Avoid Oil Crisis with Renewables, Security Leaders Advise

WASHINGTON, DC, March 30, 2005 (ENS) - Predicting a future crisis over oil supplies, 31 national security leaders are advising President George W. Bush to reduce U.S. consumption of foreign oil through "improved efficiency and the rapid substitution of advanced biomass, alcohol and other available alternative fuels."

In a letter sent to the President and released Monday, the group urges "a major new initiative" that spends $1 billion for alternative fuel production in the next five years, and uses tax incentives to encourage the use of more efficient vehicles, including hybrids, plug-in hybrids, and flexible fuel vehicles.

The letter states, "We do not know today what form a crisis over oil will take, but we know that a crisis is coming - one that could harm the United States."

The letter and an accompanying report are issued by the Energy Future Coalition, which describes itself as "an ambitious, visionary effort by business, labor, and environmental groups to bridge their differences and identify broadly supported energy policy options..."


C. Boyden Gray, a member of the Energy Future Coalition Steering Committee, and former White House Counsel to President George H.W. Bush, signed the warning letter to President George W. Bush. (Photo courtesy TV Worldwide)
The coalition identifies three challenges related to the production and use of energy - the political and economic threat posed by the world's dependence on oil; the risk to the global environment from climate change; and the lack of access of the world's poor to the modern energy services they need for economic advancement.

The Energy Future Coalition says it "seeks to connect those challenges with a vision of the vibrant economic opportunities that will be created by a transition to a new energy economy."

The letter explains that with the U.S. having only two percent of the world's oil reserves but 25 percent of the world's consumption, domestic production alone will not meet America's needs. "To reduce the risk of an oil shock in a global market, we must reduce our use of foreign oil," the letter states.

Signatures on the letter represent a star-studded bipartisan array of high level military and political officials. They include:

The signers say they believe that hybrid vehicles and alternative fuels like ethanol can substantially reduce U.S. oil consumption but will require "funding at a level proportionate with other priorities for the defense of the nation."


Vice Admiral Richard Truly, former astronaut, former NASA administrator, former Director of the National Renewable Energy Laboratory signed the Energy Future Coalition's letter to the President. (Photo courtesy NASA)
In a report released Monday and sent to the President, the Energy Future Coalition emphasizes the three challenges mentioned in its letter.

• We must reduce the world’s dependence on oil, helping to free consumers from the economic, political, and environmental risks that it entails.

• We must take steps to control the emissions from the burning of coal, oil, and natural gas that are affecting the global climate.

• And we must recognize that helping developing nations to grow can be both a boost for them and in the best interest of the United States. Extending access to modern energy services to poor people around the world can demonstrate American leadership and create new markets at the same time.

One of the most significant barriers to widespread implementation of clean and proven energy-efficient technologies in international markets is the lack of commercially viable and sustainable project financing for energy efficiency projects (EEPs), the report recognizes.

The problem is that energy efficiency projects are unable to access existing funds due to a “disconnect” between traditional asset-based lending to corporations versus cash-flow based project financing to energy efficiency projects.


Timothy Wirth is president of the United Nations Foundation, and a former U.S. Senator from Colorado. (Photo courtesy of IISD/ENB-Leila Mead)
"No immediate solution is in sight because energy efficiency markets are not developed enough to motivate local banks to invest in setting up an EEP lending infrastructure," the report says.

The coalition proposes the development of an International Energy Efficiency Financing Protocol that becomes the “blue print” for local and regional financial institutions to finance end-use energy efficiency projects in international markets.

A similar problem plagues financing of clean energy projects in both the developing and developed worlds. Projects such as end-use efficiency, large grid-connected renewables, and small-scale distributed generation have high up-front capital costs and high transaction costs, although they offer environmental benefits and relatively low operations and maintenance costs.

To resolve these problems, the coalition suggests that OECD lending guidelines should be revised to acknowledge the public good associated with low carbon and no carbon technologies and their large capital requirements.

"Bring environmental considerations into mainstream decision-making of public and private financial institutions," the coalition recommends, and "encourage public international financial institutions (IFIs) to use the leverage they exert over private financial flows (through their co-financing, risk mitigation, and policy advice) to support environmentally and socially sustainable development."

The financial and political power wielded by members of the Energy Future Coaliton is substantial. Mohamed El-Ashry, CEO of the Global Environment Facility sits on the Advisory Council alongside Chansoo Joung, managing director of Goldman Sachs, and Jamal Saghir, director for energy and water development with the World Bank.


Michael J. Sullivan, general president of the Sheet Metal Workers’ International is on the Energy Future Coalition Advisory Council. (Photo courtesy SMWIA)
Michael J. Sullivan, general president of the Sheet Metal Workers’ International also sits on the Advisory Council together with Mark Van Putten, president of the National Wildlife Federation.

The Steering Committee includes Frances Beinecke, executive director of the Natural Resources Defense Council; Thomas Lovejoy, president of The H. John Heinz III Center for Science, Economics and the Environment and former chief scientist and counselor of the Smithsonian Institution; Susan Eisenhower, president of The Eisenhower Institute; and Maggie Fox, deputy executive director of the Sierra Club as well as many signatories of the letter to President Bush.

The Energy Future Coalition is funded by the Turner Foundation, the Better World Fund, the V. K. Rasmussen Foundation, the Homeland Foundation, the United Nations Foundation, the Wallace Global Fund, the J. M. Kaplan Fund, the James M. Cox Foundation, the Surdna Foundation, and the Tides Foundation (Changing Horizons Fund).

For a complete list of participants in the coalition and a copy of their report, log on to: http://www.energyfuturecoalition.org