 1990, when President George H.W. Bush talked of the need to reverse “excessive dependence on foreign oil” at the dawn of the first Persian Gulf War, the United States was importing 42.2 percent of its oil. By the time his son ran for office, sport utility vehicles ruled the roads and 52.9 percent of the nation’s petroleum came from overseas. By 2006, when President Bush declared in his State of the Union that the nation was addicted to oil, foreign countries were delivering 59.9 percent of the fix. Geology has dealt the United States a bad hand if it hopes to achieve energy independence while continuing to rely heavily on oil. America’s old fields are tapped out; U.S. oil production has been in an inexorable decline since its peak in 1971. The government has pushed for the oil industry to squeeze out more domestic supply. Federal subsidies approved by Congress in 1995 encouraged a boom in oil drilling in the deep waters of the Gulf of Mexico. And the Bush administration’s Department of the Interior streamlined the process for drilling on federal lands, nearly doubling the number of permits approved each year. Nonetheless, U.S. oil production plummeted 22 percent over the past 10 years to about the same level that the nation’s oil fields were producing in 1947. All of the oil remaining beneath the United States amounts to less than 2 percent of the world’s known petroleum reserves. In contrast, Saudi Arabia sits on 20 percent of the world’s oil, and together with the dozen other countries of OPEC, controls 71 percent of global black gold. That’s why, recent cries of “drill, baby, drill” notwithstanding, experts have long agreed that the nation cannot escape its foreign energy dependence as long as more than 95 percent of transportation is fueled by oil and demand grows each year. The federal government has not yet put together the sort of comprehensive policy that might actually facilitate energy independence. Neither the Clinton nor the Bush administrations used the authority they had under the law to force automakers to produce more efficient cars, and Congress likewise avoided taking on Detroit for 32 years. That changed last year, when Congress passed and President Bush signed a law requiring that the average fuel economy of U.S. vehicles, stalled at 27.5 miles per gallon since the late 1980s, would move up to 35 mpg by 2020. As for oil alternatives, Washington has given the most support to the one with the most political clout — ethanol, the fuel alcohol derived from corn. Congress ramped up the “renewable fuels” mandate last year, pleasing the farm states and ethanol industry backers from Wall Street to Silicon Valley, even while critics charged that diverting so much of the nation’s grain to fuel was straining food supplies and prices. These policy changes, if they pan out, will have but a modest impact on the nation’s foreign oil dependency; the government’s energy forecasters, figuring in the impact of the new law’s ethanol and efficiency mandates, say that in 2030, the nation will rely on foreign nations for 54.3 percent of its oil supplies.

Follow-up:
Hope for a new generation of fuel-efficient vehicles, and the capital investments they would require, has been clouded by the travails of the U.S. auto industry, which has been driven to the brink by the financial crisis; automakers are seeking funding help from Washington. This year marked one achievement in the effort to reduce foreign oil dependency — the first significant decline in U.S. gasoline demand in 17 years. Americans were driving less, however, not due to any success of government policy, but thanks first to sky-high oil prices, and then to unemployment and the nation’s economic woes.

Photo credit: Department of Energy

In the 1970s, when the federal government tightly regulated the oil market, federal policies encouraged construction of gasoline refineries. But deregulation in the first year of the Reagan administration allowed the oil industry and market forces to decide how many refineries were needed. As a result, the number of refineries and total capacity to produce gasoline in the United States peaked in 1981 with 324 refineries able to process 18.6 million barrels of crude oil per day. Today, with U.S. demand for oil more than 20 percent higher, refinery capacity is roughly 1.7 percent lower. Refineries operate near full capacity in the summer, leaving the nation’s fuel supply chain vulnerable to disruption, as in September 2008 when Hurricanes Gustav and Ike shut down most Gulf Coast refineries, and gasoline stations throughout the Southeast ran out of fuel. Refining historically has been the low-profit segment of the oil business, so the industry has had little incentive to build. Some economists believe the Federal Trade Commission made things worse by forcing oil companies to divest themselves of refineries when they merged with other oil companies. The smaller companies that bought the refineries often did not have resources to expand them. And, during the past decade, the Environmental Protection Agency (EPA) required refineries to invest $50 billion, according to industry, to meet regulations for cleaner burning fuels. Over the same time period, neither the EPA nor Congress did anything to force the auto industry to make more energy-efficient vehicles, which would have helped curb pollution and lessen the squeeze on refineries — and on wallets at the gas pump.

Follow-up:
Prospects for increasing U.S. refinery capacity are dim. The current economic slowdown means less demand for gasoline, easing the immediate pressure on refineries. Many refinery expansions have been put on hold, not only due to current financial woes but also because of legislation mandating more efficient vehicles and greater use of “renewable fuels,” mainly corn-based ethanol.

Photo credit: Environmental Protection Agency

Five years after the worst blackout in North American history, in which one Ohio utility’s mistakes darkened homes and businesses for 50 million people in eight states and Canada, the federal government acknowledges that much remains to be done to address the nation’s aging electric grid. The 200,000 miles of power lines that crisscross the country were not designed to bear the burden they now carry. In response to the 2003 blackout, Congress for the first time made the more than 500 owners and operators of the world’s largest power grid subject to mandatory reliability standards. But the program, run by the industry’s own self-regulatory organization, the North American Electric Reliability Corp. (NERC), is no cure-all. In February 2008, a million people lost power for an afternoon due to the errors of a Florida Power & Light engineer. NERC issued advisories to help prevent such problems in the future, but levied no penalties. More nettlesome problems, utilities argue, are the need to build additional long-distance, high-voltage power lines, and to bring up-to-date digital technology to the grid. Investment in electric transmission has roughly doubled in the last five years, thanks in part to Federal Energy Regulatory Commission incentives, but the agency says that much more investment is needed. Some projects are slowed because neighbors and environmentalists object to power lines, but that problem may not be as great a barrier to new transmission lines as the simple question of who should pay for them — when the customers who benefit the most are often hundreds of miles from the fields, farmland, and mountains that need to be cleared to make way for towering steel pylons.

Follow-up:
The drive for cleaner energy is making the need to fix the nation’s transmission grid problems even more urgent. Areas with high wind, intense sunlight, and great geothermal potential — the sources of alternative energy — are remote, so even more high-voltage power lines will be needed. In most states, electric utilities make more money by selling more power, giving them little motive for investing in grid upgrades that would help consumers use less electricity.

Photo credit: Department of Energy