The Smartest Energy Policy is Diversification

Reporting live from the Aspen Ideas Festival through U.S. Trust's Legacy Lens: WHAT IS a legacy WORTH?

When it comes to creating a smarter energy policy in the United States, the best way forward might be to take a lesson from investing. Portfolios should be diverse, and in periods of uncertainty, more diversity is more protection. America's energy policy should be no different, according to New Orleans Mayor Mitch Landrieu.

"We have to explore a bunch of different ways so as we transition out of where we are today, we're ready to go with lots of different types of energy," said Landrieu to a packed audience at the Aspen Ideas Festival during a panel on the question "Can we be energy independent?"

For Landrieu, whose home state is one of the top producers of oil and gas in the U.S., the question is not so much can we be independent, but can we diversify and use natural resources, technology, as well as imports? "It's perfectly acceptable for us to trade with people who are our partners, who will allow us to be secure," he pointed out. "If we try to go it alone, it wouldn't make any sense."

Fellow panelist, economist Peter Orzsag, echoed Landrieu, suggesting the goal for America should not be total energy independence. "We should aim for a diversification of sources, so you have better protection against shock in one particular sector," said Orzsag. "We're moving but we are not moving towards a world in which we are completely independent, nor should we."

So what specific actions can both government and the private sector take to develop, invest in and create this diversified portfolio? "We have a lot of smart people telling us what to do," said Landrieu. "We don't have a whole lot of people telling us exactly how to do it."

Carbon-taxes, federal subsidies for natural gas infrastructure, and compressed air storage were discussed as promising solutions among panelists, though some were more controversial than others. 

Thomas Fanning, chairman, president and CEO of energy-provider Southern Company, made the case against the carbon tax. Imposing one would "raise prices and put more burdens on those people," he said. "You're going to impose by way of a carbon-tax one of the greatest tax increases this country has ever seen."

Fanning believes there are a number of other priorities that policy makers should adopt now. First, America needs new nuclear power plants, which he described as an emission-less, energy efficient resource. Second, coal must be preserved as a natural resource for the country, even if it is for the export market. Third, he describes natural gas as a dominant solution, though not a panacea for the country's energy problems.

"It's exciting -- the revolutions in technology," said Fanning. "I just believe that we need the whole portfolio."