Toward a national energy policy It's an idea whose time has come -some say none too soon. Industry wants one. Environmentalists want one. The Congress wants one. The Administration wants one. Even organized labor wants one. Everyone wants a national energy policy. Of course, everyone doesn't agree what form a national energy policy should take. Some say it should be a loose set of "guidelines" -a mechanism for bringing energy considerations into economic, social, political, and technological decisions. Others want an "energy bible"-a document listing the "thou shalts and thou shalt nots" of energy management. Still others propose a NEPAlike law, making "energy impact statements" mandatory for any proposed changes in the social order. There are nearly as many approaches to an energy policy as there are special interests. So, while nearly everybody agrees that we should have a national energy policy, there is little agreement on how such a policy should be shaped, what it might include, and how it should be implemented. Yet beyond this is the chilling realization that the United States does have an energy policy-a de facto policy which boils down to a basic goal-unlimited cheap energy. To be sure, that policy has constraints, placed on it by the environment, the economy, and national security; but the goal remains unchanged. Equally as chilling is the undeniable fact that the country is pinched for energy supplies now and will be for the foreseeable future if we continue to play the energy game with the same import, tax, and environmental rules.
about $5/ton with oil costing about $3/bbl and natural gas costing 15c/ thousand ft3 at the wellhead. Today the figures are more like $7/ton for coal, $3.5/bbl for oil, and 4 5 ~ / 1 0 0 0 ft3 for natural gas. So prices are up. Over the past five years, production of natural gas has increased from 18.3 trillion ft3 in 1967 to 22.5 ft3 in 1971, but proved recoverable reserves have dipped slightly from about 293 trillion ft3 in 1967 to about 279 trillion ft3 in 1971. That means the ratio of proved recoverable reserves to consumption has dropped from 16.1 in 1967 to 12.3 in 1971. In other words, the U.S. is using more natural gas than it is finding. A similar situation exists for oil. In 1971, domestic crude oil production rose only slightly-from the 1967 figure of 3.2 billion bbl to 3.5 billion bbl in 1971. Meanwhile, demand rose from a 1967 figure of 4.5 billion bbl to a 1971 figure of 5.5 billion bbl. The ratio of reserves to consumption dropped from 7.0 in 1967 to 5.9 in 1969. In 1970, when some 10 billion bbl were added to proved reserves
U. S. energy consumption-1970
Supply and demand
Today's energy requirements must be met from natural gas, petroleum, and coal. The importance of nuclear power over the short term will not increase appreciably (although it is expected to pick up sharply after the next decade). For the present, we're stuck with nonrenewable fossil fuels. Consider some miscellaneous supply figures from U.S. Bureau of Mines. In 1967, the price of coal was 392
EnvironmentalScience & Technology
from Alaskan north slope oil, the ratio rebounded to 7.3-an improvement to be sure, but the figure is still below the 7.6 ratio for 1965. In 1948, the United States exported oil. Today, most accounts show that 25-30% of the oil the U.S. consumes is imported. Various hair-raising estimates peg the import figure at 35% for 1973 and 50% well before 1980. Total imports of all materials into the U.S. this year will probably be about $150 billion. By 1985, imports of oil and gas alone could reach an annual level of $130 billion. The situation with respect to coal is much better. Estimates generally converge at about a 200-300 years' supply of proved domestic recoverable reserves at reasonable if somewhat higher costs. But help from coal in the short term does not appear to be forthcoming. Much of it is too high in sulfur content to be used under current clean-air strategies. Even if it aeren't, there is a shortage of mining capacity. A major national commitment to coal recovery would
Source: Duponi
Nearly everybody wants a comprehensive national energy policy, but the tricky part is pinning down just what it should be, reports ES&T's Marty Malin
like these, it's little wonder that cries for action are widespread. But, some argue, action in a vacuum-such as the present policies governing the price structure of natural gas-are responsible for the predicament facing the nation today. To be sure, no isolated decisionwhether by industry, consumers, or the Government-can be singled out as the cause of the energy dilemma. All of which makes a coordinated, orderly attack on energy issues, within the framework of a national energy policy, critical.
be necessary to get coal back into the fuels mainstream-a commitment which would take several years to develop fully. Energy hungry Americans have a voracious appetite for energy. With ' A s of the world's population, the U.S. accounts for something like 'I3 of the world's annual energy consumption. The U.S. birth rate is still running about 2.5 children per woman although zero population growth has been reported recently. Over the long term, however, the population is expected to grow about l%/year. By the year 2000, there will likely be an additional 27 million Americans in the 20-45 age group-the group which uses the most energy-and only about 2 million more in the 4565 group. While population growth will remain relatively steady, however, per capita consumption of energy will continue to grow at a rate of about 4.5%. New York's Chase Manhattan Bank estimates that overall energy
Government gets involved Senator Randolph
urgently needed effort demand in 1965 will be twice what it was in 1970. Chase Manhattan estimates that the average American, who required the energy equivalent of 42 bbl of oil in 1955 and 61 bbl of oil in 1970, will use some 97 bbl of oil-equivalent energy by 1985. Against a background of statistics
Domestic and foreign fuels in U.S. energy supply (Quad. BTU) ...
.
.
.
125 / /
Total 4.2% / / Y"
,//
//
/'
.1970
source Nstlonal Petroleum Cauncll
30%
31
Foreign 104%
Average annual growth
1985
,
.
,
. ~ ~
As early as the fifties, the nation began tackling an energy policy using governmental institutions in a diffuse way with the. beginnings of the present oil import quota system. Coal companies were able to demonstrate rather successfully that imported residual fuel oil was making serious inroads into coal markets, particularly among the electric utilities along the East Coast. The coal companies pushed very hard for a national energy policy and were successful in getting a study by the Senate Committee on Interior and Insular Affairs. That study, published in 1962, . collected a mass of information which identified several major issues of a national energy policy centering around imbalance among fuels, chief of which were oil imports and unemployment in the coal fields. At that time, the oil industry wasn't much interested in a national energy policy. Times have changed, however, and the oil industry today is'one of the most ardent advocates of a national energy policy. From the early sixties to the summer of 1970, legislative proposals which had something to say about energy were introduced in virtually every session of Congress. In July 1970, Sen. Jennings Randolph (D. West Va.) introduced S. 4092 to establish a Commission on Fuels and Energy. S. 4092 has become the benchmark of federal energy policymaking. Cosponsored by some 50 other senators, the bill called for a commision to "study the energy requirements and fuel resources and Volume 7, Number 5 . May 1973 393
policies of the United States" and issue a report to the President and Congress Congres taking into consideration: pro projected energy needs, broken down according a to regional requirements with specific attention paid to \I electrical electric; requirements ava available fuel resources including R&D ne necessary for bringing fuels on and programs to ensuretechnoline anc logical capability for efficient and econom economical use of fuel resources b air and water pollution association with energy and programs for counteracting adverse environmental effects policies of federal, state, and local governments impacting on the availability or efficient use of fuel resources The Randolph bill was strongly endorsed by most industrial management and labor organizations in hearings which began in September of 1970, but the Administration didn't like what it saw as a duplication of efforts. On August 6, 1970, President Nixon had directed his Domestic Council to investigate the national energy picture and recommend soiutions for alleviating the shortages of electricity and clean fuels responsible for a series of brownouts and blackouts then plaguing the country. Thus began the scrapping between the Congress and the Administration over jurisdiction for a national energy policy which persists to date. In a November 5, 1970, letter to Sen. Henry Jackson (D. Wash.), chairman of the Senate Interior and Insular Affairs Committee, from George A. Lincoln, then director of the Office of Emergency Preparedness, the Nixon Administration reiterated its opposition to S. 4092 set forth in an earlier statement from the Office of Management and Budget. "it would appear that the study proposed by S. 4092 would closely Parallel and duplicate the study requested by the President which is well under way. By contrast, enactment of s. 4092 and appropriation of funds to support the proposed Commission., appointment of Commission members, selection of Commission staff, and other necessary organizational steps would necessarily delay the commencement of the Commission's study. "Consequently, to avoid duplicative studies and to avoid the delays which would result if the Commission study were substituted for the Council Study, I recommend against the enactment of S. 4092." 394
Environmental Science &Technology
No further action on the Randolph bill took place because of congressional unhappiness with the watereddown Commission approach which some senators, including Sen. Lee Metcaif (D. Mont.) felt could be molded by the Administration to suit its own ends. Then, too, the 91st Congress was drawing to a close.
In retrospect, the Administration's unwillingness to cooperate with the Senate under the Commission formu-
resolution empowering the Senate Committee on Interior and insular Affairs to make a detailed fuels and energy study." Thus was born Senate Resolution 45, introduced to the 92nd Congress on February 4, 1971, by Sen. Randolph, caiiing for a two-year national fuels and energy policy study. S. Res. 45 was S. 4092 in different clothing. Instead of a cooperative effort with the Administration, the Senate would use its own staff, conduct its own investigation, and make recommendations for a national energy
Energy R&D efforts $Billions
1970
1971
1972
Fiscal years
1973
1974
Estimate
Source; The Budget of the U.S. Government, 1974
la appears to have been a tactical error. Under this formula. the President would have been able to control the input to a national energy policy if not the actual output of the Commission, because of the number of people he could have appointed. Since the Administration chose not to cooperate, Sen. Randolph prepared for a new attack-this time on all-out frontal assault. In a report issued late in December of 1970, Randolph wrote, "in view of the Administration's reluctance to participate in a joint executive-congressional study along the lines proposed, Sen. Jackson and I have reviewed alternatives. We are in agreement that the most feasible vehicle for an urgently needed congressional effort would be a
policy. The task force set up by S. Res. 45 was bipartisan; it included Senate Committees on Commerce, Public Works, and Atomic Energy. Hearings held on February 25, 1971, again demonstrated broad support from the private sector for a national energy policy and on April 5, Jackson's committee reported favorably an amended version of S. Res. 45 and sent it to the Rules Committee for additional clarification. On May 3, 1971, the Senate agreed to the resolution. Ongoing effort The two years allotted for the study under S. Res. 45 were up at the end of last February, but several months later, hearings are still going
on pursuant to S. Res. 45. At press time, the committee had no timetable for issuing a final report, but Richard D. Grundy, executive secretary and professional staff member of the National Fuels and Energy Policy study told ES&T that there would probably be a series of interim reports dealing with various aspects of the energy problem. A report on governmental reorganization to handle policymaking and a report on the role of natural gas in the energy picture will probably be available this month. A statement on the role of federal research and development needs will issue sometime later, as will a final report which will expand upon the conclusion presented in the three interim reports and define a list of other areas which are integral parts of a national energy policy. On the other side of Capitol Hill, the House too has been wrestling with energy policy. Early attempts to form a House select committee on energy policy met with resistance from powerful committee heads who felt their respective committees had energy matters under control. Most House watchers say privately, however, that jurisdiction is so fragmented that any semblance of a national energy policy is unlikely to emerge from this body of Congress. The House Interior and Insular Affairs Committee under the leadership of former Rep. Wayne N. Aspinall (D. Colo.) held hearings on energy and fuel resources beginning in April of 1972 and issued several committee prints and a final report. But the action is in the Senate where serious attempts at policy formation seem to have the best chance for success. Administration efforts The wild card in the national energy game is and has been for some time what the President thinks the policy should be. Before the elections, Administration spokesmen were everywhere speaking before public gatherings to assure the nation that the White House had the issue well in hand. In a speech before the American Petroleum Institute last November, then Commerce Secretary Peter G. Peterson said, "1 would think it safe to say that the Cabinet-level Domestic Council review, ordered by the President, which has been going on for the past several months, is probably the most comprehensive review ever made of U.S. energy policy." At Aspinall's hearings in April of
White House consultant DiBona preparing energy message 1972. a veritable parade of Administration witnesses-including Interior Secretary Rogers C. B. Morton. former Treasury Secretary John Connally, Undersecretary of State John N. Erwin Il-laid out in general, if not specific terms, the key points in the President's thinking about a national energy policy. These spokesmen affirmed the thrust of the President's June 4, 1971, energy message, the outgrowth of studies by the Domestic Council, then headed by White House aide Peter Fianigan. The Administration reiterated its concern about the security of the U.S. and the economy as they were affected by availability of adequate domestic supplies of energy. The White House was concerned about the health and safety of workers producing energy, conservation of energy resources environmental standards, the balance of payments problem, and dependence upon foreign sources for increasingly large amounts of crude oil. Administration spokesmen lobbied furiously for congressional approval of a Department of Natural Resources which would contain an Energy and Mineral Resources Administration functioning as a superagency for energy policymaking. Then, Administration spokesmen promised a second energy message which would spell out strategy more clearly by the beginning of 1973. But the lines of communications froze over rapidly last winter. The Administration's energy message was delayed from January to February and then to March or April. (At press time, Nixon had not yet sent his energy message to Congress.) Only bits and pieces of the strategy emerged from the press and other "reliable" sources.
Newly appointed Atomic Energy Commissioner Dixie Lee Ray. in an interview with National Journal in mid-March, said she understood the President would call for a White House Domestic Energy Council in his promised energy message. Hints as to how the President would handle short-term energy problems came from such announcements as his decision to scrap the 60,000 bbl/day oil import limits on small independent producers, announced by Deputy Press Secretary Gerald Warren from the Florida White House at Key Biscayne on March 23. The announcement was the second this year bending the regulations restricting oil imports, and came one day following a blistering attack on the President in a National Press Club speech by Sen. Jackson for delaying the energy message and failing to take "immediate action" to deal with a "critical shortage" in reserves and "to avert gasoline shortages this summer." Other data were extrapolated from official announcements. On February 23, for example, President Nixon named Charles B. DiBona a Special Consultant on Energy. White House Press Secretary Ronald Ziegler said DiBona, formerly president of the Center for Naval Analysis in Arlington, Va., would coordinate preparation of the President's energy message and would report to a White House energy panel headed by Treasury Secretary George P. Schultz, National Security Adviser Henry Kissinger. and Domestic Affairs Adviser John D. Erlichman. Internal reorganizations in Cabinetlevel departments have also been grist for speculation. The recent reorganization of the Interior Department to include an Office of Energy Conservation under Assistant Secretary for Energy and Minerals Steven Wakefield was read to be i n line with Administration's centralizing energy policy matters within some sort of Deoartment of Natural Resources. Industry input When it comes to getting broad agreement on energy policy, the socalled energy industries have been rather more successful than their government counterparts. There has been no scarcity of studies. In addition to the various hearings by House and Senate committees, studies commissioned by agencies of the Executive branch and several private Volume 7. Number 5 , May 1973 395
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organizations have studied pieces of the problem, and several broadly based energy policy studies are in various stages of completion. One study, commissioned by the Ford Foundation Is the Energy Policy Project, a $2 million program of studies to focus on the entire spectrum of complex issues involved in creating a national energy policy. The project, headed up by S. David Freeman, former head of the Energy Policy Staff in the Office of Science and Technology, is expected to be completed by the fall of this year. Another study, this one a Symposium on Energy and Public Policy conducted last year by the Conference Board, attempted to "identify the complexities of the problem and to assess the costs and benefits involved in ordering the objectives and priorities of a public policy." Perhaps the study which has had the most notable success in terms of recommending specific aspects of policy is the National Petroleum Council's (NPC) report on the U.S. energy outlook. (NPC. a 27-year-old. industry advisory group to the Secretary of Interior. has about 120 corporate members.) The NPC study, c o n ducted at the request of the Department of interior, explored three basic issues: How much energy do we need? 0 Where are we going to get it? What changes in government policies or economic conditions would enhance the national energy picture? Using calculations for projected
Senator Jackson blistering the Administration
396 Environmental Science &Technology
energy supply and demand over the period 1970-85, NPC concluded that there are three basic policy options open to the Government. The first is reliance upon increased imports. That option, NPC said, would not serve the nation well because of the implications for national security and uncertainties about availability and Supply. The second option, seeking reductions in the growth rate of energy demand, is not viable, according to NPC, because restrictions on usage would produce adverse social consequences. Although some improvements in the efficiency of energy use are possible, such restrictions are unlikely to have any significant impact before 1985, NPC concluded. The third option, increasing availability of domestic supplies, is the policy most likely to work, according to NPC. Policy recommendations To increase availability of domestic supplies, NPC suggested several policy recommendations (see box) Although there is broad general agreement on the goals set forth by the NPC study, there is anything but agreement as to how they might best be realized. One issue, R&D. illustrates the problems. The call for more R&D directed toward new energy technologies or methods of improving efficiency has long been the standard "final conclusion" for solving a myriad of ills. Whether, an accelerated R&D program will greatly aid in the short term, however, is open to debate. Last March, Sen. Jackson introduced a bill which would set up five industry-government corporations under an Energy Management Project and pump $20 billion into promising energy technologies over a 10year .period. Jackson proposed that each of the corporations-dealing with coal gasification, oil shale technology, advanced power cycle plants, coal liquefaction plants, and geothermal plants-would explore the two most promising technological approaches to each respective technology and settle on the better one. The goal of Jackson's proposal would be to establish national selfsufficiency in energy by 1983. Sen. Jackson takes issue with the NPC's contention that only favorable economic and regulatory schemes are necessary to bring about the needed research by industry. "in the past, a favorable economic climate has encouraged only complacency and ne-
National Petroleum Council's energy policy recommendations coordinate energy poiicies. The chief duty of government is to establish priorities and guidelines and to eliminate confusion arising from conflicts between regulatory bodies and state and local governments. The Government should leave exploration and resource development to private enterprise 0 establish realistic environmental, health and safety standards. Prompt action is needed to avoid delays caused by environmental issues in oii and gas exploration and development, laying of pipelines. and building refineries. Better licensing and siting procedures for nuclear power-plant construction are needed: better technology for using high-sulfur fuels is needed; guidelines for land restoration should be promulgated 4 encourage greater development of resources on public lands by accelerating leasing, especially offshore leasing on the continental shelf 0 assure water availability for energy development. Settle jurisdictional squabbles over water rights and provide dams and aqueducts in the Western states maintain oil and uranium import quotas. Add incentive for domestic development and decrease dependence upon foreign supplies e take steps to allow field prices of IIatUral gas to reach true market value rather than maintaining the too-low prices set by the FPC *.Investigate feasibility of using more electricity from nuclear- and coal-generating facilities which would reduce projected energy imports e expand energy research rely primarily upon private enterprise to meet the energy demand by establishing an economic and political climate which fosters development
glect:' Sen. Jackson contends. "The little research and development being done has been forced by necessity. Pollution by power plants and ravaging of land by strip mining were the subject of little research until the environmental movement compelled it." Jackson calls the $800 million in the current federal budget request for energy R&D "clearly inadequate" and points out that nearly 75% of the amount in the budget is allotted to nuclear development. "The remainder, scattered throughout federal agencies. is grossly inadequate to deal with the short-term problems of environmental controls, to carry forward creative efforts on unconventional energy sources such as solar energy, and to improve the efficiency of conventional energy technologies such as petroleum and natural gas
I .
