Among its many destabilizing and disastrous effects, Russia’s war in Ukraine serves as a wake-up call for the need for realism in U.S. and allied energy policy. For too long, those driving the conversation have embraced wishful but misinformed thinking about the pace of energy transitions.
Hydrocarbon energy—oil, gas, and coal—supply 83% of the world’s energy and are the lifeblood of modern civilization. While renewable energy’s 6% share will continue to grow, energy transitions take many decades and are driven by technological innovation and the private sector, not by government central planning. The current energy crisis highlights the geopolitical infeasibility and economic costs of policies that distort markets and would abruptly starve the United States of hydrocarbon energy that is critical for national security and economic growth.
Those advocating for unrealistic energy transitions have so far not been held accountable by having official energy agencies analyze their unrealistic, extreme proposals. Specifically, the International Energy Agency (IEA) has recently skewed its forecasts to please climate extremists while depriving policy makers of the ability to evaluate costs and benefits of energy and climate proposals. And the U.S. Energy Information Administration (EIA) has failed to provide Congress with feasibility and cost-benefit analyses of President Biden’s executive orders and legislative proposals that would mandate abrupt, massive bans on hydrocarbon energy.
To help right the ship and avoid costly and dangerous policy errors, Congress should reassert its role in setting U.S. energy policy. As a starting point, Congress should insist that taxpayer-funded agencies provide unbiased forecasts of energy markets, as well as objective evaluations of proposed energy and climate policies. Toward this end, the Forum for American Leadership Energy Working Group calls for more congressional oversight of the International Energy Agency (IEA) and U.S. Energy Information Administration (EIA) and recommends the establishment of a National Commission on Energy Transition Realism, an expert, non-partisan commission of renowned energy experts to advise government officials and evaluate policy options for energy transitions.
The IEA Must Return to its Security Mission and EIA Must Analyze Extreme Climate Proposals
The Paris-based International Energy Agency is composed of 31 member countries (the U.S. and primarily European nations) and nearly a dozen association countries, including China, India, Brazil, and Argentina. Established in the wake of the 1973 oil crisis, IEA is a forum under the Organization for Economic Co-operation and Development with a mandate to respond to disruptions in the global oil supply and provide policy recommendations, as well as data analysis, on global oil and energy supplies to bolster global energy security. In recent years, however, the IEA has strayed from its assigned role as a watchdog for energy security and instead has transformed into a lap dog for climate zealots advocating for unrealistic energy transition targets. Congress should steer U.S. policy to walk IEA back to its security mission.
Specifically, in recent years the IEA’s analyses have veered from security and unbiased analysis to feeding the newly fashionable myth that the United States, and the world, can afford to immediately ban investment in fuels that compromise over 80% of global energy. Moreover, IEA began skewing its energy forecasts to hide the costs of extreme climate policies while depriving elected officials of the ability to make informed cost-benefit assessments of energy and climate proposals. For example, the IEA 2020 World Energy Outlook abolished its “business-as-usual” (BAU, formally known as Current Policies Scenario) reference case scenario, an unwarranted break with decades of forecasting convention that makes it impossible to evaluate the costs and benefits of climate proposals.
Meanwhile, the non-partisan EIA is being underutilized as an agency that was created to deliver accurate energy data and transparent, objective forecasts and analyses to policymakers and the American people. For example, the EIA has so far not provided Congress with analysis of the energy security and economic implications of recent presidential executive orders and legislative climate proposals. The list includes President Biden’s executive order calling for the federal government to reduce its emissions by 65% by 2030 and reach net-zero emissions by 2050, as well as a bill (CLEAN Future Act) introduced by Democrats, mirroring the President’s campaign proposal, to ban the use of fossil fuels—which currently account for 60% of U.S. electricity generation—in U.S. power plants by 2035.
We recommend Congress seize an opportunity to use hearings, letters, legislation, and other oversight tools to restore realism in U.S. energy policy by focusing on U.S. policy at the IEA and the EIA. Furthermore, the creation of an expert, non-partisan National Commission on Energy Transition Realism will further enable Congress to access fact-based data, analysis, and counsel from energy sector experts.
Congressional Oversight Recommendations
This paper is a product of the Forum for American Leadership’s Energy Working Group.
The United States and rest of the world need a new and improved blueprint for a sound and serious climate policy. We need to depoliticize the scientific certainties and uncertainties, apply sound economic principles, and then legislate at home and lead abroad.
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