It’s time to be honest about fossil fuels’ role in energy transition

The global energy crisis has hit US shores: Fuel prices are rising, and a global supply shortage of natural gas is driving up the cost of heat and electricity as winter approaches. The Biden administration, worried that rising energy prices could cost votes and kneecap its ability to implement policies, has begged OPEC to pump more oil and Russia to step up gas supplies to Europe. At the same time, the Republicans have no useful energy policy alternative on offer. The United States needs a fundamentally new energy policy that will deliver reliable energy supplies at affordable prices with a low impact on the environment and climate.

Any energy policy will have to start by considering several inconvenient but incontrovertible facts.

First, no matter how quickly the administration wants to raise the share of energy from renewable sources, US energy security will require continued domestic oil and natural gas production for transportation, heating, industry, and electricity generation. Faced with the current energy crisis, the Biden administration is debating a new transition policy that recognizes fossil fuels will be necessary for the next decade or two. President Joe Biden's current transition strategy—as embodied in the Build Back Better program—is not enough to get what the United States and the world need to solve the energy crisis: the return of US oil and gas production after plummeting during the COVID-19 pandemic and not recovering to its previous level since then. Capital will not return to the US oil and gas patch if the administration's regulations limit production—nor if the administration continues to beat up on fossil fuel producers, leaving investors uncertain about the future of US oil and gas. The administration's ongoing evaluation of planned fuel and crude pipelines, which could result in their cancellation, adds to the industry's concerns.

What's more, a group of leading Democrats in the US Congress, led by Sen. Elizabeth Warren, has called for reinstating the ban on US crude exports. If the ban were implemented, it would impede the return of investment in US oil production even further. The current plan to release oil from the Strategic Petroleum Reserve is an attempted quick fix that will not make a long-term dent in the oil price. While Secretary of Energy Jennifer Granholm blamed OPEC for high oil prices, the numbers are clear: It is US oil production, not OPEC's, that is missing from the markets. For that, the Biden administration has itself to blame.

Second, a smart US energy policy should not be framed as a binary choice between renewables or fossil fuels. The current generation of renewables—hydropower, wind, and solar—cannot deliver electricity or heat without reliable baseload energy generation, most often from natural gas. Politicians, journalists, and other advocates of wind and solar are being dishonest when they say that a power system run on some percentage of renewable energy or the price of renewable energy is now competitive with that of fossil fuels. Those weather-dependent renewables can only run thanks to the backup power and grid stability provided by natural gas. That backup power system costs money and drives up costs even when it isn't running. Energy security policies should focus on the costs and stability of transmission of energy, not just production numbers.

Photo: Reuters

Third, the current set of renewable energy sources cannot deliver the energy the United States needs due to their low energy output and efficiency, no matter how much money Washington throws at them. Instead of subsidizing the consumption of the current generation of wind, solar, and other renewables, governments around the world should focus hard on developing new technologies and funding research and development.

Fourth, Washington should recognize that the failure of US energy policy is not a partisan issue. Both deeply Republican Texas and ultra-progressive California have unreliable electricity, even though both states are among the richest areas of the world. Energy security is complicated and is not achieved by ideology, no matter which side of the political divide you're on. Unlike Texas's free-market model, energy security requires government involvement or mandates in storage, redundancy, and backup. And California can't halt nuclear power and natural gas and still expect to keep the lights on. Both Biden and former President Donald Trump turned to OPEC to manage oil price trends. Neither president identified a new policy for the United States.

Fifth, Washington cannot adequately promote US national security while abandoning the geopolitics of energy, which still hinges on oil and gas. Why should the United States as the world's largest producer of oil and natural gas call on OPEC and Russia to save the West during this energy crisis? Biden, however, has completely pulled back from engaging in energy geopolitics, aptly illustrated by the White House's "Interim National Security Strategic Guidance." In this document, nearly all mentions of energy are in the context of promoting "clean energy"—even though fossil fuels provide more than 80 percent of global energy consumption. A national security strategy that completely ignores the fuels on which every country in the world depends to keep its people alive and economy running is no viable strategy at all.

Finally, the administration's energy policies do little to avert climate change while damaging the environment. Supporters of Biden's energy policy say Americans must make economic sacrifices today in order to save the planet. Yet without today's other major emitters—China and India—on board, US steps to address climate change are effectively meaningless. China's and Russia's lack of high-level participation at the recent United Nations climate summit and India's pushing the goal post to achieve net-zero emissions only in 2070 illustrates that there is no meaningful global commitment to change. The United States is making serious changes to its economy as part of its climate policy, while China, the world's largest carbon emitter, has made only unenforceable declarations to "make best efforts" to phase down (not out) coal consumption after 2030.