White House Chronicle

News Analysis With a Sense of Humor

Regulation Can Be a Huge Goad to Innovation and Creativity

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There is a paradox of regulation clearly not known in the Trump White House. It is this: Regulation can stimulate creativity and move forward innovation.

This has been especially true of energy. Ergo, President Donald Trump’s latest move to lessen the effect of regulation on energy companies may have a converse and debilitating impact.

Consider these three examples:

When Congress required tankers to have double hulls, after the Exxon Valdez oil spill in Alaska’s Prince William Sound in 1989, the oil companies and their lobbyists wailed that it would push up the price of gas at the pump.

Happily, the government held tough and soon oil spills in from tanker punctures were almost eliminated.

The cost? Fractions of a penny per gallon, so small they cannot be easily found.

Victory to regulation, the environment and common sense. In due course, the oil companies took out advertisements to boast of their environmental sensitivity by double-hulling their tankers.

When the Environmental Protection Agency mandated a 75-percent reduction in hydrocarbon and nitrogen oxide emissions from two-stroke marine engines in 1996, with a 10-year compliance period, the boat manufacturers issued dire predictions of a slump in recreational boating and a huge loss of associated jobs.

In fact, two things happened: Two-stroke marine engines were saved with electronic fuel-injection, and four-stroke marine engines started to take over the market — the same four-stroke engines the manufacturers had said would be prohibitively expensive and too heavy for small boats.

Today, most new small boats have four-stroke engines. They are quieter, more fuel efficient, less polluting and have added to the joy of boating. The weight and economic penalty, predicted by the anti-regulation boat manufacturers, turned out to be of no account. The problems were engineered out. That is what engineers do when they are unleashed: They design to meet the standards.

Similarly fleet-average standards, so hated by the automobile industry, have led to better cars, greater efficiencies, a reduction in air pollution and oil imports. They also pushed the industry to look beyond the internal combustion engine to such developments hybrids and all-electric vehicles and new concepts, like hydrogen and compressed natural gas vehicles.

A high bar produces higher jumpers. Water restrictions have produced more efficient toilets, electric appliance ratings have reduced the consumption of electricity. Regulation is sometimes incentive by another name.

Well-thought-out regulation is constructive, mindless regulation deleterious — as when the purpose is political rather than practical. Restrictions on stem cell research and the unnecessary amount of ethanol added to gasoline come to mind.

In his energy executive order, repealing many of the Obama administration’s clean energy regulations, Trump has done no one any favors: Less challenge, less innovation, less protection of the environment, and less global leadership is a cruel gift.

Take coal mining. Trump wants to save coal mining jobs, but his executive order will cause coal production to increase, further glutting the market. There are ways of burning coal more cleanly and if the president wants to help the coal industry, he should be supporting these. He also might want to look at the disposition of coal ash and its possible uses, not bankrupt what is left of the coal industry by false generosity.

Trump’s energy executive order might have had virtue 40-plus years ago. Back in the bleak days of the 1973 Arab oil embargo, and the future shock it induced, coal was our only plentiful energy source. I was one of the authors of a study, prepared for President Richard Nixon, that highlighted coal. Hence a passion that lasted through the Carter administration to gasify coal, liquefy it and back out oil with it whenever possible.

However the national genius produced a flood of innovation, leading today’s abundance of oil and gas.

For InsideSources

Earth Day: Why It Was a Quiet Party

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Forty years ago on the first Earth Day, there was the smell of revolution in the air. Metaphorically millions said aloud and to themselves, “We have fouled our nest; now we must clean it.”

The issues seemed simpler back then. They are so complex today that the world is suffering from environmental shock.

It is not that the state of the environment is not precarious, but rather that the solutions are more elusive.

There are those who believe it can all be done with a hydrogen economy; and others who believe the wind and sun alone can do the job. There are those who can see a plastic-free future, if we would just tax the plastic. Yet others believe Nirvana is just a vegetarian meal away.

Forty years ago, we were still in the throes of the upheavals of the1960s; and the 1960s were the time of The Great Accusation. This accusation was leveled by an angry populace at all institutions, both public and private, that had betrayed the citizenry. The anger of the Tea Party movement today is nothing compared to the anger on the streets in those days; the days of the Vietnam War, civil rights, gender equality and the environment.

The premise under the demonstrations on the first Earth Day, April 22, 1970, was that the only reason the Earth was going to hell in a hand basket was that big companies polluted for profit and that government covered up for them.

It was a simple, powerful premise. The road ahead was clear: Make the polluters pay and all would be well.

It also was a time when the idea of climate change was hardly known, and those who talked about it did so as an arcane curiosity.

Clean air was an issue, but not to forestall global warming. Smog and later acid rain were the air issues.

Water was a huge preoccupation, which is why the Clean Water Act —initially vetoed by President Richard Nixon but then signed after huge protests — preceded the Clean Air Act.

The critical piece of legislation was The National Environmental Policy Act of 1969 which has become the bedrock of environmental law.

As time took its course, the simple premise of good guys vs. bad guys evolved into our guys vs. your guys, a wholly different equation. Virtue was less easy to establish back then as it is today.

The environmental movement found its strength not in the streets but in the law courts, testing, and expanding by precedent the scope of the new laws.
It also developed attachments to some technologies over others. It favored a European transport model with high gasoline taxes and a portfolio of electric- generating technologies that it called alternative.

But significantly, the environmental organizations en masse became technology partisans, signifying approval of the obscure (solar, wind, waves and hydrogen) over the practical (hydroelectric and nuclear).

Of the half-dozen or so really effective environmental groups, the National Resources Defense Council became the most successful litigator, dwarfing other groups like the Union of Concerned Scientists, the National Wildlife Federation, the Sierra Club and Greenpeace. Yet to their opponents they were a unified threat, skillful and intractable. For philosophy they had Amory Lovins (“The Path Not Taken”) and E.F. Schumacher (“Small Is Beautiful”).

Forty years on, the environmental debate is more complicated and there is less room for certainty. At some point, China and India are set to surpass the United States as the world’s largest polluter; governments promise to change the ways of their people, but not if it hurts.

Earth Day’s big birthday Thursday also was overshadowed by a natural disaster: Iceland’s volcano eruption. The economic impact was global in unexpected ways which showed, among other things, how hard it is to lay down absolutes about the environment. You can’t sue a volcano.

Who would have thought a volcano in Iceland would devastate the cut-flower industry in Kenya, and with severe consequences for that country’s economy? Who ever knew that a third of Europe’s cut flowers came from faraway Kenya on polluting aircraft?

Who needs flowers? Kenyans do. –For the Hearst-New York Times Syndicate