Really, we've been talking about the role of government in the context of energy policy all along in the course so far. The government is involved in energy policy at various steps along the way from inception to enforcement. Let's take a look. As we go over these, consider the types of governmental bodies that need to be involved at various stages. (Don't forget about vertical and horizontal policy diffusion!)

The role of government is often a contentious issue in policy development. Views on the role of government represent one of the fundamental defining characteristics of how people align themselves politically. While Republican-leaning individuals and companies tend to emphasize a minimal role for government (particularly the federal government), Democratic-leaning individuals often place more stock in the ability of government-led programs to be successful and cost-effective. This course isn't about deciding whether one of those views is right or wrong - there are valid elements in each approach. What we hope you take away from this material is first, that there is a role for our government in the context of energy policy. Given that governments are at a minimum charged with helping to protect the welfare of their citizens, energy and climate change are essential considerations and require some government involvement, even if it is just oversight. Second, regardless of how much of a role you think they should play, the government is involved, and so we need to understand how they impact policy development, implementation, and enforcement.

For this discussion, we need to establish some definitions associated with goods and services.

• Rivalrous - the consumption/use of the good or service by one person reduces the availability of the good or service to another person
  Example: There are a dozen donuts in the kitchen at work. I eat one, and therefore, there are fewer donuts for my colleagues to enjoy.
• Non-rivalrous - the consumption/use of the good or service by one person does not reduce the availability or utility of the good or service to another person (these goods are often, but not limited to, intangibles)
• Excludable - any excludable good or service is one that someone can be prevented from accessing if they do not pay for it
  Example: You need a ticket to ride the train; without paying for the ticket, you do not get to use the good/service of riding the train (unless you break the law, of course).
• Non-excludable - any good or service that someone cannot be prevented from accessing because of non-payment (or it is extremely expensive to exclude)
  Example: While our taxes go to fund the military, we do not (and cannot) deny national defense services to those people in our society who have not paid taxes.

So, when we make different combinations of rivalrous/non-rivalrous and excludable/non-excludable goods, we get what are called public and private goods. Take a look at the matrix below to see examples of different types of goods, and be thinking about how different topics related to energy and our environment fit into these categories.

The Tragedy of the Commons

The Tragedy of the Commons and what that means for climate and energy policy decision-making is an interesting read. In 1968, Garrett Hardin wrote about the potential for common goods to be exploited and depleted, specifically in the context of fears of overpopulation. While this article is now almost 60 years old, the concept persists and is certainly a challenge with energy and sustainability issues we face today, and in particular with climate change. 

Some points to consider in thinking about the Tragedy of the Commons:

• Like the herdsmen seeking to maximize their own gain, we all do things that don't seem that bad in the bigger energy picture....It doesn't matter if I leave my TV on all the time, it's just one TV...So what if I drive a big SUV I don't really need; my commute is short...How much water does it really waste if I leave the sink on while I brush my teeth? While some of these goods aren't necessarily common goods, our environment is, and it's difficult sometimes to see what our individual impact really is. And it's not just individuals that operate with this thinking - think about oil companies, for example, who are seeking to maximize their own profits by producing more and more oil. Do they know there are climate consequences down the road? Of course they do, but they're thinking first about their own positions...just like those herdsmen. This thinking is not unique to oil companies, or even to the energy/climate issue. In a capitalistic society, it is not unusual for the pursuit of profit and organizational resilience to concede on ancillary impacts.
• Common goods utilized for private benefit will always be vulnerable to exploitation. We tend to fend for ourselves, not considering how our actions affect others now or future others. Keep in mind that the atmosphere is a common-pool resource (it provides the service of absorbing our pollution and can be referred to as the "atmospheric commons"), and as with other common goods, humans are exploiting it, mostly for personal (or corporate) gain.
• Hardin was concerned with how a rapidly increasing population would affect the commons of the environment. As we examine the problem of the commons from an energy policy perspective, we can see that it is (at least in part) a function of our growing population - and not just a growing population - but a growing affluent population. As more and more people aspire to enjoy the creature comforts of modern Western life, this puts pressure on our energy systems and resources and necessitates consideration in our policies governing those systems and resources.  

The Precautionary Principle was initially proposed in the Declaration on Environment and Development at the United Nations Conference in Rio de Janeiro in 1992 and states that,

In other words, when considering actions (or inactions) whose consequence could pose serious or irreversible damage to human health or the environment, the burden of proof that those actions won't cause harm lies with those taking the action. The Precautionary Principle affords policymakers discretion in the decision-making process when there's the possibility of causing harm, but not the extensive scientific research to substantiate that risk.

There are two broad types of the Precautionary Principle - strong and weak.

In the strong version of the principle, costs are not considered in preventative action, and no level of environmental risk is acceptable, regardless of the economic or social benefits. A strong precautionary principle may also involve a mechanism by which those advocating for the action to be taken (and claiming its environmental/human health risks are nonexistent or low) are liable for any environmental harm that may result.

With a weak precautionary principle, there must be some evidence to suggest a given likelihood and severity of environmental harm. A weak precautionary principle takes into account the costs of precautionary measures as well as the benefits vs costs of such actions. In addition to scientific uncertainty, economic considerations can postpone action. The burden of proof falls on those advocating for the precautionary action, and there's no assignment of liability.

The alternate model is the “Risk-Based Principle”, which states that mitigating risk, but accepting some degree of risk, is more practical.  On the non-governmental side, for example, the business community, and even the EPA to an extent, North America prefers this approach, whereas the other parts of the world, especially the EU, prefer the precautionary principle in terms of standards.  For example, the debate in the International Organization for Standardization (ISO) between the two principles has been going on since 1992.  Product and service standards written by ISO may typically incorporate one of the principles. Same for the development of rules and regulations.  This is an important element of energy and climate standards. 

While we often think of issues surrounding energy and climate policy as being global in scale, it's also important to recognize the important roles smaller scale governments and institutions can play.

Over the past 20-25 years, state level action on energy (particularly renewable) and climate policies has flourished partially as a response to federal inaction here in the United States. By tackling this problem at a smaller scale, individual states and communities are more easily able to tailor plans and activities to work well within their own unique geographic and political realities.

Visit the EPA State, Local, and Tribal Energy page to learn more about state and local actions across the country. You'll see they also offer training and greenhouse gas inventorying tools to help local governments inventory and plan to reduce their emissions. The Center for Climate Strategies has also been working with state-level stakeholders and decision makers across the country to develop climate mitigation plans that not only reduce the state's greenhouse gas emissions, but also drive the development of alternative energy technologies. Has your state developed a climate action plan yet?

On a broader scale, creating a cleaner energy future for the United States (and the world) is a dauntingly large task. So much of our economy is driven by the availability and use of inexpensive fossil fuels. The future threats of a changing climate are difficult for politicians and voters alike to reconcile with the very immediate and pressing economic realities we face right now. In fact, recent events like Hurricanes Harvey, Irma, and Maria along with the wildfires in Maui and the West prove that even current climate change impacts are difficult for people (like our lawmakers) to process and respond to quickly. It is important for us to recognize that there will be no magic bullet technology to propel us into a low carbon economy. Instead, we must strengthen and create a host of technologies and fundamentally change the way we think about energy. This will require support and innovation from all levels of government and society. Transitioning from fossil fuels is particularly challenging in that we have to overcome over a century of use and infrastructure.  Even if we decide tomorrow to transition from combustion engines to electric vehicles, it will take many years to fully flip the infrastructure and market. 

Let's look at an example from the Marcellus Shale gas and oil play happening here in the Northeast to gain a better understanding of the intertangled nature of the roles of different scales of government in energy policy.

The following is the nature of this multiscale relationship:

• The federal government requires oil and gas companies to obtain permits for exploration and extraction on public lands. This is particularly important in the American west where the government owns almost half the land, and almost two thirds of the land in Alaska.  Considering the oil and gas reserves in those areas, this regulatory link is important in that it impacts the degree of oil and gas production for the US.
• The state government dictates how mineral rights and surface rights affect who benefits from the production of wells, responds to any complaints from landowners, and also issues permits for exploration and extraction within the state.

Here is a real-world example of this: A moratorium on oil and gas exploration in the state of New York went in effect in 2014 until more information was gathered and analyzed to assess how the extraction of mineral resources from the Marcellus Shale formation could impact water supplies and ecosystems, despite threats from the Republican gubernatorial candidate (who lost) in 2022. For this state-level moratorium, it was the local governments who were responsible for managing on-the-ground efforts related to the gas production - everything from road maintenance and truck traffic to increasing public services to accommodate a larger population.

While all of this seemingly complicates matters since drillers and other players in the natural gas industry are required to work with stakeholders at multiple scales, it actually makes sense. Consider how difficult it would be if the following were true instead of the current arrangement:

• local government set permitting standards for drilling, resulting in energy companies having to comply with myriad different standards for well design, air quality, and water quality across the country;
• federal government managing on-the-ground issues related to drilling - they would lack the local expertise and trust necessary to ensure that localities' and residents' concerns are addressed adequately.

When we hear politicians talking about energy policy, one of the buzz phrases that comes up often is energy independence. It's one issue related to energy policy where politicians agree - being energy independent is preferable to relying on the resources of other countries to meet our huge energy consumption demands.

Let's move beyond energy independence as a buzz phrase, though, and take a look at the facts about where our energy comes from, how much that costs us, and how we would really achieve energy independence as a country.

Petroleum - the EIA categorizes crude oil and other petroleum products (including gasoline, diesel, heating oil, propane, liquefied natural gas, and biofuels) together. These fuels are used for a variety of functions, including transportation and home heating. In 2022, the U.S. consumed an average of 20.01 million barrels of oil...every day. This added up to 7.3 billion barrels of oil for the year.

Are you surprised when you look at the previous chart? It is also important to note that throughout history, the specific percentage of production has varied among different places in the world.  This is due to the timing of reserves discoveries, political unrest and stability, and technology (e.g., pipelines and transport).  A great resource to learn more about the history of the oil business is Daniel Yergin’s book, “The Prize”.

Take a look at the EIA Energy Explained site to learn more about energy production and consumption.

Top 5 Crude Oil Producing Countries from 1980-2022

Credit: Oil and Oil Products Explained US Energy Information Administration. International Energy Statistics. September 2023

The chart above illustrates the fluctuating production rates for the top five crude oil-producing countries in the world. Does anything surprise you? Notice how shortly after 2000, Russia began producing almost as much annually as Saudi Arabia. US production has increased sharply in recent years and is now the world leader, while Iraq has been slowly increasing since around 2005, but has been in the 2-4 million barrels a day range since 1980 (conflict times aside).

Natural gas - most of the natural gas that we use in the United States is extracted and distributed domestically, with small amounts coming from Canada. In recent years, substantial gas reserves in rock formations across the country have been discovered and are starting to be explored and processed. We've already talked about one of these, the Marcellus Shale region across Appalachia. Natural gas is used for heating and cooking, and increasingly as a fuel for large vehicles like buses and trucks.

The chart below shows the US consumption, production, and imports for natural gas from 1950-2016.  If you look around 2005, you can see the impact unconventional production has had on overall production and consumption.  Why the increase in consumption?  As natural gas prices fell, many coal-fired boilers in steam plants were converted to burn natural gas or replaced with natural gas boilers.  You can also see that as domestic production has increased in recent years, imports have gone down, which is what you would expect.  

US Natural Gas Consumption, Dry Production, and Net Imports, 1949-2022

Credit: US Energy Information Administration, Monthly Energy Review, p. 104, Table 4.1.  (Public Domain)

A gateway fuel? - Natural gas is often touted as a bridge to a cleaner, more reliable energy future. With greenhouse gas emissions roughly half those of coal combustion, natural gas is being marketed as a cleaner fossil fuel. Partially because of the direct emissions reduction, but also because it has become cheaper to produce than coal, mostly due to hydraulic fracturing ("fracking"). The U.S. currently generates about 40% of its electricity from natural gas.

Lifecycle assessments evaluating the entire processes involved in extraction and processing for both fuels are being done to determine the true environmental footprint of using these fuels. This includes recent research out of Harvard, Duke, and NASA that found that natural gas has just as much of a climate impact as coal and will continue to until gas companies "all but eliminate leaks," according to the New York Times.

Working with renewables? - In addition to the (possibly) lower greenhouse gas emissions than coal, power plants fueled by natural gas have another distinctive benefit of offering reliable, scalable backup power generation for renewable sources like wind and solar. Wind and solar supplies are less predictable and may fluctuate in short cycles. With little ability for commercially available large-scale storage options for these energy sources, the presence of a reliable backup source is crucial. Natural gas-fired power plants have the ability to cycle more rapidly than their coal-fired counterparts, quickly adjusting the amount of electricity they can produce to meet demands.

Coal - the abundant domestic fossil fuel is in many ways an iconic and cultural fixture in our society, denoting progress and growth. Coal is cheap (not including externalities, of course), readily available, and we've got the infrastructure to burn it. Coal is responsible for about 20% of the electricity in the US. We also use coal in the production of steel. Unfortunately, coal combustion results in high greenhouse gas emissions. In addition to consuming a lot of coal domestically, we also produce and export large quantities of coal. Some areas of the country (like the Gulf states) actually find it cheaper to import foreign coal than to transport it from the distant domestic places of origin.

Five states produced over 70% of US coal in 2021 (EIA, 2023):

• Wyoming - 41%
• West Virginia - 14%
• Pennsylvania - 7%
• Illinois - 6%
• Montana - 5%

The Road to Energy Independence - as you can see by examining the roles of various fossil fuels in our overall energy picture, we are not, as a country, currently totally at the mercy of foreign energy supply. But remember, as we gulp down over 20 million barrels of oil a day, even a fraction of that is still a large volume.

Will increasing our use of natural gas be the answer to solving our short-term goals of reduced reliance on foreign oil? Remember that it's not as easy as flipping a switch....things currently running on petroleum-based products must be converted or replaced to accommodate a new fuel source like natural gas. One major barrier to fuel-switching is that about 2/3 of our oil use is in the transportation sector. Natural gas vehicles are not the answer, but electric vehicles might be if - and only if - we switch to less carbon-intensive (and eventually, carbon-free) sources of electricity.  Not only will this require a scale of transportation technology deployment that hasn't been seen since the automobile started to be mass-produced, but it also requires us to change our electricity fuel mix, our electrical grid, and generate more electricity to accommodate the increased electricity demand. This is possible, but what will be the drivers for these changes? Consumer demand? Escalating energy prices? Volatility in oil-exporting regions? Political will? Do you think we'll see an energy-independent United States in our lifetime? If so, what role could/should energy policy play in this transition?

Global Markets, Local Effects: Several years ago, we witnessed a ripple of protests across oil-producing countries, as citizens demanded democracy and freedom. Here's an article explaining how unrest in Libya influenced global oil prices. Read this and do some research on your own to better understand the price fluctuations at the pump. Here's another article explaining how Saudi Arabia's price war with Russia at the start of the COVID-19 pandemic also created chaos. Just another reason to bolster our domestic clean energy initiatives!

The EIA offers a summary of Oil Prices and Outlook is certainly worth 5 minutes of your time because it offers a perspective that is 1) factually correct and 2) all too often missing from the dialogue regarding the subject to which we're exposed via the popular media and our politicians.

It is important to understand the framework through which our utilities are delivered to us. We flip a switch and lights go on, but who makes that happen? How do they produce that power? How far is it from my house or office? In order to understand almost any facet of energy policy, you need to have a good understanding of how the public and private natural gas and electric utilities work in the United States.

Energy resources are a lucrative commodity. There are various considerations to explore when it comes to ownership in the context of energy resources. One important distinction when it comes to the extraction of fossil fuels like oil, coal, and natural gas is between surface rights and mineral rights. It is not always the case that the person (or persons) who own(s) the land also own(s) the energy resources beneath it.

Surface rights - the landowner only owns the land, nothing below it.

Mineral rights - refer to ownership of the oil, coal, gas, or other minerals below the surface and includes the right to access the minerals and to receive bonuses and royalties from the extraction/production of the minerals.

It might be surprising that you could own a huge tract of land sitting on top of some valuable energy resources but not actually own any of those minerals, doesn't it? How does this happen? When the property is bought and sold, the seller may choose to retain rights to the minerals and only transfer surface rights to the new owner. But, obviously, the two go hand in hand to some extent - how can the owner of the mineral rights access their property if they do not also have surface rights?

The mineral rights owner can use as much of the surface as is reasonably necessary to extract the mineral resource. In many instances, they do not even need to acquire the permission of the surface rights owner to do so.

Policymakers engage in discussion.

Credit: UNclimatechange from Flikr is licensed under CC BY 2.0

In 1998, Steve Rayner and Elizabeth Malone made ten suggestions for policymakers developing climate policy. Most of them are as relevant today as they were then.^[1] It is worth reviewing these suggestions as we think about climate policy.

1. View the issue of climate change holistically, not just as the problem of emissions reductions. As we learned earlier in this course, to establish lasting, long-term reductions in emissions, it is necessary to address not only the human activities (proximal causes) emitting GHGs, but also the underlying socioeconomic drivers causing people to engage in those activities.
2. Recognize that, for climate policymaking, institutional limits to global sustainability are at least as important as environmental limits. The failures of the Framework Convention and Kyoto Protocol, as well as of national-level climate policy in the U.S., demonstrate that policy cannot become law when intractable political, legal, and other barriers stand in its way.
3. Prepare for the likelihood that social, economic, and technological change will be more rapid and have greater direct impacts on human populations than climate change. Climate change is not the only factor influencing people, and, in most instances, climate change will have much less impact on people than human changes. Good examples are the rapid change in global security following 9/11 and the profound impact of the Internet on society since the mid-1990s.
4. Recognize the limits of rational planning. Planners are not omniscient: they cannot plan for all contingencies, and they make mistakes. No long-range plan goes “according to plan.”
5. Employ the full range of analytical perspectives and decision aids from natural and social sciences and the humanities in climate change policymaking. Most policymakers rely too heavily on engineers and physical scientists, paying little attention to life scientists, social scientists, and humanists. However, this course has demonstrated that climate change is essentially a holistic, human problem that requires significant input from all branches of science, especially the social sciences.
6. Design policy instruments for real-world conditions rather than try to make the world conform to a particular policy model. For example, the Bush Era climate policy was that it tried to make climate policy, as well as most other policies, conform to a particular worldview. Climate change is a real-world problem requiring pragmatic policies.
7. Incorporate climate change into other, more immediate issues, such as employment, defense, economic development, and public health. This course has demonstrated that climate change affects people, their jobs, their security, and their health. It has also been shown that climate change infuses many parts of life. Because it is difficult to get policymakers either to believe that climate change is a serious issue or to maintain focus on climate change when so many other issues demand their attention, a good strategy is to incorporate climate change policies into other policies that address employment, defense, development, and health, to name a few. This must be done with care, as the risk here is overreach, and making it seem like everything, every wildfire, every storm, etc., is due to human-induced climate change. This can be easily disproven, thereby undermining the effort.
8. Take a regional and local approach to climate policymaking and implementation. We have seen that regional and local climate policy is currently more effective than national and international policy. In 1998, this idea was quite radical because most people, including scientists and policymakers, thought of global warming as a global problem. Today, the regional and local dimensions of climate change are understood and appreciated by many individuals.
9. Direct resources into identifying vulnerability and promoting resilience, especially where the impacts will be largest. At least among scientists, this idea is well understood today; it was much less well understood in 1998. This idea is slowly trickling down to policymakers.
10. Use a pluralistic approach to decision-making. A characteristic of Bush Administration policy was its assumption that decision-making should come from the top down. Numerous research studies show that, at all levels of governance, people tend to accept and support a policy when they have a hand in developing that policy, even if they are initially skeptical. This finding is also true of climate policy.

These suggestions were directed at policymakers.  But we need to realize that much can be done in regard to energy and climate outside of policy.  The free market can have significant influence, and consumer decisions and shareholder pressure can make a difference regardless of policy.  For example, per capita US emissions have steadily decreased over the past 20 years, in spite of Kyoto and Paris Agreements coming and going.  Which means, actions are being taken to reduce emissions regardless of what treaty was in place and whether or not the US signed it.

Important Concepts to take away from this lesson

This lesson has provided an exploration of many concepts associated with assumptions in energy policy formulation. Again, we're looking at the different roles various entities and structures in our government and economy play in creating energy policy. Governments, utilities, and markets all play a part in ensuring that the energy policies we adopt lead to efficient, fair use of resources. As we consider the evolving goals in energy policy, we need to understand that all competing interests must be addressed. Is it just about supplying the economically cheapest electricity for homeowners, or do we bear some social responsibility to place economic value on the environmental impact of the energy we use? How can we prioritize economic, environmental, and political attributes of energy sources and the policies that govern them? These are questions that you, as energy professionals in a changing landscape, will need to address.

We said at the beginning that climate policy is energy policy to make the overarching point of the interconnectedness of the two.  But in reality, each has its own drivers and there are times when one does not have a compatible effect on the other.  For example, energy policy decisions to ensure adequate petroleum supply may not align well with climate goals.  Alternatively, climate change reducing goals may impact energy security, accessibility, and reliability considerations.