Revitalizing U.S. Energy Policy for the 21st Century | By Ariel Cohen

Achieving a green future is a worthy and necessary aspirational goal. However, realizing aspirations requires sound strategy and a willingness to learn and reformulate policies and plans in the future.

The United States is undergoing a growing politicization of the energy transition, a “megatrend,” as Alexander Mirtchev, a Distinguished Professor at George Mason University, called it in his magisterial book on the subject, The Prologue. Such polarization is typical for other transformative technological and policy issues in America, from abortion to gun control.

Ariel Cohen

In fact, no other important issue brings together foreign policy, environmentalism, technological development, economics, and equity. The transition to renewable energy, whether partial or full, entails multi-decade, massive industrial, economic, and societal processes. It decentralizes energy production and is shifting the global balance of power in favor of those who master renewable technologies and supply chains. And today, that means China.

As with railroads, cars, aviation, missiles, telephone cables, contraceptives, space travel, and genetically-based medicine, we do not fully grasp all the far-reaching consequences of this phenomenon. We can, however, look forward.

The United States has come a long way from 2005, when our energy imports peaked. America became a net energy exporter in 2019. Our national and continental energy security has improved due to shale oil and gas production, growing exports of liquified natural gas, and increased electricity generation from renewables. Only nuclear power generation is stagnating at 18.6 percent of the total.

The prosperity of the United States and the West collectively has been built on cheap and abundant energy. This has defined economic progress since the beginning of the Industrial Revolution: from wood to coal, to oil, to gas, to nuclear, and now to renewable energy. In most cases, renewables still cost more than fossil fuels if one calculates the cost of storage and subsidies. Denying these fuels to the developing world condemns its people to slower development and lower living standards. Restrictions on fossil fuels, especially natural gas, will stall progress in combating energy poverty, which has seen a worldwide reduction of 10 percent in the last two decades.

The United States must provide the kind of leadership and dedication that these vital tasks demand. Its leadership is instrumental in addressing climate change and global energy poverty. This can only be done simultaneously with science, technology, and well-calibrated economic policy, making renewable energy profitable in the national economy at large, not picking winners and losers by introducing a command economy, which historically failed Soviet Russia and communist China.

Tragically, the energy field is rife with politicization. American policymakers must weigh fateful geopolitical considerations. Authoritarian governments worldwide are on the march. The United States is locked in ferocious competition with China over the world’s energy future as it monopolizes photovoltaic technology for solar panels, EV tech and batteries, and mining and refining rare earth minerals.

With this burden, more pronounced during a time of war in Europe and the Middle East, the United States must carefully balance Western national security and economic interests with the aspirations and needs of our democratic allies and the developing world, whose people need abundant electricity, clean air, and water just as much as we do.

The struggle between the desire to go green immediately and having heat in winter played out in sharp relief in Europe since the February 2022 Russian invasion of Ukraine. Germany is an exemplar. With an almost religious faith in Energiewende (a rapid transition to renewables), Germany has poured billions of euros into wind and solar feeding tariffs and subsidies while shutting down nuclear reactors. This spending may reach €1 trillion by 2030, causing high energy prices, high taxes, low industrial competitiveness, and slow economic growth. In September 2023, the cost of a kilowatt hour of energy in Germany was about $0.40. GDP declined by 0.3 percent in the fourth quarter of 2023. The cost of kw/h in the United States was $0.17, with fourth-quarter growth at 3.4 percent.

A limited volume of renewables was no substitute for the hydrocarbons that Berlin was buying from Moscow. The only alternative that might have provided a stable energy supply—nuclear—had already been vilified by the Bündnis 90/Die Grünen, the German Green Alliance, and the Social Democrats, that its reactors were shuttered amid the Russian energy supply crisis. At that point, continuing to buy gas and oil from Russia as though everything was business as usual could not work. Gas, heating oil, and diesel fuel prices skyrocketed as the sudden Russian onslaught in Ukraine caused panic and fear of embargoes. Berlin was forced to re-open high-pollution coal power plants to keep its citizens from freezing.

Achieving a green future is a worthy and necessary aspirational goal. However, realizing aspirations requires sound strategy and a willingness to learn and reformulate policies and plans in the future.

Force-marching the source of our baseload electrical production to renewables will not work. There are two reasons for this: intermittency and the lack of storage. Intermittency is caused by drops in power production when the sun isn’t shining, or the wind isn’t blowing.

The grid, industry, and households require a consistent baseload to function. Our national grid was largely built between the 1920s and the 1970s for a steady baseload and is not equipped to handle intermittency. More importantly, there is no storage capacity to store electricity in industrial-size quantities via batteries or pumped hydro storage.

Lithium-ion batteries are not an answer for storage as they are extremely costly. According to the International Tax and Investment Center’s Energy, Growth and Security Program calculations, if America were to keep a store of energy in these batteries to hedge against disruptions, as we do with the Strategic Petroleum Reserve, the cost of production, installation, and operation of such a system would be astronomical. For a standard ninety-day buffer, it would be $333 trillion.

These costs highlight the infeasibility of a rush away from natural gas and nuclear, as the Inflation Reduction Act (IRA) and the Build Back Better plan project. If the U.S. transitions to EVs as the EU and California plan, our power production needs to increase by 20 to 50 percent, and the grid must be massively upgraded.

This is why the Biden administration’s pause on approving future LNG infrastructure projects, disrupting the use of this transition fuel in Europe and Asia in favor of older fuels, like coal, works against the goal of furthering a green energy future. Thankfully, there are better options.

Nuclear energy is one of the best routes to meet baseload demand. Unfortunately, it is overregulated. Bias and irrational fear have prompted the United States to regulate itself into a corner, with the Nuclear Regulatory Commission’s approval process alone taking up to five years for a new reactor. 

In 2022, nuclear energy only accounted for 18.2 percent of electricity generation despite producing no CO2 emissions. While the Inflation Reduction Act (IRA) allocates an estimated $30 billion toward nuclear energy in the next five to ten years, funding for batteries and renewables exceeds $80 billion. Downplaying this alternative baseload power source and instead focusing on wind and solar will only cause avoidable difficulties.

The IRA is more focused on the politics and optics of renewables than on their reality. This is evidenced by the inflationary subsidies provided to stereotypically “renewable” energy sources while ignoring less flashy but more effective alternatives like nuclear or energy grid reform. While renewable sources like wind and solar have utility, we cannot yet rely on them alone. The Biden administration admitted, and most pro-environment studies indicate, that the IRA’s grid decarbonization targets are impossible without technological breakthroughs.

Renewables have made incredible progress in recent years, but they need more time, possibly decades, to properly replace current baseload sources, like natural gas, including LNG, for exports. Renewables have their place, but not to the exclusion of nuclear and natural gas—not at least for the next three decades.

Geopolitically, LNG is vital to their economy and their freedom. Even if we could magically fix every technological problem, America’s LNG exports are not just a domestic economic issue. It is a vital national security predicament. Without American LNG exports, Europe would not have been able to wean itself off Russian gas when Russia re-invaded Ukraine. Support for Ukraine would have been much lower, and high energy prices would have persisted. In other words, American LNG was and is a lifeline for Europe and Ukraine. It was a lifeline requested by the Europeans and a lifeline the United States extended. We did it in World War II and are doing it now. However, the Biden administration’s recent decision to pause approvals on LNG infrastructure projects threatens this lifeline and, by extension, benefits those who wish to see Europe and Ukraine weakened.

European allies must be safe knowing that U.S. LNG is and will be available to fuel their efforts. If this pause becomes a freeze, it will deliver another energy shock. This blow would be felt not only by our allies in Europe but also in Asia and further reinforce what many in the world increasingly believe: America is unreliable and lacks strategic vision.

Russia is fighting a war against the West, counting precisely on our lack of strategic vision. If they continue, LNG export pauses and freezes would only support Russia’s war. Russia aims to drive LNG prices up, increase its gas sales to European markets (where Russian LNG is not sanctioned), and boost its revenue to fund the war in Ukraine. Russian LNG is still sold within Europe. In 2024, Russia supplied 4.89 million mt of LNG to Europe (16 percent of the total supply). Within individual countries, Russia supplies 32 percent of Spain’s, 49 percent of Belgium’s, and 27 percent of France’s total LNG imports. Russia doesn’t see this changing soon, as it is expanding its LNG export capacity with the Novatek project in Murmansk, aiming to eventually produce 20.4 million tons annually. This is part of Russia’s ambition to capture 20 percent of the global LNG market by 2030-2035. The discussion of sanctions on Russian LNG trade in Europe is just beginning, and the United States should do more to expedite it.

Russia is doing all it can to ensure that the United States abdicates its role as an energy security guarantor to its allies. Moscow is actively spreading claims without scientific basis to discourage further U.S. energy production and exports. Common Kremlin narratives include overstating shale’s negative impact on the environment and fearmongering about nuclear energy.

President Biden’s decision has impacts that extend far beyond Europe. It affects U.S. allies in the Asia Pacific—Taiwan, Japan, and South Korea—whose energy needs are heavily dependent on LNG imports, accounting for 35 percent, 29.9 percent, and 26.8 percent of their respective energy mixes.

The United States needs to worry about more than Russian LNG exports. Qatar has announced an 85 percent expansion of its LNG exporting capacity. If American LNG isn’t available, Qatar’s will be.

A policy of LNG pauses and freezes will not replace American LNG with green energy. It will replace American LNG with Qatari LNG, Russian LNG, Algerian LNG, etc. Ukraine is fighting for its life, while our European allies cannot do without the LNG we promised them. South Korea and Japan need American LNG to stand up against China. If we don’t deliver, they will be forced to turn elsewhere. LNG is the bridge fuel to the future, but if that bridge isn’t standing, we won’t be able to make it to the other side of the energy transition.

The United States must manage the energy transition in gradual, consumer-friendly, and business-friendly ways. The American energy industry needs to expand electricity generation to meet the growing demand from the transportation sector and AI. We require a nuclear renaissance and a new generation of U.S.-built SMRs. We need technological breakthroughs for affordable storage and will need to upgrade the grid to make it smart and capable of handling renewables.

Current U.S. government policy does none of these. This policy is not just too expensive. It is a faulty policy that aims for the stars but ignores the present. In doing so, it inadvertently sacrifices the future. America can do better. America deserves better.

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