European Affairs

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Bush Will Push For Market-Oriented Reforms in the Energy Sector     Print Email
William F. Martin

Chairman, Washington Policy and Analysis Inc.; Senior Advisor for Platform, Bush/Cheney Campaign

U.S. energy policy under President George W. Bush will start with international realities. It is a mistake to think that we have energy independence, or that we are separate from the rest of the world.

Energy policy, both domestic and international, will be one of the first challenges Mr. Bush will face in office. With high prices for heating oil and gasoline at home, and the power crisis in California, the American public will demand a better domestic energy policy.


But the Bush administration will also be concerned about international leadership, especially at the first summit of the Group of Seven nations that Mr. Bush will attend, in Italy in July. One thing we may have to do is see if we can create mechanisms to harmonize energy policies between Europe, the United States and Japan. The task of tying these strands together will not be easy.

Mr. Bush's policies are clearly stated. He emphasizes market forces. He strongly believes that the 1999 Kyoto Protocol, intended to combat global warming, was not a good agreement. Science is beginning to show that there may be climate changes, but Kyoto is a bad deal.

Our energy policy projections provide for lower carbon dioxide emissions and lower oil imports than those of the Clinton-Gore administration. We are taking the problem of CO2 seriously, regardless of whether or not we believe in Kyoto.

There are three factors that will allow the Bush administration to lower CO2 levels. First, we support nuclear power, which is the best option for reducing CO2 emissions. We would like to see as much as 85 percent of existing nuclear power capacity in the United States recommissioned.

Second, unlike the Clinton-Gore administration, we support the re-licensing of dams and hydroelectric projects. Third, we shall be more aggressive in allowing access to federal lands for natural gas production. We believe that the United States must aim for a one third increase in gas production, which is an ambitious target because production has been flat over the past few years. The technology is available, and the price is presently right.

But it will also be necessary to allow companies access to federal lands, especially in the Rocky Mountains. If we want a gas future, we have to allow America to produce that gas on federal lands, including the Alaskan National Wildlife Refuge.

Targets such as those contained in the Kyoto accord cannot be achieved without using nuclear, hydroelectric, and gas resources. It cannot be done with just renewable energy.

Gas will be very important, not only for generating electricity, but also for powering fuel cells, a very promising energy-saving technology. There is also no doubt that gas must replace coal in order for us to have cleaner air.

There are some consequences involved in drilling for that gas. Permitting the oil companies to drill, with the requirement that they restore the land to proper environmental standards afterward, will be worthwhile if it results in clean air. Rather than closing off the gas option, by not allowing any drilling, we would have a better environment.

What else should be on the agenda? First, perhaps, we should look at whether to increase our strategic oil reserves, and work out an appropriate policy for using those stocks in the event of a price spike similar to the one that occurred last year.

Although some of us urged stock releases during the Gulf War, we did not go that route, and our economies paid the price. Is there something we can do in terms of the coordinated building up and drawing down of stocks that we have not thought of already? This is a question for the International Energy Agency.

Second, it is very important that the European Union is again discussing improving relations with producing countries. It was not appropriate for Bill Richardson, the Clinton adminstration's Energy Secretary, to go around the world cajoling oil-exporting nations to increase production. Such efforts only generate antagonism toward the United States.

Third, a discussion about sanctions is needed. The Bush team still has serious concerns about the activities of Iran and Iraq. We are aware that European and Japanese energy ministers have visited Iran. We should have a common set of understandings of what constitutes good and bad behavior by these countries.

Clearly, if Iran and Iraq are developing weapons of mass destruction, are interfering with the Middle East peace process, or are sponsoring terrorism, the United States, Europe and Japan should adopt a collective approach. If they are not misbehaving, then sanctions should be lifted.

Another reason why a serious and frank discussion on sanctions is required is that the world is heading to a time when we may need Iranian oil production again. There may be public pressure for that, but in the meantime the sanctions against Iran should be upheld.

 

This article was published in European Affairs: Volume number II, Issue number I in the Winter of 2001.