Countering the Oil Curse: Senators Offer a New Plan

“Oil will bring us ruin…[it is] the devil’s excrement.”

— Former Venezuelan oil minister and OPEC co-founder Juan Pablo Perez Alfonso, quoted in Fortune magazine

By now everyone is painfully aware of the threat oil dependence poses to our nation's energy security and economy as well as its role in driving up carbon pollution. Economists have also written about the “curse” faced by nations seemingly blessed with a rich endowment of a natural resource. The basic thesis is that nations become over-dependent on exploitation and export of the resource, and fail to develop diversified economies with educated workforces to power them. My friend Lisa Margonelli writes harrowing tales of the curse at work in oil-rich Nigeria and Venezuela in her terrific book Oil on the Brain. And it turns out there’s a domestic equivalent, according to a thoughtful article by Steven Mufson in Sunday's Washington Post: Oil-industry-dependent Louisiana, which made “its deal with the devil a long time ago.”

The best counter to the oil curse is to break our dependence on oil for good. What we really need is a national strategy for oil independence.

Thanks to Senators Merkley (D-OR), Carper (D-DE), Udall (D-NM) and Bennet (D-CO), such a plan is now ready for debate in the U.S. Senate: The Oil Independence for a Stronger America Act. The bill is somewhat reminiscent of policy that a group of security hawks, environmentalists and others were pushing five years ago, except that it’s been updated and enhanced based on what we know now about the best path forward. Most of what is in the bill is praiseworthy and should be enacted right away, although there is some room for improvement.

Specifically here’s what’s in the Oil Independence for a Stronger America Act:

  1. Setting the Overall Oil Savings Goal: A National Energy Security Program, which includes a multi-agency membership that is tasked with developing a national oil independence plan with the goal of reducing oil consumption by 8 million barrels per day by 2030, compared to the Energy Department’s projection of our consumption. This is a cut of 40 percent, which is pretty aggressive. This overall plan defines the end, and tasks a host of agencies from Transportation to Housing and Urban Development to help develop the means to achieve that end, with annual requests and reports to Congress to ensure progress. One useful addition to this section would be an interim 2020 goal and annual, ratable targets to make sure we have a realistic trajectory towards the 2030 goal.
  2. Boosting Efficient Use of Fuel: A section on vehicle fuel economy and heat-trapping pollution, which requires establishment of new performance standards that “maximize reductions in oil consumption and greenhouse gas emissions” for cars and trucks (light-, heavy- and medium-duty meaning everything from an S.U.V. to a semi) as well as nonroad vehicles. The Environmental Protection Agency and the Department of Transportation would be tasked with moving the fuel economy and greenhouse gas performance bar upward, building on historic progress with new rules described by colleagues here and here.
  3. Electrifying Our Cars and Trucks: The largest section of the bill, Title III, provides a number of tools for accelerating deployment of electric vehicles, and the authors appear to have read the solid report on electrification by a new coalition launched last fall. The plan is drawn from the Electric Vehicles Deployment Act (S. 3442, offered by Senators Merkley, Alexander and Dorgan)simple and ambitious, providing both grants and incentives to encourage market penetration of electric vehicles as well as the supporting infrastructure. The Department of Energy would provide grants to 5-15 “deployment communities” that serve as models for an electrified transportation system. A national transition to electric and plug-in electric vehicles will surely pose many questions relating to regulation, refueling, infrastructure, and consumer acceptance. By bringing all of these pieces together in defined geographic proximity, the proposal would allow the nation to answer many of these questions constructively. Towards that end, successful grant recipients will bring a range of stakeholders and expertise together including utilities, public and regulatory officials, vehicle manufacturers, infrastructure providers and community coalitions. The groups would work together to increase plug-in electric vehicle market penetration and integration, sharing what they’ve learned with others in order to spread best practices rapidly.
  4. Delivering Mobility Choices: Title IV includes new several new policy tools to help states, cities, and towns build transportation projects to maximize their contribution to energy independence and climate goals, and draws heavily from the CLEAN TEA bill (S. 575, offered by Senators Carper, Specter, Bennet, Gillibrand, Merkley, Cardin, Lautenberg and Nelson). There’s a lot of potential to make more efficient use of fuel by expanding rail and bus rapid transit lines, by making neighborhoods more walkable and by improving highway system efficiency as described in cutting-edge reports including Moving Cooler and the Transportation Department’s new Report to Congress on Transportation’s Role in Reducing Greenhouse Gas Emissions. To take advantage of this potential, first the Transportation Department would set a national goal for reducing oil use and cutting global warming pollution in the transportation sector. States and large metropolitan regions would be asked to set similar targets and over time develop strategies to meet these goals as part of their transportation investment plans. The bill also offers technical assistance from the Environmental Protection Agency and the Transportation Department for states and regions as they develop plans and strategies. Finally, it creates a grant program to assist with implementation of these strategies and transportation project construction.
  5. Moving Goods, Saving Fuel: The bill also requires the adoption of a national freight strategy – what a novel concept! – which must include the goal of shifting at least 10 percent from truck to rail and marine, much less oil-intensive means of transportation. This section also includes a competitive grant program addressing freight rail congestion and a new study of the potential to electrify rail (moving away from oil-based diesel).
  6. Filling the Tank with Biofuel: The bill also addresses liquid fuels, focusing on biofuels development through grants, tax credits, and depreciation allowances. Notably, in addition to making “algae-based biofuels” eligible for existing tax credits under previous energy legislation (to learn more about this futuristic alternative click here), It establishes an investment tax credit for “advanced biofuels.” Qualified fuels are a mixed bag since the eligibility requirements include both desirable and undesirable features. To the bill’s credit, advanced biofuels must have lifecycle greenhouse gas emissions that are 50% below those of petroleum based fuels. Mature corn ethanol production, which has serious energy and environmental downsides, is excluded. And importantly, the language adopts the existing Clean Air Act definition of “lifecycle greenhouse gas emissions,” ensuring that international indirect land use emissions are accounted for. The most recent science suggests that indirect land use emissions can be significant, as formerly food-producing acreage is moved to energy production and carbon rich undeveloped lands are cleared to meet food demand. Thus, the authors are prudent to take these risks into account when qualifying fuels. That said, the “advanced biofuels” definition takes its meaning in part from the Internal Revenue Code definition of “alcohol”. This simply includes methanol or ethanol (excluding feedstocks of coal, petroleum, and natural gas as well as low proof alcohols). Unfortunately, this definition is far too simple a subject as complex as biofuel. Creating fuels from biomass feedstocks can be a good or bad thing depending on how feedstocks are cultivated, collected and transformed into fuel.  Even a promising new technology could do more harm than good if it is grown in a manner that threatens sensitive ecosystems or biodiversity. Policymakers must weigh these factors so that valuable natural spaces are not subject to the unsustainable intrusions of energy development. Policymakers acknowledged this in 2007 and included a substantial list of feedstock protections in the updated Renewable Fuels Standard (for more click here). Including the Clean Air Act definition of renewable fuels would ensure that emerging fuel technologies are built upon a sustainable foundation.
  7. Gassing Up: The bill would also ramp up natural gas use in vehicles, specifically by establishing tax incentives and bonding authority for natural gas-powered vehicles, likely leading to increased natural gas exploration and production in the United States both onshore and offshore. Natural gas exploration and production presents many environmental threats, including the risk of contamination of our clean air and clean water, threats to human health, enormous amounts of toxic waste, destruction of wildlife habitat, pollution of wild public lands, dangerous noise pollution, and destruction of private property (for examples see my colleague Amy Mall’s blog, with information-packed posts like this one). Natural gas, while cleaner burning than other fossil fuels, is the source of significant amounts of greenhouse gases, air pollutants known to harm human health, and other toxic substances that can pollute ground or surface water. In order to promote both oil independence and a clean environment energy companies that benefit from these incentives should be required to use the best available technologies and approaches to minimize all threats to the environment and human health.
  8. Saving Fuel Wasted in Our Homes and Offices: And last but not least the bill includes a section which would fund energy-efficiency upgrades to homes and businesses which use heating oil and propane and financing assistance for replacement of fossil-fueled boilers or furnaces.

I hope you will take a look at the bill, and contact your Senators about it. The legislative clock is running down as we approach the August recess, so now is the time to demand that our elected officials put a real plan for oil independence in place.