Frontlines

Oklahoma Sen. James Inhofe has made it his mission to block environmental regulations, especially greenhouse gas constraints. His most recent attack targets John Bryson, former Edison International CEO and Pres. Barack Obama’s nominee for Commerce Secretary. But rather than protecting economic interests, as Inhofe purportedly aims to do, his actions have added to the ongoing policy chaos that frustrates clean coal development.

Policies aimed at promoting one good thing can diminish a better thing, for a net loss to the overall public welfare. Raising prices to promote renewables, for example, makes electricity less affordable and hurts the economy. But artificially low prices can themselves create social ills — by preserving an unsustainable status quo.

In the information age, big growth doesn’t come from putting steel in the ground; it comes from innovating and creating value. But if electricity customers care only about reliability and price, how can utilities create real value that didn’t exist before?

All things being equal, momentous events like the Fukushima nuclear disaster and the Arab spring would bring fundamental changes in U.S. energy policy. But things aren’t equal, and they never will be under America’s democratic and capitalistic process. Frustrating? Maybe, but it’s the only way to ensure our decisions are based on sound economic and environmental principles.

Because we can’t define the consequences of nuclear accidents — and because radioactivity is invisible and undetectable without a Geiger counter — nuclear power’s risks are like shadowy monsters of unknown proportions, inspiring irrational fear. But that’s no excuse for complacency. Learning the lessons of Fukushima-Daiichi requires first acknowledging that we might have overestimated our ability to manage nuclear risks.

Anyone who’s been watching the solar power industry for more than a few years can’t help but be impressed by the recent explosion of large-scale projects. It seems akin to the rapid scale-up of wind in the late 1990s and early 2000s—when megawatt-scale turbines became standard-issue, and the definition of a “large” wind farm changed from a capacity of 20 MW to something more like 200 MW.

New Jersey Gov. Chris Christie in February signed into law a bill that will have the state commissioning construction of 2,000 MW of new gas-fired power capacity and dumping it into the PJM capacity market at a $0 price. Maryland is considering a similar capacity-dumping scheme. What’s behind these efforts to manipulate capacity auctions — regional constraints or local politics?

Now that wireless carriers are promoting their networks as a cost-effective communications platform for smart grid data, they face legitimate questions about fundamental performance issues. But if public networks turn out to be the better choice in many cases, utilities might have some explaining to do before state commissions.

In terms of the political calculus, GHG regulation faces an uncertain future, at least into 2013. And as a flood of cheap gas erodes the perception of an impending environmental crisis, politicians will have less incentive to impose carbon constraints. Does shale gas signal the end of the road for greenhouse gas regulation?

Investor-owned utilities might seem fairly robust, but they’re not impervious to unpredictable black-swan events. Ensuring the industry’s survival might depend on our ability to reduce our dependence on fragile and unsustainable regulatory structures.