The energy bill is
getting older, but it isn't getting any better. Congressional
debate over energy legislation has dragged on since 2001 and is
starting up again in the 109th Congress. The House has marked up
its most recent version of the energy bill, and the Senate will
follow soon. If both bodies pass their bills, the many differences
between them will have to be ironed out in conference. Though late
in the game, Congress still has the opportunity to improve what
remains a flawed approach to addressing the nation's energy
challenges.
Energy markets work better than central planning-this simple fact
is too often lost in the energy debate. A sensible federal energy
policy should reflect the market approach. Decades of central
planning, in the form of energy and environmental laws, have left
energy markets considerably less than free. Virtually every major
element of the nation's energy infrastructure-oil and natural gas
wells, pipelines, refineries, electric power plants, and
transmission lines-has been saddled with federal red tape. The feds
have even gone to such micromanaging extremes as dictating specific
recipes for gasoline.
As a consequence, our energy system is barely able to meet current
demand, much less deal with future growth. What we need now from
Washington is not an affirmative energy policy but an end to the
current anti-energy policy.
The energy bill is at its best when it tries to streamline or
eliminate government meddling in energy markets. Unfortunately, the
bills before Congress work more in the opposite direction.
One example of energy policy done right is the proposed
streamlining of federal provisions that have hampered oil and
natural gas production both offshore and on federally owned lands.
Many promising areas off the coasts and in the Rockies are
off-limits, and the rest are subject to years of administrative
delays and lawsuits by environmental groups. Granted, the proposed
provisions would only make a dent in the many unnecessarily
restrictive laws delaying or prohibiting domestic energy
production. Nonetheless, the energy bill would allow America to use
at least a little more of the energy that we have available in this
country.
Another good idea is repeal of the Public Utility Holding Company
Act. This law places restrictions on investment in electricity.
Removing these restrictions will increase investment in the
electric grid and allow more private-sector upgrades to the
system.
The energy bill would also eliminate a few of the regulations that
make gasoline more expensive, and it contains other provisions that
chip away at federal anti-energy rules. This is the right approach
to make energy more affordable, but much more could be done.
For every provision that would take energy policy in a free market
direction, however, there are several others that reek of central
planning. For example, while eliminating some unnecessary gasoline
regulations, Congress also wants to mandate the use of ethanol, an
expensive fuel additive made from Midwestern corn.
The energy bill also tries to pick winners and losers among sources
of energy. It contains many targeted tax breaks designed to
encourage certain alternative energy technologies and to promote
energy efficiency and conservation, as well as billions of dollars
for research. Solar and wind energy systems, fuel cells,
alternative vehicles, and nuclear and clean coal research are among
the beneficiaries. This is nothing new, but decades of such efforts
have yielded few results. Programs that funded research on electric
cars and synthetic fuels demonstrate that the federal government
does a poor job and wastes money when it tries to steer the energy
market. Washington would do better to stay on the sidelines.
Congress has already removed several of the worst provisions that
were in earlier versions of the energy bill, but they could come
back. Previous versions included a requirement for a certain
percentage of electricity be generated from so-called renewable
sources, such as wind, solar, and biomass. This measure, of dubious
environmental worth, would increase the cost of electricity; it has
no place in a bill that is intended to make energy more affordable,
not less. Earlier versions also included measures that would begin
the regulation of carbon dioxide, the ubiquitous by-product of
fossil fuel consumption, on the ground that it contributes to
global warming. Again, measures to fight global warming do not
belong in a pro-energy bill. To the extent the energy bill is
allowed to morph into yet another anti-energy environmental bill,
it will be part of the problem rather than part of the
solution.
If past is prologue, debate over the energy bill debate will be
relatively quiet in the House but much more contentious in the
Senate. There will be opportunities to make the bill much better
and much worse. Those interested in creating a bill that helps
solve the nation's energy problems should put more free market
ideas and less federal micromanagement into the final
version.
Ben Lieberman is
Senior Policy Analyst in the Thomas A. Roe Institute for Economic
Policy Studies at The Heritage Foundation.