Natural Apex- Defining a National Energy Policy for the Next Decade

Summary

‘Natural Apex- Defining a National Energy Policy for the Next Decade’ is a book authored by Bruce E. Fleming; this book is Fleming’s effort to explain and make clear the imminent shortage of energy options in the future, and as the title suggests, goes further to propose the future energy options (Fleming).

In recent years, in the face of global warming and its effects, there have been more debates on the adoption of ‘green’ energy alternatives. In this book Fleming joins this debate. He attempts to offer solution on the global need for alternative energy sources.

First, he acknowledges the possibility that in a few years there’s likely to be a “disruptive shortage of natural resources” (Fleming), which are dwindling at a speed that the current efforts to secure them may not be possible. He explains the irony that the slow dwindling of natural resources is partly due to the effort by the world to adopt ‘green’ energy alternatives. For instance, with the decline of crude oil the world is considering biofuel as a replacement.

But, the world may be reckless in its effort to make that transition as reflected in the call to clear the Amazon forest for the sake of growing crops that could be used as biofuel, when the air pollution resulting from clearing and burning would be worse than if the forest were not touched and people continued to use fossil fuels.

It is Fleming’s wish in this book that people would understand and accept that natural resources and energy crisis is a possibility. Second, he explores the energy options with which to effectively respond to such a time when it comes. Finally, he hopes that his arguments in this book will be a good platform on which to “develop and coordinate a long-term national strategy for energy that bears a global perspective that is inclusive of viable and affordable alternatives” (Fleming).

In this effort, Fleming makes a number of arguments. Fleming opens his argument by claiming that, unlike the gone quarter of a century when a country’s economic strength was judged relative to the amount of finished goods that it produced or the services it offered, a time is approaching when a country’s wealth will be judged based on how much access to and control of natural resources it has. Already, Fleming cites, China and India, two of the fastest growing economies which are facing the problem of limited natural resources. But in time, due to an increasingly “highly interrelated global economy” (Fleming), the problem will eventually come to affect all nations.

What Fleming finds challenging in the effort to solve a global energy crisis, as predicted in this book is the present globalization and where it is likely to be headed, and the consequent closeness of nations, especially in relation to the magnitude of the crisis. Also, because of it, all nations may need to commit themselves and cooperate among themselves. Unfortunately this global solution is quite complex and might not be a smooth ride. This is especially since, while “meaningful cooperation” (Fleming) is the only way to fill in the social and economic gap between the rich and not-so-rich nations, such a cooperation is likely to be threatened when self-interest race for the dwindling natural resources starts.

But Fleming also clarifies that the ‘crisis’ is not likely to be as a result of shortages of natural resources per se, but as a result of an interrupted flow of these resources to the vital developed and developing countries: “shortages would cause short-term economic effects on specific nations… (but) serious interruptions in the vital natural resources flow to key emerging and developed nations will in the end start a protracted world-wide economic meltdown” (Fleming).

All this is likely to be helped by unsolved complex social, economic and political issues in the world today: political unrest in Africa and the Middle East, recent Central America food riots and, among others, rising hostility on basic commodities in emerging and industrialized nations.

As already stated, one of the resources likely to head for the worst low is crude oil. This will be due to rise in cost and low supply. This, Fleming clarifies, will not be as a result of disappearing crude oil, on the contrary, he admits that it is unlikely oil will disappear from the face of the earth. Instead, this will be due to a world-wide decline in production and exploration.

He notes that while petroleum can still be found under the oceans and earth’s crust, those that can easily be extracted, easily reachable, are drying up. Already, Fleming cites production of oil in Russia and Saudi Arabia, the two nations with the world’s biggest fields of oil where production has started to decline. Many other fields are producing less and less.

It is possible that in fifty years crude oil will not be the main source of energy for the world’s economy. Having a number of energy alternatives is an assurance for the continued growth and prosperity of the world economy. For these reasons, there is dire need to review the world’s energy options.

Fleming laments the fact that even as the world acknowledges the need to seek alternative sources of energy, both as insurance against the imminent reduction of crude oil and as a step towards a more green world economy, the nations are not giving the issue the seriousness that it deserves. A comprehensive energy policy, Fleming proposes, can only be achieved through cooperation between both the government and the private sector.

In the second chapter, appropriately titled ‘Powered by Diversity’, Fleming proposes the need to increase energy options as a way to ensure continued power supply. Many industry analysts, based on projected consumption rates in the next 30 years agree that global petroleum reserves will be depleted between the years 2030 and 2040. As such, there’s need for alternative sources of energy, especially renewable energy as long-term steps towards reducing extreme dependence on fast-dying fossil fuel.

Fleming proposes that the US should adopt an integrative energy policy that involves both non-renewable energy sources, such as nuclear (uranium) energy and fossil fuel (natural gas, coal, oil), and renewable energy sources, such as Hydropower, Solar, Wind, Geothermal, Biomass, Tidal, Wave, Hydrogen and Pumped Storage (Fleming). Further, he checks their advantages and disadvantages based on their effect on the environment.

Fleming also explores the ups and downs of biofuel, while he recognizes that biofuel is a crucial source of energy for the US and other industrialized countries, he warns against an “unchecked biofuel industry growth” (Fleming 3) as this would be a disaster for the global environment. Rise in biofuel production coincides with low food production since biofuel is made from food; Fleming refers to this as ‘Food as Fuel’.

The US, for instance, has been producing less wheat since 2005, this is because most farmers have dumped wheat production and moved to corn farming needed for ethanol production. And so while “demand for food has risen worldwide, except for Argentina, surplus production from the world’s major food producers, alongside the US have actually decreased” (Fleming). As a result there’s been a rise in the cost of food and other food products.

As it were, there is a rise in the demand for biofuel in the US, as such there’s been an increased diversion of food (edible crops) for use as and in the production of biofuels. Production of ethanol also reduces the amount exportable consumables. As already mentioned, the need for biofuel has reduced the production of wheat.

Because producing corn is more profitable to farmers, they are increasingly dumping production of exportable crops. For instance, cotton producers in the US are also moving to corn production. The implication of this is that in the near future, the US is likely to be a cotton importer.

According to Fleming, this trend is more disadvantageous that it has its benefits, for instance, more energy is used in producing ethanol from corn than it gives. This ethanol is referred to as ‘energy sink’ (Fleming). In the end, unchecked biofuel production is not only likely to lead to further environmental degradation, but also to extremely increased food shortages.

It is in the third Chapter that Fleming gets down to the main focus of his book as implied in the title; here he provides the framework, what he calls the ‘Blueprint’, for ‘his’ proposed energy strategy.

He discusses the objectives of this strategy under seven major initiatives; these initiatives as he discusses them would involve, (1) reducing the US’s consumption of crude oil; (2) increasing the daily amount of light crude oil and other oil from domestic sources into the SPR reserves; (3) the G8 group of industrialized nations setting Food and Biofuel Protocol to ensure a balanced outcome of the need for both; (4) preservation of the world’s major rain forests through direct monetary and food aids to the people in areas prone to indiscriminate deforestations; (5) putting in place an aggressive strategy for diverse energy use in the US; (6) development and implementation of a storage strategy for natural gas to ensure continued power supply in the coming generations; and (7) finally, sufficient fuel reserves in the country to facilitate easy transition to other no-oil based economy (Fleming).

Fleming does not fool himself on the ease of achieving these goals, he is pragmatic enough to admit for instance that the last initiative, although relatively straightforward, will be challenging as it does not only require financial resources alone, or just the political will, but also a healthy cooperation with other nations.

These efforts do not overlook the present role of petroleum, which is why Fleming proposes an integrative energy strategy, involving the use of both crude oil and other available non-crude oil power sources. This strategy involves conserving petroleum at these times when the supply of crude oil is dwindling, and also expanding reserves for crude oil to cater for sudden interruptions of supply in the future.

As part of a step to invite the private sector and utility companies into the bandwagon in this effort, Fleming encourages the use of renewable energy incentives and tax credits for energy efficiency. This would “encourage the use of alternative energy” (Fleming).

Failing to do this, as well as providing long-term support for state and federal regulations only increases the dependency of the state on non-renewable alternatives, as well as undermining the role of the renewable energy alternatives, and ultimately undermining the national policy on energy.

Critical Analysis

The issue of dwindling natural resources that Fleming emphasizes on can already be seen in the new scramble for Africa; China, especially, has increased its operations in Africa. This is not just a race for investment opportunities in Africa but also a fight for the share of natural resources in Africa. Besides China, India has also increased its role in Africa; both nations are obviously “jostling for access to the continent’s oil” (Cheru & Obi, 174). But this fact also creates a new situation.

Fleming acknowledges the fact that, with the imminent times of need that he prophesies, there will be increased need for a more unified world with “meaningful cooperation” (Fleming) among the nations of the world. But he also acknowledges the limitations of such cooperation. First, that finding a global solution, one which requires a certain level of commitment by all nations of the world, is not going to be easy.

Not only does it have to cater for the interests of the nations involved, and therein lies the complexity of finding such an all-round solution, but especially in relation to the interplay of other factors such as foreign and diplomatic policies by all these world nations and the threats to the prevailing balance of power. This latter case is what will determine the economic and diplomatic loyalties and alliances between nations during such times.

China today reflects both cases quite well since Africa is increasingly looking to the East. China is largely seen by most African leaders as a better business ‘partner’, unlike the hitherto perceived big-brother handling of African nations by the west, led by the US.

Of course, it is not exactly true that the relationship of Africa and China is a partnership between ‘equals’, it may just be nothing more than a linguistic play. But still Africa finds the approach by the East more appealing. Already, China as a fast growing economy is assuring itself a piece of African resources should the rough times come.

China has already made it obvious that it is not willing to favor a world solution that threatens its economic dreams. This has already been reflected in its stand in the debate on environment and its response to global warming policies, especially on cutting Carbon emissions, for instance the stalling behavior of its officials during the recent Copenhagen Summit in 2008.

But the US is also guilty of putting its energy needs first. Fleming himself has mentioned the negative impact that US’s (alongside other food producing nations) search for biofuel has had on the supply and rise in the costs of foods. And it has turned a blind eye on the criticism directed to it for such a move.

Also, Fleming points out the possibility that nations are likely to seek new alliances in the face of such deficiencies as another threat of comprehensive global talks and solution-finding. For instance, Russia is also out to create alliances as a way of “exerting its economic and political power” (Fleming), the first step towards which it made when it seized Georgia’s vital pipelines for natural gas and oil resources during their small 2008 war.

All these arguments are relatively valid. Unfortunately, while Fleming seems to wish for a ‘global’ solution, that the US is meant to “guide and lead in providing solutions to big problems outside its borders” (Fleming) he seems to give up with his claim that such a move is complex (which is true considering, for instance, the behavior of China today), so that afterwards he only argues in favor of what the US can do to protect itself when such a time comes.

It is as if he recognizes the likeliness of China being the most appealing to Africa, so that he proposes to protect US against competition from, say, China and its allies. When he mentions the rest of the world as part of this solution and as beneficiaries of such precautions, one gets the feeling that he is only doing this out of, say, sympathy or as remorse for not including them. The best reflection of this is the fact in all his arguments, there’s no role for the rest of the world to play. It is all to be carried out by the US.

Perhaps this is understandable, as his work is on ‘National’ energy policy, however it does not seem realistic that the US will do all this independent of the rest of the world. While he recognizes the might of globalization in the world today, his plan seems to act independent of it. The question that remains for Fleming to answer is; where does the rest of the world fall in this strategy, and what is in it for them?

Also, having looked at Fleming’s proposals, it is time that we assess and evaluate the feasibility of his proposals. The first question that can be asked in this effort is; is it possible for the US to take up other sources of energy besides oil, especially by 2040, the year by which oil is expected to be very low? This question needs to be looked at not based on not just the disadvantages of the energy alternatives that Fleming proposes but also on the present US energy policies.

Fleming extends the use of renewable energy incentives to encourage the adoption of this policy by the private sector by “influencing both their investment in/supply of and consumption/demand of renewable energy alternatives” (Clement), as well as encourage the transition to the new policy that calls for dependence on renewable energy sources.

Tax incentives have, in most parts of the world, been successful at “boosting public policies meant to stimulate the development of markets and industries for renewable energy” (Clement).

Some of these tax incentives includes: investment tax incentives which are tax deductions/credits for a fraction of capital investment or cost of equipment meant for renewable energy systems and projects; production tax incentives meant to extend credits or tax deductions on energy produced by renewable energy systems; tax holidays; value-added tax incentives; property tax reductions and many more (Clement).

However, while these incentives have been proven to encourage investments and consumption of renewable energy by the private sector for instance, it is important to find a guideline for ensuring that such efforts are honest and real.

For instance, project costs may be inflated for allocation of large amounts of investment incentives (Madlener & Wohlgemuth). Equally, investment tax credits can be beneficial at enticing profitable projects/enterprises or wealthy individuals to enter the market for renewable energy in order to cut their taxes.

However, the danger lies in the likeliness that the investors may be out to benefit from the tax shelter rather than making any real electricity production. In addition to this, investment credits are less clear as compared to investment incentives and this may reduce the degree of effectiveness (Madlener & Wohlgemuth).

Such were the abuses that accompanied the 1980s California wind energy development (Righter, 1996; Wiser et al., 1998). Also, the fact that some small-project investors and developers may lack enough pre-tax income for the full absorption of the tax limits the number of benefits and range of businesses which can access such benefits (Madlener & Wohlgemuth).

The other forms of incentives also have their own limitations but Fleming has not addressed these likely outcomes. By acknowledging these possibilities is an admission that incentives do not necessarily encourage use of renewable energy. Most importantly, Fleming seems to be of the idea that, unless the US finds solutions now for the likely depletion of natural resources in the future, it cannot avert conflicts with other competing nations such as Russia and China.

But such conflicts are not new, in fact the US’s cold war with Russia, other cold war related conflicts being only an extension of this, is the most famous in world’s history, and is likely to remain so in generations to come. The US’s wrangling with China, fanned by a perceived competition for world domination and China’s perceived attempts to oust the US as the only global superpower, is only just beginning.

The former happened at a time of abundance of natural resources. The latter is happening only at the threat of a natural resources crisis. In other words, whether there is a scarcity of resources or not, such conflicts will always be there. True, the scarcity of natural resources will provoke new alliances and conflicts. But that doesn’t mean that conflict is going to be the only way to solve the problem. Just as there have been healthy ways to handle international wrangles, so is there likely to be a solution here.

Conclusion

In his conclusion, Fleming adopts a rather socio-political stance- like he is being a mouthpiece for the US on its supremacy and the superiority of its culture (mainly capitalism and democracy) over the rest. By claiming that China has only succeeded after adopting capitalism, it feels like he is not just attempting to not just say that China’s post-capitalism economic strategies have failed, but that it is only the US that has the right solutions for the world problems.

The one problem with this stand is that it overlooks the fact that other nations practicing capitalism, even much earlier than China, have not been able to achieve the economic capability that China has today. This claim overlooks China’s own unique, even non-capitalist, efforts for economic growth and their resultant successes.

While the US still remains the only superpower, it is an on-going debate that it is slowly losing its grip on the globe. As already discussed above, Africa, for instance, is increasingly looking East and whether these mean that the US is losing its powers is debatable. But still it is a reflection of the fact that nations outside the US are considering other option as alternative partners to their problems other than the US itself.

And in talking about the US version of Democracy, Fleming has failed to acknowledge other forms of democracy that have emerged in other parts of the world, which are quite different from the one of the US. By becoming a kind-of political commentary, a deviation from his intended economic focus, Fleming loses readers. He emphasizes the importance of the US government rather than using the conclusion to make a final stressed call for the US to make the energy strategy proposals that he presents.

But ultimately, in the rest of the work’s body, Fleming has tackled the issue of dwindling natural resources with great effort and insight. This work is a wakeup call to not just the US, but also for the rest of world to start looking for solutions for any shortages of resources in the future. Because, as Fleming puts it, when the time finally comes, it will be a burden for the whole globalised world.

More importantly the need to attain reliable energy options will secure energy need of a world that is rapidly becoming industrialized and which requires more oil to use as energy like never before.

This strategy will solve global oil crisis that have been a source of major conflict historically such as the 1970s oil embargo that paralyzed the whole world; more recently we have seen even more wars being waged purely because of scramble for oil as has been the case in Iraq. So exploring alternative energy needs will have wide ramifications for global peace.

Works Cited

Clement, David. International Tax Incentives for Renewable Energy: Lesson for Public Policy. 2005. Web. 28 Nov. 2011.

Cheru, Fantu, and Obi, Cyril. The Rise of China and India in Africa. London: Zed Books. 2010. Print.

Fleming, Bruce. Natural Apex- Defining a National Energy Policy for the Next Decade. 2009. Web. 28 Nov. 2011. .

Madlener, Reinhard, and Wohlgemuth, Norbert. Financial Support of Renewable Energy Systems: Investment Vs operating Cost Subsidies (Proceedings of the Norwegian Association for Energy Economics (NAEE) Conference towards an Integrated European Energy Market). 2000. Web. 28 Nov. 2011. .