Friday, October 8, 2010

U. S. Energy Plan

President Obama and Energy Secretary Steven Chu need to get going on finally putting together their comprehensive national energy plan. They have acknowledged it's an important priority, and have begun to implement a few good initiatives like funding clean energy technology and research. I'm fairly confident they'll get to it in the next several months, but the clock is ticking. No doubt the main reason for the delay is that the president has had his hands quite full with the weak economy, foreign policies, including the two wars, health care and financial regulatory reform, among many legislative issues.

The energy plan issue got a lot of provocative publicity about two weeks ago when General Electric's Chairman and CEO Jeff Immelt made a speech in Washington, D. C. at the Gridwise Global Forum, which happened to be co-hosted by Chu's Department of Energy. An article in the Wall Street Journal on 9/24 discussed his remarks. Immelt warned that the lack of a comprehensive U. S. energy policy and its "stupid" current structure are causing America to fall behind in new energy fields. He indicated that China is moving faster to develop clean technologies such as nuclear power, electric vehicles and wind power. New York Times journalist and author Thomas Friedman has commented on this as well in his recent book "The World is Flat."

In my blog post back on May 6th I also commented on this subject, emphasizing that the U. S. can learn a lot from other countries who are leaders in their respective fields of energy development: Germany with solar, France with nuclear, Denmark with wind and biomass, and China with electric vehicles and most of the others.

Important reasons why China is moving faster than us, Immelt pointed out, is that they, as well as Canada and Australia, have a much simpler regulatory structure for energy development and the government policies provide more support to the industry, handicapping opportunities for American companies like GE. Of course, China's centrally controlled government system doesn't have to deal very much with public opinion, special interests, and an independent judiciary, compared to the case in the U. S.

Immelt was also particularly critical of how the U. S. has failed to maintain and expand our nuclear power industry. He apparently indicated that only one new nuclear power plant is being built in the U. S. now, whereas there are close to fifty being built in the rest of the world, many in China. As is widely known, there are a number of key reasons for this situation: huge costs, limited appetite from prospective lenders to provide financing, environmental resistance, safety concerns, and lobbying by the utilities and coal mining industry. Right now there are 104 commercial nuclear power plants licensed to operate in this country and they currently provide roughly 20% of the nation's total electric energy consumption, coal-fired power plants providing 50% or so.

In some defense of President Obama, it should be noted that in February of this year his administration approved an $8 billion loan guarantee for the construction of two nuclear reactors in Georgia. If the project goes forward, these would be the first plants to start construction in the U. S. since the 1970's! And in May last year he announced a national fuel efficiency policy aimed at increasing fuel economy and reducing greenhouse gas pollution for all new cars and trucks sold here. The new standards, covering model years 2012-2016, ultimately require an average standard of 35.5 mpg in 2016 for cars and were intended as one step to move us closer to his goal of national energy independence.

Secretary Chu did acknowledge at the Forum that an energy policy overhaul is needed. Components of this must include close collaboration with Congress, the private sector, environmental interests, and the public on how we can best move forward aggressively to meet our energy needs as efficiently and prudently as possible.

Priority objectives should include maximizing clean and renewable sources and becoming as independent as possible of imports from the Middle East, Africa, and Latin America, but excluding Canada, a major supplier. Surely this means over time a much lesser reliance on coal-fired power plants, more reliance on natural gas, more selective drilling for oil in the U. S. and certain offshore areas, much more nuclear power for electricity, more electric vehicles, and much greater production of electricity from clean coal technology, solar, geothermal, biomass and wind power sources.

The tricky part is fairly balancing the needs of the private sector, consumers, taxpayers, environmentalists, and our government. This energy transformation cannot come at the undue expense of our state and federal governments. The ultimate though obviously challenging goal must be to manage this transformation so it fulfills the reasonable needs of all the above players, and promotes economic growth without a federal budget deficit and without adding to our national debt. Easy, right?


Wondarwie said...

A U.S. energy plan is already written. All Obama has to do is to copy it and present it to Congress. It is laid out in a paper recently published by the Brookings Institution, the American Enterprise Institute, and the Breakthrough Institute, titled "Post-Partisan Power." It suggests that the federal government invest roughly "$25 billion per year in military procurement, R&D, and a new network of university-private sector innovation hubs to create an energy revolution." They even exlain how the program can be financed. To read the 36 page report, click on this PDF link:
They did the work and all our government has to do now is to implement this great plan. How hard is that?

Viking Views said...

"Post-Partisan Power" is a very interesting read focusing on making cleaner energy sources much cheaper and employing a practical and bipartisan approach. It seems prudent to me that President Obama and Secretary Chu should seriously consider incorporating their recommendations in their new national comprehensive plan.

But aren't there desirable additional components in the right plan that should get broad public and possibly also congressional support? While good work is being pursued on cleaner energy innovation and achieving lower costs, shouldn't we also prioritize reducing dependence on oil imports from the Middle East and other unstable areas and incenting lower use of fossil fuels by higher fuel mileage requirements and/or higher gas taxes, for example? I'm assuming that one cannot expect substantial needed results from innovation results within a relatively short timeframe. It will probably take 3-5 years, if not longer. So maybe Obama needs to do more than just copy this paper for his plan.