BRUCE EVERETT

Back to Basics on
Energy Policy
For the past 40 years, political leaders have
promised that government can plan and engineer
a fundamental transformation of our energy industry.
They were wrong.

n June 1973, President Richard Nixon addressed

the emerging energy crisis, saying that "the answer to our long-term needs lies in developing
new forms of energy." He asked Congress for a
five-year, $10 billion budget to "ensure the development of technologies vital to meeting our future
energy needs." With this speech, the federal government set out to engineer a fundamental transformation
of our energy supply.
All seven subsequent presidents have endorsed Nixon's
goal, and during the past 40 years, the federal government
has spent about $150 billion (in 2012 dollars) on energy
R&D, offered $35 billion in loan guarantees, and imposed numerous expensive energy mandates in an effort to develop
new energy sources. During this time, many talented and
dedicated people have worked hard, done some excellent
science, and learned a great deal. Yet federal energy technology policy has failed to reshape the U.S. energy market
in any meaningful way.

The major failure has been in efforts to commercialize

technologies, with many billions of dollars essentially wasted
on loan guarantees, tax credits, and other subsidies that
never produced results. We have failed to learn that commercialization cannot be forced and must wait until the
technologies are competitive enough to support private investment on a market basis.
It's time to refocus the nation's efforts on what the federal government has traditionally done best: supporting
conceptual and technical research. Commercialization should
be left to the marketplace.
A rocky road
Fossil fuels (oil, coal, and natural gas) are the dominant
source of energy today and will be for decades to come (figure below). The federal push to develop alternatives in the
two other major energy categoriesnuclear and renewableshas been rocky, to say the least.
The nuclear era began with the brilliant physics and en-

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gineering of the Manhattan Project and the subsequent development of nuclear reactors by the U.S. Navy for submarines and aircraft carriers. The road to civilian applications, however, has been less successful. The aftermath of
World War II brought a wide range of ideas for the peaceful application of nuclear power, including nuclear-powered aircraft, rockets, and even cars (the Ford Nuclen). In
1959, the U.S. government launched the N.S. (Nuclear Ship)
Savannah, a nuclear-powered passenger-cargo ship, to
FIGURE 1
U.S. energy consumption (in quadrillion Btus)
Year

Fossil

Nuclear

Renewable

Total'

1973

70

76

2010

81

98

2035

87

12

108

Source: Energy Information Administration

'The discrepancy in the totals is due to rounding and electricity imports.

demonstrate the commercial potential of nuclear power.

The ship was a technical success but an economic failure,
and no other commercial nuclear vessels were ever built in
the United States.
Electricity generation emerged as the best civilian application for nuclear fission. In the immediate postwar period,
coal was the dominant source of electricity, but it created
serious air quality problems. Beginning in 1965, electric
power companies began building generating plants burning high-sulfur heavy fuel oil made from imported crude.
Nuclear power offered the potential for an almost infinite fuel
supply with no pollution or dependence on foreign oil. Technically, nuclear power plants can be built almost anywhere
and in any number, and can be operated with high load factors, often more than 90%. At first, the economics of nuclear power looked promising, prompting Atomic Energy
Commission Chairman Lewis Strauss to hope that electricity would someday be "too cheap to meter." The federal government offered massive support. Since 1973, roughly 30%
of federal energy R&D has been devoted to nuclear power.
Billions of dollars were also spent on subsidies for plant construction and commercial and regulatory support. There
was also extensive spending for military applications.
Civilian nuclear power made some real progress, but only
for a while. The United States has 104 nuclear power plants
with a total capacity of around 100 gigawatts (GW). These
plants were built in three roughly equal tranches: the first

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plants broke ground between 1964 and 1969, the second

between 1969 and 1974, and the final third between 1974
and 1977. The first tranche showed good economics and an
average construction time of 6.5 years. Prospects began to
dim quickly, however, with reduced government subsidies,
increasingly strict safety standards, and growing public opposition. The second tranche of nuclear plants took an average of 10.5 years to build, and the third tranche nearly
12 years. The Watts Bar #1 plant of the Tennessee Valley
Authority came on line in May 1996, 23 years after construction started. Long delays are deadly to the economics
of any capital-intensive project. Groundbreaking for new
nuclear power plants came to a complete halt in March 1977,
and hopes for a restart died with the Three Mile Island accident in 1979. Sixty-three planned nuclear power plants
were canceled between 1974 and 1995.
Many of the completed nuclear power plants suffered severe cost overruns, but the canceled plants were often even
more expensive. The Shoreham plant on Long Island cost
$6 billion, about 30 times the original estimate. Even worse,
the completed plant was abandoned and decommissioned
before startup in the face of overwhelming public opposition.
The burden of this stillborn plant fell on Long Island electricity consumers.
The commercial nuclear program also produced another
problem: radioactive waste. A typical nuclear plant generates
about 20 tons of radioactive waste annually Almost all the
waste products are currently stored at power plant sites, but
there are limitations to this approach. The federal government has always anticipated a long-term solution through either a central storage site or fuel reprocessing. But these options have proven to be politically difficult, and the planned
waste repository at Yucca Mountain in Nevada has been
scrubbed after more than $10 billion in sunk costs. There is
no solution in sight.
In 1973, Nixon predicted that nuclear energy would provide 25% of the nation's electricity supply by 1985 and 50%
by 2000. The actual share was about 15% in 1985, plateauing at 20% in 1991. The nuclear program thus proved much
more modest and much more expensive than expected.
The context for nuclear power has now changed. Not
only are nuclear plants much more expensive than anticipated, but their primary competitor is no longer dirty coal
or imported oil but instead clean, inexpensive domestic natural gas. The problem of nuclear waste remains unsolved, and
public opposition, rekindled by last year's Fukushima disaster in Japan, will probably frustrate the nuclear industry for
the foreseeable future.
Only two new nuclear plants are currently under con-

ENERGY POLICY

struction. The latest Energy Information Administration

(EIA) outlook projects 10 GW of new nuclear capacity by
2035, plus another 7 GW of productivity improvements in
existing plants. Unfortunately, the EIA also anticipates the
gradual retirement of older nuclear plants, leading to an absolute decline in nuclear capacity after 2029. In current parlance, nuclear is no longer scalable.
The outlook for renewables
The limitations on nuclear power leave us with renewables
as our only alternative to fossil fuels. In 1973, renewables
accounted for 4 quads or about 6% of our energy consumption. By 2010, renewables had doubled to 8 quads and their
share had increased to 8%. By the year 2035, the EIA projects another 50% increase to about 12 quads. It's tempting to
see the growth in renewables as evidence of success in developing alternative fuels, but when we look at the disparate
components of the renewables category, the picture is not
quite so rosy.
The current 8 quads of U.S. renewables include: hydropower (2.5 quads), wood (2 quads), municipal solid waste
(MSW) (0.5 quad), corn ethanol (2 quads), geothermal (0.2
quad), wind (1 quad), and solar (0.1 quad). Let's look at each
of these energy sources.
Hydropower provides clean and virtually carbon-free
power, but is expensive to build, and its output varies by
season and by year. Both scalability and economics are limited by geography. The United States has 1,426 hydro plants
with a combined capacity of 78 GW. About 40% of this capacity, however, is in 16 massive dams on major rivers, such
as the Grand Coulee (7 GW), Chief Joseph (2.5 GW), John
Day (2 GW), and Dalles (2 GW) dams on the Columbia
River in Washington State and Oregon. Almost all of the
low-cost sites are already developed, and the EIA projects
an increase of only 0.5 quad by 2035.
The economics of wood are excellent, but only if you happen to be in the lumber or paper industry. About two-thirds
of the 2 quads of wood energy is in the 15 main timber-producing states in the Southeast and Northwest, and growth
will track lumber and paper production. MSW contributes
another 0.5 quad to our energy supply. Producing electricity from burning trash may help cities deal with landfill limitations, but it's not a very efficient, economical, or environmentally friendly form of energy. MSW electricity costs
about four times as much as natural gas combined-cycle
power and, according to the Environmental Protection
Agency, releases toxic chemicals, mercury, and dioxin. Not
much growth potential here.
Corn ethanol (2 quads) is the only renewable energy

source competing with oil, but it's expensive and diverts

crops from the food supply. In 2011, the United States used
nearly one-third of its corn crop to replace only 5% of its
oil supplynot a very good tradeoff. The resulting corn
price increases have hurt not only U.S. consumers but also
consumers in poor countries that rely on U.S. corn exports.
Ethanol is not technically complex. In fact, virtually every
society during the past 5,000 years has mastered the technology of distilling ethanol from plants. Ethanol shows great
economics for wine and spirits, but not for fuel. Fuel ethanol
requires buying huge amounts of corn, transporting it to a
distillery, operating the distillery, and then distributing the
final product into the gasoline pool. Ethanol contains only
two-thirds as much energy per gallon as gasoline, and moving it by pipeline presents a number of technical problems.
Despite these problems, the federal government forced
ethanol into the market, initially through federal excise tax
breaks, plus a tariff to keep out Brazilian imports. So far,
U.S. consumers have paid about $50 billion in subsidies plus
at least an additional $5 bulion per year in higher food prices.
Although direct ethanol subsidies were eliminated in
2011, Congress has retained a mandate requiring that the
gasoline supply contain increasing amounts of ethanol. The
2022 requirement of 36 billion gallons would consume almost the entire corn crop. To square this circle. Congress
mandated that ethanol from cellulose feedstocks contribute
at least 16 billion gallons by 2022. That makes the arithmetic work, but unfortunately, there is no viable technology to produce cellulosic ethanol, and corn-based ethanol
is hitting its limits.
Next on the list is geothermal (0.2 quad). In many seismically active areas, high-temperature, high-pressure water
trapped below the surface can be accessed by shallow drilling.
Although its environmental footprint is small, geothermal
energy is limited by geography and thus not scalable. About
85% of U.S. geothermal capacity is in California and another 13% in Nevada. The ELA projects growth to about 0.5
quad by 2035, a negligible contribution to the energy balance.
Wind energy ( 1 quad) has shown rapid growth, with electricity-generating capacity increasing from less than 2.5 GW
in 2000 to over 43 GW today. Wind economics have improved somewhat, mainly by making turbines larger and
building ever larger wind farms, but wind power is still expensive. Onshore wind power costs about 70% more than
natural gas combined-cycle power, and offshore wind costs
about 300% more. Wind power is also intermittent, has low
load factors (around 30%), and is disproportionately available at night, when utilities have other low-cost units sitting idle.

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BENOIT MANDELBROT A N D SIGMUND HANDELMAN (PROGRAMMER). Carved Fractal Mountain,

Metal object, ca. 1975-1976. Photograph by Bruce White.

Perhaps most important, state-of-the-art wind turbines,

some taller than the Washington Monument, bring into
conflict two basic tenets of the environmental movement:
support for clean energy and opposition to disturbing pristine areas. Although the environmental community supports wind power in general, large wind farms near populated areas tend to generate substantial local opposition, often from staunch environmentalists. As a result, most wind
turbines are built in remote areas, requiring expensive longdistance transmission lines.
There would be no wind power in the United States without massive federal and state support, including a 2.2-cent
per kilowatt-hour federal production tax credit and Renewable Portfolio Standards in various states that require electric utilities to acquire a certain percentage of their power
from approved renewable sources, regardless of cost. These
subsidies and mandates cost consumers/taxpayers on the
order of $3.5 billion to $4 billion a year. The EIA outlook
shows only modest growth in wind power from 1 quad today to about 2 quads in 2035, which is still less than 2% of
energy supply.
Solar, the icon of the green movement, contributes only
0.1 quad, or about 0.1% of the U.S. energy supply. The first
solar cells, developed by Bell Labs in 1954, were inefficient
(4% conversion) and expensive, but they were a real engineering breakthrough. The search for more cost-effective
solar became a cornerstone of the federal energy R&D effort
in 1977 with the establishment of the Department of Energy's (DOE'S) Solar Energy Research Institute, now part of
the National Renewable Energy Laboratory
Today's silicon crystal solar panels are a dramatic improvement over the original Bell Lab designs, with some
cells achieving a conversion efficiency of about 35%, but the
power output is still intermittent and load factors are very
low, around 15%. On balance, solar energy is way too expensive for widespread application. Residential rooftop solar panels or large-scale photovoltaic power plants generate
electricity at 7 to 10 times the cost of grid power. Even with
continued heavy subsidies at the federal and state levels, the

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EIA expects solar energy to grow from 0.1 quad today to

only about 0.4 quad by 2035, which is less than 0.5% of our
energy supply 80 years after their invention.
Why have we failed?
On balance, 40 years of intensive federal research have produced no new technologies that could be called transformative. Why have all the hard work and taxpayer money failed
to meet the national goals set by the past eight presidents?
Successful technologies pass through three distinct stages.
In the conceptual phase, we develop a solid understanding of
the science involved. In the technical phase, we learn how
to build machines that actually work. In the final commercial phase, we figure out how to make products whose cost
and performance convince consumers to prefer them over
competing products. Few technologies can move all the way
through this progression, and it's not easy to pick the ultimate winners.
The United States has a long history of extraordinary
technological achievements in all aspects of life, and the federal government has played a critical role in this process,
driven mainly by national security needs. Having learned
the hard way in World War II the disastrous consequences
of military inferiority, the United States has invested trillions of dollars in our defense capabilities. The economics of
national security, however, are different from the economics of the civilian economy. Technical superiority is mission-critical in many military situations, and the Pentagon
is often willing to pay a high premium for relatively small advantages. The military also has a high tolerance for program
failures, cost overruns, and an inefficient procurement
process, because the consequences of military failure can
be catastrophic. As a result, the military tends to focus on
technical success. Fortuitously, some but by no means all
military advances turn out to have major commercial applications. Four-engine bombers easily became airliners. Jet
engines, computers, the Internet, and the Global Positioning System moved easily into the civilian economy. Commercial applications, however, are incidental to military re-

ENERGY POLICY

BENOT MANDELBROT AND SIGMUND HANDELMAN (PROGRAMMER), Failed Nature, Plotted graphics, ca. 1974-1977.

search, not its objective.

In the civilian economy, new technologies face a much
more severe economic test. The Department of Defense's
(DOD's) fiscal year (FY) 2012 budget, excluding the Iraq
and Afghanistan wars, is $531 billion. U.S. consumers, however, pay approximately $1.5 trillion for energy every year.
The economy is therefore very sensitive to energy costs, and
forcing the use of more expensive forms of energy can have
serious consequences for growth.
The mantra ofthe energy R&D program has always been,
"If we can put a man on the Moon, we can do anything,"
but this comparison is wrong. Apollo was a conceptual and
technical triumph with no commercial aspirations. Between
1969 and 1972, the United States landed 12 astronauts on
the Moon at a cost of $12.5 billion (in 2012 dollars) per astronaut. The purpose of the program was to accomplish a
technically difficult feat a few times despite the enormous
cost. Civilian technology requires the exact opposite: the
ability to do something on a large scale at a low cost. More

than 40 years after Neil Armstrong's giant leap, spaceflight

is still too expensive for the average citizen, at least those
unable to pay Virgin Galactic $200,000 for a 15-minute suborbital ride.
Supersonic night faced the same problems. On October
14,1947, Air Force pilot Chuck Yeager broke the sound barrier in the Bell X-1. The U.S. military quickly developed supersonic fighter and ultimately bomber aircraft and has been
flying them successfully for more than 60 years. In contrast,
there are no supersonic airliners in civilian service. Everyone is familiar with President John Kennedy's famous May
1961 speech in which he committed the United States "to
achieving the goal, before this decade is out, of landing a
man on the moon and returning him safely to Earth." Less
well known is Kennedy's commencement address to the U.S.
Air Force Academy in June 1963, in which he committed
us to the development "of a commercially successful supersonic transport superior to that being built in any other
country ofthe world." The difference between Apollo's suc-

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cess and the supersonic transport's failure lies in the single

word "commercial."
Jet engines are superior to piston engines in terms of efficiency, performance, and cost, thus creating the perfect
conditions for commercial application. Supersonic flight,
however, is very expensive, because the only way to break the
sound barrier is to burn massive amounts of fuel. Furthermore, supersonic aircraft cost more to build and maintain
and produce annoying sonic booms over populated areas.
For the military, supersonic flight can mean the difference
between mission success and failure and between life and
death for flight crews. The high cost of high speed is therefore justified. For civilians, however, supersonic travel means
the ability to get from New York to London in 3.5 hours
rather than 6.5. The clientele for supersonic airliners are the
tiny group of people who value their time at $1,000 to $2,000
per hour. The supersonic Concorde was a technical marvel
but a commercial disaster, barely covering its cash operating
costs until its retirement in 2003. Its European investors
never recovered their investment.
Transformation of the nation's energy balance requires
technologies that succeed not just in the conceptual and
technical phases but in the commercial phase as well, and
government commercialization efforts have been a complete failure. The root cause of the problem is the inherently
political nature of government programs.
The market is far superior to government as a vehicle for
commercialization. Private investors spend their own money
and tend to watch it carefully. Lots of private commercialization efforts fail. In the marketplace, however, investors
demand that management recognize failure quickly and
stop throwing good money after bad. The government, on
the other hand, has an almost infinite supply of other people's money to spend. Elected officials are reluctant to say
to voters, "The solution to this problem should be left to
the marketplace." They would much rather say, "If you elect
me, I will fix this problem for you through government action." The promise itself often brings the desired short-term
political benefits, even if the policy itself ultimately fails.
In his 2006 State of the Union message. President Bush
made a pitch for cellulosic ethanol, stating, "Our goal is to
make this new kind of ethanol practical and competitive
within six years." It's now six years later. The government
spent some money and put in place a cellulosic ethanol mandate, but there is still no economically viable way to make cellulosic ethanol.
President Obama's "Blueprint for an Energy Strategy"
claims as its centerpiece a Clean Energy Standard, which
would require that an increasing share of electric power come

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from "clean sources." The White House claims that "With

this requirement in place, clean sources would account
for 80% of our electricity by 2035." The administration has
also launched the SunShot Initiative "to make solar energy
cost-competitive with other forms of energy by the end of
the decade." The objectives of the DOE's FY 2013 budget request include reducing the cost of car batteries by three-quarters by 2020. These are appealing promises, but how exactly
will the government make these things happen, and why
should we believe them? By the time we know whether these
objectives can be met, Obama will be long retired from the
White House.
Moreover, the actual allocation of government funds is
always heavily influenced by short-term political considerations. Most federal employees are capable, honest, and professional. Congress, however, tends to write laws to direct
funds to favored constituencies, and the president controls
the appointments of all senior officials in the Executive
Branch, creating an understandable sensitivity to the viewpoint of the White House.
Since 1973, the federal government has spent $40 billion
(in 2012 dollars) on coal R&D, including President Bush's $2
billion Coal Research Initiative designed to "improve coal's
competitiveness in future energy supply markets." Why are
U.S. consumers better off with more coal and less domestic
natural gas in the energy balance? Why not let the coal industry compete on its own? The answer, of course, is jobs.
Government coal programs support employment in several
critical swing states, including West Virginia, Illinois, Ohio,
Pennsylvania, Montana, and Missouri.
In order to support the commercialization of renewable
energy, the Energy Policy Act of 2005 authorized loan guarantees, supplemented by President Obama with additional
money from the economic stimulus program. Outstanding
DOE loan guarantees now total $34.7 billion. Despite the
best efforts of DOE staff, considerations of the political connections of loan applicants, the districts in which they operate, and the number of jobs they provide find their way
into the decisionmaking process.
The loan guarantees include $8.4 billion for electric cars
and their batteries. The technology for low-cost electric cars
does not yet exist, and it's unlikely that forcing the manufacture of the current generation of vehicles will create a technological breakthrough. In fact, forced scale-up may actually impede technological progress. Tesla Motors, for example, received a $465 million government loan guarantee. Its
first model, the all-electric Roadster, was priced at more
than $100,000. The Model S, Tesla's new all-electric offering
for 2012, is a mid-size sedan selling for $50,000, or twice

ENERGY POLICY

Rather than working to design commercially viable

electric vehicles, electric car and battery companies lobby
the federal government for subsidies. Why innovate when you
can make money on inferior technology?

the price of comparable conventional cars such as the Toyota Camry or Ford Fusion. Even with the current $7,500
federal tax credit, Tesla's cars are toys for rich people. Rather
than working to design commercially viable electric vehicles, electric car and battery companies lobby the federal
government for subsidies. Why innovate when you can make
money on inferior technology? Why spend R&D dollars
when lobbying dollars generate more profit?
Two new nuclear power plants have been granted $10.3
billion in loan guarantees. What is to be gained from expensive subsidies to nuclear plants without solving the outstanding problems of economics, waste disposal, and public opposition?
More than $1 bilhon of program money has gone to solar manufacturing companies, including the infamous Solyndra. Unfortunately, the solar market created by state and
federal subsidies for U.S. homeowners has now been taken
over by the Chinese, whose manufacturing costs are lower.
U.S. homeowners are now buying expensive solar systems,
and the U.S. solar industry is going bankrupt, both at taxpayer expense.
An increasingly popular argument in defense of federal
renewable commercialization efforts is the need to compensate for government support to fossil fuels. A 2011
study by Management Information Services, Inc. (MISI)
calculated federal energy incentives between 1950 and
2010, including tax policy, regulation, R&D, market activity, and government services, and concluded that 44%
of these incentives went to oil, 12% to coal, 14% to natural gas, 11% to hydro, 9% to nuclear, and only 10% to wind
and solar. There are serious methodological problems with
this study, such as defining partial relief from oil price
controls as a subsidy, but let's take the numbers at face
value. The study counts $369 billion (in 2010 dollars) in
government support for oil, implying that oil has been underpriced and therefore unfairly advantaged in the market
place as compared to renewables, which enjoyed only $81
billion in support. This analysis ignores the fact that oil is
the most heavily taxed product on Earth. Between 1950

and 2010, U.S. excise taxes on motor fuels totaled $1.2 trillion at the federal level and another $2 trillion at the state
level (in 2010 dollars). Renewables are not burdened with
any significant taxes.
Eight steps to reform
So given the disappointing results of government energy
R&D to date, where should the United States go from here?
Here are eight suggestions for restructuring the federal energy technology program.
First, focus the federal energy technology budget on conceptual and technical research. Private companies don't do
enough conceptual research, because it's difficult to capture
the benefits of better science. Further, laboratory work is
relatively inexpensive, and the government has a real comparative advantage in this area.
Second, give up the loan guarantees, production tax credits, renewable portfolio standards, government/industry
partnerships, and mandates. These programs are the most
expensive and least effective components of our energy policy They try to force premature commercialization.
Third, stop trying to pick winners. Government energy
R&D should seek a wide range of fundamentally new approaches and ideas. For example, the current technologies
of crystalline silicon or thin-film solar cells may never be
commercially successful. Federal R&D dollars would be better spent working on fundamentally new ways to capture
sunlight. The concepts produced from federal research
should be made available free of charge to U.S. companies for
development by the private sector.
Fourth, fix the Research and Experimentation Tax Credit
(RETC). The 20% RETC reduces the cost of private research,
but it applies only to incremental R&D expenditures, and
Congress periodically allows it to lapse. A permanent 5 to
10% tax credit for all R&D would allow companies to plan
properly and boost overall R&D, including in energy.
Fifth, deal with externalities explicitly rather than implicitly Fossil fuels do indeed have external costs that are
not reflected in their prices, and renewable technology does

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offer potential advantages. U.S. air and water quality have

improved dramatically during the past several decades because of the creation of reasonable federal standards for criteria pollutants, such as sulfur, carbon monoxide, and particulates, and allowing the affected companies to choose the
most effective and least expensive means to comply.
Other externalities, however, are harder to address. U.S.
dependence on the global oil market raises national security
concerns because oil price volatility has an impact on the
economy. The United States needs a comprehensive strategy to deal with this problem, involving not only alternative fuels but domestic oil resource development, diplomacy,
and defense. Forcing small amounts of expensive ethanol
into the gasoline pool offers little if any relief. Replacing
coal or domestic natural gas with wind or solar has no impact at all on the oil market.
Carbon dioxide (CO2) is an even more perplexing problem. Climate change scientists argue that increasing CO2
emissions will have a catastrophic impact on humanity. If
this view is correct, the solution must involve substantial
and cooperative carbon reductions on a global scale. No
government anywhere in the world, including the United
States, has shown any willingness to bear the economic costs
of such reductions. All the current solar and wind power in
the market today have reduced U.S. CO2 emissions by 30 to
35 million metric tons per year, which is less than one-10th
of 1% of the current worldwide total. China is increasing its
carbon emissions by that amount every month.
The congressional cap-and-trade proposals discussed
during the past few years would have limited the price of
carbon to $25 to $50 per metric ton out of fear that higher
CO2 prices would impede economic growth. Such a price is
well below the level required to change consumer behavior
or to bring the current generation of renewable technologies into the market. Addressing climate change requires an
open and honest debate about the severe tradeoffs involved
and the feasibility of achieving meaningftil results on a global
scale. The forced commercialization of tiny amounts of highcost wind and solar is simply throwing money away.
Sixth, stop using job creation as a rationale for renewable energy. Any federal program by definition creates jobs
for the people who administer it and for those who receive
its largesse. Jobs are also destroyed, however, by the removal
of those funds from private capital markets by taxation or
government borrowing. It's impossible to determine whether
this substitution has a net positive effect on the economy.

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Government spending should be judged solely on whether

it meets program objectives.
Seventh, let the US military focus on defending the country. Covering military installations with solar panels and
wind turbines and testing biofuels in military aircraft may
enhance the DOD's relations with Congress and the White
House, but do nothing to enhance military capabilities or
reduce costs. The considerable prestige of the military cannot rescue expensive, poor-performing energy technologies.
Finally, and perhaps most importantly, don't overpromise.
For 40 years now, political leaders of both parties have been
proclaiming that government can plan and engineer a fundamental transformation of the energy industry. Some
elected officials continue to promise specific new technologies within specific time frames. Although these promises
always sound good when they are made, none has ever been
kept. When the promises prove to be empty, the politicians
who made them are long gone from the scene.
The Unites States won the Cold War because it did not
succumb to the temptations of central planning. Instead, it
put its trust in the strength of its economic institutions to find
new technologies and bring them to fruition, with the government and the private sector each doing what it does best. It's
quite possible, perhaps even likely, that the next 100 years
wiU bring energy revolutions as profound and consequential
as electricity or the automobile, but the technologies that
spark these revolutions may not even be on today's list of goverrunent-sponsored candidates. A real energy supply transformation may involve technologies we can't even imagine today.
In 1540, Francisco Vasquez de Coronado set out from
Mexico into what is now the U.S. Southwest in search of the
Seven Cities of Gold. He failed not because his project was
underfunded, but because he was seeking something that
didn't exist. In contrast, in 1804 President Thomas Jefferson sent Lewis and Clark's Corps of Discovery to explore
the U.S. Northwestnot to find anything specific, but to
find what was actually there. Unlike Coronado, Jefferson
understood the essence of research.
Bruce Everett (chathams@aol.com) is an adjunct associate
professor of international business at the Fletcher School at
Tufts University. He has 40 years of experience in global energy markets, including 6years with the U.S. government, 22
years with ExxonMobil, and 10 years on the faculties of the
Fletcher School and Georgetown University's School of Foreign Service.

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