competition and deregulation into what had been a highly regulated system. Independent power producers are gaining market share, but they support essentially no research and development and have little corporate infrastructure for issues such as security. Significant restructuring of the equipment-supply industry has occurred as well, with manufacture of some key components moving abroad. Unlike generation, the transmission portion is not being deregulated. This situation is straining the electric system because the priorities and practices of generating companies, transmission entities, and customers differ.

All these trends have led to systems that are highly efficient, productive, and cost-effective, but also subject to increased stress even without the threat of terrorism. Controls, cost competition, and regulatory uncertainty could each, in one way or another, limit the willingness of companies to invest in security upgrades that might seem desirable from a societal point of view.

It is readily apparent that any prolonged interruption of the supply of basic energy—be it electricity, natural gas, or oil products—would be a devastating blow to the nation and its people. This chapter addresses these systems’ vulnerabilities and identifies current means of addressing them, which should be implemented as rapidly as feasible. The chapter then describes key areas for R&D on materials, tools, systems, and methods. These R&D programs should be initiated immediately, and the resulting technologies should also be implemented as rapidly as feasible, although in some cases this could take up to 10 years. Overall, the recommendations in this chapter stress the importance of expediting implementation of technologies to reduce vulnerability due to the urgency of protecting this infrastructure. The most critical recommendations are numbers 6.9, 6.10, 6.11, 6.15, 6.16, and 6.17 below.

More fundamental changes, which might reduce vulnerability still further, are of course possible. Electricity generation might become more decentralized, reducing the impact of the loss of key components. The use of renewable energy resources (e.g., wind and photovoltaics) would complement this trend. The use of energy—oil in particular—could become more efficient, reducing the need for imports and, to some extent, vulnerability to upheavals in the Middle East. The use of alternative fuels derived from renewable energy or coal might grow, reducing dependence on the most vulnerable components of the energy systems. However, all these possibilities also have drawbacks, such as poor economics, unreliability, or remoteness. Furthermore, the U.S. energy systems are massive, and major changes can take decades, even after the technologies are developed. While it is worthwhile pursuing these research options and encouraging a diversity of supply, they will make little or no difference in reducing vulnerability to terrorism over the time frame of this study.

Although the threat of terrorism to our homeland places new requirements on energy infrastructures, the industry can draw on experience elsewhere. Because the national security and defense communities of this country have lived with such requirements for decades, a key element of our strategy must be to



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