Blackouts and the Big Picture

September 4, 2003

Media Contact(s):

Martin Kushler, 248-579-6445, Senior Fellow

Washington, D.C. -— The crucial point to understand about the Great Blackout of 2003 is that it is just a symptom of a much larger problem having to do with the inefficiency of our energy systems and the resulting massive over-consumption of energy in our country. With a mere 5% of the world's population, we consume over one-fourth of the global energy used each year. It is shocking how many of the current problems we face are linked to our excessive energy use. The Great Blackout was just the energy crisis of the week.

Consider that it was just a few weeks ago that the headlines were about our looming natural gas crisis. Demand for natural gas has been increasing rapidly (in particular due to its increased use in electricity generation), and wholesale prices have doubled. Government and industry sources are warning about a natural gas crisis this winter, and projections are that these higher prices will persist for years. The fact is that domestic fields are declining, and no amount of drilling in protected wildlife preserves or parklands will reverse that long-term trend. Some talk of imported liquefied natural gas (LNG) as a solution, but LNG is very expensive and extremely vulnerable to accidents or terrorist attacks that could be catastrophic.

Also consider the matter of the environment. In just the past year there has been increasing documentation of medical problems from the pollution from fossil fuel combustion, including both Nitrogen Oxides and particulate matter. Then there is that growing elephant in the living room: the unavoidable reality of global warming. Just the week before the Great Blackout the headlines were filled with stories of the horrendous heat wave in Europe. Thousands of people died in that unprecedented event, and the highest temperatures in recorded history were reached in London, Paris, Italy and Germany. Historic forest fires have raged across Europe and Asia for the past two years, but at home the Bush Administration blames the fires on environmentalists and turns our national forest over to greater logging.

Then there is the issue of national security, and its ramifications on our treasury. Even before the Iraq War, we were spending an estimated $100 billion on defense expenditures related to security in the oil-rich Middle East. This year, of course, the headlines have been dominated by the war in Iraq, which many people believe was motivated in large part by our energy dependence (we import over half the oil we consume) and the fact that Iraq sits on the world's second largest oil reserves. We're projected to spend hundreds of billions of dollars on the Iraq effort, not to mention the tragic loss of hundreds of U.S. soldiers and countless Iraqi civilians.

The list goes on and on: the threatened loss of some of our most beautiful federal lands and coastal areas to oil and gas drilling; the worsening of our balance of payments deficit from more and more energy needing to be imported; the damaging effects on our economy from the mounting costs of wasteful energy consumption in our homes and businesses.

It is past time for federal policymakers to see the big picture. Simply building more transmission lines will not only be very expensive ($100 billion in one recent estimate) and create numerous conflicts with property owners and local and state governments, it ultimately provides no solution. "Expanding the grid" alone is just a band-aid, and does nothing to help with any of those other energy-related problems listed above. In fact, it is likely to make them worse by temporarily facilitating even greater energy consumption.

The one action that helps address every one of those energy-related problems we face is to improve our energy efficiency. It reduces stress and overload on the transmission grid; it reduces demand for increasingly expensive fuels; it helps reduce energy imports; it helps put downward pressure on market energy prices; it saves real money for households and businesses on their fuel bills; and it reduces environmental pollution. The good news is that energy efficiency works. Numerous well-documented studies of programs conducted in a handful of leading states have shown that energy efficiency (i.e., paying to install more efficient lights, appliances, motors and equipment in our homes and businesses) can save electricity at a cost of two to three cents per kWh - - a cost less than half that of constructing, fueling and operating a power plant. Detailed studies have estimated that energy efficiency could reduce projected energy use over a decade by 25% or more - - enough to have massive beneficial effects on every one of those problems outlined above.

Yet in spite of this enormous need and potential, the federal energy legislation currently being considered in Congress has only the tiniest provisions for energy efficiency - - provisions that are dwarfed by tens of billions of dollars in tax breaks, deregulation, and other give-aways to oil, gas, and coal companies and to electricity generators. Now, as a result of the Great Blackout, you can be sure that billions more will be thrown in as "incentives" for building more transmission lines. But what about energy efficiency? U.S. national energy policy should begin with a foundation of aggressively pursuing energy efficiency as the top priority, then investing only what is necessary in additional costly energy production and transmission projects. Failure to recognize this compelling reality will only lead to further headlines regarding energy-related economic, environmental and national security crises in the weeks and years ahead.