Shades of gray in our energy policy

With the election behind us, it’s time for Congress and the Obama Administration to – as we say in Georgia – “Hunker Down”; stop with the sound bites and campaign barbs, and get serious about putting America’s economy back on track. A good place to start -- a comprehensive energy policy.

While both parties have proposed viable ways to increase American energy production that could form the basis of bipartisan compromise, one idea that needs to be quickly discarded is the so-called carbon tax.

Recently, a number of think tanks experts and economists have warmed to the idea of taxing carbon emissions as a way to generate revenue as we approach the “fiscal cliff.” While some may be tempted to address the budget shortfall through this scheme, a carbon tax is a fundamentally flawed policy. Such a plan perpetuates the simplistic and time-worn rhetoric that certain fuels, like coal, are “dirty” while other sources, such as “clean” natural gas, can “save the environment.”

Congress must accept the fact that solutions to our energy crisis are not black or white, or in this case, “clean” or “dirty.” When you remove the politics and look at the facts – all of the facts -- it becomes clear that energy answers actually appear in shades of gray.

Nowhere is this more evident than the debate over coal or natural gas; a burgeoning competition being increasingly rigged against coal.

As we saw during the presidential campaign, natural gas has become the darling fuel of the Left and the Right. Both Gov. Romney and President Obama spent significant time extolling the virtues of natural gas, which has been dubbed the “bridge” to a clean energy future.

But the truth about natural gas is that it may have trouble living up to that lofty moniker.

It is true that, insofar as it contains less carbon than coal, natural gas can be considered a “clean” fuel – but other factors must be considered. And this is where carbon tax proposals fall short. Carbon tax proponents only consider carbon produced during end-use, and declare energy winners and losers based on this single calculation.

Once the extraction and transportation process are factored into the overall environmental impact, the distinction between coal and gas becomes far murkier. For example, potent methane leaks caused by hydraulic fracturing (“fracking”) in many natural gas extraction wells become problematic, and contribute to making natural gas a “dirtier” source than its proponents claim. Yet, this very real environmental impact is not accounted for by a carbon tax.

At the same time, technological advances in coal mining and power generation have lessened coal’s environmental footprint significantly. While this progress has been largely ignored by those waging a “War on Coal,” it is an improvement that conservationists and supporters of the punitive carbon tax should appreciate.

What any energy compromise must reflect is that coal and gas actually work best as complements to each other – not as substitutes. And the environmental profile of both fuels is but one factor to consider

At the moment, natural gas is an attractive power source because prices are low. However, this situation cannot continue indefinitely. As noted last July by analysts at Standard & Poor’s, gas prices are below the discovery, development, and production costs of the product in the long run. Accordingly, gas prices must rise – or supplies must decrease.

The Environmental Protection Agency’s misguided efforts to regulate coal-fired power plants out of existence directly expose American families to skyrocketing energy prices when – not if – the price of natural gas increases.  Adding a carbon tax on top of coal power plants only exacerbates the problem.

As future Treasury Secretary Tim Geithner said in 2007, “Most consequential choices involve shades of gray.” While he was not  at the time discussing the coal versus natural gas debate, in this case his assessment was right on the money.

It is now time for Congress and the Obama Administration to move beyond the rhetoric and come to terms with reality: our energy crisis is complex, and the only way to deliver affordable power to American families is to pass comprehensive energy reform that respects market forces and does not ignore those complexities. Defeating ill-advised carbon tax proposals is an essential first step.

Barr served as a Republican in the House of Representatives from 1995-2003.

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