The Energy Paradigm Has Shifted
I am very pleased to welcome guest-blogger Joe Tomain, who is Professor and Dean Emeritus at University of Cincinnati College of Law. Joe is also co-author, with regular guest-blogger Alexandra Klass and three other scholars, of a new energy law and policy text.
By Joe Tomain
On June 2 of this year, the Obama administration announced its Clean Power Plan (CPP).[1] This announcement is a game changer and it shifts the energy paradigm. Those phrases are often overused, however, in this instance they are fully apposite for two reasons.
First, the federal government has linked energy and the environment in ways in which they have not been linked in the past. This bringing together of energy and the environment is an essential move towards an effective energy transition for reasons that I will develop below. The second reason that this is a game changing move is because for too long the word in the street has been that the federal government will not take the lead in climate change efforts. The Clean Power Plan refutes that tightly held belief.
In one sense, the promulgation of the CPP is not surprising. Indeed, over 40 years of energy policy studies indicates that a transition away from a fossil fuel economy is a desirable policy preference.[2] Early studies, such as Limits to Growth[3] in 1974 and Amory Lovins’ Soft Energy Paths[4] in 1977 were critical of the dominant model of energy policy that relied on large-scale, capital-intensive, centralized energy projects particularly those wedded to fossil fuels and nuclear power. Those studies were wary of continued reliance on dwindling oil and natural gas resources.
The next wave of energy studies was born out of necessity and reaction to the energy crises of the 1970s. The distorted natural gas market, the bollixed wage and price controls on oil, the Arab Oil Embargo followed by the Iranian Embargo, and the collapse of the nuclear power industry all in a few years, put energy in the news in ways that it had not been before. Not only was energy a matter of industry and economic concern, consumers were frustrated by waiting and gas lines and were frustrated with rising energy bills. Studies by the Harvard Business School, the Ford Foundation, and Resources for the Future urged the United States to wean itself from reliance on Middle East oil precisely because of the threat of further economic dislocations.[5] To be sure, the studies also touted resource and energy conservation but did not put forward an aggressive plan for renewable resources or for energy efficiency.
Then a funny thing happened on the way to the next energy crisis – energy was out of the news for the last decades of the 20th century even though our dependence on foreign oil continued to increase through 2006. In the beginning of the 21st century, however, energy policy studies began to ramp up again. Bipartisan think tanks and nongovernmental organizations began publishing energy policy studies that continued warnings about dependence on foreign oil.[6] This new wave of studies, however, added a particular dimension to the energy policy discussion – the environment. A precursor for these studies was the UN report Our Common Future[7]that popularized the idea of sustainability for natural resources as well as for energy in order to improve the plight of everyone on the planet.
On the domestic front, the new energy policy studies concentrated on the environmental impacts of our traditional fossil fuel energy policy and began to highlight the challenges presented by climate change. In short, the policy community began to adopt a fairly wide consensus on the need for a transition to clean energy resources particularly renewable resources and energy efficiency.
The Clean Power Plan is of a piece with the trend to a cleaner future. More specifically, by linking energy and the environment, the CPP is breaking a barrier that has long existed between the disciplines of energy law and policy and environmental law and policy. It is a bit of an historic anomaly that the discipline of energy law was born in the mid-1970s in response to the crises noted above. The curiosity is that environmental law, particularly with the passage of the National Environmental Policy Act and associated environmental laws, was created as a discipline at the dawn of the 1970s. So, then, even though these two disciplines were developed close in time, they not only acted independently of each other they relied a separate set of assumptions, vocabularies, and metrics.[8]
Even though, energy law became known as a discipline in the 1970s, it had its predecessors. The most immediate predecessor was public utilities regulation. Energy law also incorporated elements of oil and gas laws and natural resources laws. By examining that welter of law, one can see that state common law and statutory law focused on the exploration and extraction of the natural resources used to produce energy. Federal laws, then, focused on the transportation, transmission, and distribution of those resources and of the electricity produced from them. In short, energy law was about exploration, production, and transportation and was grounded in the core assumption that the more energy that was produced and consumed, then the greater and more robust the economy would be.
Environmental laws were not chiefly concerned about extraction and production of resources as such. Instead, environmental laws addressed resource protection and conservation. Additionally, environmental laws focused on ecology and the human and natural environments in order to create more healthy ecosystems. Consequently, the metrics for energy law dealt energy prices, economic productivity, and the like. Environmental metrics measured the cleanliness of the water we drink, in the air we breathe, and the number of species we preserve.
At a superficial level, given the fact that energy and environmental systems are complex, the fact that they are independent regulation makes some sense. However, the physical reality is that throughout the fuel cycle from exploration to distribution to consumption, environmental consequences follow each step of that cycle. Energy and environmental laws and regulations, then, are physically linked to each other and, therefore, should be coordinated. Until the CPP, they have not been so treated.
Thus, the first significance of the Clean Power Plan is to have these two disciplines begin to address each other and to find a common language. Linking energy and the environment is a necessary step toward a clean energy future.
The second significant development of the CPP is that the federal government is now assuming a leadership role as long urged. Several of the policy studies mentioned above, as well as more recent ones, emphasize the need for federal leadership if energy and climate change are to be addressed in any meaningful way. [9] In part, the call for federal leadership resides in the fact that the US consumes 25% of the world’s energy resources and emits about 25% of the world’s greenhouse gases. If any international progress is to be made on the climate front, then the United States must play a leadership role.
On the domestic side, federal leadership is desirable for any number of reasons including the fact that while state energy initiatives are valuable in and of themselves, interstate coordination can advance a clean energy transition. On the electric side, for example, transmission line siting, a coordinated market for renewable energy credits, effective cost allocation for the development of the smart grid, and a rationalized set of renewable portfolio standards could benefit from national leadership. On the natural gas side, uniform disclosure rules for fracking chemicals, national water standards, and the like may help alleviate many of the concerns surrounding hydraulic fracturing. Further, the matter of energy subsidies, for both fossil and clean fuels, should be addressed responsibly and uniformly and national leadership in this arena should yield beneficial official results.
Thus, the Obama administration’s CPP is an important as well as necessary step in moving away from a fossil fuel economy to a clean energy future precisely because it begins to merge energy and the environment and puts federal leadership in play.
[1] Carbon Pollution Emission Guideline for Existing Stationary Sources: Electric Utility Generating Units, Fed. Reg. June 18, 2014) available at http://www2.epa.gov/carbon-pollution-standards/clean-power-plan-proposed-rule.
[2] Joseph P. Tomain, Ending Dirty Energy Policy: Prelude to Climate Change chs. 3 and 4 (2011).
[3] Donella Meadows et al., The Limits to Growth: A Report for the Club of Rome=s Project on the Predicament of Mankind ch. IV (1974).
[4] Amory B. Lovins, Soft Energy Paths: Toward a Durable Peace (1977).
[5] Robert Stobaugh & Daniel Yergin (eds.), Energy Future: Report of the Energy Project at the Harvard Business School (1979); Ford Foundation, Energy: The Next Twenty Years (1979); and, Sam H. Schur, et al., Energy in America’s Future: The Choices Before Us(1979) (Resources for the Future study).
[6] See e.g. Energy Future Coalition, Challenge and Opportunity: Charting a New Energy Future (2003) available at http://energyfuturecoalition.org/Resources; National Commission on Energy Policy, Ending the Energy Stalemate: A Bipartisan Strategy to Meet America’s Energy Challenges (2004) available at http://belfercenter.ksg.harvard.edu/publication/4000/ending_the_energy_stalemate.html; and,Natural Resources Defense Council, A Responsible Energy Plan for America (2005).
[7] World Commission on Environment and Development, Our Common Future (1987).
[8] Amy J. Wildermuth, The Next Step: The Integration of Energy Law and Environmental Law, 31 Utah Envt’l L. Rev. 369 (2011); Alexandra B. Klass, Climate Change and the Convergence of Environmental and Energy Law, 24 Ford. Envt’l L. Rev. 180 (2013); Joseph P. Tomain, The Politics of Clean Energy: Moving Beyond the Beltway, 2 San Diego J. Climate & Energy L. 299 (2011-12).
[9] See e.g. Challenge and Opportunity, supra note 6; A Responsible Energy Plan for America, supra note 6; Ending the Energy Statelmate, supra note 6; Institute for 21st Century Energy, Energy Works for US: Solutions for Securing America’s Future 3 (2013) (Energy Works) available at http://www.energyxxi.org/energy-works-for-us; William Norhdaus, Climate Casino (2013).