New RFF Paper Looks at Using Oil Money to Combat Climate Change
WASHINGTON—Resources for the Future (RFF) Visiting Fellow Heather L. Ross has posted a new paper,Turning Rainy Day Oil into Clean Energy Gold: Funding Mission Innovation with a Strengthened Strategic Petroleum Reserve. In it, the author states: “The biggest energy threat to the US today is not the possibility of a temporary oil disruption somewhere in the world but the likelihood of long-term climate deterioration everywhere in the world.”
The paper then offers a policy proposal aimed at better utilization of the Strategic Petroleum Reserve, or SPR: Require oil companies to purchase the oil in the SPR, thereby releasing the large store of value locked in the little-used reserve to combat, through clean energy R&D, “a monumentally bigger energy threat—climate change.”
Just 3 members of the International Energy Agency (IEA)—the United States, New Zealand, and the Czech Republic—currently maintain government-only strategic stocks. Other members rely in whole or in part on industry participation. Establishing a public-private agency to run the US strategic stockholding, as many IEA members have done, will strengthen coordination of commercial and strategic stocks and transport infrastructure at a time of major shifts in domestic crude oil flows. Industry ownership and maintenance of the SPR will preempt the possibility of its dissipation as a federal budget stopgap and its deterioration as a result of inadequate public operating funds.
Oil companies will purchase the existing 695 million barrel SPR with a fee on US production and imports that will substantially correct the prevailing market price—a price that falsely sets increasingly severe carbon costs to zero. The money will go into a dedicated clean energy R&D fund to carry out the Mission Innovation commitment made by the United States at COP 21 last November. A dedicated fund will increase the certainty of public investment in this crucial commitment and thereby its prospects for success.
Ross concludes that, lacking better carbon policy, “… mounting a moon-shot campaign for climate safety while leading a vastly remunerative technology market, reducing a highly injurious subsidy for directly-counterproductive fossil fuel overuse and creating a better buffer for the unstable global oil market ahead is a truly winning combination.”
Read the full paper: Turning Rainy Day Oil into Clean Energy Gold: Funding Mission Innovation with a Strengthened Strategic Petroleum Reserve.
Resources for the Future (RFF) is an independent, nonprofit research institution in Washington, DC. Its mission is to improve environmental, energy, and natural resource decisions through impartial economic research and policy engagement. RFF is committed to being the most widely trusted source of research insights and policy solutions leading to a healthy environment and a thriving economy.
Unless otherwise stated, the views expressed here are those of the individual authors and may differ from those of other RFF experts, its officers, or its directors. RFF does not take positions on specific legislative proposals.
For more information, please see our media resources page or contact Media Relations and Communications Specialist Annie McDarris.
