A silver lining to the present mayhem in energy markets, policy, and geopolitics is an opportunity to reassess and reform our energy policies to protect our economy, national security, and environment. It is becoming abundantly clear that our current policy approach is spectacularly failing on all accounts. A better strategy has three components: 1) putting our own house in order by correcting policy errors and enacting sensible policies; 2) leveraging our abundant energy resources to create an arsenal of energy to assist our allies and confront adversaries; while simultaneously 3) addressing climate change with sound and serious policies at home and leadership abroad. The following recommendations draw heavily on three recent reports produced by the Forum for American Leadership’s Energy Working Group.[1]
Put Our Own House in Order
The United States must ensure that energy policy supports the ample, secure, and affordable energy, predominantly hydrocarbon, resources that modern civilization and national security require while addressing externalities associated with all forms of energy. Hydrocarbon energy (oil, gas, and coal) lifted humanity from millennia of squalor and will remain the lifeblood of modern civilization for the foreseeable future. Hydrocarbons account for 80 percent of our primary energy resources and are essential for healthy transportation, electrification, heating, light, and industrial sectors. Policymakers can assist the private sector in providing energy by addressing the following challenges:
Remove unnecessary obstacles to energy production and infrastructure and provide certainty to investors. Reverse President Biden’s deeply irresponsible cancellation of the Keystone XL pipeline and abolish the requirement for a national interest permit for any cross-border energy infrastructure projects unless the president finds that it would gravely imperil the national security of the United States. Modernize and improve the leasing and management of the federal estate to ensure that taxpayers realize the full and complete benefit of the resource base of the United States. Amend the National Environmental Policy Act to enforce timelines and provide expedited permitting for critical national security energy projects.
Reduce ruinous oil price volatility. The return of extreme oil price volatility over the last twenty years stems from the absence of an effective and durable swing producer. Wild oil price volatility threatens investment not only in the energy sector but hammers the broader economy and confounds defense, monetary, and budgetary policymaking.[2] The United States should engage with allies such as Saudi Arabia, the United Arab Emirates, and other friendly swing producers to encourage ample maintenance of spare production capacity in the global oil market and sound use of swing production. While shifting resources to address the threat from China, the United States will continue to have a vital interest in the security and stability of the Arabian Gulf region, which will remain the world’s most important source of oil.
Reverse the short-sighted and dangerous policy of draining our Strategic Petroleum Reserve (SPR) and fill it to its maximum of one billion barrels. Recent history has proved being a net oil exporter does not protect us from wild oil price volatility stemming from large geopolitical disruptions in global oil supply. Congress’ decision to sell off the SPR to pay for non-energy expenses along with President Biden’s illegitimate use of the SPR for price control must be reversed. As long as spare production capacity remains tight and geopolitical risk high, the United States and other importing nations will need to hold and, at times, use strategic stocks to offset emergency supply disruptions and attempts by hostile producers to damage the economy.
Bolster deterrence and defense against underappreciated cyber threats to critical energy infrastructure. A prolonged disruption in energy flows caused by foreign cyberattackers could quickly inflict catastrophic harm to American lives, health, and national security. The May 7, 2021, Colonial Pipeline cyberattack highlighted the importance of engaging in strategic deterrence against future, potentially catastrophic, attacks on our critical energy infrastructure and exposed significant national security gaps that require timely legislative and executive branch remedies. Congress must work with the executive branch to take robust steps to deter and punish cyberattacks on critical energy infrastructure while preparing the country to manage future attacks better than it did in May 2021. Actions to date have fallen far short.
Additional steps should include:
- Toughen penalties and sanctions for foreign cyber attackers who target critical energy and other vital U.S. infrastructure.
- Deter, preempt, and punish foreign cyber attackers targeting U.S. critical energy infrastructure as it would Al Qaeda, ISIS, or any other similar foreign-based terrorist planning or using weapons of mass destruction (WMDs) to inflict catastrophic harm to the homeland.
- Require the president to notify Congress of countries that support cyberattackers who have, are, or are likely to plan or execute cyberattacks against critical energy infrastructure.
- Bolster our active defense, persistent engagement between the executive and legislative branches and with our allies and defend-forward efforts.
- Declare it shall be the policy of the United States to regard any future attempts to disrupt or dismantle U.S. critical energy infrastructure by cyber attackers an act of aggression that shall warrant swift and commensurate retaliation against the attackers and any foreign governments deemed to sponsor them.
- Spend more money on human capital and training for public-private cybersecurity programs, which will improve the government’s capacity to help companies that are managing critical energy infrastructure assets.
- Require critical energy infrastructure owner-operators to immediately inform the federal government of major cyber or any other type of attacks that could impact domestic supply. Reporting mandates should protect the identity of reporting organizations and provide liability and regulatory protection.
- Require the owner-operator of a critical energy infrastructure asset to consult and obtain the permission of the appropriate federal authority before taking any discretionary action that could threaten the economy or national security, including the prolonged shutdown of energy flows. Provide an exception in cases when operators do not have sufficient time to consult with federal officials, i.e. to prevent a chain reaction, leak, or staving off an ongoing attack. In the case of foreign attacks on vital energy infrastructure that could quickly inflict catastrophic damage to the homeland, the federal government must have the final say about whether to implement any prolonged, discretionary shutdown of critical energy flows.
Become an Arsenal of Energy
Russia’s invasion of Ukraine has roiled global energy markets, spawning oil and gas price spikes that threaten economic growth and geopolitical stability. Moscow’s war of choice may instigate the most severe energy crisis since the 1970s. The United States must leverage its vast energy resources and technological prowess to protect our economy and become an Arsenal of Energy for allies threatened with authoritarian aggression.
The United States should:
- Reject calls to ban energy exports, which would raise energy prices at home and abandon our allies.
- Approve every liquid natural gas (LNG) liquefaction project currently before the Department of Energy.
- Amend the Natural Gas Act of 1938 to eliminate the public interest determination for LNG exports to non-Free Trade Agreement countries.
- Consider loan guarantees, co-funded with European countries, to expedite the construction of LNG liquefaction and regasification facilities.
- Enact a streamlined permitting process for mineral extraction and processing in the United States to bolster our competitiveness against established producers in China.
Implement a Sound and Serious Climate Policy
The climate is warming and human activities, principally accumulating carbon dioxide from hydrocarbon combustion, exert a physically small but growing effect upon it. While the science is far from settled regarding how the climate will change under human influences and the net economic and environmental impacts of those changes, the issue requires a serious and sound policy response.
The prevailing narrative held by the current administration and many activists is ineffective, unscientific, and endangers America’s economic growth and national security, as well as the environment that it claims to protect. It distorts the science, advocates for massive central planning to achieve impossible and ruinous targets, and endangers the economy and national security.
A sound strategy would leverage practical but serious policies to address the real risks posed by human impacts on the climate while protecting economic freedom, a healthy economy and environment, and national security as well as providing adequate energy to those who need it.
That strategy should include steps to:
Depoliticize and accurately represent the science and technologies. The foundation of any sound and serious climate policy must be complete, transparent, and unbiased descriptions for non-experts of the scientific understanding of climate and human effects upon it. Given the rampant bias and intimidation, it is not surprising that the popular perception of what the science says is quite different from what the actual science says. There is scientific consensus that the climate is warming. Human activities contribute a physically small, but growing, warming influence on the climate, principally by consuming hydrocarbon energy.
However, as the veteran climate scientist and President Obama’s Undersecretary for Science at the Department of Energy Steven Koonin (among others) has noted, the science is far from settled about past human contributions to climate and is incapable of producing useful forecasts of future warming, much less human influences upon it.[3]
The problem is that while the scientific research is typically transparent, rigorous, and objective, the government summaries that inform non-experts in the media, government, and citizenry are not. The U.S. government should subject summaries of the science to the same objective, rigorous peer-review that the actual science enjoys.
Additionally, the United States should:
- Sustain and enhance funding for scientific observations of the earth’s climate system.
- Require that authors of Summaries for Policy Makers (SPMs) of the United Nations Intergovernmental Panel on Climate Change (UN IPCC) reports be selected by independent, non-government experts and scientists without conflicts of interests.
- Require disagreements arising in the peer-review of assessment reports to be resolved by an independent referee, as is the case for research papers, instead of allowing the assessment report’s authors to discard criticisms without explanation, as is the case now.
- Require UN and U.S. assessment reports to undergo a formal review by a group of independent climate experts tasked with challenging the assumptions, conclusions, and presentation, probing for weak spots, distortions, and exaggerations. Require report authors to rebut any points raised.
Beyond that, we must:
Consider all strategies based on cost-benefit analyses. This should include mitigating or reducing emissions; geoengineering or enhancing the earth’s reflectiveness and removing carbon from the atmosphere; and adaptation to live, if not thrive, within a future climate. Assess each priority based on cost-effectiveness and national security as well as economic and environmental impacts. Any mitigation strategies should include an emphasis on promoting technological innovation and market-based policies instead of imposing mandates, taxes, and restrictions on consumers and businesses.
Ensure policymakers have thorough, transparent, and accurate data and analysis. To allow for cost-benefit analyses, the International Energy Agency (IEA) must resume business-as-usual or Current Policies Scenarios that assume only existing policies in its long-term energy forecasts. Require the IEA and Energy Information Administration to conduct energy market “stress tests”. Require UN and U.S. official analyses and their summaries to consider both the positive and negative economic impacts of various climate projections, including costs.
Prevent dependence on Chinese controlled critical minerals. Officials, investors, and companies are moving aggressively to shift away from petroleum and the internal combustion engine to electric vehicles and batteries. While the commercial viability of this plan remains to be seen, its ultimate success depends on voluntary and unsubsidized mass adoption of electric vehicles and the expansion of the electric grid and electric vehicle charging infrastructure. Should vehicle electrification accelerate, U.S. and global dependence will increasingly shift from OPEC+ oil reserve holders to China, which currently dominates the electric vehicle supply chain. U.S. policy must ensure neither China nor any other power can dominate core global energy systems, including transportation.
To those ends:
- Congressional leadership should prioritize critical minerals legislation. Enact legislation that would force defense contractors to stop buying rare earth-enabled products from China by 2026 and use the Pentagon’s Defense Logistics Agency to create a permanent stockpile of rare earth minerals.
- Smooth the path for companies to open new mining production and refining facilities. Currently, U.S. companies must overcome numerous permitting hurdles and sparse sources of financing for upstream projects, leaving them less competitive against established producers in China.
- Prioritize domestic development and direct any foreign assistance for clean energy-mining towards friendly and stable sources of supply, particularly U.S. allies like Australia and Canada and partners in Latin America.
- Create a streamlined permitting process for mineral extraction and processing in the United States. A major reason for the lack of domestic mineral processing facilities is the difficult, costly, and time-consuming process involved.
Foster innovation and harness free enterprise. Given their poor historical track record, governments should not be picking winners in the economy, especially in the energy sector. Any policy responses should be fuel- and technology-neutral and account for market forces.
- Congress should repeal tax benefits and outlays benefitting mature but uneconomic technologies and redirect any future tax benefits and outlays toward activities that the private sector may bypass, such as basic science and strategic endeavors, including work on minerals dependence and nuclear energy, with the potential for disproportionate security benefits.
- Should fuel switching policies be required, all energy sources should be on the table including nuclear, natural gas, fusion, hydrogen, and advanced biofuels.
Legislate on climate at home and lead abroad. Congress should lead the debate and enact domestic and international climate policy. The current approach led by the executive and judicial branches yields only transient, legally vulnerable, and easily reversible domestic and foreign policies. The Senate should ratify any international energy or environmental agreements in which the president has joined.
The text of the 2015 non-binding Paris Agreement includes unwarranted alarmism and unrealistic targets. The United States should push for changes that would strengthen the agreement by depoliticizing science, embracing all strategies and fuels, leveraging sound principles, and clearly messaging that the purpose of the agreement is not to establish transfer payments from wealthy countries to poorer ones.
- An improved Paris Agreement should be submitted to the U.S. Senate for ratification, ensuring that U.S. climate policy enjoys a strong and durable political and legal foundation.
- S. negotiators should insist that China and other major countries similarly enact legally binding, verifiable policies to backstop their international commitments. The United States must develop both cooperative and non-cooperative methods to verify other countries’ emissions reductions.
[1] Forum for American Leadership, “Eight Necessary Steps to Defend U.S. Critical Energy Infrastructure from Cyberattacks,” https://forumforamericanleadership.org/defend-energy-from-cyber; Forum for American Leadership, “Blueprint for a Sound and Serious Climate Policy,” https://forumforamericanleadership.org/climate-blueprint; and Forum for American Leadership, “Creating an Arsenal of Energy,” https://forumforamericanleadership.org/policy-product/creating-an-arsenal-of-energy/.
[2] Robert McNally, Crude Volatility the History and the Future of Boom-Bust Oil Prices (New York, NY: Columbia University Press, 2017).
[3] Steven E. Koonin, Unsettled: What Climate Science Tells Us, What It Doesn't, and Why It Matters (Dallas, TX: BenBella Books, 2021).
