Dedman Law School Professor James Coleman led a discussion at the Tower Center looking at the complexities of the energy sector focusing on transportation as the driving force. His talk covered what is driving new investment in energy transport, what is holding that investment back, and how the U.S. can better the procedures involved. Read HCM Tower Scholar Destiny Rose Murphy’s summary of the lecture below.
The need for new energy transport investment – pipelines and powerlines
The fracking revolution opened huge new oil reservoirs all across states and regions that had previously had little to no local oil. These new production sites mean that now oil does not need to be transported into traditionally oil-needy areas, like Texas and the Midwest. Instead, what is needed is pipelines to take oil out of these new production sites.
There is a parallel need in the renewable energy world. Though there is a great deal of land in the center of the country that is perfect for wind energy production, this land is significantly less populated, and so requires significantly less energy than the U.S.’s densely packed coastal regions. That means that renewable energy production projects from these areas need to build powerlines to bring the energy to more populated areas.
Adequate energy transportation is increasingly important because of the desire to use renewable resources. Though solar power may be able to cover half a city’s power usage during the prime sunshine hours of the day, that same city needs to have other energy resources to fill in during non-solar hours. Without flexible backup energy, like natural gas, that can be turned up or down during different times of day, cities often cannot fully utilize renewable resources. Unfortunately, however, natural gas is expensive to transport because it requires a pipeline. This means it is often right at the source, instead of being sent to cities that need it.
Trends increase uncertainty for investors
With all that need for power transportation, it would seem that investment in the energy transport sector should be booming. However, several policy and public action trends have contributed to uncertainty for investors, resulting in lower levels of energy transportation investment.
Opponents of certain kinds of energy have realized that transportation is a perfect choke point for halting energy production. These advocacy groups have thus launched projects to halt transportation of energy, including everything from protesting pipeline production to suspending people from bridges to prevent boats from passing through harbors. These protests have drawn media attention, which has led to increased fights and huge swings in energy transportation policy.
The swings in energy transportation policy have manifested in huge sets of rule changes. The Obama administration moved toward growing the power of the federal government in regard to decisions on the legality of interstate projects, which was shown greatly in the fights over the Keystone XL pipeline. Several states have also pushed to increase their power, especially in the area of gas pipelines, sometimes requiring power transportation projects to get permission from each individually affected county in the state before beginning construction. These grabs for power in the energy transportation sector have led to new rule sets and constantly moving governmental review deadlines that make investors hesitate to believe that energy transport projects can ever get done and return on investments.
Principles to enable the energy future
Professor Coleman proposed three policy suggestions that he believes will reduce the costs in energy transport procedure, and more generally improve the process by which energy transportation projects are produced and completed.
- Hard deadlines for reviews and projects, so that investors can know definitively when the project will move forward.
- There should not be overlapping review on projects; though both the states and the federal government should be included in the discussions on projects, there should be strict rules on who gets the final say.
- Coleman proposed that new rules regarding the creation of energy transportation projects should only be implemented on future projects so that projects already underway are not affected. By not applying new rules to existing projects the government would be able to provide certainty to investors.
Destiny Rose Murphy is from Denton, Texas and is triple majoring in political science, English, and philosophy, each of which she will be pursuing distinction in, as well as minoring in Human Rights and Public Policy and International Affairs. In addition to being an HCM Tower Scholar, she is a Dedman Scholar and a Second Century Scholar. In her free time she writes and is managing editor for the Honors Magazine Hilltopics, competes with SMU’s award winning competitive ballroom dancing team, and has founded a Rotaract club on campus to provide service for the greater Dallas community in conjunction with the Dallas Rotary Club. Her policy interests focus on the judicial branch and how policy can be affected through nontraditional, non-legislative means. She hopes to pursue a career in the judiciary, and dreams of one day becoming a Supreme Court Justice.