Offshore Wind and Oil: BFFs in a new Federal Bureau

Here's a link to a betterworld.org post about offshore wind on the east coast. Governors from ten East Coast states pledged to work together on exploration and development of offshore wind resources. The post also mentions Department of the Interior's new "Bureau of Ocean Energy Management." I hadn't heard of it before, but apparently it is a third of the new trifecta of bureaus replacing the Minerals Management Service. Here is a very under-hyped (in my opinion, maybe I'm just out of the federal energy loop) Secretary Order citing the formation of the Bureaus of Ocean Energy Management and Safety and Environmental Enforcement, and the Office of Natural Resources Revenue (the link goes directly to a pdf on the right hand side of the page, three items down). This effectively splits up the party responsible for ensuring offshore drilling ventures are safe from the one that collects the paychecks from the drilling profits. It sounds similar to the split of the Atomic Energy Commission back in 1974, forming one body responsible for the licensing and safety of nuclear plants (the Nuclear Regulatory Commission) and another responsible for the research and promotion of nuclear energy, now part of DOE.

It will be interesting to see how one bureau handles the management of both wind energy (and possibly wave and tidal energy eventually) and drilling for oil. Hopefully they can recruit people with expertise in offshore renewable energy since this is somewhat of a mission-change for them. Tradeoff decision-making will also be an important skill set for the new group, as situations where offshore wind and offshore drilling compete for the same spot of ocean may arise.

An End to Fossil Fuel Subsidies?

Simon writes each week on international issues relating to energy policy.

Among the most recent grand ideas to emerge in the pre-Copenhagen scrum is this from the US administration. President Obama has thrown his backing behind a plan to ban all government subsidies of fossil fuels, everywhere in the world.

It is a plan with considerable merit. New forms of electricity generation are constantly called on to prove themselves economically - a difficult enough task without their fossil fuel competition receiving both implicit and explicit subsidies in many countries.

However, fossil fuel subsidies are used to achieve a variety of policy objectives, and their removal will leave governments having to work out how to replace them. In the developing world, especially oil-producing countries, though they distort consumption patterns, they can be a more effective way of transferring wealth to the population. After all, in nations bedeviled by corruption, the choice is often not between cheap fuel and other government services, but between cheap fuel and embezzlement. In non-producing LDCs, subsidized fuel is not a perk for the very poorest, but can facilitate simple entrepreneurial activity - being able to run a tractor to improve land's productivity or have a generator so a factory no longer depends on unreliable municipal electrical utilities.

In the developed world, meanwhile, programs such as the Low Income Home Energy Assistance Program (LIHEAP) in the US or Britain's Winter Fuel Allowance program, fuel subsidies are a standard form of redistribution to the poor or elderly. Abandoning these programs risks leaving vulnerable communities bearing the brunt of switching to more efficient energy production.

Meanwhile, the tax breaks, competition protection and generous regulatory environments that western governments offer for a variety of industries, including oil and gas exploration and drilling, electricity generation and utilities could all come under pressure from the new agreement.

I think the idea is a good one - removing government subsidies for big business and polluting fuels is a necessary step towards leveling the marketplace for energy production and nurturing the next generation of energy solutions. However, as with almost all the big ideas in energy these days, the political obstacles are going to be large, with influential industry and citizen groups both being affected. Having resolved the question of what to do, it'll be interesting to see how to make it happen.