Energy infrastructure needs our attention

There has been an energy revolution in the United States over the past decade. We are now the world’s largest producer of oil and gas and our percentage of oil imports is the lowest since 1971. Natural gas use in power generation has significantly increased and liquefied natural gas exports will start within a year. Wind and solar power generation have multiplied and ethanol is now ten percent of U.S. gasoline supply. Gasoline and electricity use have been flat or decreasing as efficiency measures and alternatives take hold.

These dramatic changes in the nation’s energy fortunes boost the economy but also pose challenges for policy makers, investors, NGOs and industry. Specifically, the transformation of our energy landscape has implications for energy transmission, storage and distribution infrastructures — the vast, long-lived and capital-intensive networks that move energy supplies to intermediate processors and end users. Much of this infrastructure is aging, not well-matched to new sources of supply and increasingly exposed to cyber attacks and climate change impacts.

The costs of aging infrastructure or disruption can be considerable. For example, the nationwide replacement of old natural gas distribution pipelines is estimated to cost $270 billion. From 2008 to 2012, weather-related power outages cost the economy as much as $200 billion. Hurricanes Katrina and Rita shut down 28 percent of the nation’s refining capacity, sending gasoline prices soaring.

The flip side is that modernizing our energy infrastructure will pay big dividends in driving the economy, enabling clean and affordable energy and providing consumer services. An improved electricity grid that meets the challenges of the 21st century, low-carbon economy can move more renewable energy to cities and energy efficiency and distributed generation opportunities to homes.

To address these issues, the Obama administration recently released the first installment of the Quadrennial Energy Review (QER). It provides policy makers, the private sector and the public with a road map for meeting key energy infrastructure objectives: enhancing resilience, reliability and safety; modernizing the grid and our energy security infrastructures; and improving “shared” energy infrastructures — railways, waterways, ports and roads — that move energy and other commodities. This is particularly important in Houston and other Gulf Coast energy centers that are increasingly vulnerable to rising sea levels and extreme weather conditions.

This policy road map recognizes the essential role of the states, tribes, cities and industry in shaping the nation’s energy future. The plan also recommends ways to further integrate the energy infrastructures of North America to enhance market opportunities (we already have about $200 billion of annual energy trade) and enable success in meeting national greenhouse gas emissions targets.

The QER includes many recommendations to meet the nation’s energy infrastructure objectives. For example, the review identifies incentives for pre-disaster hardening of energy infrastructures to severe weather, designed to both reduce consumer costs and enhance public safety. The QER also makes specific recommendations to accelerate the replacement of aging and leak-prone natural gas distribution system pipelines that pose safety, reliability and environmental concerns. In addition, the QER identifies options to help modernize the electric grid, engage the states in increasing its reliability, and develop economic valuation of new grid-connected energy technologies and services.

To enhance energy security, the QER examines the role of the Strategic Petroleum Reserve, or SPR, in the context of today’s global oil markets. The SPR is one of our first lines of defense in the event of a global oil disruption. However, it is aging and shares storage and distribution systems with industry — pipeline and port systems that are now congested from increased domestic oil production. We need to modernize the SPR and its distribution systems, as well as improve the rail, truck and barge connectors to the nation’s energy ports to make our goods more competitive in the global marketplace.

Immense payoffs have often followed federal investments in ambitious infrastructure development — highways, rural electrification, water to open up the West. Some of the QER’s recommendations will require similar investments in our energy infrastructures, leveraging significant private investment and pay big dividends — high-paying jobs, increased energy security, and a cleaner environment.

The administration’s most recent budget request to Congress includes a down payment on some of the QER’s key recommendations. Its full implementation will, however, require a bipartisan commitment to modernizing the nation’s energy infrastructures. Decisions taken — or not taken — will influence our energy mix for much of the 21st century. The QER will help us make the right choices.