An Institutionalist Critique of the Bush Administration's Energy Policy

The purpose of this paper is to critique the Bush energy policy from an institutionalist perspective. The first section will sketch current energy usage in the United States; the second section will discuss the central elements of the Bush energy policy. The final section will critique this policy

Current Energy Usage in the United States

Table 1 lists current U.S. energy production and consumption and compares this with 1960, the year the Organization of Petroleum Exporting Countries (OPEC) was founded.1 A salient observation is that today, forty-four years after the founding of OPEC, the United States relies on fossil fuels for 80 percent of energy production and 86 percent of consumption. Coal is the only fossil fuel to enjoy a resurgence since 1960 and currently accounts for 31.9 percent of U.S. energy production and 22.7 percent of energy consumption.2 Approximately 90 percent of coal is used by electrical utilities, and utilities in turn, rely on coal for 52.3 percent of their electricity-more than oil, natural gas, and nuclear power combined.3

The United States possesses one-fourth of global coal reserves, which given current annual production of 1.1 billion tons (second to China's 1.2 billion tons) should last approximately 260 years. This supply advantage, however, is outweighed by coal's deleterious effects on the environment. Coal combustion produces sulfur dioxide, a preponderant factor in acid rain; nitrogen oxides, a preponderant factor in ozone; mercury, a contaminant of fish and wildlife; and carbon dioxide (CO2), a preponderant greenhouse gas. China and the United States, the world's largest coal producers, are also the top CO2 emitters, accounting for 37 percent of global emissions. It is estimated that emissions from coal-fired plants kill almost 30,000 Americans annually, and in China where coal accounts for 70 percent of its energy needs4-about the same as the United States in 1910-coal emissions cause 1 million deaths annually.5

Today oil accounts for 17.2 of energy production and 39.8 percent of consumption. U.S. domestic oil production peaked in 1971 at 11.3 million barrels per day (bpd) and is currently 9.0 million bpd, third behind Russia and Saudi Arabia. In 1994 for the first time, imported oil exceeded U.S. domestically produced oil, a difference that has since widened. Not surprisingly, the United States is currently the world's largest oil importer at 9 million bpd, more than Japan, Germany, and South Korea combined. The United States consumes 19.6 million bpd, which is more than Japan, China, Germany, Russia, and South Korea combined. The preponderant use for oil is transportation, accounting for 64 percent of total production.

Natural gas accounts for 27.6 percent of U.S. energy production and 23.7 percent of U.S. consumption. The preponderant use of gas is home heating; approximately 60 million homes are heated with natural gas. Natural gas is the cleanest burning fossil fuel-it contributes 50 percent less CO2 emissions than coal; however, the United States possesses only 3 percent of the world's natural gas reserves. Russia possesses 29 percent of world reserves, followed by Iran (15.8 percent) and Qatar (12.8 percent).

Nuclear energy accounts for 11.5 percent of U.S. energy production and 8.3 percent of U.S. energy consumption. The United States has 104 nuclear reactors, none constructed since the 1970s. Nuclear power's main disadvantage is radioactive waste which must be stored underground. Given high profile disasters at Three Mile Island and Chernobyl, the United States has been reluctant to build additional reactors.

Nuclear energy is more prevalent in Europe, particularly France, which relies on nuclear power for 78 percent of its energy. Of the thirty-one nuclear reactors currently under construction worldwide, eight are in India, three in China, and three in Japan, which relies on nuclear power for 42 percent of its energy.

Currently, renewable energy accounts for only 8.3 percent of U.S. energy production and 6 percent of consumption. While renewables have increased as a percentage of U.S. energy production, they have declined as a percentage of energy consumption. Hydropower, wood, waste, and alcohol fuels currently account for 93 percent of renewable production and consumption, while wind and solar account for less than 2 percent.

In 1973, net imports as a share of total oil consumption was 34.8 percent; this share peaked in 1977 at 46.5 percent and then fell to a record low of 27.3 percent in 1985. It has since increased to a record high of 53.4 percent in 2002. The United States, while not curbing its oil appetite, has diversified its source of imports. In 1973, OPEC imports as a percentage of total imports was 47.8 percent; this percentage peaked in 1977 at 70.3 percent and after decreasing during the 1980s currently is 39.9 percent. The United States obtains 30 percent of its petroleum imports from Canada and Mexico and 13 percent from Saudi Arabia. Canada and Mexico, however, collectively account for only 7 percent of global oil reserves. Fifty-four percent of the world's oil reserves reside in the Persian Gulf nations of Saudi Arabia, Iraq, Kuwait, United Arab Emirates, and Iran. Saudi Arabia alone possesses one-fourth of the global oil reserves, whereas the United States possesses only 3 percent of oil reserves.

Today, the United States remains committed to fossil fuels, abetted by the low price of oil in real terms and the lack of a perceived energy crisis (i.e., gas lines and/or shortages) compelling consumers to conserve or switch to alternative fuels.

Energy Policy of the Bush Administration

While energy did not play a prominent role during the 2000 presidential campaign-the main economic issue was what to with the projected fiscal surpluses-from the perspective of the fossil fuel industries, the difference between the two main candidates was stark. Al Gore's book Earth in the Balance bruited awareness of global warming, and as vice-president, Gore negotiated the Kyoto Protocol while slapping increasingly restrictive measures on electrical utilities. George W. Bush and his running mate Dick Cheney, both former energy company executives, were perceived as more sympathetic to the concerns of the oil and gas industries.

During the campaign, Bush pledged to increase domestic supplies of fossil fuels and nuclear power to reduce dependency on foreign oil. Not surprisingly, the fossil fuel industry rallied behind Bush/Cheney, supporting them by a nine-to-one margin (Byock 2001). The electrical utility industry also heavily supported Bush/Cheney. The West Virginia coal industry raised record sums of money and was instrumental in delivering the state to Bush (Freese 2003, 193-94), the first presidential election West Virginia voted republican since 1972. As Barbara Freese noted, "If Bush had not won West Virginia's five electoral votes, Gore would have been in the White House" (2003, 194).

George W. Bush did not disappoint. He nominated former energy executives and fossil fuel sympathizers to key positions in his administration. In a surprisingly candid statement, Frederic Palmer, executive vice president for Peabody Energy, the world's largest coal company, said, "The people running the United States government are from the energy industry" (Dan Van Natta and Neek Banerjie, "Many Made the Move from the Industry to the Administration" and "Bush Policies Have Been Good to Industry," The New York Times, April 21, 2002, 24).

In May 2001, the National Energy Policy Development Group, chaired by vice president Cheney, issued its report, which emphasized increased reliance on domestic supplies of fossil fuels and greater use of nuclear power. Absent was a long-term strategy to deal with the growing demand for imported oil, energy security, or the environmental consequences of an increased reliance on coal. The group also recommended drilling for oil and natural gas in the Arctic National Wildlife Center, on the Continental shelf-currently banned from oil exploration-and under federal land in the Rocky Mountains. Significant opposition arose, however, over potential environmental damage in relatively pristine areas.

In June 2001, the Bush administration reneged on its campaign promise to cap global CO2 emissions, arguing that this would hinder economic growth. This was most likely a political payback to the West Virginia coal industry. Coal accounts for 36 percent of CO2 emissions from energy consumption, and given current technology there is no effective means to reduce CO2 emissions other than substituting away from coal. Thus, attempts to regulate CO2 emissions, even modestly, would change coal's future entirely, and largely explains the coal industry's vociferous opposition to CO2 regulation (Freese 2003, 182).

In August 2001, the Bush administration rejected the Kyoto Protocol, which was vigorously opposed by the coal industry. The protocol intended to reduce CO2 and sulfur dioxide (SO^sub 2^) emissions of rich nations to 5 percent below 1992 levels. The Bush administration argued that the treaty would have hindered economic growth and given an unfair advantage to less developed nations-particulatly China-exempt from most of the protocol's provisions. Nevertheless, as the largest producet of global warming gases, the United States had an ethical obligation to take the initiative. At the very least the treaty could have provided a foundation for future negotiations.8

As an alternative to the Kyoto Protocol, the Bush administration purports to reduce greenhouse gases voluntarily without sacrificing economic growth. Specifically, under the Clear Skies and Global Climate Change Initiative, the United States will reduce greenhouse gas intensity, defined as CO2 emissions per GDP dollar, by 18 percent by 2012. However, without specific measures to reduce CO2 emissions from electrical utilities and transportation, which contribute 72 percent of COz emissions from energy consumption, I fail to see the efficacy of this approach, other than the obvious: increasing the denominator at a greater rate than the numerator decreases the greenhouse gas intensity.

The events of September 11, 2001, tragic as they were, presented an opportunity for the Bush administration to redirect its energy policy to equate national security with energy independence. Despite tepid rhetoric, little of substance was done. But then again, as John Munkirs and Knoedler noted, it is naive to expect "government officials who, because of personal conviction or expedient politics [or] profess a laissez-faire attitude ... to use the policing powers of government to counter corporate interests on behalf of the general public" (1987, 1689). In fairness to President Bush, however, the United States has never had a systematic, sustained energy policy. Historically, the federal government gave a carte blanche to the private sector to develop coal and oil while enabling the energy industry "to make more effective its exploitation of the public interest" (Blair 1978, 399).

After two years of negotiations, a Comprehensive Energy Bill was presented to Congress in November 2003, passage of which President Bush promised would make "America more prosperous and more secure [and] less dependent on foreign sources of energy" (Bush 2003). The bill emphasized greater reliance on domestic coal, natural gas, and nuclear power; it proposed tax incentives for energy efficiency, conservation, and residential use of renewables; modernization of the electrical grid; research funds for a new generation of hydrogen-powered automobiles and a natural gas pipeline from Alaska to the continental United States; a doubling of ethanol production; and recommendations to strengthen energy integration between the United States, Canada, and Mexico and "deepen ties" with the Caspian nations, as well as India, Russia, Turkey, and Georgia. Drilling in the Arctic was dropped in an effort to garner bipartisan support.

The Energy Bill, however, catered to fossil fuel interests without offering an arresting vision of a renewable energy future or a transition roadmap toward hydrogen. Insidiously, the extension of tax credits for the wind and solar sectors was linked to passage of the entire bill, which drove a wedge between the environmentalists who strongly opposed the bill and the wind and solar sector which needed the tax credits (National Public Radio 2003). A criticism made of former President George H. W. Bush's 1991 energy plan is regrettably just as appropriate today, yet more poignant, given the lapse of time: "A major weakness [is that] it has no clear goals, resources are scattered over miscellaneous technologies, and funding is guided by today's shortsighted industrial interests rather than by a strategic view of the country's energy future" (Flavin 1990, 10). The Energy Bill was passed by the House but fell two votes short of a Senate vote. Debate was planned to resume in early 2004.

A continuation of the status quo will, unfortunately, intensify U.S. dependency on foreign oil and worsen the deleterious effects of carbon combustion. The U.S. population is expected to increase 20 percent during the next twenty-five years (Census Bureau 2003) with a concomitant 1.5 percent increase in energy demand, a 2.7 percent annual increase in oil demand, a 3.2 percent increase in natural gas imports, and a 1.5 percent annual increase in CO2 emissions.

Under the Energy Policy Conservation Act of 1975, the federal government sets Corporate Average Fuel Economy (CAFE) mileage standards for new automotive vehicles. Light trucks-minivans, pickup trucks, and sport utility vehicles have a lower requirement than passenger cars, 22.2 mpg versus 27.5 mpg, respectively. Closing this loophole would save approximately 1 million bpd of oil; while increasing the mileage requirement to 40 mpg, which many environmentalists are demanding, would save approximately 2 million bpd, about 10 percent of daily consumption (Carey 2003). As of this writing, the Bush administration has agreed that the loophole needs to be changed but not at the expense of jobs or passenger safety, and the exact details have not been specified (Power 2003).

Under the Clear Skies Initiative, the Bush administration has proposed to sharply reduce emissions of sulphur dioxide, mercury, and nitrogen oxide by 2018, but nothing for CO2 emissions-another payback for the coal industry's support during the 2000 election. The Bush administration has also enervated the New Source Review, passed in 1977, which requires existing power plants to install new pollution-control technology when they substantially upgrade.

In his January 2003 State of the Union Address, Bush pledged to spend more than $3 billion over the next five years for hydrogen research with the goal of putting a hydrogen-powered car into automobile showrooms by 2020. Hydrogen is the most abundant element on earth; however, it does not exist in pure form. Energy must be expended in order to extract hydrogen. Currently the preponderant method is to burn natural gas, but another, more environmentally friendly, method is to use renewable energy. As of this writing, the Department of Energy's Fossil Energy Office has prioritized developing technology to produce hydrogen from gas and coal; however, the net effect on the environment, unfortunately, would be the same.

An Institutionalist Critique

From the rich tradition of institutionalist thought, several elements can be culled to form an institutionalist approach to energy. The starting point is the instrumental value principle which states that policies should be enacted that "provide for the continuity of human life and the noninvidious re-creation of community through the instrumental use of knowledge" (Tool 2001, 293). The effects of carbon combustion are cumulative and can permanently alter climate and agricultural patterns, thus jeopardizing the continuation of human life. Given the evidence of global warming, continued use of carbon-based energy violates the instrumental value principle.

No nation has an inherent right to consume an inordinate share of resources. The United States consumes 24 percent of the world's primary energy, more than China, Russia, and Japan combined. And on a per capita basis, the United States consumes five times as much energy as the world average and double that of every G-7 nation, except Canada.

Institutionalists believe that participatory democracy is crucial; specifically, energy policy should be decided democratically, rather than by a cabal of multinational corporations. And central to institutionalist thought is the existence of corporate power and coercion, which is used "in the community's economic decision making process" (Munkirs and Knoedler 1987, 1679). Finally, institutionalists believe that resources are not natural, fixed, or finite; rather, resources are a set of capabilities, culturally defined by knowledge (DeGregori 1987). Knowledge is essential to acquire the technology to create resources. The acquisition of knowledge and its dissemination should be as democratic as possible, preferably under the aegis of the public sector (Dugger 1984).

How does the Bush energy policy fare? Not well. It is a retrograde policy, based on political expediency rather than a grand vision of an alternative energy future. It advocates a continuation of the status quo, despite evidence that the status quo will intensify demand for imported oil and undermine the life-sustaining ability of the earth. Underpinning the Bush energy policy is belief in a trade-off between economic growth and fossil fuel use, whereas institutionalists argue that a full-scale commitment to phasing out fossil fuels would enable the United States to become a global leader in the manufacture of alternative energies (Greer 1995).

Energy companies have also exercised invidious influence on the "community's decision making process" by increasing their control over renewable energy technologies.10 This attenuates democratic control over the development and dissemination of new energy technologies.

A hydrogen economy, on the other hand, supported by wind and solar technology, is consistent with the institutionalist approach. A virtually inexhaustible supply of energy could be obtained without deleterious consequences for the earth's life-sustaining capacity. A fully developed hydrogen system would obviate the need for integrated electrical utilities; electricity production and distribution could be radically decentralized and made more democratic. A hydrogen transition could also engender a parallel dispersal of political and economic power in the energy sector, with a reversal of the trend toward ever larger corporations in favor of smaller firms (Freese 2003, 245).

Future generations will ask why we did not utilize the recent blackouts, brownouts, and terrorist attacks to make a concerted effort to redirect our nation away from fossil fuels. In the absence of an ecological crisis, a sharp increase in fossil fuels prices, strong political leadership, or a groundswell of public support, we are, unfortunately, locked into our current energy situation. And without a strong impetus, there is no guarantee that a transition away from carbon will be made.

Institutionalists should develop specific strategies to initiate this transition. Continuation of the status quo is simply not acceptable. As James Swaney elegantly stated, "No set of economic institutions, certainly not the market as it functions today is key . . . to solving resource problems. Rather, it is the human instrumental process, driven by the desire to contribute and disciplined by the scientific process, that solves problems" (2003, 273). Institutionalists are well equipped to understand the human instrumental process. We should rekindle the fun and excitement that built a new coal-fired world during the early stages of the Industrial Revolution (Freese 2003, 246) and be in the forefront of a transition to a hydrogen-based economy.