It may be time, as U.S. Sen. John Barrasso, R-Wyo., suggests, to “declare a cease-fire in the war on red, white and blue jobs.” But maybe we should ask who really is waging that war, and how do those jobs stand to be lost?
In the last three years, more than 100 coal-fired power plants have been canceled or shut down. This is not happening because coal has become more expensive. Indeed, coal remains by far the cheapest form of electric power production. Yet electric power utilities are abandoning it despite its low cost. They recognize that future markets for electric power will reward producers who switch to wind and natural gas as preferred low-carbon energy sources.
That is hardly the picture drawn by Sen. Barrasso: “Any shift to an alternative energy economy should occur because the people decide that alternative energy is better, not because Washington has made every other form of energy too expensive.” Electric utilities are not being driven away from coal because Washington has made it too expensive. They are abandoning it because, under current policy conditions, they already see these alternative forms of energy as a “better” investment, in anticipation of shifting public preferences for energy sources.
What would it take to change this calculation? Owners of coal-fired power plants would have to see some advantage in installing new carbon emission reduction technologies (such as carbon capture and storage), in order to level the playing field in carbon emissions with alternative sources of energy. Given the current state of public policy, there is no such advantage to be gained, because of the high capital costs of these technologies.
But what if, for example, Congress were to impose a price penalty for the emission of carbon dioxide? Owners of coal-fired power plants would then have no choice but to install these new technologies or go out of business. How would they pay for this added investment? Clearly, by passing its cost onto the consumer.
But that’s okay. Coming back to the issue of red, white and blue energy jobs, the question is: Are we as consumers willing to make the patriotic sacrifice of paying this added price? If we decide we are, we can buy more time to develop not only better, but also less expensive, sources of alternative energy. At the same time, we can increase our energy security by continuing to draw on our most abundant domestic fossil fuel source — coal — in an environmentally friendly way.
It is this reluctance to concede the potential role of patriotism in promoting U.S. energy security and a cleaner environment which, in my view, poses the greatest threat to America’s red, white and blue jobs. What are red, white and blue jobs, if not those jobs that are made possible by patriotic sacrifice? And what does that mean — at least in the electric power sector so important to Wyoming — if not paying a higher price for power?
Does that mean we need to call in the EPA to get the job done? Of course not. Regulation by EPA is a reversion to the old “command-and-control” approach to environmental protection. That approach served us well in the 1970s, when many landmark environmental laws were passed. But it is also the least cost-effective method of environmental management. As a response to today’s environmental challenges, it makes sense for Sen. Barrasso to oppose it.
To get the job of environmental protection done in a cost-effective way that creates jobs and conserves resources, these days, we need to look to the market. That entails setting the proper price signals, and then letting industry do what it does best — figure out how to get the job done. For all its shortcomings, that’s what a cap-and-trade approach to controlling carbon emissions was all about. To call EPA’s current approach a backdoor cap-and-trade scheme is to divert attention from the real challenge: to find ways to reduce carbon emissions without imposing regulations.
Right now, there are technologies being developed at the University of Wyoming’s School of Energy Resources which hold great promise for the reduction of carbon emissions from coal and other fossil energy sources. The problem is that these technologies are not being deployed — and that is a problem of public policy, not technology.
We need to take policy steps soon to provide incentives for the electric power industry to make the necessary investments to bring these technologies to market. Until we do so, red, white and blue energy jobs will continue to languish for lack of patriotic sacrifice, and America’s energy future will continue to be held hostage to those whose fossil fuel reserves are greater than ours.
David Wendt is president of The Jackson Hole Center for Global Affairs.
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