Department of Energy

Foreword: Global Energy Institute’s International Index of Energy Security Risk

June 21, 2018

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International Index of Energy Security Risk: Assessing Risk in a Global Energy Market

[Editor's note: This is a foreword Energy Secretary Rick Perry wrote for International Index of Energy Security Risk: Assessing Risk in a Global Energy Market. The report is published by U.S. Chamber of Commerce’s Global Energy Institute.]

As U.S. Secretary of Energy, I am pleased to contribute the foreword for this fifth edition of the Global Energy Institute’s International Index of Energy Security Risk. As with prior editions, this report uses one of the best available sources for energy data, the Energy Information Administration (EIA) within the U.S. Department of Energy (DOE). 

This index and the EIA have spotlighted striking energy trends across nations. None is more consequential than the energy transformation that has occurred in the United States. In less than a decade, the U.S. has moved from heavy dependence on energy imports to the cusp of energy independence.

This remarkable story began at the dawn of DOE’s creation more than 40 years ago. For the United States, those were troubled times of price controls at home, oil boycotts imposed from abroad, and cars waiting on long lines for short supplies of gasoline.

U.S. energy policy was disproportionately influenced by people who believed domestic production was in permanent decline, resulting in permanent energy scarcity. Even if new reserves were discovered, it was thought they would be too costly to produce or impossible to use without harming the environment. 

Eventually our leaders began saying they were for greater domestic energy development. They just didn’t want to explore for it, drill for it, transport it, or sell it. Essentially, they kept trying to solve a problem caused by regulation by imposing even more of it.

Those promoting this policy saw it as realism, but in fact it was pessimism rooted in a flawed view of reality. There never was a shortage of energy, only a shortage of imagination and a loss of confidence in a nation’s ability to innovate.

Understanding this perfectly well, the actual realists ignored the conventional wisdom. While Washington chose regulation, they embraced innovation.

Much of this innovation took place in DOE’s national laboratories but it didn’t end there. In states like Texas, where I served as governor, taxes were reduced and regulations kept simple and transparent, providing people both the incentive and the freedom to innovate. And with innovation came a revolution in technology. 

 There never was a shortage of energy, only a shortage of imagination and a loss of confidence in a nation’s ability to innovate.

Secretary Rick Perry

The breakthroughs in hydraulic fracturing and horizontal drilling—leading to America’s natural gas boom—began in Texas. And our national labs helped make not only this technology possible, but other technologies as well, achieving substantial gains that unleashed every energy source the United States had. 

With science and technology leading the way, the U.S. made outstanding energy progress. From fossil fuels to renewables, supply rose, costs fell, efficiencies increased, and energy diversity expanded. 

U.S. energy progress has been on vivid display in the arena of oil output. U.S. crude oil production rose from 5.5 million barrels per day (MMbbl/d) in 2010 to 9.3 MMbbl/d in 2017. Progress in natural gas production has been no less remarkable. Production has risen from 58.4 billion cubic feet/day (Bcf/d) in 2010 to 73.6 Bcf/d in 2017. The United States is now the number-one combined oiland-gas producer in the world.

Technological advances are also driving renewables growth. Solar and wind energy costs have fallen, triggering increased electricity output from renewable sources. U.S. companies are actively selling solar and wind solutions in the global marketplace. From refrigerators to LED lighting, technology is also raising energy efficiency. 

And the same technology revolution that was producing energy more abundantly and efficiently and from a wider range of sources than previously thought possible was also making U.S. fuels cleaner. 

From 2005 to 2017, while our economy grew, the United States led the world in reducing carbon emissions, cutting them by 14%. And from 1970 through 2016, while U.S. GDP grew by 253% and vehicle miles traveled rose by 190%, total air pollution from six common pollutants fell by 73%, while the U.S. coal fleet reduced emissions of nitrogen oxide, sulfur dioxide, and airborne particulates by as much as 93%.

And what works for the United States can work for other nations as well. No country should have to choose between developing its energy and economy and caring for its environment. When nations embrace innovation over regulation, they can do both. 

That is the heart of what we at DOE are calling The New Energy Realism. Through innovation, the U.S. is breaking through the self-imposed limits of the old energy pessimism. Over the past year, the Trump Administration has brought this approach to Washington. Today, Washington is advancing policies like tax and regulatory reform. 

The President has approved new pipelines, removed draconian oil-and-gas restrictions on responsible exploration, and supported clean coal technologies. He has sought to reinvigorate civilian nuclear energy while supporting research and development efforts that enable renewables, storage and energy efficiency to remain critical elements of U.S. energy strategy. 

As a result, “all-of-the-above” has moved from being a slogan to becoming a serious energy strategy for the United States. The U.S. is on the verge of energy independence and is on track to become a net exporter of multiple energy sources and the technologies and know-how that produce these fuels. 

 

No country should have to choose between developing its energy and economy and caring for its environment. When nations embrace innovation over regulation, they can do both. 

Secretary Rick Perry

Already, the U.S. has become a net exporter of natural gas. After spending billions to construct LNG import facilities to address a predicted domestic gas shortage, U.S. natural gas producers are now converting to export operations. Today, the United States is exporting LNG to 27 countries on five continents. 

The United States is also increasing its coal exports substantially. These exports rose by an estimated 61% in 2017 over the previous year, according to the EIA. The United States is now exporting coal to countries around the world, from India to Brazil to the Netherlands, from South Korea to the Ukraine.

By exporting its energy, the U.S. is exporting freedom of choice and all that comes with it. The United States is helping empower its friends and allies, liberating them from dependence on nations that wield their energy resources as a political weapon.

And by exporting its energy technology and know-how, the United States can help developing countries in Latin America, Africa, and Asia break the bonds of poverty by harnessing more energy to improve people’s lives. 

There are some who, in the name of environmental protection, would rather the U.S. refrain from exporting this technology. They oppose production of fossil fuels, which comprise 80% of world energy usage and continue to produce carbon emissions. They support zero-emissions renewables alone.

The choice for every nation is whether to reduce emissions by starving itself of these indispensable fuels, or by making them cleaner. It is ultimately the choice between regulation and innovation. 

Secretary Rick Perry

But studies show that even by the year 2040, fossil fuels will comprise 77% of world energy use. Even if, as I believe, technology will make renewables competitive with other energy sources a lot sooner than we think, it might still take decades for renewables to reach critical mass of world energy use.

Given that reality, the choice for every nation is whether to reduce emissions by starving itself of these indispensable fuels, or by making them cleaner. It is ultimately the choice between regulation and innovation. 

If the United States continues to pursue policies that are friendly to innovation, it will likely have a bright energy future. And to the extent that it exports this idea, along with its energy bounty and technical know-how, we can expect other nations will share in a more promising tomorrow.

I am hopeful that the U.S. and other nations will secure a great energy future by favoring innovation.