Press Release

Table of Contents

Preface

Chapter 1: Summary and Recommendations

Chapter 2: Energy System Security Criteria

Chapter 3: The Bush Administration and the IEER Energy Plans

Chapter 4: Vulnerability Comparison: The Bush and IEER Energy Plans

Chapter 5: Policy Recommendations

References

Prior warnings about the dangers of excessive reliance on Persian Gulf region oil imports, going back as far as 1952, and then many times in the 1973-1982 period, and then again briefly during the Gulf war period have resulted only in sporadic and modest action. Even that level of action, such as appliance standards, improvements in building efficiency, the government's encouragement of energy efficiency through voluntary programs such as the Energy Star Program,⁴⁹ and the Corporate Average Fuel Economy standards for cars have produced substantial results. Energy consumption between 1973 and 1985 stayed about the same, despite substantial economic growth.⁵⁰

The failure of available technologies to be in more widespread use in the market place has several broad causes:

1. Institutional (whether governmental or corporate or both) roadblocks to the use of efficient technology, despite the fact that it is economical.
2. Corporate resistance to government-set standards combined with a corporate failure to pursue vigorous voluntary approaches to improving efficiency for motor vehicles, with some notable exceptions, such as the marketing of hybrid cars by Toyota and Honda.
3. The lingering of nearly commercial technologies at the margins of implementation by the lack of a steady market and the inertia of vast and powerful vested interests in present inefficient technology.
4. The lack of adequate governmental standards that would combine security, environmental, safety, and economic criteria.
5. Lack of widespread business and institutional structures to implement energy efficiency technologies in the residential and commercial marketplace that are economical today.

We will not analyze these problems in detail here. Many studies have covered them in detail. For instance, the DOE published a study in May 2000⁵¹ that provided considerable detail on the institutional obstacles to distributed grid technology, despite its economic and environmental advantages. These impediments have been sufficient to cause what might be termed as massive market failures. Indeed, the dominance of a centralized, supply-biased energy system is evidence of a massive market failure.

One of the most important problems in the lack of rapid integration of new technologies into the market place is lack of a consistent market that would allow a new technology to become established. The traditional method for attempting to overcome this market barrier has been to provide tax breaks, such as credits per unit of fuel or electricity generation. We view this approach as inferior to the provision of a steady market by the federal, state, and local governments for desirable technologies that are already technically feasible. The federal government should dedicate a fixed sum each year to an open-bid performance based purchase of energy from designated renewable sources generated in specified areas, new electricity generation technologies for its buildings, efficiency improvements for its buildings, and highly efficiency new vehicles that are beyond what is available in the marketplace. An expenditure of $20 billion per year for a ten-year period, with the option of continued expenditures for another ten-year period would provide wind energy, solar energy, fuel cell vehicles, efficient on-site generation using fuel cells, combined microturbine fuel cell plants, and other similar cutting edge technologies, with a reliable market. Such an $20 billion per year program would, over ten-years, amount to just about 15 percent of the ten-year tax reduction enacted in 2001 prior to September 11, or on the order of 5 percent of planned Pentagon spending. While this is very substantial commitment, the results in higher security as well as environmental benefits would be incalculable great. Moreover, the net outlay would be considerably lower, since the investment would reduce federal, state, and local energy expenditures.

We provide here the broad outlines of policy action at the federal, state, and local levels that are needed in order to transition to a far more secure energy system that will also result in a substantial reduction of carbon dioxide emissions over the four decades. Since the reduction of oil and nuclear vulnerabilities is central to the IEER plan, we will first discuss these issues in some detail before listing the broad policy actions needed at the federal, state, and local levels.

The current state of technology in relation to automobile efficiency is far in advance of the current average performance for passenger cars. The average performance for cars is about 27. 5 mpg miles per gallon and that for sport utility vehicles is 20.7 miles per gallon. Currently manufactured and commercially available cars can give far more than that:

• The Honda Insight (2-passenger) gasoline powered hybrid engine gives about 60 mpg
• The Toyota Prius, 4-passenger gasoline powered car with a hybrid engine gives almost 50 mpg.
• The Audi A2 1.2 TDI diesel gives 78 miles per equivalent gallon of gasoline.⁵²

GM has made a prototype fuel cell car that gives 100 miles per gallon of gasoline equivalent, which it believes, can be commercialized by about 2010. It goes from zero to sixty in about 9 seconds.⁵³ A number of other manufacturers also can make cars of 75 miles per gallon or more. What is needed is a steady, significant market to bring these into general use rapidly. Volkswagen has announced that it will make a car that would get over 280 miles per gallon.⁵⁴

Carmakers are resisting rapid change in part because of the costs and uncertainties in regard to consumers. An appropriate purchasing policy for federal, state, and local government fleets would remedy this problem and provide the incentive to build vastly more efficient cars as a matter of routine.

A mileage goal for all new cars and light trucks by 2020 should be 100 miles per gallon is feasible and should be set now. This goal should be buttressed by a sound government purchasing policy. This is admittedly a stringent goal and goes far beyond what has been advocated so far. But if energy vulnerabilities relating to oil imports are taken seriously, a stringent goal that would rapidly reduce dependence on imports is required. Given that society in the United States continues to depend on private vehicles and that an adequate public transportation structure will take decades to develop and is less likely to have political support, it is imperative that very stringent standards be set for passenger vehicles.

Such a goal would result in the average fuel efficiency performance of the U.S. passenger vehicle fleet of about 100 miles per gallon by the year 2030. Gasoline use would decline from the represent 8.5 million barrel a day to about 3.5 million barrels a day, given the same assumptions about use of cars. Current trends of rising gasoline consumption would put use at about 11 million barrels a day by that date. Oil imports would rise to 70 percent of consumption even if the Alaska National Wildlife Refuge and other sensitive areas were to be used as additional domestic sources of oil.

The policy for stringent standards would relieve long-term upward pressure on oil prices due to rising consumption in the developing countries and also create opportunities for export of technology that would reverse or reduce the rate of oil consumption increases there. If the decision to adopt a 100 mpg standard were accompanied by an announcement that any attack on oil export infrastructure would be accompanied by a response that would reduce oil use even more by accelerating efficiency standards (because that is well within the realm of technical achievability), the attractiveness of oil infrastructure as a target would be greatly reduced.

Of course, the immediate vulnerability of the world economy to an attack on oil infrastructure cannot be greatly reduced in this way. The Bush administration has proposed filling the Strategic Petroleum Reserve to its full capacity of 700 million barrels, which is currently enough for about two months of imports. That cushion would decline under the Bush plan slowly at first (due to rising oil production but faster rising consumption) and then rapidly, declining to about one month of imports by 2040. The same reserve would last for almost four months of imports under the IEER plan, providing far greater resilience against shocks in the crude oil supply system.

There has been great resistance among motor vehicle manufacturers to stringent efficiency standards. Historical experience shows that car makers seem to remember safety when the issue of mileage standards is raised and seem to remember mileage when the issue of reducing emissions of noxious gases, like nitrogen oxides or hydrocarbons, is raised. In practice they have needed government action to set standards for all three -- emissions (other than carbon dioxide), mileage, and safety. All three can and should be simultaneously mandated by the government. Setting achievable, stringent standards well in advance also encourages research and development on new technologies, such as new strong materials to reduce the weight of cars and increase safety at the same time.⁵⁵

High efficiency standards can achieve a collateral benefit in terms of security relating to oil pipelines, refineries and storage facilities. A 10 gallon equivalent tank in a vehicle getting 100 mpg would give it a theoretical range of 1,000 miles, or about two to three times the present range. The time for which cars could be driven in case a major refinery were attacked would be lengthened, in a typical case, to several weeks, allowing time for repair and recovery. This means that high efficiency standards provided considerably increased resilience to the system in case of some kinds of attack. That resilience can be increased if parts of fleets of governments and corporations are dual-fuel capable. This means that they could switch from gasoline to, say, propane. This technology is already commercial.

Public transportation has been viewed in relation to oil consumption question mainly as a matter of efficiency. However, we believe that public transport in large cities should first of all be viewed as a public utility, in the same manner as electricity, water, sewage, and telephones. A functioning, reliable, safe, and economical public transport system is essential for cities to be livable and for people of all economic classes to have equal opportunity for jobs. People who use public transport subsidize people who use cars at rush hour for the latter use up far more of society's resources and cause far more pollution. Users of automobiles also give rise to far more security vulnerabilities and indirect security-related costs in terms of oil imports. If major cities had pubic transport systems that functioned as well as that in, say, Paris, and issues relating to schools and safety were addressed, cities would be far more attractive for the very people who have been the prime factor in the explosive growth of sprawl with all its implications for oil, environment and security.

The above considerations of public transportation as a public utility means that the direct fuel efficiency considerations should be secondary to frequency, convenience, safety, and cost of public transportation. The gains in reduction of oil use and other environmental benefits would occur only over the long-term thorough reduced use of personal vehicles for commuting and through different settlement patterns and reduced sprawl.

A second consideration relating to security is diversity of transportation modes. Choices of transport modes -- cars, bicycles (which would require more bicycle lanes), public motorized transport (buses, trains), or walking (which could require more sidewalks) - would not only make cities and urban areas generally more livable. They would have considerable security advantages. Were any one means to be disrupted, others would continue to be available. Such resilience within the system also reduces the attractiveness of any particular mode to attack.

We therefore recommend that a comprehensive study on the cost and feasibly of approaching public transport as an essential public utility to be maintained at reasonable cost, with a portion of revenues arising from taxation of gasoline or personal vehicles be carefully investigated. Such a study should also carefully consider the various security vulnerabilities of an automobile based urban transport system compared to one in which cars, trains, buses, bicycle paths, and sidewalks are in a better balance.

The damage from a single attack on a nuclear power plant that results in a severe accident would be so catastrophic that it must be avoided. In the short term there is no substitute for increased vigilance. But given that contamination on the scale of Chernobyl can occur in far more populated areas, immense damage in the hundreds of billions of dollars is within the realm of credibility, with loss of life potentially far larger than that which occurred on September 11, 2001.

Spent fuel storage vulnerabilities are in some ways lower and in others far greater than reactor vulnerabilities. Spent fuel is stored outside the secondary containment in most cases, so that there is no substantial buffer against an attack. Given that fresh spent fuel must be stored underwater, the option of dry, subsurface storage for all spent fuel cannot be realized unless existing nuclear power plants are phased out. It may be possible to add barriers to spent fuel pools to make them less vulnerable, but the reduction would be unlikely to be of a magnitude comparable to the reactor core itself, which is itself vulnerable at least in some degree. Phasing out nuclear power in a manner compatible with electric grid stability is imperative if nuclear vulnerabilities, especially from spent fuel storage are to be reduced to a point where the entire installation become unattractive as a terrorist target.

In the context of such a program, spent fuel storage vulnerabilities can be greatly reduced. Spent fuel can be transferred to dry storage within a few years of discharge from the reactor. Such casks can be put into subsurface facilities that are similar to the way in which vitrified high level military radioactive waste is stored at the Savannah River Site, which is a nuclear weapons plant in South Carolina. In our judgement, an attack comparable to September 11 on these subsurface facilities would cause grievous harm to the site and many people working on it, but it not cause the kind of catastrophe that would result from a comparable attack on a spent fuel storage pool, or even above ground storage in dry casks.

We recognize that, in the long-term on site storage is not desirable. The events of September 11 have reinforced that view. We also recognize that the phase out of nuclear power will result in ending the revenue stream for nuclear utilities. The federal government should take over the responsibility for storage of spent fuel, once nuclear power plants are closed. Nuclear utilities have paid into a nuclear waste fund since 1982, but the federal government's program for taking the waste and having a viable repository program is faced with a host of delays and difficulties, not least because it is focused on a single, poor site, Yucca Mountain in Nevada.⁵⁶ That program should be ended and replaced with a sound repository and engineering program, such as the one recommended by IEER.⁵⁷

It will take time to create and implementing a repository program of the necessary characteristics that will enable both environmental protection and the achievement of security goals. In the interim, the government should take control of the spent fuel at closed nuclear sites. In some cases, the spent fuel may need to be stored close to the site rather than at the site for safety reasons. Consideration should be given to consolidation of spent fuel from closed nuclear power plants at one site in a state, in those cases where there are several closed power plants near each other and special storage vulnerabilities exist.

It is necessary to put plutonium into a different physical form that would (i) limit the damage to as small an area as possible, (ii) resist fire, and (iii) enable easier clean-up and recovery of plutonium with less danger to workers and the public, even in case of an attack similar in scale to that of September 11.

Immobilization is an approach that mixes plutonium with a non-radioactive material and puts the mixture into a ceramic form that is highly resistant to fire and dispersal in the form of fine particles. The ceramic hockey-puck like storage form is put into a steel cylinder and molten glass is then poured around it. The resulting steel canisters with glass logs containing the plutonium-laced ceramics can then be stored underground on-site at one or more large nuclear weapons plants in silos a few tens of feet deep. With carefully thought out technical specifications, the offsite consequences could be minimized even in case of an attack on the scale of September 11. Minimizing the potential for severe offsite impacts would also be the best preventive measure against attack, since it would make plutonium storage sites unattractive as targets. The risk of theft or illicit sale would also be greatly reduced.⁵⁸

Plutonium immobilization uses technology that is reasonably well understood and is similar to that now used for high-level radioactive liquid waste, which is, in some ways, more difficult to process than plutonium. For instance, glass logs containing high-level waste are produced and stored in individual silos at the Department of Energy's Savannah River Site in South Carolina.

The Bush administration eliminated funding for immobilization of plutonium because it wanted to focus on the conversion of surplus weapons plutonium into a nuclear reactor fuel. Not only that, the U.S. also proposed to finance a similar plutonium fuel program in Russia. The entire policy was already problematic before September 11. But to persist now with a plan that would put plutonium fuel on the highways and in commercial nuclear power sites in the United States and Russia is very risky, to say the least. It is to disregard one of the most important lessons of September 11 - worst case scenarios that are plausible should not be ignored.

The problem of current U.S. plutonium policy goes even deeper. The Bush administration is not only persisting with a plutonium fuel program it inherited from the Clinton administration, but it proposes, as part of its energy plan, to spend money on developing commercial plutonium fuel as a normal part of the U.S. nuclear power system. This would reverse a quarter century of bipartisan nuclear non-proliferation policy though five previous administrations and exacerbate both proliferation pressures and vulnerabilities to attack.

It is essential that an immobilization program be re-instituted and implemented with urgency.

The Bush administration's energy plan, which was published in May 2001 and the details of which have been re-affirmed since September 11 would create a national electricity grid to facilitate the transmission of electricity by large-scale generators. It has been presented as part of plan to increase electricity systems reliability by allowing generators to build plants anywhere they want. However, this will not necessarily address reliability problems and may aggravate them. Low reliability arising from a lack of reserve capacity was the main reason for the power problems in California. Deregulation created a situation in which power producers had no responsibility to maintain reserve capacity, and the regulators had no resources to do so either.

A completely unfettered electricity generation sector that has no responsibility for transmission or for reserve capacity would increase costs and be prone to unanticipated breakdowns. A free-for-all in generation on a large scale, across the continental United States, is a recipe for continued economic and technical problems. The Bush energy plan does not propose to impose any rules of good behavior on large-scale generators. Therefore, it is unlikely to create a reliable system that will have reasonable and predictable costs. Transmission capacity and location, reserve capacity, and the consuming system need to be coordinated with generation in order to get a reliable system overall. Reliability requires that large-scale private (and public) power producers have a responsibility for providing or paying for the maintenance of reserve capacity and for channeling power along efficient, relatively predictable routes.

The lack of responsibility of generators for reserve margins and the increasing complexity of system requirements for reserve capacity would add to the security concerns relating to potential attacks on the system. The changing pattern of generation would introduce new vulnerabilities that would be difficult to characterize at any time due to the rising complexity of the national grid, the locations of electricity generation stations, and the varying patterns of electricity flows based on spot markets.

The September 11 attack adds to the already growing sentiment for some regulation of the system and for more local control of electricity system that arose of the California energy crisis of late 2000 and early 2001. Instead of a national electricity grid, the United States should announce the achievement of regional distributed electricity grids, with a high standard of reliability. A distributed grid is one in which very local (household, small business) to medium scale local electricity generation (large buildings, most industry), or of heat and electricity combined (cogeneration), is achieved. Local generators consume some of their own electricity (solar, fuel cells, cogeneration), purchase some at some times, and sell at other times. While such an approach has now been feasible for some time, a variety of institutional and regulatory obstacles still stand in the way.

Currently almost all electricity is generated in large-scale centralized plants connected to regional grids. It would be far better to mix small-scale plants that are close to the consumer or are on the consumer's premises and interconnect them to regional grids, which also have large-scale plants on them. Regional grid systems, which already exist and only need modest improvement, as for instance between southern and northern California. Such a system of regional distributed grids can be joined with regional renewable energy sources on a large scale. In particular, the wind energy resources of the Midwestern region can be fed into existing transmission corridors. Given the fuels used for space and water heating in households and commercial establishments, as well as solar energy availability, and offshore wind power availability in coastal areas, it should be possible to have an interconnected electricity structure that relies a combination of central station power plants, local consumer-based small-scale generation systems, and medium-scale local or regional generation. Regulatory changes on both the generation and consumption side would be required to make such an outcome possible. Were it done, the share of renewables in the electricity supply could be increased to about fifty percent in the next forty years. In the long term research and development of hydrogen derived from renewable sources is important to continued reduction of greenhouse gas emissions. This technology needs considerable development and is not necessary to the achievement of short and medium term security and environmental goals. However, it should be part of the government's procurement policies. See below.

1. Purchase of renewable energy, efficient on-site electricity generation, highly efficiency motor vehicles, highly efficient heating and air-conditioning technology to the tune of $10 billion per year by the federal government, with an commitment to continue the program for at least ten years. The procurement program should be carried out on annually on a performance based bidding process similar to that used for leasing out tracts for oil and gas drilling.
2. Allocation of $10 billion per year of federal money to state and local governments for their own procurement programs.
3. 100 miles per gallon for all new passenger vehicles (including light trucks) by 2020, with simultaneous safety and emissions standards.
4. Continued filling of the Strategic Petroleum Reserve. The Bush administration is pursuing this important policy. Its impact on security would be greatly increased if stringent mileage standards were adopted.
5. Enactment of progressively more stringent carbon dioxide limits per unit of electrical power generation.
6. A phase out of nuclear power, with plants being shut down as their original licenses expire, or sooner in those cases where special vulnerabilities exist.
7. Abandonment plans for new nuclear power plants and for use of plutonium as a fuel in nuclear reactors.
8. Transfer of spent fuel out of pools into dry storage when as it is safe to do so rather than waiting until the pools are full.
9. Storage of dry casks containing in sub-surface storage on-site at operating nuclear power plants.
10. A transfer of the control of spent fuel to the federal government at closed plants, with consideration given to in-state consolidation of spent fuel at a closed power plant in case of special vulnerabilities.
11. An adoption of policies to encourage distributed grids, and the orientation of the federal procurement program that is devoted to the electricity sector to helping states achieve distributed grids.
12. A re-commitment of the United States to the Kyoto Protocol process, with the starting point being a commitment to reduce carbon dioxide emissions by between forty and fifty percent over the next four decades (without international trading but possibly with some internal trading of credits in the electricity sector). The achievement of intermediate goals would be negotiated with the those who have ratified the treaty.

In addition to the institution of their own procurements policies along the lines discussed above for their own facilities such as schools, colleges, state government buildings, state and local vehicles, etc. the state and local governments should:

1. Create or maintain state level regulation of electricity system in order to achieve the overall goals of system reliability, reserve margins, and transmission and distribution capacity.
2. Establish state and locally owned utilities with public oversight and transparency safeguards, with the goal of promoting high efficiency, secure distributed grids, and adequate capacity of the transmission and distribution system to withstand attacks on critical electricity infrastructure without massive prolonged disruption.
3. Institute regulation at the level of regional reliability councils (which correspond to regional grids) to provide the overall framework for achieving secure and reliable transmission and generation on a system-wide basis, including adequate reserve margins and transmission capacity. Local and state governments as well as regional and national associations of such governments should have adequate oversight and regulatory authority to ensure reliable, economic, secure, and environmentally sound distributed grids.
4. Institute rules requiring developers to consider on-site generation with best available technology for heating and cooling, efficient devices and justify why these technologies should not be used.
5. Put in place requirements for energy audits to be part of the re-sales of residential and commercial buildings with information about best practices during resale and consequences for the new owners of buildings.
6. Enact stringent efficiency standards for appliances, buildings, and vehicles, should the federal government fail to do so.
7. Create task forces on transportation as an urban utility that would analyze the security, environmental, and economic benefits of regarding public transportation as a public utility, especially when connected with efforts on public safety and excellence in schools.

Next: References

⁴⁹ Energy Star 2001.
⁵⁰ There were fluctuations due to variations in economic conditions, phasing of regulations within this period.
⁵¹ Alderfer, Eldridge, and Starrs 2000.
⁵² Alpha Newspapers 2001(?).
⁵³ Evanoff 2000.
⁵⁴ For information on efficient cars, safety, and latest technical developments see, for instance, the web site of the Rocky Mountain Institute, http://www.rmi.org.
⁵⁵ See www.rmi.org
⁵⁶ IEER has done extensive work on this subject. Many articles and references can be found on IEER's web site.
⁵⁷ Makhijani 2001d.
⁵⁸ The National Academy of Sciences has recommended a "spent fuel standard" for immobilizing plutonium to reduce the risk of theft or re-use in nuclear weapons (NAS 1994). While this level of diversion resistance is desirable, it would take far longer. It is more urgent to put the plutonium into a non-dispersible, not-easily-usable form and obtain more proliferation resistance through joint monitoring and verification programs.