The "Energy Security" myth: It's a synonym for lazy, expensive policies that don't cut oil imports or reduce climate…

Commentaries on economics and technology.
May 19 2011 10:11 AM

The Myth of "Energy Security"

It's become a synonym for lazy, expensive policies that don't cut oil imports or reduce climate change.

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Oil Tanker. Click image to expand.
Are current climate-change policies effective?

Turmoil across the Middle East and Northern Africa has refocused attention on the impact that political tensions or interference can have on the price and availability of energy imports. Partly because of consumer fears of gas-price hikes, energy security ranks high on many Western governments' policy agendas.

Of course, this is hardly a new phenomenon: Europe started trying to build up its energy reserves back in the 1960s. Likewise, every American president since Richard Nixon in the early 1970s has tried, and failed, to reduce dependence on foreign oil.

A new trend, though, is that policies that just a few years ago were being touted to fight climate change are being presented as a necessary way to increase energy security. Against the backdrop of the financial crisis, and as public support for climate-change policies scrapes new lows in many developed countries, we hear less from leaders about the threat of global warming, and more about the supposed economic benefits of climate policies.

This shift is hardly surprising, given the increasing number of analyses that demonstrate that current—unilateral—climate policies will have virtually no impact on the rise in global temperature.

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The European Union offers a classic illustration of this point. Its "20-20-20" climate plan—by far the most comprehensive climate-change policy in effect anywhere—aims to reduce greenhouse-gas emissions by 20 percent from 1990 levels by 2020, ensure that renewable energy delivers 20 percent of energy consumption, and cut primary energy use by 20 percent.

A 2010 analysis of the costs and benefits of the policy by climate economist Richard Tol showed that the annual price tag would be around $300 billion. Running the policy through the RICE climate-economic model reveals that by the end of this century, it will reduce temperature rises by just 0.05°C (0.1ºF).

Undaunted by the policy's utterly feeble impact on global warming, politicians have declared that the policy will at least enhance the EU's "energy security." So the Copenhagen Consensus Center asked professor Christoph Böhringer and Andreas Keller of the University of Oldenburg to test this claim.

Of course, the notion of energy security is fuzzy. In their research paper, "Energy Security: An Impact Assessment of the EU Climate and Energy Package," Böhringer and Keller note that the EU has never set itself a clear metric for energy security.

Despite—or because of—this lack of definition and measurability, policymakers, write Böhringer and Keller, "exploit the energy security argument to justify a myriad of measures." Such measures even include bans on light bulbs and patio heaters, tax breaks for bicycle owners, standards for tire pressure, and tests for fuel-efficient driving—none of which would appear to have much impact on the level of Russian or Middle Eastern oil imports.

What is clear, according to Böhringer and Keller, is that the EU Climate and Energy Package violates basic principles of cost-effectiveness, if the sole objective is emission reduction. The package stands out for its tangle of instruments—and thus the risk of counterproductive, overlapping regulation, which will substantially increase costs compared with an effective climate policy.