Schizer Presents How Energy Policy Can Protect Both National Security And The Environment Today At San Diego

David M. Schizer (Columbia) presents Red White and Blue – and also Green: How Energy Policy Can Protect Both National Security and the Environment at San Diego today as part of its Tax Law Speaker Series.

Too often, energy policy protects the environment while neglecting national security, or vice versa. Since each goal is critical, this Article shows to how to advance both at the same time.

For national security, the key is to avoid depending on the wrong suppliers. If they are vulnerable to attack (like some Middle Eastern producers), they need to be defended. Or if they are themselves geopolitical threats (like Russia and Iran), their energy exports fund harmful conduct. This Article breaks new ground in showing why suppliers tend to be insecure or menacing: authoritarian regimes have a comparative advantage in producing oil and gas, since they are less responsive to opposition from environmentalists, local residents, and other groups.

To avoid depending on the wrong suppliers, the U.S. and its allies should pursue two strategies. First, they should cut demand for fossil fuel. Along with making it easier to stop buying from the wrong suppliers, slashing demand also reduces greenhouse gas emissions and pollution.

Yet although these are significant national security and environmental advantages, there is an offsetting national security risk: like fossil fuel suppliers, many clean energy suppliers are insecure or potentially hostile (like Congo and China). In response, the U.S. and its allies should ramp up domestic production of clean energy technology, while also encouraging households and businesses to use it.

Second, since the transition to clean energy will take time, the U.S. and its allies also need to tap new sources of fossil fuel in countries that are secure and friendly. Yet since new fossil fuel development raises familiar environmental concerns, this Article proposes three ways to do it while still reducing emissions and pollution. First, these new sources should be as “clean” as possible (e.g., natural gas instead of coal). Second, in adding new capacity, the goal should be to replace other fossil fuel sources, not to add to them (e.g., so more production in the U.S. means less in Russia). Third, new sources should be flexible, so they can ramp up and scale back, as needed. Fortunately, these shifts are relatively easy for U.S. shale producers—indeed, more so than for others--and can be encouraged with the right regulatory approaches.

While government intervention is needed to pursue these goals, policymakers should strive to harness the private sector’s capacity to innovate, cut costs, and enhance quality. A moratorium on new fossil fuel development is counterproductive, entrenching a status quo that depends too much on coal, as well as on insecure and hostile energy suppliers. Instead, the best approach is to “price” the relevant national security and environmental costs with Pigouvian taxes, motivating businesses and consumers to mitigate these costs and letting them choose how to do it. Yet if Pigouvian taxes aren’t politically feasible, this Article recommends a heuristic called “the marginal efficiency cost of energy”: policymakers should account for all the social costs of each source—private costs, national security costs, and environmental costs—and strive to replace high cost sources with low cost sources. This framework should guide all aspects of energy policy–from permits and regulations to rate-setting, mandates, moratoriums, subsidies, and government leases–so policymakers stay focused on both environmental and national security goals.