Bloomberg this morning gives a rundown of President-Elect Obama’s plans for energy and environmental policy, and on this bright morning in America, I thought I’d take a stroll through it and pick some flowers:
With unemployment at a five-year high, an early effort to create jobs by encouraging electricity production from solar and wind will get top priority, energy lobbyists and analysts said. A more far-reaching effort on a climate-change bill may be delayed until late next year or 2010.
“He will put forward an energy bill ahead of a climate bill,” said Kateri Callahan, president of the Alliance to Save Energy, an energy advocacy group in Washington that represents 3M Co., Areva SA and Dow Chemical Co. “That bill will stimulate the economy toward development and use of energy efficiency and clean energy sources and technology.”
Well, that’s not what Obama told the San Francisco Chronicle earlier this year — which was: make carbon more expensive, drive up the price of traditional sources of energy through taxation, and use the resulting billions to fund renewables. But hey. It’s a new day.
Obama’s advisers won’t say which initiative he will push first. He has proposed a $175 billion economic-stimulus package and plans to revamp the energy economy as part of a separate climate bill, campaign adviser Jason Furman said in an interview.
Obama calls the green-jobs and climate plan a “mid- to long-term solution” on his campaign Web site. He plans $150 billion in investment over 10 years to create 5 million jobs in the auto and clean-energy industries.
So, are we up to $325 billion in new taxpayer-funded “investment” already, or is part of the energy $150B included in the economic stimulus $175B? Enquiring minds want to know. As for those green jobs: taxing coal companies into bankruptcy and then finding make-work government jobs (as, say, a Compact-Flourescent Torque Engineer) for displaced coal-industry workers is not “creating” anything. Let’s just throw that out there now, with all due respect to the President-Elect.
Obama may block oil and natural-gas drilling in new offshore areas. He said Aug. 1 he would compromise on offshore drilling if it was necessary to win approval for alternative- energy investments and more fuel-efficient cars.
“That was total lip service,” said Kevin Book, an analyst at Friedman Billings Ramsey & Co. in Arlington, Virginia. “If Congress doesn’t block drilling in its appropriations work in March, Obama is very likely to re-withdraw the areas that Bush put back in bounds.”
Honestly, I wouldn’t be surprised to see a little snide score-settling injected into this — remember the Obama e-mail announcing his vice-presidential pick, and its arrival “at 3 AM”? I wonder if Team Obama will be able to refrain from a Palin jab here, or a play on “Drill, Baby Drill” in the course of their obstructionism on increased domestic fossil-fuel production. Let’s hope not.
Jack Gerard, president of the American Petroleum Institute in Washington, said Obama’s plan to impose a windfall-profits tax on oil companies would harm one of the few industries that are thriving.
“We certainly hope public officials wouldn’t look at this and say, `Gee, let’s see what damage we can do to the one bright spot,”‘ Gerard told reporters Oct. 20 at an industry meeting in Scottsdale, Arizona.
Funding for Obama’s windfall-profits tax may have dried up. The plan is to impose the tax when crude prices exceed $80 a barrel. Obama campaign adviser Jason Furman said Oct. 22 that he’s now assuming zero revenue from that tax because oil tumbled from a record above $147 a barrel in July to less than $70 last month.
Well, one can hope . . . for no change, I suppose. Of course, we’ve already witnessed Obama’s promised tax increase creep down from a quarter-million dollars to lower and lower income levels –- “no one who makes under $[your salary here] will pay a penny more in taxes.” So a little leeway on what constitutes a “windfall profit” should be expected.
I mean, after all, isn’t every profit a windfall profit? So a barrel of oil should cost whatever the BTU-equivalent of ethanol costs — and not a penny more! (“I love you, Iowa.”)
As if on cue:
Obama wants the ailing auto sector to make plug-in hybrid cars and more models that run on ethanol. He proposes a tougher fuel-economy mandate. He plans $4 billion in tax help to retool factories to make advanced cars on top of $25 billion in loans that have been enacted for that purpose. Consumers would get a $7,000 tax credit for purchases of advanced cars. . . .
I’ll let Henry Payne comment on that. But Obama’s promise of an additional $25 billion-dollar bailout for GM on top of the original $25 billion reveals his economic instincts: regulate companies into non-profitability, then give them government handouts.
[Sen. Jeff] Bingaman said in an interview he didn’t know the order in which Obama would pursue his energy priorities. He said he would develop bipartisan energy legislation early next year and has advocated for longer tax credits for renewable energy and mandates for renewable electricity production, as Obama has.
Renewables, including hydropower, account for 8 percent of U.S. electricity. Obama has said he wants 10 percent of electricity to come from renewable sources by 2012 and 25 percent by 2025.
A measure to expand use of green power and plug-in hybrid cars could ease the transition to a climate bill, Callahan said. A climate bill will be a “massive piece of legislation with such far-reaching impacts” and Obama understands the “need to take some time with it,” Callahan said.
As proposed, Obama’s climate plan would cut emissions of so-called greenhouse gases linked to global warming by 80 percent by 2050. Emissions credits would be sold in an auction under a cap-and-trade program, not doled out to utilities and others for free. Companies that exceed caps must buy credits on top of those obtained at auction, in Obama’s cap-and-trade plan.
“Barack Obama could well put off a costly and regressive surcharge until later in 2009 or 2010, leaving Congress to shoulder the burden,” Book said. “On the day that he is elected, cap and trade will fall to No. 10 on his list of top 10 priorities and won’t come back until the economy does.”
I think Chris Horner has some thoughts on the above in a forthcoming Energy Tribune.
Power from renewable energy and cleaner coal-fueled plants is more costly than current U.S. generation sources, said Michael Morris, chief executive officer at American Electric Power Corp., the nation’s biggest producer of electricity from coal.
“I do think there are a few things there that a president Obama doesn’t have right,” Morris said in a telephone interview. He objected to Obama’s plan to auction all credits and said any climate plan must incorporate a stronger commitment to nuclear power than the president-elect elect has made.
Morris gave Obama high marks for pushing the creation of jobs through expansion of the renewable energy industry, pointing to the proposal to string high-voltage lines to population centers like Chicago from areas high in wind-power potential like the Dakotas.
Yes, AEP likes Peter Huber’s grid idea that Henry Payne noted yesterday.
“He’s a big believer in green energy and the jobs that might be created by alternate energy forms, wind and solar,” Morris said. “We think that’s a good thing.’’
But created, right? Not just shuffled around between industries. We’ll see. Hope springs eternal.