Lessons for the States on Energy Security

The recent extended electricity outage in Texas has spurred a sharp debate on how to prevent future disasters in Texas and other states. Much of this debate ignores the fact that few states have adopted a proactive approach to energy security. Instead, most have left energy security matters to market mechanisms and to Washington, neither of which can deliver on local needs. States would benefit from adopting energy security policies. In crafting these policies, they can learn from the tenets of international energy security policy as practiced by many countries with smaller populations and GNP than medium and large U.S. states.

These lessons include the need for government involvement in energy security, the necessity of emergency-supply plans, the importance of diversifying fuel sources, the need for energy storage and dual-fuel power plants, and legal protection of ownership and operations of critical energy infrastructure.

Lesson one is that energy security is akin to national security, and markets alone can’t provide it. Accordingly, U.S. states need energy security policies. While market mechanisms and private companies can play the dominant role in energy production, transit, and marketing, the state must stay involved in ensuring that mechanisms are in place for energy security.

Second, well-governed states develop and execute detailed emergency plans in case of disruptions of natural gas, liquid fuels, and electricity supplies. Most NATO member countries, for instance, have energy emergency-supply plans. These plans allow these governments to pre-emptively shut down energy-intensive, non-essential industries, such as cement production, desalination plants, and some manufacturing.

By doing so, governments can prevent grid collapse and ensure that those that need the supplies most, particularly residential customers, will receive energy supplies. As the recent bitter freeze loomed, Texas should have preemptively ordered such a shutdown. Instead, several days into the crisis, energy-intensive industries in Texas, like gas-liquefaction plants, chose to shut down. Texas and many other U.S. states rely on market mechanisms to direct such shutdowns, but the market mechanisms did not deliver. A simple emergency-response plan could have prevented the meltdown.

Next, diverse fuel mixes enhance security of energy supply. Following the Texas outage, interested parties sought to blame specific energy sources such as wind and natural gas for the failure. It’s a good thing that Texas’s electricity is produced by multiple energy sources, but as foreign countries know, energy systems need back up and redundancies. Governments need to mandate that natural gas companies store backup supplies, not leave it to the companies’ discretion.

Israel, for instance, despite possessing, like Texas, vast natural gas resources in the ground, stores liquefied gas for emergency use. And some of the electricity power plants should be dual-fuel, so that when gas supplies are disrupted, they can easily transfer from one fuel type to another and keep generation going. The dual-fuel plants are less efficient, so the private market tends not to install them. Again, it falls to governments to ensure some backup plants are available when needed. Most Eastern European nations possess dual-fuel power plants to offset potential disruptions of Russian gas.

While not connected to the Texas supply outage, future disruptions could be tied to foreign actors that acquire ownership in U.S. energy infrastructure. Most foreign countries enact laws to protect their strategic infrastructure from being acquired by potential hostile actors. For instance, Lithuania in 2012 barred ownership of its energy and other strategic national infrastructure by companies that do not share a “trans-Atlantic orientation,” in an effort to prevent Russian ownership of its grids and ports. U.S. states need also to assess the risks from foreign actors and put legislation in place to protect essential energy infrastructure.

Marketization of energy trade has had many worthwhile results, leading to greater supplies and lower prices of many forms of energy. However, U.S. states need to enact policies that ensure the reliability of those supplies, especially as most American communities plan expanded use of electricity. States are much better equipped than the vast federal government to provide for local security of supply of energy. Market mechanisms are not enough to get the job done. The public expects local governments to ensure secure energy supplies. When the lights go out, citizens blame their states, not private companies or Washington.

Dr. Brenda Shaffer is an international energy expert. She is a research faculty member of the US Naval Postgraduate School, a Senior Advisor for Energy at the Foundation for Defense of Democracies, and a Senior Fellow at the Atlantic Council’s Global Energy Center. Her book Energy Politics is used as a textbook in over 200 university courses.