With several bills on the table, how will the Senate's climate and energy proposals impact the economy, emissions, and oil consumption? During today's OnPoint, Tony Knowles (D), former governor of Alaska and president of the National Energy Policy Institute, discusses a new report examining the United States' climate and energy policy options. The analysis, co-authored by Resources for the Future, compares transportation, carbon pricing, energy efficiency and renewable energy policies.
Monica Trauzzi: Welcome to the show. I'm Monica Trauzzi. Joining me today is Tony Knowles, former governor of Alaska and president of the National Energy Policy Institute. Governor Knowles, thanks for coming on the show.
Tony Knowles: It's great to be here, thank you.
Monica Trauzzi: Your organization, along with Resources for the Future, just released a report examining the U.S.'s various policy options for reducing oil consumption and curbing greenhouse gas emissions. You examined everything from cap and trade to renewable electricity standard to an oil tax. Can the U.S. implement a policy today, this is a big argument that we're having on the Hill right now, that won't damage the economy?
Tony Knowles: Well, you know Monica, I think finally the first glimmer of hope that there will be an energy policy passed, I think I saw it the other day in a cartoon in the newspaper, and it showed a guy at the gas pump filling up his RV and right in front of him was a big sign that said, "Oil Price," and then underneath it, it had Gulf of Mexico, national security, and climate change. And the little balloon above his head read that, "Gee, I remember the days and I wish it were the days when it was just two dollars a gallon." And, to me, that showed that America, around the dinner table, at the water cooler, is talking about energy because they get it and what that getting it is that the price of oil and the price of how we generate our electricity is a lot more than what we pay at the cash register. And that's why our President Obama called upon the nation to, it was beyond the time that we need to address our energy policy, because the cost to America, in terms of our environment, our jobs, our economy, the national security is too much not to do it. So, that's why there's hope.
Monica Trauzzi: Before we came on set you and I had an interesting discussion about renewables and you said that renewables have no impact on oil consumption. Talk about that a bit because that is an argument that we hear very often. If we increase production of renewables, we'll use less oil.
Tony Knowles: Well, what we tried to do in this report, and here it is, just the executive summary of it, and there's lots of good reports out about energy that are science-based and economics-based, but what we tried to do is do a comprehensive report looking at all the policies and judge by common metrics which ones reduced the use of oil, which ones reduced CO2, some do a little bit of both, and how much it cost so you could score them. And one of the common mistakes that people bring to energy policy discussion today is they'll say, well, we need to reduce our dependence on foreign oil; therefore, we need renewable energy like wind turbines and solar. But the fact of the matter is, if you look at the facts, what it will show you is that when we generate electricity only 1 percent of our electricity is generated by oil. Now, that doesn't mean that we don't need to change to cleaner fuels on how we generate our electricity, which right now 50 percent is by coal, 20 percent nuclear, 20 percent natural gas and about 3 percent with renewables. So, those are the facts and it's an old saw here in Washington that you're entitled to whatever opinion you want, but you're not entitled to make up your own facts. So, this is why we hope that this will be a flashlight in terms of helping shed a little light instead of groping in the dark about energy policy.
Monica Trauzzi: So, the prospects for passing a cap and trade in the Senate are slim, slimmer by the day some would argue. Are there alternatives to cap and trade that could be cost effective, reduce emissions, and also reduce our oil consumption? Are there other options out there?
Tony Knowles: Well, all of the angels aren't on the head of one pin. There are a number of policies and what we hope decisionmakers will look at is the policy, the cost, and then there's other factors that will be involved and some of it isn't doable. In terms of what policy that America needs to adopt now, surely the price mechanisms that would be a cap-and-trade policy or an oil tax, your economists will show and the study shows that it is the most effective for the least cost. But, in the cases you mentioned, cap and trade doesn't seem to be gaining any traction. You know, we've been talking about it for 40 years, so when President Obama mentioned it here the other night in the Oval Office about we need an energy policy, Richard Nixon started that almost with the same words about breaking the back of an energy crisis back in 1970.
Monica Trauzzi: Amazing how in 40 years though the policy has not come through.
Tony Knowles: And the reason ...
Monica Trauzzi: Do you think this is the president to do it?
Tony Knowles: Well, I think certainly we have a chance and seem to have the will and we have that glimmer of hope because I think the public really does get it, that we need to make those changes. But if you don't want to do a cap-and-trade policy, and there's all kinds of reasons why, the arguments that people have gotten so comfortable with and not changing on something, we'll never have a cap and trade and we can't have any more oil tax, is to take a look at other policies. And, although there may be more cost involved with them, it may be a lot more palatable. For instance, with electricity, which is your primary issue with cap and trade, although it is broader than that, if you did what 29 states do right now, which is to have what they call a portfolio standard, a mandatory amount that the utilities are required to use more clean fuel, then that seems to be a route that you can go to reduce the carbon dioxide emissions with the utilities having to change, over a period of time, their fuel. Slightly more expensive then as you move to higher cost fuel and renewables, natural gas and nuclear, but something that certainly would fit in with a policy of reducing CO2 emissions.
Monica Trauzzi: Are there specific policies that have been introduced in the Senate? We have the Lugar proposal, Bingaman's bill, Kerry-Lieberman certainly. Out of all of those, the Clear Act by Cantwell and Collins, out of all those is there one that stands out to you as being all economical, reducing emissions and reducing oil consumption?
Tony Knowles: Well, one of the things that this report, two years in the making, and it's wonderful, it just comes out now at a time when it is so, people said it's the genius they way they work it. I said we were slow, but Congress is even slower and it's come out at the right time. And one of the things we show in this report is there is no silver bullet. A lot of people have always had their favorite way to fix the energy crisis, but we believe with these facts, with analyzing and with common metrics, common methodologies so that you can compare apples to apples, it is going to take a portfolio. When I say there's no single silver bullet, there's also you don't want a shotgun approach because some policies actually overlap each other. They're redundant. Some actually work against each other. So you need to strategically look at which policies work together to reach a target of what you want to do in terms of the reduction of oil, to bring better national security, and reduce CO2 emissions for our climate change challenge.
Monica Trauzzi: And many policies we've seen introduced are dependent on new technologies coming onto the marketplace, so there's some risk involved there. Is that a necessary risk in order to get to where we need to be to reduce emissions?
Tony Knowles: We have the technology now to produce policies that will reach a responsible and aggressive goal for our energy policy. Pick the figure 4 million barrels a day, right now we use 20. If you cut 4 million barrels a day, by the year 2030, we establish that as a responsible goal to help protect our national security, to send a message to the cartel that we're not always dependent on, our foreign policy is not for hire. So, when we want to reduce that amount there's number of policies that will get us there without having to look at technology that is not existent today and we can do that and the same goes with reducing the CO2 emissions.
Monica Trauzzi: OK, we'll end it right there. Thank you for coming on the show.
Tony Knowles: Thank you.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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