Energy Policy

Energy is not only critical to the economy, but also to our health, safety, and general welfare. Energy is an input into every good and service. Our hospitals need electricity to operate the high-tech machines that provide us medical care. Fuel provides us the means to drive vehicles that give us the mobility that has transformed the nation.

We need to promote policies that ensure low-cost and reliable energy. Low-cost energy is not a luxury but a requirement to fill our most basic needs. As John Reinker of GE Global Research stated in a recent presentation titled "Future Energy":

Societies have continually increased productivity through the harnessing of different energy sources, which has allowed for economic expansion and the development of the modern world .... The availability of abundant, low-cost energy is key to a modern society and a necessity for continued economic expansion.

Shooting Ourselves in the Foot

Despite the critical importance of low-cost energy, state policymakers have gone out of their way to increase the price of energy artificially, while wringing their hands about energy prices.

In 2007, the North Carolina legislature passed a controversial law, Senate Bill 3, which was literally drafted by special-interest groups. This bill mandates that utility companies generate 7.5 percent of their electricity through renewable sources of energy, such as wind and solar power.

According to the North Carolina Utilities Commission's own estimate, the "partial" costs of this bill are staggering: by 2021 when the law is supposed to be in full effect, electricity customers will bear a cost of $500 million a year.

North Carolinians are being forced to pay extra for their electricity (i.e., electricity taxes) so that renewable energy providers can have a guaranteed market for their cost-prohibitive and unreliable electricity.

The Next Round

The North Carolina legislature is likely to consider numerous policy recommendations in the name of fighting global warming that will drastically increase energy prices (a detailed discussion of global warming can be found in the preceeding chapter, Climate Change).

One of the primary policy recommendations coming from global warming extremists is a state or regional cap-and-trade program. It would limit the total amount of carbon dioxide that can be emitted by regulated parties. Because carbon dioxide emissions are primarily a result of burning fossil fuels to produce energy, cap-and-trade systems are effectively a limit on the amount of energy that can be produced.

The National Association of Manufacturers and the American Council for Capital Formation have studied the primary cap-and-trade bill recently considered by Congress (S. 2191). Their analysis helps provide a sense of what such a program could mean to North Carolina — there would be a devastating impact on North Carolina — Charts 1 and 2 below show the impact the cap-and-trade program would have on gasoline and electricity prices in North Carolina, respectively.

Global Warming Alarmism and Energy Policy

Even global warming alarmists admit that there is no way to have any meaningful effect on temperature. To adopt policies that increase energy prices and thereby significantly harm the welfare of every North Carolinian is beyond irresponsible; it is unethical.

The need for wealth is critical to solve whatever problems North Carolina and the United States may face in the future. Low-cost energy is critical to wealth and to providing innovators the means to solving environmental problems.

On December 13, 2007, in an open letter to the Secretary-General of the United Nations, nearly one hundred international scientists, economists, and leading scholars, including some Intergovernmental Panel on Climate Change (IPCC) members, argued:

It is not possible to stop climate change, a natural phenomenon that has affected humanity through the ages. Geological, archaeological, oral, and written histories all attest to the dramatic challenges posed to past societies from unanticipated changes in temperature, precipitation, winds, and other climatic variables. We therefore need to equip nations to become resilient to the full range of these natural phenomena by promoting economic growth and wealth generation ... Attempts to prevent global climate change from occurring are ultimately futile, and constitute a tragic misallocation of resources that would be better spent on humanity's real and pressing problems.


1. Adopt policies that promote low-cost and reliable energy:

• Reduce the obstacles for the construction of coal and nuclear power plants.

• Pressure Congress to permit offshore drilling.

2. Fight policies that increase energy prices, such as a cap-and-trade program, and:

• Repeal Senate Bill 3.

• Do not to force consumers to pay for costly and unreliable sources of electricity, such as wind, solar, and biomass.

• Protect the public from efforts to build grid-connected wind power plants that increase electricity prices, undermine the reliability of the electricity grid, and harm local communities.

• Eliminate costly energy-related subsidies that are just special-interest handouts.

• Require more transparency from the North Carolina Utilities Commission.

• If Senate Bill 3 still exists, require the extra costs (i.e., taxes) associated with renewable energy and energy efficiency to be itemized clearly on customer bills.

• Restructure the Public Staff — the Public Staff is supposed to be the consumer advocate for electricity customers, but instead has taken on environmental goals. It has even pushed for energy solutions that would drastically increase prices for consumers.

3. Recognize that energy independence regarding oil has nothing to do with renewable energy sources for electricity such as solar and wind. Based on 2006 Energy Information Administration data, electricity generation accounted for only 1.5 percent of all petroleum consumption in the country. Drawing a distinction between renewable energy for electricity and renewable energy for transportation, such as alternative fuels, is critical.

4. Do not get fooled into using the global warming excuse to destroy our way of life.