The Breakthrough Institute

by Breakthrough Senior Fellow Frank Laird

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We all get trapped by our assumptions. One of the main points of the Breakthrough Institute is to challenge old assumptions in order to find policies that will work. That can get uncomfortable, but two reports out this week show us how important it is for everyone in the energy policy game.

The New York Times reports that the Bureau of Land Management has just brought all large solar energy projects in the Southwest to a screeching halt while they do a large environmental assessment. Solar plant developers have applied to install 130 new facilities on BLM land that, when built, will occupy upwards of 1 million acres.

The halt has upset the solar energy firms and advocates. A million acres sounds like a lot, but it's less than one percent of BLM land in the west. Plus, everyone knows that oil and gas production is moving merrily along in the intermountain west, so why pick on solar development?

Still, if the solar developers want to claim the environmental mantle, it's unseemly for them to think they should be exempt from environmental assessment. Both they and the federal regulators need to shed old ways of thinking. If solar power plants occupy a million acres of federal land, they need to have their environmental ducks in a row, and the regulators should have thought of these problems some time ago and should be asking now if they can conduct the assessments without bringing the industry to a 2-year standstill. Neither group should rely on its old ways of thinking.

The other example of old assumptions out this week is the new International Energy Outlook published by the Energy Information Administration, part of the Department of Energy. This report has projections out to 2030 of global energy production and consumption and all their scenarios show greatly increasing energy consumption in the next 20 years, with most of it coming from the developing world. The frustrating part of this report, as will almost all EIA reports, is that they assume low oil prices. This report contains both a base case and a high oil price case, but both of them look low given current conditions. In particular, they list the 2008 price for oil as $100/bbl and project it going down, in both scenarios, for the next several years.

In fairness to EIA, oil prices are hard to nail down, with different sources citing different prices, such as futures prices and spot prices. The $140/bbl we read about in the papers is usually a 30-day futures price. Still, the EIA's own oil division reports spot prices in June as $130/bbl, so prices will have to go down quite a bit for the rest of the year to bring the annual average back to $100/bbl.

Why am I haranguing on this geeky point? Because believing that oil prices won't get too high is an old way of thinking that takes the edge off the urgency of developing a new energy economy. The biggest failure in much of energy policy is a failure of imagination and it is way past time that we started to imagine a world with very high fossil fuel prices so we can get to a world with clean and affordable energy.