Energy is the pre-eminent strategic issue facing America today. The choices that our nation makes in the production and use of energy create deep and lasting influences on our economy, our position in the world, and on the natural capital that underpins modern civilization.

Making the right energy choices has become crucial. As a result of a convergence of extraordinary geopolitical and environmental circumstances, we are at a moment of both great danger and great opportunity. The conservative ethic of prudence requires us to acknowledge the challenge, and our obligation to be good stewards must impel us to act.

Energy Security

Oil is embedded in modern human society. Oil has a dark side, however. The U.S. sits atop only 3 percent of the world’s proven oil reserves. Yet we consume 25 percent of current global production, about 21 million barrels daily. Much of the world’s production, along with the largest remaining conventional oil reserves, is located in world regions racked by poor governance, chronic instability, and violence.

Climate Change

The evidence is clear that fossil fuel combustion is increasing the atmosphere’s carbon dioxide load. Prudence demands that we acknowledge the facts and act. Despite the daunting nature of the challenge, taking it on will create large opportunities in America to reduce energy costs, build new industries, revitalize rural economies, and carry out a constructive foreign policy free from the corrosive influence of petroleum politics.

Here is what the federal government must do:

Establish a Market for Carbon Reductions

The most important step that Congress and the administration must take to reduce oil dependence and lower greenhouse gas emissions is to put a price on those emissions, by establishing a market-friendly "cap-and-trade" system. A carbon tax, the leading alternative to cap-and-trade, would not be as effective in sending a market price signal, and therefore, should not be adopted.

Increase Funding for Energy Research and Development

Reducing oil dependence and stabilizing greenhouse gas concentrations will require scaling up numerous advanced energy technologies. A strong research and development program is necessary for moving promising technologies out of the lab and into the marketplace.

Strengthen Energy Efficiency Standards and Incentives

Energy efficiency is consistent with conservative values of frugality and stewardship. As the cheapest, cleanest, and most secure energy resource available, efficiency has a strong track record. It’s time to build on that record of success, through measures to increase efficiency in buildings, industry, and transportation.

Expand Transportation Fuels from Renewable Resources

Ethanol is a promising resource for displacing significant quantities of gasoline when combined with plug-in hybrid-electric drive trains. Research, standards, and incentives should be adopted to accelerate broader use of cellulosic ethanol.

Expand Electric Power from Renewable Resources

Diversifying our electric power system with renewable resources will result in numerous economic benefits, including reduced vulnerability to fuel price and supply risks, economic development opportunities for rural communities, and greater freedom of choice for energy consumers. A renewable portfolio standard, extension of production tax credits, and other incentives should be adopted.

Keep a Place for Nuclear Energy at the Table

Nuclear energy can deliver large amounts of carbon-free baseload electricity. It is in the nation’s interest to develop promising technologies for improving plant security and economics, managing high-level nuclear wastes, and minimizing risks of theft and diversion of fissile materials.

Ensure Responsible Use of Natural Gas

Natural gas is a relatively clean fuel for power generation and transportation. Gas can serve as a bridge to a cleaner, more diverse, less carbon-intensive energy economy. Steps should be taken to ensure the most efficient use of this fuel and minimize the impacts of gas production in the Intermountain West.

Clean Up Coal

The United States has large coal reserves. Coal, however, is the most problematic of the fossil fuels, because of climate, air quality, and land impacts. Through research and standards, the federal government should speed the transition to cleaner coal technologies, including large-scale carbon sequestration.

Conclusion

America stands at the threshold of both immense risk and opportunity. Beyond the practical economic and security benefits of moving to a cleaner, more secure energy economy, good stewardship is a moral imperative that is central to traditional conservatism. What is needed now is the will to marshal our nation's considerable assets, develop a conservative energy strategy for the future, and put it to work today.

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This paper was written by in 2007 by REP Policy Director Jim DIPeso and Government Affairs Director David Jenkins. It combines and replaces two previous policy papers on energy and climate change that were written in 2001 and 2002.