James Pethokoukis

Politics and policy from inside Washington

Obama’s clean energy pivot goes awry

Jun 16, 2010 17:51 UTC

Imagine if your local fireman started lecturing you on fire safety and the need for more research into advanced flame-retardant materials while your house was engulfed in flames. (“Dude, shut up and save my dog!”)

I mean, maybe Barack Obama’s Oval Office address would have been an effective energy speech had the Gulf gusher already been capped. But the oil is still flowing. And until it stops, shifting from the BP spill to the broader White House energy agenda seems an awkward political and policy pivot. The whole thing had an air of unreality to it.

Obama tried to cleverly argue that the spill is less like a natural disaster than it is an epidemic. One does its damage in minutes, the other in months or years. So not only must America be patient, but it is also entirely appropriate to use the oily mess in the Gulf as a catalyst to quicken America’s long-term shift away from fossil fuels.

But an appeal to focus on the future sure seems like a hard sell to an American public watching damage estimates rise daily. A government panel announced the same day as Obama’s speech that it thinks as many as 60,000 barrels a day are flowing into the Gulf. That’s double last week’s projection and way above the original guess of 5,000.

But in his speech, Obama could offer no new hope for a quick end to the crisis, only plans for cleanup (including how BP will pay) and prevention — and a potential clean energy future. But the president’s green dreams may turn into a nightmare if Republicans smash the Democrats in the November congressional elections. And the spill is making such a rout ever more likely by slowly eroding the president’s popularity.

But Team Obama and his Democrat allies on Capitol Hill don’t see it that way. They believe the oil leak disaster has helped persuade voters that action is necessary even if it creates a short-term drag on the economy. And they are betting more Republicans will decide they can’t any longer merely oppose Democratic plans.

For his part, Obama says he wants to “aggressively accelerate” America’s shift away from fossil fuels through business subsidies, government R&D funding and carbon emissions pricing through a cap-and-trade system.

But is there any evidence any of this would actually work? Obama’s 2009 stimulus package increased funding for alternative energy research, and currently the government is spending about $5 billion a year on everything from renewables to smart grid technology. And a new group of business execs, including Microsoft’s Bill Gates and GE’s Jeff Immelt, is pushing Washington to triple that level of funding. They point to such successful government R&D efforts as Internet and Human Genome Project.

But energy has been tricky for Uncle Sam. For instance, the 1970s energy crisis led to a federally funded synthetic fuels project beset by cost overruns and technical failures. (The 1980s collapse in oil prices didn’t help, either.) And a 2003 OECD study found that government-led R&D doesn’t seem to boost economic growth, or at least not in ways that can be easily measured by economists.

But first things first, Mr. President. The Pivot can wait.

COMMENT

What is needed are energy systems that are inexpensive, clean, and self contained, do not rely on fossil fuels and can be developed and maintained locally. You think I am dreaming I can feel that in my bones! Yet over the past (give or take ) hundred years or so, scientists, inventors and various curious people, have developed ideas and innovations, that would help us move totally away from our reliance on the presently accepted norms of oil, coal and gas – aka ‘fossil fuels’. Consider the work of Nikola Telsa and Stanley Meyer for starters!

If our governments are sincere in their attempt to reduce carbon emissions, and also reduce our dependence on fossil fuels, then why have they hidden this information from us? It is known that they have had knowledge of most of these innovations and scientific discoveries for a very long time. How do you define ‘sincerity’? Or better still can you say ‘sincerity’ and ‘government’ in the one breathe? An oxymoron!

http://just-me-in-t.blogspot.com/2010/06  /define-sincerity.html

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Bill Gates’ Big Government plan for clean energy ‘miracle’

Jun 14, 2010 15:26 UTC

Bill Gates and a bunch of other top corporate executives want Uncle Sam to spend a lot  more on clean energy research and development. Here’s why:

Energy innovation is a commitment to long-term prosperity. If the United States invests in its clean energy future now, our nation can reap immense benefits. We have seen this work in other sectors, and it can work in energy. Public- and private-sector innovators have made miracles happen right here on home soil—Americans developed the computer and the Internet, delivered air and space travel and decoded the human genome. Standing on their shoulders, we can see a clean energy future within reach. By scaling the good technologies of today and discovering new technologies that do not yet exist, we have an opportunity to achieve a similar miracle in energy.

So they have created a new group to push their agenda, the American Energy Innovation Council. Here are some of its members:

Norm Augustine, former chairman and chief executive officer of Lockheed Martin; Ursula Burns, chief executive officer of Xerox; John Doerr, partner at Kleiner Perkins Caufield & Byers; Bill Gates, chairman and former chief executive officer of Microsoft; Chad Holliday, chairman of Bank of America and former chairman and chief executive officer of DuPont; Jeff Immelt, chairman and chief executive officer of GE; and Tim Solso, chairman and chief executive officer of Cummins Inc. The Council is advised by a technical review panel consisting of preeminent energy and innovation experts and is staffed jointly by the Bipartisan Policy Center and the ClimateWorks Foundation.

And group has five big recommendations:

1) Create an independent national Energy Strategy Board; 2) Invest $16 billion per year in clean energy innovation (vs. $5 billion currency); 3) Create Centers of Excellence with strong domain expertise; 4) Fund the Advanced Research Project Agency-Energy at $1 billion per year; 5) Establish and fund a New Energy Challenge Program to build large-scale pilot projects.

And this is how they plan to pay for it:

When there is a system to reduce greenhouse gas emission in the United States, it will likely generate revenue—in the form of permit sales, for example. The first $16 billion of these greenhouse gas revenues should be devoted to RD&D— because new technologies will make it far cheaper to reduce emissions. This is a virtuous cycle. The United States employs other user fees on the energy system today that could be expanded. Wires charges (a small fee on electricity sales) are a natural way to finance improvement in the electric sector, just as gasoline taxes pay for transportation infrastructure. Reducing today’s subsidies to fossil fuel industries could also cover much of the distance.

Me: Why, exactly, do they think this will work? Granted, when you are talking about trillion dollar deficits, this is not a great deal of money. So maybe it is worth taking a flyer. But the evidence would indicate it is a long-shot at best. A 2003 OECD study on what drives economic growth in advanced economies found “no clear-cut evidence” that government R&D — as opposed to private sector R&D — provides any economic benefit.

What does boost economic growth, according to that study? Avoiding this scenario, for one thing: “For example, high personal income tax rates can discourage entrepreneurship since entrepreneurs are self-employed and/or managing unincorporated businesses, whose profits are taxed through the application of a progressive rate schedule to personal income.”

COMMENT

Just to throw the conspiracy cookie in here: why do you think private industry would not stifle creative clean energy research as they have for the last 80 years? This is why government-sponsored research, with appropriate oversight, through private contractors could yield better results than a straight-up free market program.

Of course the interference could always be done (as it is now, also) through lobbying efforts, but it’s much easier and cheaper to buy competitors than congressmen.

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Trust but verify, China edition

Dec 15, 2009 13:47 UTC

The words of #42 (RWR) came back to me when I read this in the NYT:

China, which last month for the first time publicly announced a target for reducing the rate of growth of its greenhouse gas emissions, is refusing to accept any kind of international monitoring of its emissions levels, according to negotiators and observers here. The United States is insisting that without stringent verification of China’s actions, it cannot support any deal

$10 trillion for clean energy? Maybe a bit overambitious

Oct 6, 2009 17:23 UTC

Working for the International Energy Agency must be hoot. Where else can you recommend a $10 trillion investment and kinda-sorta be taken seriously? From the WSJ:

The IEA, energy adviser to the world’s richest nations, urges more-aggressive reductions in carbon emissions than what many nations are currently planning. In the report, to be released Tuesday, the IEA calls for investment — in clean-energy initiatives such as solar power, new nuclear plants and other measures — of $500 billion a year over the next 20 years.

That is 37% more investment than what the IEA estimated was necessary just a year ago. Some analysts put the current level of investment in clean energy at around $100 billion a year.

And this is my favorite line in the story:

The IEA’s projections, though sometimes seen as overly ambitious, are generally regarded as relevant guideposts for the energy industry.

COMMENT

This is not really a huge deal compared to the size of the energy problem.
Large numbers should always be considered in context.
Let’s see, OECD primary energy consumption is ~5.5 bill tonnes oil equivalent per year. (http://www.iea.org/Textbase/stats/balan cetable.asp?COUNTRY_CODE=28) This corresponds to about 40.4 billion barrels of oil-equivalent. So $500 billion per year is $12.37/bbl oil-equivalent used in OECD per year.
Or, 29 cents/gallon-oil-equivalent. That seems quite reasonable.

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