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Energy and Energy Economics
The Sierra Club believes our long-range welfare, and the integrity of the natural
environment upon which we ultimately depend, can better be served by the use of energy in
a manner more consistent with the prudent use of the world's remaining natural resources
and the restoration and preservation of environmental quality. To achieve this, all the
major uses and sources of energy must be considered together, along with their
environmental consequences and social and economic inequities. The Sierra Club therefore
has as its basic objectives:
- The conservation of energy resources by the elimination of inefficient, wasteful, and
unnecessary production and consumption, with the goal of limiting the total rate of energy
conversion to a level that would produce minimal damage to the natural environment.
- The restoration and maintenance of a quality environment by subjecting energy to
environmental constraints such that there shall be no significant air, water, and land
pollution, and such that facilities shall conform to comprehensive regional or national
land-use plans.
To achieve these goals, the Sierra Club supports:
- The formulation and enforcement of a national energy policy that is consistent with
these goals and that coordinates all energy resources.
- The formulation and enforcement of a comprehensive national land-use plan that embraces
all principal uses of land and waters, and that subjects all energy-related facilities and
activities to environmental, ecological, and aesthetic constraints.
- Regulations on extraction, transport, and storage of fuel; on the siting, design, and
operation of facilities for energy conversion; on the discharge of waste products into
air, water, and on land, and the disposal and storage of solid wastes; on the coordination
of the use of energy and energy resources; and on advertising and other promotion of
energy consumption. There shall be provisions for prompt public disclosure of all matters
related to energy production, public participation in planning and decisionmaking, and for
appeal and judicial review.
- Economic incentives, including the institution of taxes and price structures that
promote the conservation of fuels and of energy, and the development of sources and
facilities that are more efficient and environmentally benign, and the abatement of
pollution. Existing economic incentives that tend to promote energy consumption and waste
should be eliminated.
- Research and development to determine the nature and extent of environmental impacts of
fuel extraction and energy transport, conversion, and use; to improve efficiency; to
reduce emissions from present forms of energy conversion; to develop new, efficient, and
environmentally less harmful energy facilities and conversion methods; to improve safety
and reliability; and to devise means for safe and environmentally acceptable disposal of
all wastes.
- Reformation and creation of institutional structures for the formulation and enforcement
of energy policy and land-use planning; for the regulation and administration of energy
production and use; and for research and development. As a matter of principle and of
proper administration, no agency should be responsible for both regulation and promotion
of any activity.
- Education and promotion that engenders an ethic of energy conservation.
- International coordination and planning to achieve these goals.
Adopted by the Board of Directors, October 21-22, 1972; amended July 8, 1995
Current and past economic policies with regard to energy are a major cause of the
problems we face with respect to environmental impact, and energy supply and demand. New
economic policies can be a major factor in bringing about a more rational and less
environmentally destructive pattern of energy development and use. The Sierra Club
believes that the prices of all forms of energy should cover energy's true costs. When
these true costs are established, this will favor those energy sources that have minimum
environmental impact while penalizing those with the most serious impact. It should also
blunt the growth in total energy demand.
The Sierra Club specifically recommends:
- Rapid phasing out of all economic subsidies to energy industries. Examples include
depletion allowances on the extraction of energy resources, which should be replaced by
recovery of amortized investment costs only; the favorable tax treatment of imported oil;
the tanker subsidy program; and the subsidy of hydroelectric projects by means of specious
calculations of recreational and flood control benefits, and the use of a discount rate
less than the opportunity cost of capital.
- Removal of environmental and social subsidies by internalization of environmental and
social costs. For example, emissions of pollutants should be taxed, and the industry, and
ultimately the user, should be required to pay for the costs of pollution abatement,
adherence to stringent regulations to protect the health and safety of workers, and full
compensation to the victims of job-associated diseases and injuries such as black lung
disease. Pollution taxes must be set at a level high enough to assure that they will be
effective in abating pollution. They should also be high enough to cover all direct and
indirect costs to society of the polluting activity.
- Revision of rate structures to better assure that energy is priced at its full cost.
This should follow the principle of marginal cost pricing, i.e., the setting of prices at
that level which covers the full costs of new supplies of energy. Included in the marginal
cost pricing should be the charging of higher rates during periods of peak demand, to
cover the higher costs of providing energy at such times. Rate discrimination which
results in large users paying less than the full costs of providing new capacity and
energy must be prohibited. The possibility of windfall profits for energy companies from
marginal cost pricing should be eliminated by imposing an energy tax to divert surplus
revenue to the government.
- The imposition of severance taxes upon the extraction of nonrenewable energy resources
should follow the rapid phasing out of subsidies.
- Termination of the fuel import quota systems. If some system for reducing fuel imports
is considered important for reasons of national policy, a tariff system should be
substituted. The revenues from the above taxes could well be spent to cover the costs of
government programs to develop less wasteful and environmentally damaging ways of
producing and using energy, to pay for surface restoration of old mine workings, and to
cover the costs of monitoring and effective regulation of health, safety, and
environmental impact. However, a trust fund may not be desirable, since it may tend to
circumvent rational budget- making and the setting of priorities.
Special efforts should be made to ensure that those of low income do not suffer from
the generally higher level of energy prices that can be expected to result from having the
user of energy pay energy's true costs. Fortunately, the economic reforms that we advocate
will have a far greater impact on the users of large quantities of energy than on the
poor. However, until our society devises an effective program to address the economic
needs of the poor, special provision must be built into the energy rate structure to
assure all domestic users a minimum quantity of energy to meet basic needs at rates that
will not adversely impact the poor.
Adopted by the Board of Directors, January 20-21, 1973
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