increasing at a capacity of 100,000 Bbls/day every five years.2 The line labeled
"Alternative Fuels II" is an accelerated development case.3 The line labeled "Alaska
II" assumes that a large new field is found in Alaska and an accelerated
development effort is assumed to result in production levels rising to 500,000
Bbls/day by the year 2005.

Figure 6 also depicts three different transportation efficiency improvement strategies, shown as "Base Case (28 mpg)", "38 mpg", "50 mpg", and "Trucks". The case of 28 mpg and 38 mpg cases were discussed above. The 50 mpg case assumes that by 2020 both new cars and new light trucks have an overall weighted average fuel efficiency of 50 mpg, resulting in an average on-the-road total fleet fuel efficiency of 36 mpg by 2020 (allowing for turnover of the fleet stock and for the 20% reduction in actual on the road efficiencies from CAFE-type standards). The case "Trucks" assumes that half of the diesel fuel (heavy trucks, buses, etc.) projected to be consumed by 2020 (EIA projection to 2010 extended at the same growth rate to 2020) could be backed out by 2020 through, for example, the use of compressed natural gas and increased efficiency.

Scenario III: Aggressive Oil Backout. Figure 7 includes further oil backout. It assumes (in addition to 50 mpg and trucks) that one-half of the remaining nontransport uses of oil will be backed out in an aggressive oil conservation and fuel conversion program. This results in a savings of 2.7 MMBbl/day by 2020, phased in

2These estimates are derived from the EIA Base Case as described above and are comparable to the estimate of the white paper, Solar Energy Research Institute, "The Potential of Renewable Energy" (SERI/TP-260-3674, March 1990) for the "Business as Usual" case. The accelerated development case listed in the above SERI white paper which forsees alternative biomass derived liquid fuels reaching 1.8 MMBbis/day more than in the base case by 2020 if additional RD&D funding is made available.

linearly. Compared to current rates of use, this would suggest oil savings in the
EIA Base Case of about one-half in the residential and commercial sectors, and
one-third in the industrial and utility sectors from what it would have been in 2010 if
energy use were to grow linearly with economic activity and/or population.

The lesson from these scenarios is that much can be done to countervail against the ominous projected growth of oil import dependence, but that even with relatively heroic measures we face a future of high dependence on imports.

Linking U.S. Energy Strategy to Global Climate Concerns

For decades we assumed that fossil fuels can supply our energy needs for several more centuries. Our only serious "bet-hedging" to fossil fuels has taken the form of work on harnessing nuclear power -- fission and fusion. While the latter goal remains frustrating and elusive, the former now accounts for 20% of U.S. electricity, or about 8% of our total primary energy budget. Other non-fossil (mostly-hydroelectric) adds another 4%, so our present non-fossil energy budget is about 12%. But the nuclear fission enterprise, for several reasons, is in deep trouble -- so deep that the requirement to rescue it could well be more difficult than the original task of creating it. And our long-term efforts to harness solar energy -- directly or indirectly through wind, biomass, hydropower or other means are minimal, ephemeral, and also troubling in terms of environmental impacts if massive use evolves.

*The EIA Base Case Scenario already envisages annual residential and commercial consumption of oil decreasing at 2.6% and 1.8% respectively between 1990 and 2010 while population grows at 0.6% and total real GNP grows at 2.4% annually. Oil use in the utility and industrial sectors is assumed to increase at about 0.7% per year each, while electricity generation and manufacturing output are assumed to increase 3% and 2.8% respectively per year.

The rising specter of air pollution and climate change casts an ominous shadow over the fossil option. That era may need to end, not in centuries, but in a century or less. This means that, unless we ignore, at our peril, global climate change, solar and nuclear power (fission and fusion) must be considered as the energy sources for mankind that may soon have to become globally dominant, perhaps within fifty years. Developing and preserving nuclear and solar options are certainly possible. They also require long-term commitments of research, development, and investment which, in turn, means we must move ahead on that odyssey now. A prudent candidate goal for U.S. energy policy is to reduce fossil intensity of U.S. energy use on average 1% per year for at least the next two decades. The number I mention for this goal is less important than the will to pick a number and vigorously pursue it. Economically attractive energy efficiency improvements would dominate the first decade or two, securing time to allow alternative transportation fuels and alternative, non-fossil sources for electric power generation to develop systematically and efficiently.

Two weeks ago OTA released the summary of its assessment report, Changing by Degrees: Steps to Reduce Greenhouse Gas Emissions, that outlines the technical steps that would be necessary to reduce U.S. carbon dioxide emissions. In that analysis, we examined several alternative scenarios, summarized in Table 1 and Figure 8. In addition to a "Baseline" scenario, OTA constructed a so-called "Moderate" scenario that involved measures typically requiring some capital investment but later saving money through fuel savings, which in most cases more than compensated for initial costs (see Table 1). While none of the measures included in this scenario are difficult to achieve technically, inducing consumers to use them may not be easy. Another so-called "Tough" scenario, lowers energy demands further than the moderate case, but typically includes measures that cost more for the same level of convenience or comfort. All of the measures in the Tough case are technically feasible, but while most are not based on best available prototypes or

practices, OTA made judgments about what would be feasible for widespread use. Implementing the technically feasible Tough measures would be challenging--politically, logistically, and economically. The net cost of the tough scenario would range from better than break-even to perhaps 2% of GNP, depending upon a variety of factors such as future energy prices.

The detailed data for the OTA scenarios are not yet available (we expect to deliver the final assessment report in several weeks), but Figures 9, 10, and 11 show a similar set of three scenarios for just the electric power sector. The base case (Figure 9) shows the fuel mix that would accompany U.S. electricity consumption, projected through the year 2020. Figure 10 shows a scenario of reduction in carbon emissions in the electric power sector corresponding to about a 10 percent reduction in overall carbon emissions by 2010. Finally, Figure 11 shows a scenario of reduction in carbon emissions from electric power generation corresponding to about a 20 percent reduction in overall carbon emissions by 2010.

CONCLUSIONS

In addition to providing for contingencies and interruptions, we need to constrain our growing appetite for imported (especially Middle East) oil. We also need to make an explicit commitment to a smooth, multi-decade transition to the post-fossil fuel age as well as an era of constantly advancing energy efficiency. If we want accomplish such goals at minimum cost, it will take several decades from whenever we start to stabilize our dependence on imported oil, and it could take a century to get beyond fossil fuels. Our long-term economic, environmental and national security future hangs on these transitions, and the specter of global warming could greatly foreshorten the time we once thought we could depend on fossil fuels. The relationships among the long-term goals of economy, environment, and security I have outlined provide some important guiding principles--principles from which a systematic, integrated, and comprehensive energy strategy, which is responsive to all three goals, can logically follow.

There is an ancient Chinese saying worth repeating here: "If we do not change our direction, we are very likely to end up where we are heading." We find little in what we have seen of the Administration's National Energy Strategy or in its position on responses to mitigating the agents of global climate change that gives us comfort that the need and opportunity for change is appreciated or perhar derstood.