As President Trump and the Republicans on Capitol Hill are quickly learning, developing real public policy is a lot more complicated than repeating popular slogans to excited fans on the campaign trail. And this holds true not just for health care, but for taxes, energy, environmental and transportation policy. Earlier this week President Trump signed an executive order, instructing agency heads to take several steps toward “promoting energy independence and economic growth.”
Energy independence and economic growth sound like good goals—just like everyone wants health care insurance with better coverage, more competition, and lower premiums. But since the campaign is over and the work of actual policy-making is getting underway, let’s consider how the measures proposed in this executive order and other recent actions stack up against the promises.
Looking for energy independence in the wrong places
My colleague Rachel Cleetus reviewed the broad implications for the planet of President Trump’s All-Out Attack on Climate Policy. I’ll focus on the transportation specific implications. President Trump’s executive order talks about “energy independence,” but, in reality, the Clean Power Plan that the President’s order seeks to repeal focuses on electricity generation.
Very little of the fossil fuels used to make electricity — primarily coal and natural gas — are imported. The United States is a net exporter of coal, and net imports of natural gas have been falling steadily, down to 2.4 percent of production (or about $1.5 billion) in 2016, mostly from Canada. The U.S. imports most of the uranium used in nuclear energy production, but these imports accounted for only about $2.5 billion a year in recent years. And electricity imports (mostly hydropower imports from Canada) provided about 1.6 percent of U.S. electricity generation in 2015. Wind and solar energy, meanwhile, are clean, non-depleting domestic resources. Imports for electricity generation are valued at less than 5 percent of the $143 billion net imports of crude oil in 2016, which is used primarily to make transportation fuel. The vast majority of our energy imports are oil and the Clean Power Plan has little to do with oil. Eliminating the Clean Power Plan will have virtually no impact on energy independence.
Historical data and projections from the Energy Information Administration’s Annual Energy Outlook 2017 show that the US does not import coal, and imports very little natural gas. Oil has been and is expected to remain the main energy import.
Oil Imports = Oil Use – Oil Production
It’s simple arithmetic, but the Trump administration seems to have forgotten that the amount of energy (mostly oil) that the United States does import depends on how much oil Americans use, less the amount the nation produces. So, we can reduce imports by either using less oil or by producing more. Of the two options, using less oil solves a lot of other problems; producing more causes more problems than it solves.
Cutting oil use through efficiency is the smart path to energy security
Cutting demand for oil is a long-term process, because we all have places to go and, on any given day, we don’t have an unlimited set of choices for transportation. Over the last decade, the United States has made major progress improving the efficiency of the cars we drive. A decade ago an average new car got about 20 miles per gallon (mpg), and that figure is 25 mpg today. We are on the road to new cars averaging 35 mpg or more a decade from now. This means that while a new car used 600 gallons of gas a year in 2005, a new car is using 480 gallons to drive the same distance today and this will fall to less than 350 gallons in 2025.
With similar improvements in the efficiency of big rigs, planes and other vehicles, this adds up to substantial oil savings as the current inefficient fleet is replaced by more efficient cars, trucks and planes. Efficiency improvements don’t just help reduce oil use, they save drivers billions of dollars and reduce global warming pollution.
But that’s only if our efficiency programs are fully implemented. Instead, the Trump administration has signaled its intention to weaken our federal fuel efficiency and vehicle emission program. Weakening these standards would cost drivers more money, increase our consumption of oil and hurt energy independence, as well as increasing global warming pollution.
Every additional electric vehicle cuts oil use, energy imports, and slows climate change
Replacing a typical 2015 25 mpg car with a 35 mpg car in 2025 saves 130 gallons a year. But replacing it with a plug-in electric vehicle cuts US oil use to zero. And since electricity is 99 percent domestic, the impact on energy imports is dramatic. In addition, electric vehicles are less polluting than gasoline powered cars, even when electricity generation is included, and are getting steadily cleaner over time. The smartest path to energy security, as well as a low carbon future, is to electrify transportation as quickly as possible.
US oil production increased rapidly in the last decade, so what problem are we trying to solve?
The administration claims that Obama-era policies have choked off the oil industry, but this does not square with the facts. Domestic oil production grew 80 percent between 2005 and 2015, almost entirely because of expanded production of so-called tight oil from fracking, which now accounts for more than half of US oil production. US oil production fell in 2016 because of low oil prices, and future domestic oil production depends mainly on the global price of oil, rather than on regulations. Indeed oil companies’ financial statements make it clear that recent and proposed environmental regulations have “no material impact” on their business. What does matter is global energy prices.
The Energy Information Administration projects that if oil prices rise enough to bring gasoline retail prices to $5 per gallon, the U.S. may indeed become a net oil exporter as consumption falls and production rises. But if oil prices are low, imports will rise. If you are worried about Americans struggling to pay their fuel bills, investments in efficiency will do much more to protect them from volatile oil prices than will weakening regulations that protect the public from oil industry pollution. And while many factors influence global oil prices, cutting demand for oil by accelerating the progress of efficiency and electrification will certainly help push oil prices down and protect consumers.
The administration’s proposals have nothing to do with responsible energy production
The term “energy independence” is never defined in the executive order, but the emptiness and cynicism with which it is used is clear. This order, together with other recent energy related measures the administration is advancing, allow oil and gas producers to waste natural gas instead of collecting it, to weaken fuel efficiency standards, and permit construction of a pipeline that will encourage expansion of some of the dirtiest crude in the world. These measures will harm many people and set back efforts to reduce global warming pollution. They primarily remove energy producers’ and automakers’ obligations to consider the consequences of their actions on climate change, and they will not reduce US energy imports.
Real energy security means energy that does not harm our security (or health or economy)
Energy in many different forms is essential to our lives, but just because energy is important does not imply that energy companies should not be responsible to minimize the harms caused by the production and use of their products. Climate change poses a profound threat to our health, prosperity and security, so meaningful energy security must include a path to climate stabilization. Transportation recently surpassed electricity generation as the largest source of CO2 emissions in the United States, and these emissions come overwhelmingly from oil. Cutting transportation emissions means using less oil, through improved efficiency and rapid electrification of transportation. Transportation fuel producers also have an important role to play, and oil companies no less than biofuels or electricity producers must reduce the pollution from their operations.
Companies and countries that lead the way towards a low carbon future will have a competitive advantage as the world inevitably moves to grapple with climate change. The winners will be vehicle manufacturers that produce the most efficient vehicles and lead the way towards electrification, and energy companies that avoid the most polluting fossil fuels and reduce avoidable emissions from their operations. Smart policies will help American companies lead the way, but the short sighted regulatory rollback the Trump administration is pursuing will leave American industry uncompetitive. Responsible industries understand that protecting their customers and the communities in which they operate is key to maintaining their social license. While the Trump administration is actively facilitating irresponsible behavior, the world is watching. The future will ultimately and inevitably favor companies that live up to their responsibilities.
CORRECTION: On April 6th 2017, this blogpost was corrected to add details about uranium imports in response to a comment by a knowledgeable reader.