Tuesday, October 18, 2005

US Energy Policy

I sat down recently with someone who works on US energy policy. I thought it would be a good opportunity to get my education the subject. An education is exactly what I received. Over lunch, he told me about how energy policy is set in the US. The Department of Energy acts on guidelines voted on by Congress. The guidelines, say tighter energy standards for toasters by 2010, are then sent off to their various laboratories throughout the US. These labs run the experiments that give the DOE its cost/benefit analysis. According to DOE rules, the results must be reported in order of most to least efficient. They have to justify why the most efficient standards wouldn't work - high efficiency toasters cost $x+3 to produce but will only save $x+1. In short, the intended goal is to find out the maximum efficiency standard any given industry can support.
It will probably surprise very few readers here to learn that according to this inside policy expert the current adminstration has watered down efficiency standards so as not to offend the various industries. Reports kept coming back telling them to retest their data without the complex formulas (sound familiar? EPA, Treasury, etc.) and/or to simply skew the data. I offer you the following anonymous example: it will cost X industry $200 million to replace a certain feature on their product line making these products efficient enough to save $12 billion over the next ten years. While this would seem rather straight forward, this administration refuses to back these standards since citing the cost as too high to the industry. The product, I might add, is not even a competive one. It's a protected industry in which they are the sole makers of the product. They could pass the cost on to the power industry. It gets complicated from here, but suffice it to say this this administration has consistently opted to go with the least efficient standards on a regular basis, to the point of asking the labs to simplify their testing which they think is too complicated (read as: gives too much credit to high-efficiency standards). When they don't comply, people are asked to leave or testing is taken elsewhere. I'm sure the industry would love to run some of these tests for themselves.
One other tidbit that I learned is a detail about something commonly known. I brought up the Cheney energy meetings which went on in DC shortly after Bush took office. I mentioned that it didn't bother me so much that industry officials should be present at a meeting to discuss US energy policy with other energy experts. His reply provided the missing detail, one which our readers probably already knew. The meeting on US energy policy was ONLY industry officials. There was NOBODY there from outside the industry. You have to give them credit for consistency. I don't think they've favored the consumer or the environment once.
I'll try to give you a bit more info on US energy policy - including my source's 'dream policy' - in the next few days.


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