Unconventional Energy:

Carnegie Endowment's Burwell discusses challenges of managing oil and gas boom

What are the primary challenges facing lawmakers and regulators as they try to manage the unconventional oil and gas boom? During today's OnPoint, David Burwell, director of the Energy and Climate Program at the Carnegie Endowment for International Peace, explains why he believes presidential leadership is critical to shaping the United States' energy future. Burwell also discusses the role a carbon pricing structure should play in energy policy.

Transcript

Monica Trauzzi: Hello, and welcome to OnPoint. I'm Monica Trauzzi. Joining me today is David Burwell, director of the Energy and Climate Program at the Carnegie Endowment for International Peace. David, thanks for coming on the show.

David Burwell: It's great to be here.

Monica Trauzzi: David, you've written a new piece along with Deborah Gordon on the challenges to managing the unconventional oil and gas bonanza. Why do you believe that Presidential leadership is key here when much of what needs to happen needs to come out of the legislative branch, where we're seeing a whole lot of partisanship right now?

David Burwell: Well, I think there is a strong opportunity for Presidential leadership, because of the impasse we do have in energy and climate policy here in the United States. And it's much better to do it in a time of energy abundance, when we have time to be self-reflective, than, you know, when we're in a panic, as opposed to a trance. And, you know, we want energy, and we'll get it any way we can. So that's the time now when we have the blessing of these new energy resources for the President to take a leadership role in energy policy and climate policy.

Monica Trauzzi: So what then would you consider the President's greatest opportunity on energy during his second term?

David Burwell: Well, number one is to have a self-reflective, proactive energy policy. He can establish both and integrate energy concerns and climate concerns. The opportunities for the United States with this energy abundance are tremendous. It's great for our, you know, economic competitiveness. It's great for our trade balances. It projects our power in the world with energy abundance. So it's a good time for the President to directly establish a national energy and a climate policy, because there are conflicts between the two.

Monica Trauzzi: And let's talk about that climate piece. This is central to the discussion. You're talking about a transparent carbon pricing structure that advances national energy, economic, and climate security. The US has been unsuccessful at trying to move forward with cap and trade, carbon tax. What makes you think that something different might happen over the next four years?

David Burwell: I think it's because there is an imperative now because of the oil and the energy abundance, that we have to have this policy. The downside of oil and abundance and, oil and gas abundance is great volatility in the markets. You know, energy booms always tend to be followed quite soon by their evil twin, which is, you know, the energy bust. So you have panic, trance. You have volatile markets which can destroy our investments in alternative energy, for example, and can cause disruptions in the market. So now is a good time to establish a carbon price for energy.

Monica Trauzzi: MIT recently reported that the entire natural gas system was driving up methane emissions. So is there an effective way to tap into all of our US domestic energy resources, which are rapidly being discovered, while still protecting the climate? Can you do both?

David Burwell: Yeah. You definitely can do both, and you're correct that each of these resources has opportunities and challenges. And natural gas, for example, the fugitive emissions problem which was pointed out in the MIT study, is a problem. Also, if you're, you know, for protecting the climate, while natural gas is displacing coal, it's also so cheap that it's displacing nuclear, which is a zero carbon source of energy. So another reason for having a carbon price is to be able to stabilize the market, set a particular price on carbon, and that's another good point, that the oils that are coming on, these unconventional oils, are, vary greatly in carbon intensity. Some of them from, you know, the northern parts of Canada, for example, can have emissions that are in their total life cycle, you know, greater than coal. So, and some of them are very light, more like natural gas.

Monica Trauzzi: So would that then mean that setting that carbon pricing structure would take some of these unconventional sources out of the running, that they wouldn't be able to be developed because there's a price on carbon?

David Burwell: All right. I mean, I think we do have to prioritize. We're so, you know, blessed with this abundance that it's time to prioritize which of these fossil fuels we use, and then also which type of alternative energies we promote. And the carbon intensity of some of these has to be addressed. We do in fact now globally have enough fossil fuels to vastly exceed the ability of the atmosphere to absorb the carbon, so we have to make some choices about which fuels we use, which fuels we, what uses we put them to. There are noncombustible uses of fossil fuels. And then which we, you know, hold in reserve for the far future.

Monica Trauzzi: So this is not about Keystone, but there is a political element here when we talk about something like the Keystone proposal. Do we explore all these different sources, oil sands, shale gas, despite the fact that there could be some long-term consequences on the environment? So on Keystone specifically, oil sands, what's the future there?

David Burwell: Well, that's a very interesting question, and, you know, the Keystone question, permit issue has to be based on what's in the national interest. And so we have both the energy interest and we have the climate interest and we have the impacts on, you know, the locations where the pipeline goes through. Our report is not about Keystone. Our report is about, you know, these new energy sources generally, and the need to look very closely at both the carbon intensity of these fuels and how they're used and distributed. And it is possible to select different uses. Petrochemicals, for example, the industry is, takes a lot of oils, but they don't combust them, so that's good. That industry itself, which had moved offshore, is coming back. So those issues should all be discussed, we think, in the question of where we source our fossil fuels and how we use them.

Monica Trauzzi: All right. We'll end it right there. Thank you for coming on the show. Nice to see you.

David Burwell: Thank you.

Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.

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