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Robert Rapier

Robert Rapier

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Is Biden’s Energy Plan Too Ambitious?

You may count me among those who want to see society move beyond fossil fuels. We all know there are negative consequences associated with fossil fuel usage, such as the emission of carbon dioxide and various other pollutants.

However, fossil fuel replacements come with their own risks and trade-offs, and it is important to understand and weigh these trade-offs as we transition from fossil fuels.

Two key issues are scale and reliability. Most people drastically underestimate our ongoing dependence on fossil fuels. According to the latest BP Statistical Review — which is the “bible” of energy statistics — in 2019 fossil fuels supplied 83.3% of our energy in the U.S.; nuclear power supplied another 8.0%. Renewables, including hydropower, just 8.7%.

Even though renewables are expanding rapidly, the percentage of energy we get from fossil fuels hasn’t changed that much over the years. After declining a bit a decade ago due to high prices, oil consumption in the U.S. has once again been on the rise (excepting last year’s pandemic-related collapse).

The U.S. has seen a drastic decline in coal consumption over the past decade (but global coal consumption has risen) as it has been displaced in the power sector by natural gas primarily, as well as renewables. As a result, natural gas consumption has increased by nearly 40% over the past decade in the U.S. 

Meanwhile, most people still rely on the local service station for fuel for their cars, and they rely on their local utility to power their homes and businesses. There are occasional exceptions, but generally, when we need energy we can count on it. Fossil fuels, despite their negative environmental aspects, are reliable and available at large scale.

Related: How High Can Oil Really Go?

I believe there will be a day when renewables — combined with backup storage like batteries — will reliably replace our massive fossil fuel consumption. We are moving in that direction. But, moving too fast can lead to unintended consequences.

The risk is that we develop unrealistic expectations for the load renewable energy is going to carry — and how quickly — and we underinvest in fossil fuel production and infrastructure. The reality is that we are still going to be using a lot of oil in a decade. The question is whether we will produce that locally, or go back to being dependent on foreign countries for that oil. 

Consider the Keystone XL pipeline, as an example. This was an expansion of an existing pipeline. It was designed to bring more Canadian crude oil into the U.S., but would have also transported oil from the Bakken in Montana and North Dakota.

One of President Biden’s first actions in office was to revoke the permit for this pipeline. This is exactly the kind of action that makes it exceedingly difficult for energy companies to execute major projects that may take many years to complete. There is always a political risk that energy companies have to consider.

Environmental activists have argued that we don’t need the pipeline. Let’s take that argument first. If we ultimately don’t need it, then a private company took a calculated risk, spent money building the pipeline, employed lots of Americans to build the pipeline, and then maybe it is underutilized. A private company created jobs to build something they believe will be needed. If we don’t need it because our oil consumption declines, then they lost money on the investment.

Related: India's Largest Refiner To Invest $4.5 Billion To Boost Capacity

Now, take the other side of that argument. Let’s say they don’t build it, and a decade from now renewables aren’t displacing fossil fuels as quickly as had been imagined. Now we need the oil that the pipeline could have supplied. So instead of getting it from our friendly neighbor to the north, we have to get it from Venezuela, Saudi Arabia, or Russia. 

This isn’t just theoretical. As I pointed out in a previous article, California is one of the most progressive states in the country when it comes to renewable energy. At the same time, the state is not known as being particularly friendly toward the development of fossil fuel infrastructure.

What has been the result? Despite California being the fastest-growing market for electric vehicles in the U.S., its oil consumption (pre-pandemic) is nearly as high as it has ever been, and it has steadily grown in recent years. Further, California’s dependence on foreign oil imports has tripled in the past 20 years. California now relies on OPEC for more than half of its oil needs. This is in stark contrast to most U.S. states, which have seen crude oil imports plunge over the past decade.

If we prematurely discourage investment in fossil fuels — and then our dependence doesn’t decline as rapidly as the Biden Administration envisions — that is a recipe for shortages, higher prices, and greater dependence on foreign nations for our energy.

I understand that the Keystone XL cancellation is more about messaging than anything else. It is a signal to the world that we are serious about combatting climate change. But if our message is undermined by our actions (e.g., failing to replace fossil fuels with renewables quickly enough), what have we accomplished?

By Robert Rapier 

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Leave a comment
  • Lee James on February 27 2021 said:
    How hard should we try to transition away from fossil fuel dependency? That's the question that we all need to answer.

    Besides the environmental consequences of burning fossil fuel there's another key issue. What are the implications for world peace if we greatly reduce our need to transport and burn fossil fuel? We fight over oil. in addition, a number of oil-producing countries use oil revenue to buy lots of weapons -- preferring guns to butter.
  • Kendall Svengalis on March 01 2021 said:
    The idea that carbon dioxide is a leading driver of global warming or “climate change” is the greatest scientific fraud in history. Or that, ludicrously, it
    Is an “existential threat to the planet” which is sheer lunacy. Carbon dioxide is just one of several hundred factors that influence climate, from the sun’s output to the earth’s position in the solar system playing out over cycles lasting hundreds of years, all of which drove past climate periods without the influence of fossil fuels. When John Kerry days we have eight years, he is demonstrating a demonstrable level of scientific illiteracy that has infected the left and the Democrat Party generally, including the current occupant of the White House. But sadly, it has also infected the boardrooms of many of our major corporations who see PR advantage in buying into the fraud, but, instead, furthering a gross misallocation of resources in pursuit of a “green” agenda in both the short and long term. BP is arguably the worst offender, shifting dramatically to so-called unproven “renewables” instead of doing what it used to do best. This will harm both shareholders and consumers; and taxpayers who will be shelling hundreds of billions in pursuit of this fantasy. We should instead allow market forces and common sense to drive our energy future, not the agendas of power hungry politicians who use fear of climate change to drive voters into their corrupt arms.
  • Bob :{D Bobbob on March 26 2021 said:
    Good article. helped me understand the other way of thinking/perspective on environmental advocacy and transition off fossil fuels. Although I do agree that the action on renewable energy and the cancellation of fossil fuel infrastructure may seem sudden, scientists were first aware of global warming and climate change in the 1960s, and we have known of the effects of our fossil fuel dependency for quite some time. According to the IPCC, we have less than a decade to transition of fossil fuels in order to prevent irreversible damage from climate change. And although it seems sudden and that it might have negative impacts on our economy, due to increased funding, renewable technologies are now the cheapest energy available in 2/3s of the world and in the US. Also, jobs from renewable energy already outweigh fossil fuel jobs 3 to 1 and that is when the US only has renewable energy as 11% of its total energy! also one last note to add, the keystone pipeline would be damaging indigenous land and throughout 100s of years of colonization we have committed mass genocide against indigenous and have stolen almost all their land so as a nation currently, i think its important that we stop the damage and discrimination against natives and start repairing our damage.

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