For the center to hold

As oil prices soar and power prices threaten to follow, our republic’s mix of diverse cultural and economic interests must cooperate to achieve our common goal of energy self-sufficiency. Those interests seem to fall into one of four main groups—policy, corporate, finance, and technical innovation—each seeking to control the direction of our nation on major issues. Members of these various cultures see each other at meetings and hearings but don’t connect; they know the common lingo but don’t communicate. Each craves control of the levers of political power and will vigorously protect its turf against trespassers. Let’s describe each of the four stakeholder groups:

  • Policy analysts seek optimal holistic solutions consistent with the intellectual model (conservative or liberal) of the policyholder. It seems conservative solutions must always defer to markets, and liberal solutions frequently must take into account previously unaccounted-for social costs. Both bend public opinion in the name of the common good. They are all, one way or the other, diviners of the Invisible Hand.
  • Corporate managers have been trained to focus on the business of maximizing short-term profits. Industry leaders have long demonstrated that astute shaping of public policy can create business winners, and the “public affairs industry” in Washington is just another competitive tool.
  • Finance industry specialists have a more comprehensive and objective perspective: They see how policy and business decisions can shift corporate bottom lines, and hence their interest. Often free with others’ money, they appear to believe that they can finance anything, because for every loser there is somewhere a winner.
  • Innovators in the energy business, while knowledgeable about what they do best to achieve technical breakthroughs, frequently (and sometimes not without reason) view the other established cultures as necessary evils or even anti-innovation.

Universal translator needed

Members of each group may speak the same language, but they define their terms differently. Concepts like “invest” or “short term vs. long term” or “return” are contextual. Until our national energy policy Tower of Babel develops a common lexicon, finding areas of agreement is problematic and, by default, each group will continue to focus on optimizing its own environment, whether measured in perceived public policy benefits or quarterly earnings. Without unified leadership focused on a common purpose, the center will not hold when attacked by the forces of global competition and rising nationalism. Success depends on effective communication internally, as we forge consistent policies externally.

Measures merely calculated to satisfy multiple constituencies and meet legislative trade-off objectives are not going to be enough, going forward. “Sustainable imperatives” must be selected in terms of their technological breakthrough, high self-reliance, and yield potential. Absence of sustainable imperatives, for example, is what has made a folly of our energy tax laws.

This does not mean that government should be empowered to pick technology winners and losers. It means we urgently need to establish a competitive marketplace for innovation and then give it time to develop leading-edge products. But deregulation, or nonregulation, without direction of some sort is a good formula for random motion. The key is that all four stakeholder groups have a role in establishing that direction.

The U.S. is on the verge of repeating its mistakes by promoting sectoral above national interests in formulating future energy policy. I believe our future depends on how we leverage three innovation opportunities:

  • Using domestic coal in a manner compatible with greenhouse gas (GHG) reductions by adopting integrated gasification combined-cycle technology and GHG sequestration.
  • Expanding the power/storage grid to support hybrid or all-electric cars.
  • Optimizing energy efficiency opportunities, starting with smart grids and Internet-based energy efficiency platforms.

Unified approach essential

Perhaps a new economic and political model is in order. Not a new Manhattan Project, but a highly focused problem-solving institution charged with developing comprehensive solutions that are implemented on a national level. It would not be a sprawling governmental agency like the Department of Homeland Security or the spread-thin Department of Energy. It would be a National Center whose sole objective is to find comprehensive solutions to our need for energy self-reliance by the judicious use of public sector incentives. Players from each of the four sectors would be invited; no one leaves the room until a comprehensive plan is ready to submit to the American people.

Our country is at a crossroads. Do we work together to formulate a cogent energy policy that will rebuild the U.S. into an economic powerhouse, fueled by domestic energy sources, or do we remain log-jammed by parochial interests and slowly become internationally irrelevant? We need an energy strategy that combines all stakeholders’ strengths, founded on sound economic principles, yet flexible enough to adapt to a constantly changing playing field. We need the center to hold.

Roger D. Feldman is co-chair of the Clean and Renewable Energy Group at Andrews Kurth LLP. He is also director of the American Council on Renewable Energy and co-chair of the Climate Change Committee of ACORE.