As the new head of the Department of Energy, Former Texas Governor Rick Perry faces many challenges from the bureaucracy, environmentalists, and the media.
President Jimmy Carter created the agency in 1977, partly in response to Middle Eastern oil-exporting countries’ decision to use oil as a political weapon.
DOE, whose proposed 2017 budget is $32.5 billion, is responsible for several energy-related tasks. Regulating the fossil fuel industries isn’t one of them. Those responsibilities primarily belong to the Environmental Protection Agency and the Department of the Interior.
One important function is dealing with nuclear power, missile complexes, nuclear waste and cleanup.
The agency develops a national energy plan, which changes with different presidential administrations. Under Obama, the agency was a cash cow for green energy projects, with questionable results.
In 2014, DOE ponied up a $150 million loan guarantee for Cape Wind, a wind turbine project to be located in Nantucket Sound. However, local pushback over the potential doubling of consumers’ electricity bills stalled the project.
The solar energy company Solyndra, whose failure became a national scandal, received its $535 million loan from DOE in 2009.
In short, Perry needs to reign in, downsize and refocus DOE. Here’s what he should do.
Eliminate mandates and subsidies for energy sources. The Obama administration spent an average of $39 billion annually over five years subsidizing solar and renewable energy projects. A chunk of that money came from DOE.
The government shouldn’t decide private sector winners and losers — that’s what consumers and markets do. Perry should phase out DOE clean energy subsidies and hand that money back to taxpayers.
Rationalize energy research. DOE is charged with conducting energy research and development.
In an effort to fulfill Obama’s dream of a clean energy economy, DOE’s 2017 budget request hoped to “double clean energy R&D funding in five years.” That’s not likely now.
There may be a role for DOE to engage in certain types of specialized energy R&D — for fossil fuels and clean energy — but that possibility is often used to promote political agendas. Perry should depoliticize DOE’s R&D and refocus it to develop a realistic energy plan, one that recognizes the country will be dependent on fossil fuels for coming decades.
Expedite approval of liquefied natural gas terminals. LNG could become a major U.S. export, but the federal government has long been a roadblock rather than a catalyst.
The Federal Energy Regulatory Commission is an independent agency within DOE. Among other duties, it’s charged with approving applications to build LNG terminals that cool natural gas so it can be shipped on tankers.
Under the Obama administration, permits have been slow in coming. Perry should expedite the application approval process. Not only would the additional income from gas exports help the economy, it would provide an alternative for our allies who depend on countries like Russia for their natural gas.
End the Strategic Petroleum Reserve. The SPR was created under the DOE to stockpile crude oil in case of U.S. oil import disruptions. But innovative drilling techniques increased U.S. oil production so rapidly that we’ll soon be a net oil exporter. With its need negated, the SPR should be phased out.
DOE has several important core responsibilities, but it has also engaged in numerous costly and counterproductive activities. Perry must eliminate those activities and return the agency to its original mission. It’ll be a smaller, less costly, but much more effective DOE.
Merrill Matthews is a resident scholar with the Institute for Policy Inn