Ten Principles of Energy Policy

Published August 15, 2008

Why do we need principles of energy policy?

Energy issues are rising to the top of the agenda in many states, compelling elected officials to take positions on topics as wide-ranging as subsidies to biofuels producers and restrictions on mercury emissions from coal-burning power plants. Energy issues often are complex and frequently changing, with changes in technology, prices, and policies adopted in other states and other countries all affecting what policymakers do.

This booklet was written for busy state elected officials who need to stay well-informed about of the energy debate. It covers 10 of the most important energy issues facing the country, with each section ending with recommended actions and suggested readings. A thorough bibliography appears at the end of the booklet.

Three themes

Three themes appear frequently in this guide:

  • Energy issues are often environmental issues, and vice versa. Restrictions on access to energy are often defended in the name of environmental protection.
  • Newspaper stories and advocacy spin are often at odds with sound science and facts.
  • Markets usually do a better job than governments at giving consumers what they want and directing capital and other scarce resources to their best and most efficient uses.

The first theme explains why this booklet addresses such issues as air quality, global warming, and mercury emissions. All are implicated in the use of fossil fuels, and solutions to these problems (or possible problems) have major effects on the supply and cost of energy.

The second theme, sound science, is in response to the fact that debates over energy policy often are driven by exaggeration and scare tactics used by advocates to boost public support for their agendas. Environmental groups embrace these tactics as a way to generate public sympathy for their cause, while business groups embrace them to secure subsidies for themselves or regulations that harm their competitors.

The final theme of this booklet, that markets tend to be more efficient than government at solving social and economic problems, is one of the lessons of the twentieth century. The collapse of the Soviet Union, the fall of the Berlin Wall, and the rise of Pacific Rim economies, China, and India give testimony to the power of free minds and free markets. The ideas of socialism and central planning, so influential at the beginning of the century, are now viewed by many policymakers as flawed and discredited by real-world experience.

The policy question

How do we balance energy and environmental concerns with the individual rights and freedoms we hold dear?

Those who say we must not utilize our least expensive fuel sources are putting small and hypothetical risks ahead of better-understood costs and benefits. We know that coal, natural gas, and nuclear power can be used to generate electricity safely and cleanly. If we fail to do so, we risk supply interruptions and rising costs, which in turn will reduce economic growth and job creation.

Unhindered and unsubsidized competition among energy technologies is the best means to discovering tomorrow’s new energy sources. Elected officials should refuse to try to pick winners, even though doing so may score points with one group or another in the short term.

In the long term, the individual choices of people and businesses, not governments, will lead to a more diversified fuel supply, reliable energy technology, and environmental protection that is effective as well as efficient. Market-driven energy policies will generate the wealth necessary to maintain a healthy environment and provide our homes and businesses with affordable and reliable electricity.