‘All of the above’ should mean all of the above

Joseph T. Kelliher Senior Executive, NextEra Energy
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Both President Obama and Republican leaders have called for an “all of the above” approach to U.S. energy policy. It is one of the few areas where the parties seem to be in agreement, assuming the “all of the above” strategy backed by both parties means what it says.

I’ve toiled in the energy policy field for many years. What I’ve found is that energy policy is naturally nonpartisan or bipartisan, so an outbreak of bipartisanship on energy policy should not make anyone uncomfortable.

I also understand how proponents of different energy resources do battle. They all too often try to handicap their competitors to gain a competitive advantage.

But this kind of gamesmanship doesn’t work anymore. We need every resource available to meet the needs of America’s consumers.

One hundred years ago, Winston Churchill explained the importance of diversity in oil supply to the British Empire by saying, “On no one quality, on no one process … must we be dependent. Safety and certainty in oil lie in variety and variety alone.”

If you substitute “electricity” for “oil,” you have the foundation of a sound energy policy for the United States. Today we must fashion public policy to bring about a greater diversity of electricity supply.

Republicans in particular should truly embrace an all-of-the-above energy strategy.

Republicans have long recognized that we cannot just trust in the marketplace to deliver a diverse supply of affordable electricity. Sometimes the government must step in. Dwight Eisenhower signed a law promoting nuclear energy development in 1954. Twenty years ago, George H.W. Bush enacted legislation promoting wind energy through the production tax credit. The current nuclear expansion would not have been possible without federal government loan guarantees under a law enacted by George W. Bush.

Promoting price stability and power supply diversity are important national security interests. When the country becomes too dependent on foreign oil or on one particular source for electric power, the marketplace becomes volatile and the country is put at a strategic disadvantage. A more balanced approach steadies prices.

Without public policy support for a diverse electricity supply, the U.S. risks staggering down a volatile path of price shocks and insecure supply. We would adopt a herd mentality, betting on whichever fuel or technology looked cheapest at the time. We would follow price changes, not anticipate them, lunging from one fuel to the next, based solely on short-term price outlook. Electricity supply changes would display all the discipline and foresight of a binge drinker.

The common wisdom on energy trends is commonly wrong. Thirty years ago Congress banned natural gas for electricity generation to preserve our perceived dwindling supply. A few years ago, natural gas prices were expected to remain at very high levels, spurring a building boom of liquefied natural gas import terminals. Today, it appears the U.S. may be awash in a sea of low-cost shale gas in perpetuity. As Yogi Berra once said, “It’s tough to make predictions, especially about the future.”

Our own national energy record shows that investing in multiple fuels and technologies is the best policy to achieve a diverse supply and stable prices. One of the most successful examples of this concept in action is the wind production tax credit or PTC. Thanks in part to the incentive offered by the PTC, private industry has built 420 wind manufacturing plants in the U.S. and directly employs 75,000 skilled workers. The PTC costs about $3 billion a year, but wind delivers $10-20 billion in direct investment annually. Over the last four years, wind accounted for over 35% of U.S. electricity supply additions.

American wind is a completely different industry than it was just 20 years ago, but the lack of federal action can derail this progress. When the PTC lapsed in the past, wind development came to a crashing halt. That will happen if the PTC expires at the end of 2012. While previous expirations of the PTC slowed U.S. imports of wind products from Europe, today it means idle manufacturing facilities in the U.S. We will lose manufacturing jobs that moved here because of the PTC. Whether or not the PTC is extended determines whether or not wind development continues in the U.S., plain and simple.

Diversity of electricity supply is not a Republican or a Democratic concept, it is mainstream policy shared by both parties for many years. “All of the above” should mean the continuation of public policies that achieve diversity in U.S. electricity supply. It should mean the same thing to the president and Congress. And everyone should recognize that abandoning effective public policy support for electricity supply diversity will only produce “one of the above.”

Joseph T. Kelliher is a senior executive with NextEra Energy, Inc., one of the largest U.S. electricity companies.