Moving Forward, Part Three – Sustainable Energy Policy
I really should have made this number one. This is the place where we can have the biggest impact on economic growth, job creation, the environment, and national and international peace and security. Even if you think global warming is a myth and/or there really were WMDs in Iraq, there is still enough here that makes reducing fossil fuel usage and replacing it with clean renewable energy a good idea.
Last summer, I drove out to Arizona for business, stopping in Albuquerque to visit my sister on the way back. Along both I-20 and I-40, I saw some windmill farms, but I also saw lots of empty space where many more could be. As I got closer to my home, I really wanted to turn around and head back out West. Heading east through Mississippi and Alabama, on any part that is elevated, you see a nasty brown cloud in the sky. Welcome to Georgia Power, a Southern State. They don’t even bother with the delusion of “clean coal”. Only with action at the Federal government level is that ever going to get cleaned up. The Georgia Legislature point of view is “we’re keeping power as cheap as possible even if it kills you.”
That’s the problem, isn’t it? Changing our energy infrastructure means we have to pay more today to get a benefit in the future. It’s not just big corporations who are stuck on making this quarter’s financials look good at the expense of sustainability. We all do it. We have become a nation whose largest product is debt. Too many of us look at purchases not as “Do I have the money in the bank to pay for this?” but as “Do I have enough room under my credit limit to pay for this?”
The way to overcome this is to change the cost structure via taxes, tax credits, and government spending habits. The same Congressmen who decry bailouts as socialism had no problem giving Big Oil tax credits during the years they were making record profits. The US has the lowest gasoline taxes of any developed nation. Companies get special tax treatment for purchases of pickups and truck-based SUVs, the least fuel efficient vehicles out there. We sort of have tax incentives to buy hybrids, but there is a cap on the number of vehicles sold that qualify. All this is backwards!
When gas prices hit $4.00 a gallon last year, we finally started to see a change in car buying habits. Adding $1.00/gallon tax would raise $127 billion dollars in a year, based on Energy Information Administration statistics. Use this money to increase the tax credit for hybrid purchases. As hybrid production increases, the difference in price between hybrids and standard versions will decrease. (The research and development costs are the same whether you sell 1,000 or 1,000,000. The R&D cost per car changes drastically.)
The other piece of this is in the generation of electricity. The technology exists for large scale solar and wind generation. What is needed is the infrastructure to store and distribute power from areas where it can be generated most efficiently to areas where it cannot. We need large scale production and investment in a “smart grid” that can do efficient distribution.
This investment can come from the market, but only if there are clear and consistent policies that investors can rely on for years to come. You can’t expect people or companies to invest in something if they have to fight with Congress each year to keep the rules from changing. There is a company in Ohio that developed a cheaper solar panel suitable and economical for use on private houses. They are doing well and have built a new plant that created lots of new jobs. But it’s not in Ohio. It’s in Germany, where their customers are. Why is it there and not here? Because the German government requires utilities to buy back your excess power from your solar panels at the same rate it costs them to generate electricity.
These tax policy changes are not socialism. This is not “redistribution of wealth”. This is “We the People” acting in concert to prevent individuals from escaping paying for the environmental and health care costs of fossil fuel pollution. As oil usage decreases, the profits of oil producers decrease. On a national security level, this reduces terrorist capital. Oil money is what keeps the House of Saud in business, and splinters of the House of Saud form both the financial and ideological backbone of Al-Qaeda. Oil money funds Iran, which uses the same ideology to promote its national self-interest. If we didn’t need to meddle in the Middle East in the name of securing our energy supplies, we would further undercut terrorist propaganda and recruitment. This in turn would reduce our defense spending requirements, and let us use that money instead to pay down debt and invest in production, not destruction.
“All this has happened before and will happen again.” Unless we do something differently.