Thinking in Scales
If history since the late 19th century offers one provisional lesson, it’s that dramatic policy change is more likely in times of crisis or perceived crisis. This is certainly true for energy, whether it’s World War I’s tax breaks for oil exploration, Depression-era industrial codes that sought to stabilize oil production and prices, World War II gasoline rationing, or the 1970s establishment of the EPA and Department of Energy. In flush times, energy policy tends to drift, with market forces, corporate decisions, and international relations often playing a larger role.
Of course, it’s perverse to hope for a crisis in order to effect change.
Here then is a way of approaching major energy policy changes in the absence of a crisis, in times when energy prices are not staggeringly high, supplies unavailable, or environmental problems catastrophic.
Rather than pose particular problems and suggest solutions, though, I want instead to frame a more general approach. There is no one energy problem, but many. They are interconnected, and addressing one (say, greenhouse gas emissions) may exacerbate others (nuclear waste disposal). Drivers usually welcome a decrease in gasoline prices, while economists note that low prices merely encourage profligate consumption. Technological innovation and improved efficiency, as has been recognized since William Stanley Jevons in his 1865 essay, “The Coal Question,” can similarly lower fuel prices to the point where total consumption rises.
A successful energy policy will be framed in terms of scale. Some policy goals may be easier to accomplish emphasizing individual action, some by state programs, others by working internationally. Many problems may require multiple levels. The challenge will be for Congress and the President to package these multiple policies on multiple scales in ways that garner public support.
At the micro-scale, there are policies that depend on individual action. Grounding public policy in exhortations to change personal behaviors is a tricky business. A powerful current in American culture resists requests to change behavior, especially when those requests come from the state. And such attempts around energy have been particularly unsuccessful—Jimmy Carter was famously mocked in 1979 for insisting that turning down thermostats was an act of patriotism, and in August 2008, then candidates Obama and McCain wound up in a bizarre debate over keeping automobile tires properly inflated to improve fuel economy. Many people simply don’t want to change, and such requests can be seized by partisan opponents to paint the official making the request as weak, lacking any ability to solve a problem short of, well, asking everybody to do a better job.
Smart policy will identify structural “pressure points”—those laws, regulations, markets, and technological systems that can be most easily changed and help tilt the balance of individual choices in a more sustainable direction. For at least fifteen years, engineers have investigated how driving habits correlate to the emissions of noxious gases and carbon dioxide, and found that certain behaviors, like rapid acceleration and high engine speeds, are particularly polluting. I. De Vlieger showed in 1997 that aggressive driving consumed 30% to 40% more fuel than calm driving. Reducing these behavior is both an individual good and a public one. Yet improved driver education will only go so far (as most environmentally knowledgeable drivers who happen to be running late will acknowledge). Drivers typically receive no feedback to remind them—or better, to empower them—to drive more efficiently. A model for the future might be hybrid cars, many of which include gauges that display instantaneous fuel consumption. Seeing in real time that a lighter foot on the pedal saves money—and reduces harmful exhaust emissions—might well contribute to changing public behaviors. To my knowledge, no experiments have been conducted on driver feedback, though such an exercise would be a bargain compared with the billions now spent on research and development of new technologies.
A similar case could be made for electricity consumption. Few residential consumers have the remotest idea how electricity prices fluctuate throughout the day. And few have a clear notion of how much power individual appliances and electronics consume. A public policy that mandates providing consumers with more information, rather than demanding particular behaviors, may be more accepted and ultimately more effective. As an added bonus, such policies do not depend on massive investment in developing new technologies—they already exist. Utilities in New York and California have both run pilot programs with smart meters to help customers make more informed decisions about electricity usage patterns. Various kinds of meters can be purchased at hardware stores. Public policy that required homes to be outfitted with these sorts of devices might well enable consumers to make choices that are both economically and environmentally in their best interest.
The problem, of course, is that today, the business model of most utilities depend on selling more electricity, not encouraging their customers to buy less. Which brings us to the second, or meso-scale of public policy, the one that operates on the state or regional level. The modern market economy developed a structural perversity by ignoring various costs of commodities—externalities—especially social and environmental ones. For energy, producers typically benefit by selling more, while the environment benefits by selling less. A meso-scale energy policy might restructure this arrangement by decoupling energy sales from energy producer profits. This model flies in the face of most market transactions with which Americans are familiar, but may point the way towards improved environmental outcomes that are politically acceptable to existing market players.
Look to California as a step in the right direction. In 1978 it decoupled consumption from profits in its natural gas market; in 1982, in its electricity one. Under decoupling, a state regulatory board sets profit targets for utilities to recoup their investments and frees them from depending on increased sales. In part from this policy, per capita electricity consumption in California is 40% below that of the rest of the country. Recently, Maryland and Idaho have instituted decoupling policies, and other states are experimenting as well. While not a panacea, decoupling at least makes possible conservation and efficiency policies that do not run headlong into the business model of major utilities. States can develop energy policies that reward both consumers and utilities for consuming less. More generally, meso-scale energy policies should seek to identify large structural impediments to a sustainable energy future —obsolete taxes, outmoded regulations, haphazardly created markets—and reinvent them. It’s a mistake, however, to assume that reforming and restructuring domestic energy markets will suffice in dealing with the multitude of energy problems we face.
Finally, then, the macro-scale, where policies operate at international or global levels. Energy policy can no longer be contained by national borders, if it ever could. As David Nye has shown, some American cities depended on imported coal from England in the 18th century. My own research explores how Americans sought access and control of fuel supplies from around the globe beginning in the early 19th century to support steam powered merchant ships and naval vessels. Increasingly, problems of energy scarcity, equitable access, pollution, and climate change must be dealt with internationally.
Global warming is the obvious case here, but other issues ought to be considered—and reframed—as inherently international. Too many Americans mistakenly believe America’s energy challenges can be met with American solutions, when markets, corporations, and of course nature, have long been global. Developing countries will consume more energy, and this will affect global prices and the environment. Pressure to extract oil may continue to exacerbate social tensions in impoverished countries. At the macro-scale, new treaties and institutions, perhaps parallel to the Bretton Woods institutions developed during and after World War II, ought to seek stability and sustainability in global energy production and consumption rather than permit destructive competition.
The challenges are great and solutions imperfect. If these multi-scaled approaches prove unsuccessful, well, there’s always the next crisis.
Peter Shulman is an Assistant Professor of History at Case Western Reserve University. He is currently working on a book titled Engines and Empire: America, Energy, and the World, 1840-1940.