CIAO DATE: 07/03

America and the Global Energy Challenge

Introduction

Energy is at once the lifeblood and the bane of the modern world. Fossil energy has fueled tremendous economic growth over the past 150 years. The economic history of the United States is largely the history of extracting and using coal and oil. At the same time, the profligate use of these energy sources has created the world's most pressing environmental problems, and led to major national security concerns for the United States. Energy consumption is the primary source of greenhouse gas emissions, smog, acid rain, oil spills, and nuclear waste. American dependence on oil from the Middle East forces our hand on foreign policy and imposes high economic and human costs. It is becoming increasingly clear that America's— and the world's—current diet of fossil energy is not sustainable.

U.S. energy policy fails to adequately address these issues. The energy industry is governed more by inertia than by forethought. There is no clear, long-term directive to clean up energy supplies or reduce dependence on oil imports. The major policy initiatives in the past few decades have been experiments with deregulation. Little effort has gone into addressing environmental and national security concerns, which are the overriding features of modern energy consumption.

These are not intractable issues. There is a way out of the energy dilemma. As is described in this paper, the means to a safe and sound energy future are advanced, energy-efficient and low carbon technologies, and the way is through smart public policy. Technology policy is a "game-changer." New technologies can change the old relationship between economic progress and fossil fuel dependence. Today's emerging technologies—from hybrid electric cars to super-efficient refrigerators, and from wind energy to fuel cells—are making low-carbon, secure affluence look possible. This paper argues that with intelligent policymaking, a technological transformation of the energy industry can come at modest cost.

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