Archive for October 13th, 2010

Beware of ‘post-partisan’ energy policy

October 13, 2010

Just as tea party activism is about to snatch American energy policy from the jaws of cap-and-trade, some on the right are already moving into “bipartisan” mode. The (often) conservative American Enterprise Institute has teamed up with the (liberal) Brookings Institution and the (self-described, “founded in 2003 to modernize liberal-progressive-green politics”) Breakthrough Institute to offer a “post-partisan” energy policy.

Below is the introduction and summary of recommendations of the group’s report “Post-Partisan Power: How a Limited and Direct Approach to Energy Innovation Can Deliver Clean, Cheap Energy, Economic Productivity and National Prosperity.” Our comments are in bracketed bold.

INTRODUCTION

If ever there were a time to hit the reset button on energy policy, it is today. [Agreed, if this means getting rid of centrally-planned and dictated energy policy and politics. Somehow, though...] Congress is set to adjourn without taking substantive, long-term action on either climate or energy. [Great. The defeat of cap-and-tarde is a victory for America.] While conservatives may be celebrating the death of cap and trade, the truth is that the right’s longstanding hopes for the expansion of nuclear power and oil production have also run aground, foundering on the high cost of constructing new nuclear plants and the impacts of the devastating oil spill in the Gulf of Mexico. [C'mon, if the greens had passed cap-and-trade, there would still not be any nuclear power or new oil/gas drilling. To argue to the contrary is either naive or disingenuous.] As a result, energy policy is at a standstill, despite overwhelming public support for accelerating the move to clean, affordable energy sources and tapping fast-growing clean energy industries to create jobs and wealth in the United States. [American-produced energy already is clean — it's the Chinese that could use the Clean Air Act.]

Today, few issues in American political life are as polarized as energy policy, with both left and right entrenched in old worldviews that no longer make sense. [Global warming skepticism is based on sound science. If that's an "old worldview," then call us dinosaurs.] For the better part of two decades, much of the right has speculated darkly about global warming as a United Nations-inspired conspiracy to destroy American sovereignty, all while passing off chants of “drill, baby, drill” as real energy policy. [Speculated? Did you miss Climategate? Glacier-gate? Pachauri-gate? Al Gore's admission that climate regulation is about global governance?] During the same period much of the left has oscillated incoherently between exhortations that avoiding the end of the world demands shared sacrifice, and contradictory assertions that today’s renewable energy and efficiency technologies can eliminate fossil fuels at no significant cost. [The left isn' oscillating at all. They are focused on establishing a one-world socialist paradise. Whatever path gets the comrades there, they'll follow. Global warming has just been their most successful gambit to date.] All the while, America’s dependence on fossil fuels continues unabated and political gridlock deepens, preventing real progress towards a safer, cleaner, more secure energy system. [We have plenty of fossil fuels, and they are cheap and safe. We'd be even more energy independent, if we relied more on our own resources including coal, natural gas and nuclear power. Three cheers for gridlock — it's better than the Obama alternative.]

The extremes have so dominated mainstream thinking on energy that it is easy to forget how much reasonable liberals and conservatives can actually agree on. [Watch out conservatives, here's where the post-partisans get us to walk into the chopper blades.] Fossil fuels have undeniably been critical to American prosperity and development, but we can gradually move toward cleaner, healthier, and safer energy sources. [There is no objective or empirical evidence indicating that alternative forms of energy are cleaner, healthier and safer than fossil fuels.] Indeed, throughout history, as we have become a more prosperous nation, we have steadily moved to cleaner energy sources, from wood and dung to coal to oil to natural gas, hydropower, and nuclear energy. [Nonsense. There is no such transition going on. We use more coal than natural gas. The greens have essentially killed off more nuclear development. Hydropower is only used where possible. The greens want to go back to burning wood and weeds (biomass).] Our goal today should be to make new clean energy sources much cheaper so they can steadily displace fossil fuels, continuing this ongoing process. [Fossil fuels are not "dirty" as used in America.] If we structure this transition correctly, new energy industries could be an important driver of long-term economic growth. [How does more expensive energy without any accompanying benefits lead to long-term economic growth?]

Arriving at a new post-partisan consensus will require liberals and conservatives, alike, to take a renewed look at key facts, which challenge some long-standing assumptions about energy. [Translation: Now that conservatives have triumphed over cap-and-trade, it's time to surrender.]

For liberals this means acknowledging that today’s renewable energy technologies are, by and large, too expensive and difficult to scale to meet the energy needs of the nation, much less a rapidly growing global population. [Does this mean that: (1) liberals should wake up and smell reality; (2) Al Gore and his fellow green profiteers/rentseekers should try to make money the old-fashioned way, i.e., by earning it; and that (3) green Marxist/socialists and other reds should cease and desist?] New mandates, carbon pricing systems such as cap and trade, and today’s mess of subsidies are not going to deliver the kind of clean energy innovation required. And nuclear power, long reviled by many on the left, is far cleaner and safer than most liberals imagine, and holds enormous potential to displace low-cost but high-polluting coal power. [The left doesn't care about how safe nuclear power is. Nuclear power is energy non grata as far as the left is concerned.]

For conservatives this means acknowledging that fossil fuels have serious health, safety, and security consequences aside from any risks global warming might pose. [Sorry, not buying the junk science. This sentence is footnoted to materials from groups like Physicians for Social Responsibility and the Clean Air Task Force.] The biggest obstacle facing nuclear
power is not environmental policy but rather public opposition, high construction costs, and associated financial risks. [All green activist inspired problems.] And while many faults can be found with ethanol and synfuels investments, the bulk of historic federal investments in energy technology — from hydro and nuclear to solar, wind, and electric vehicles — have been an overwhelming success. [Hydro has worked. Nukes can work. but solar, wind and EVs are taxpayer rip-offs.]

This white paper is the product of a more than yearlong dialogue between scholars at three think tanks situated at divergent points on the political compass. Drawing on America’s bipartisan history of successful federal investment to catalyze technology innovation by the U.S. military, universities, private corporations, and entrepreneurs, the heart of this proposal is a $25 billion per year investment channeled through a reformed energy innovation system. [Because central planning (as the 20th century proved) works so well...]

This new system is built on a four-part energy framework:

1. Invest in Energy Science and Education
2. Overhaul the Energy Innovation System
3. Reform Energy Subsidies and Use Military Procurement and Competitive Deployment to Drive Innovation and Price Declines
4. Internalize the Cost of Energy Modernization and Ensure Investments Do Not Add to the National Debt

To accelerate energy innovation and modernization, we propose a role for government that is both limited and direct. It is limited because it is focused, not on reorganizing our entire highly complex energy economy, but rather on specific strategies to drive down the real cost of clean energy technologies. Instead of subsidizing existing technologies hoping that as they scale up, costs will decline, or providing tax credits to indirectly incentivize research at private firms, this framework is direct because the federal government would directly drive innovation and adoption through basic research, development, and procurement in the same way it did with computers, pharmaceutical drugs, radios, microchips, and many other technologies.

Time and again, when confronted with compelling national innovation priorities, the United States has summoned the resources necessary to secure American technological leadership by investing in breakthrough science and world-class education. The United States responded vigorously to the Soviet launch of Sputnik by investing the resources necessary to ensure American innovators, entrepreneurs, and firms would lead the world in aerospace, IT, and computing technologies, igniting prosperous new industries in the process. [The successes of the Manhattan Project and race to the moon should not swell the heads of would-be central planners. Both were exceedingly limited-in-scope projects. Not easy, but limited.] Today, we invest $30 billion annually in pursuit of new cures to deadly diseases and new biomedical innovations that can extend the lives and welfare of Americans. [Investment? We have accomplished precious little with that annual $30 billion. That expenditure has become more akin to workfare for the overeducated.] We similarly devote more than $80 billion annually to military innovations that can help secure our borders. [Another rousing government success!] We propose a similar national commitment to energy sciences and education, which have languished without the funding deserving of a national innovation priority. [We already spend a fortune on education — more than any other nation. What do we get for it? 25th in worldwide math and science?] At the same, this proposal is based on what we know about successful public-private partnerships to build and strengthen regional hubs of innovation, such as the one that evolved into Silicon Valley. Therefore, we propose investment in a national network of regional clusters of universities, entrepreneurs, private investors, and technology companies. [Apparently, we can't make progress until we have the proper bureaucracy set up. Taxpayers need to hold on to their wallets any time the term "public private partnership is used.]

While the left wants to cut fossil fuel and nuclear subsidies and the right wants to cut renewable energy subsidies, we propose across-the-board energy subsidy reform, disciplining all incentives for technology deployment and adoption to a new framework that rewards innovation — as measured through real declines in the cost of generating energy — not simply producing more of the same. [Why not get rid of all subsidies and reform the tax code? Make technologies compete on their own economic merits. Technology is its own incentive; if it needs to be subsidized then it has no real value.] Today’s federal investments — whether for solar and wind or ethanol and nuclear — are structured around scale and quantity, not innovation. The innovation system we propose builds on the successes of military procurement to purchase and prove advanced energy systems while providing competitive markets for emerging energy technologies, which can facilitate mass manufacture, demand progressive innovation, and bring down the real, unsubsidized cost of clean and secure energy alternatives. [Military procurement as a model? Which cost-overrun should we point to? What is this fascination with command-and-control style government?]

These productive investments have the potential to raise America’s economic growth over the long term and thus help reduce the budget deficit. America’s $1.3 trillion budget deficit is largely a consequence of low growth and the increasing cost of structural entitlement programs, but it can be overcome by a combination of higher growth, responsible entitlement reform, and targeted spending cuts. Achieving higher growth will require continued federal investments in productive enterprises, including health, information technology, and energy. [Believe it or not, fire, electric current, the automobile, airplane, telegraph, telephone and many other technologies were all developed and commcialized without government involvement. AEI and Brookings have been in Washington, DC too long.] Furthermore, fear of technology failure should not paralyze strategic investments in innovation, since some amount of failure is inevitable and essential to such a disruptive and non-linear process. [We have nothing to fear, but the government itself.]

To ensure that these limited, targeted new investments do not add to the federal deficit, we propose a suite of options that Congress and the President can use to finance energy innovation. [Because the government can/should be picking winners and losers? President Obama was a community organizer, not Thomas Edison, in his past life (and even Edison was wrong when it came to electricity for the masses).] These include cutting existing energy subsidies, charging new royalties for oil drilling, small surcharges on oil imports or electricity sales, and a very low carbon price. While each of these mechanisms may bother some on both the left and right, all should agree that exacerbating the national debt is unwise. Revenues must be found in order to make these productive investments, which have long-term potential to revitalize the economy. [A growing economy will float all boats — including our bloated government. Growing government will do just the opposite.]

Increasing investment in energy technology and innovation, as we advocate, remains exceedingly popular with Americans of all political stripes. Of all energy policy proposals, from carbon pricing and cap and trade to new oil and gas drilling, expanding production and lowering the price of clean, innovative energy technologies is the most popular approach, regularly receiving support from 65 to 90 percent of Americans in independent news polls, Gallup surveys, and other opinion research. [Unicorns for everyone and free cotton candy would also be popular.]This public support is consistent over time, and reflects the historical willingness of publics to pay slightly more for cleaner and safer energy sources. [Let's poll the public and whether it likes being lied to and ripped off by the government.]

In the pages that follow, we aim to present a practical and bipartisan [Bipartisan = supposed conservatives who want to be invited to tony Washington DC cocktail parties.] approach to American energy policy. The time has come for a fresh start that can bring our nation into the future through a pragmatic drive to make clean energy cheap and abundant. [Fresh start = July 4, 1776]

POST-PARTISAN POWER
AMERICAN ENTERPRISE INSTITUTE!BROOKINGS INSTITUTION!BREAKTHROUGH INSTITUTE
SUMMARY OF RECOMMENDATIONS”

Invest in Energy Science and Education

Secure funding necessary to complete the doubling of Department of Energy (DOE) Office of Science budgets. Direct a significant portion of new funds to programs related to energy sciences, including roughly $300 million in annual funding to scale up the Energy Frontier Research Centers (EFRC) program over the coming years. [The Department of Energy is a failure and should be abolished.]

Invest roughly $500 million annually to support K-12 curriculum and teacher training, energy education scholarships, post-doctoral fellowships, and graduate research grants. [We need to get the federal government out of education. Has anyone noticed that kids have gotten stupider as the government gets more involved?] Just as the United States rose to the Cold War challenge by enacting the National Defense Education Act and leveling critical investments in science, technology, engineering, and mathematics education, a new national commitment is needed today to train, educate, and inspire a generation of energy innovators, engineers, and entrepreneurs. [Cold War defense challenges were solved by men and women who were educated in the days before taxpayer largesse flowed freely to a corrupted university system.]

Overhaul the Energy Innovation System

Help reform the U.S. energy innovation system by investing up to $5 billion annually to establish a robust national network of regional energy innovation institutes bringing together private sector, university, and government researchers alongside investors and private sector customers. Funded at $50-300 million annually, each institute will foster competitive centers of clean energy innovation and entrepreneurship while accelerating the translation of research insights into commercial products. [Because in Washington DC: Bureaucracy=Success]

Bring the Advanced Research Projects Agency for Energy (ARPA-E) to scale by providing $1.5 billion annually, while dedicating a significant portion of new funding to dual-use energy technology innovations with the potential to enhance energy security and strengthen the U.S. military. The Department of Defense (DOD) should work actively with ARPA-E to determine and select dual-use breakthrough energy innovations for funding through the ARPA-E program and potential adoption and procurement by the DOD. [Hopefully, DOD's success with pioneering the Internet will translate into a perpetual motion machine.]

Reform Energy Subsidies and Use Military Procurement and Competitive Deployment Incentives to Drive Price Declines

Reform the nation’s morass of energy subsidies. Instead of open-ended subsidies that reward firms for producing more of the same product, employ a new strategy of competitive deployment incentives, disciplined by cost reductions and optimized to drive steady improvements in the price and performance of a suite of emerging energy technologies. Create incentives for various classes of energy technologies to ensure that each has a chance to mature. Decrease incentive levels until emerging technologies become competitive with mature, entrenched competitors to avoid creating permanently subsidized industries or picking winners and losers, a priori. Meet the new morass; same as the old morass.]

Expand DOD efforts to procure, demonstrate, test, validate, and improve a suite of cutting-edge energy technologies. New, innovative energy alternatives are necessary to secure the national defense, enhance energy security, and improve the operational capabilities of the U.S. military. Provide up to $5 billion annually in new appropriations to ensure the Pentagon has the resources to pursue this critical effort without infringing on funds required for current military operations. [We should just surrender to the Chinese now. In return, maybe they'll let us keep using knives and forks.]

Recognize the potential for nuclear power — particularly innovative, smaller reactor designs — to enhance American energy security, reduce pollution, and supply affordable power. [We can "recognize" anything we want, but as long as the greens have the ability to choke of nuclear power through regulation and litigation, they will.] America cannot afford to bank on one technology alone, however, and must pursue all paths to clean, affordable energy, supporting all innovative, emerging clean energy sources, from advanced wind, geothermal, and solar to electric vehicles and advanced batteries, allowing winners to emerge over time. [At what point does the taxpayer get to pull the plug on failed technologies?]

Internalize the Cost of Energy Modernization and Ensure Investments Do Not Add to the Deficit

Secure revenues to ensure these productive new investments do not exacerbate the national debt, through one or a combination of the following means: phase out unproductive energy subsidies, which have not sufficiently driven innovation; direct revenues from oil and gas leasing to energy innovation; implement a small fee on imported oil to drive energy innovation and enhance American energy security; establish a small surcharge on electricity sales to fund energy modernization, similar to the Highway Trust Fund; and/or dedicate revenues from a very small carbon price to finance necessary investments in clean energy technology. [Translation: Make consumers pay more for energy.]

So there you have it —  “post-partisan energy policy.” It’ll build on what’s failed and then charge people more for it.

Sorry, but we’re for gridlock until the American left packs up and moves to Totalitarian Fantasy Island.

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