Pareto Policy Solutions, LLC

advancing innovation through smart regulation

Pareto Policy Solutions, LLC is a policy analysis and advocacy firm committed to advancing sustainability through “smart” regulation: regulation that rewards, and does not penalize, superior performance.  Often, such actions leverage advances in science and technology and make the regulatory program itself more effective as well as more efficient.

Tunnel Vision

A regulatory agency tends to focus with laser-like precision on its mission. 

This is both a blessing and a curse.  It is a blessing because intense organizational focus is often needed to achieve national goals.  It is a curse because an agency sometimes doesn’t give enough weight to factors outside its mission, with negative consequences.

Take energy policy, for example.  This morning on Capitol Hill, I was part of a panel discussion sponsored by the Clean and Safe Energy (CASE) Coalition.  Moderated by former New Jersey Governor and EPA Administrator Christie Whitman, the event focused attention on a new report: Balancing Long-Term Energy Planning with Near-Term Energy Opportunity.

As the panelists pointed out, the current domestic price of natural gas is relatively low compared to other domestic forms of energy and compared to natural gas prices in the rest of the world.  This fact is leading the federal government to push policies that would greatly increase demand for natural gas without thinking too hard about the longer-term consequences.

For example, EPA is pushing regulations on the power sector that will lead to the retirement of aging coal-fired power plants and significant new investment in gas-fired power.  DOE is evaluating, for the first time in our nation’s history, applications to export natural gas in amounts equal to half of current US consumption.   Congress is considering serious cuts in spending on clean alternatives to fossil energy, such as nuclear power. 

EPA is focusing on air quality, DOE is focusing on the economic benefits of exports, and Congress is focused on reducing spending.  No part of government is thinking seriously enough about the potential impact on consumer energy prices, or on the availability of alternative forms of energy when natural gas prices inevitably rise as result of these policy decisions.

Barring enactment of a truly comprehensive national energy policy, which is unlikely, perhaps the best hope to reduce tunnel vision is for a study of the expected energy situation over the next decade or so.  Senator Mark Pryor (D-AR) is drafting legislation to require a quadrennial study of energy, patterned after the long-established Department of Defense (DoD) Quadrennial Defense Review, a study of the threats and challenges affecting the military.  A quadrennial review of our nation’s energy challenges is a sensible, and relatively low-cost, idea.

Sometimes it is best for agencies to take the blinders off and take a good, hard look around before making a decision that has significant, long-term consequences for the country.

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