December 1, 2008

Energy’s Articles of Confederation

Steven F. Greenwald and Jeffrey P. Gray

An attendee at a recent industry conference made the cynical observation that the dysfunctionality of our national and state energy policies can be attributed to the fact that implementation of any program is subject to institutional limitations akin to those imposed by the "Articles of Confederation." Readers may recall that the Articles preceded the Constitution as the governing compact for the 13 original states.

The distinguishing feature of the Articles was its emphasis on state "sovereignty": "Each state retains its sovereignty, freedom, and independence, and every power, jurisdiction, and right, which is not by this Confederation expressly delegated." The Articles granted each state, regardless of size or population, one vote on legislative matters. The Articles empowered the central government to make war, but each state issued its own currency. Conversely, the central government had no taxing authority but was funded by voluntary contributions by the states. The net effect was a governmental structure that severely frustrated coordinated national policy and within a few years led to adoption of the Constitution and its greater focus on the nation.

State "sovereignty" impedes path to energy independence

This analogy to the Articles of Confederation suggests that fundamental changes in our governmental structures are needed to achieve a workable energy policy. The overriding national energy imperative since the oil embargos has been "energy independence" — a mission indisputably unaccomplished. Government has consistently failed to successfully implement any coherent energy policy. Presidential candidates debate "drill, baby, drill" versus a "green agenda"; the real focus, however, should be on developing governmental structures with the capability and authority to successfully implement any energy program, once the critical policy decisions have been made.

For instance, even if a new president determined that building 45 nuclear power plants is the best path to energy independence, there is zero chance that states and localities would approve the siting or disposal procedures for even the smallest fraction of those facilities. Conversely, achieving energy independence with green resources remains frustrated by our inability to construct necessary transmission facilities and the absence of any institutional means to comprehensively address this glaring deficiency.

Current state and local "sovereignty" on energy infrastructure development enables communities to "control their destiny" and balance overreaching by distant officials; however, it also impedes achieving broader-based energy priorities.

Our regulatory bodies responsible for creating and developing energy policy are not designed for efficiency or fairness. Rather, they reflect a century of empowering an ad hoc hodgepodge of agencies at different times, for diverse purposes. Any governmental system must recognize that, at times, the unique needs of a minority be allowed to supersede the interests of the majority. Energy policy must, accordingly, continue to recognize the community consequences of increased power costs, power plant emissions, or transmission line aesthetics.

However, energy independence will remain unachievable if we allow the sovereignty of constituencies with limited focus to effectively veto necessary infrastructure developments. Officials responsible for energy policy must have the tools and authority to balance the local costs of needed energy infrastructure against the benefits to the greater community and nation.