NEW ENERGY’S NEEDS AND PRESIDENT-ELECT OBAMA’S PLAN
Time Magazine couldn’t ask a more timely question: Is Obama’s Energy Plan Enough?
It even kicks off with a beautiful thought: “With the possible exception of Barack Obama's puppy-anticipating daughters, no one is more eagerly awaiting the incoming Administration than the leaders of the renewable-energy industries.”
Wisely, it leaves the puppy-love in the lead paragraph. After a brief description of the Obama New Energy plan ($150 billion investment in New Energy and Energy Efficiency to create 5 million New Energy jobs) and his unequivocal reaffirmation of the plan at last week’s Governors’ Summit on Climate Change, Time lowers the boom:
“The problem is, it won't be enough.”
After quoting a UC professor’s urgent observation that it will take big money and foresight to avoid the economic devastation and other worst effects of energy shortages and climate change, Time asks: “Do Obama — and other world leaders — possess that foresight?”
NewEnergyNews has the answer: Maybe.
Not very reassuring, is it?
Time’s essay is attention-grabbing, designed to create controversy. The truth is, multiple reports in the last year have assessed the costs and benefits of developing 21st century energy resources and infrastructure and fighting climate change. The numbers (from the International Energy Agency (IEA), the University of California, GE Financial Services, the Apollo Alliance, the U.S. Mayors Conference and the Center for American Progress) agree only in their broad outlines: It will cost a lot, generate benefits and take time.
The fact of the matter: Nobody knows for sure how much it will cost or how long it will take to move to a New Energy economy.
As Time describes, a legitimate set of steps was recently outlined by the leaders of the New Energy industries (the American Wind Energy Association, the Geothermal Energy Association, the National Hydropower Association and the Solar Energy Industries Association). (See NEW ENERGY WILL LEAD RECOVERY) The New Energy leaders did not specify an ultimate amount of investment necessary but were clear about how money should be used.
The leaders want an immediate adjustment of the 2.1 cents/kilowatt-hour production tax credit (PTC) approved by Congress and the President October 3 as part of the stimulus package. Without any profits earned, investors are no longer in need of tax credits. (No profits, no taxes.) What investors need is capital. That's why the New Energy leaders now want their tax credits in the form of cash “refunds.”
Beyond that urgent matter, but still in the short-term, New Energy leaders want the PTC to be extended beyond its current December 31, 2009, deadline to 5 years, providing New Energy in the U.S. with a stability it has never known.
The leaders also want President-elect Obama to invest $30 billion of his promised $150 in New Energy projects in 2009, as a way of getting the New Energy industries and the economic recovery started forward in a big way.
Over the next 8-to-10 years, New Energy wants 2 big-ticket items: (1) A Renewable Electricity Standard (RES) – like the RESs now in force in more than half the individual states – that requires all U.S. utilities to obtain 10% of their electricity from New Energy sources by 2012 and 25% by 2025, and (2) a modern national electricity transmission system, equipped with “smart” technology capability, spanning the country with high voltage wires from the remote regions where New Energy is produced to population centers where it is consumed.
Time’s essay makes a great observation about the necessity of the (costly) new transmission: “…[P]umping money into the renewable-energy sector while neglecting the antique electrical grid is like building a fleet of cars without laying down roads…”
Beyond 2025, New Energy wants an aggressive system for pricing greenhouse gas emissions (GhGs) in the form of either a tax (the better choice though politically unlikely) or a cap-and-trade system (a market-based system that caps all emissions and auctions emissions “allowances” for excesses, making it cheaper to reduce emissions than generate them). Revenues will be generated by either system. These revenues can be invested in building New Energy infrastructure and in easing the burden on the economy’s have-nots.
Sound expensive? It will certainly be.
Time’s chosen estimate is $1 trillion/year for all energy investments. It will cost more, according to Time, to build New Energy faster. It will cost more, still, to cut GhGs enough to keep global average temperature rise below the 2 degree centigrade level urged by the IPCC. Time puts the price at an additional $9.3 trillion.
As the essay says, many of the studies – including those cited – say the changes (building New Energy infrastructure, instituting Energy Efficiency upgrades and the other items on New Energy’s wish list) pay for themselves with new jobs, revenue production, energy savings and environmental and health benefits.
Mustering the political skills and long term investment strategies to face the undertaking is a truly daunting challenge. That’s why Time’s question – “Is Obama’s Energy Plan Enough?” – is the wrong question.
Better questions: Is the U.S electorate smart enough to give the leader they’ve chosen the time and money he needs to face the challenge? Will it stick with him while he tries the best ideas, improves on the ones that seem to work and rejects the ones that don’t?
The best question: To paraphrase Time, are the skills that got this smart young man elected enough to sustain him through the coming “interesting” year?
From ChangeDotGov via YouTube.
Is Obama’s Energy Plan Enough?
Bryan Walsh, November 22, 2008 (Time Magazine)
President-elect Barack Obama; California Governor Arnold Schwarzenegger; International Energy Agency (IEA); American Wind Energy Association (Randall Swisher, Executive Director); Geothermal Energy Association (Karl Gawell, Executive Director); National Hydropower Association (Linda Church Ciocci, Executive Director); Solar Energy Industries Association (Rhone Resch, President); Intergovernmental Panel on Climate Change (IPCC)
Will the Obama energy plan be enough and can the new administration lead the change?
This GE Financial Services study showed conclusively that New Energy investments generate more than enough revenues to pay themselves. (click to enlarge)
- November 14: New Energy leaders spoke out on their plan: Immediate refundability for the PTC, extension of the PTC for 5 years, investment of $30 billion in New Energy projects in 2009, a national RES with 2012 and 2025 goals, new, high voltage and “smart” transmission in the next 10 years and a cap-and-trade system by 2025.
- November 18: At Governor Schwarzenegger's climate summit, Obama reaffirmed his commitment to a New Energy economy and to the fight against global climate change with a cap-and-trade system.
The energy plans discussed are for the entire U.S., though predictions regarding climate change consequences pertain to the world and except for the UC report pertaining to California.
click to enlarge
- Obama’s plan: $150 billion over the next 10 years to create 5 million new jobs.
- The IEA’s annual World Energy Outlook projects that global energy demand will increase by 45% between 2006 and 2030 at a cost of $26 trillion. The IEA report also predicts a rising oil demand there does not appear to be supply to meet.
- A UC Berkeley study predicts that unchecked global climate change could cost California alone up to $50 billion/year.
- Tax credits are not useful if businesses are not making profits and therefore do not have taxes to offset with credits.
- The nation will not be able to meet its energy needs over the next quarter century, will not be able to integrate New Energy supplies and will not be able to institute efficiency measures requiring “smart” grid technologies without new transmission.
- A North American Electric Reliability Corporation report predicts brownouts and blackouts without new transmission.
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- Linda Church Ciocci, Eecutive Director, National Hydropower Association: "This is a crucial step forward…"
- David Roland-Holst, professor of economics at UC Berkeley: "We have to have the foresight to avoid this crash…"
- Randall Swisher, Executive Director, American Wind Energy Association: "[The grid] is the single largest long-term issue facing wind and other renewables…We can't solve the climate challenge without the green electricity superhighways that we are calling for."
- Nabuo Tanaka, head, IEA: "We would need concerted action from all major emitters…"
Roland-Holst, UC Berkeley: "It's like guiding a supertanker to avoid a distant collision…"