To get the recent $700 billion bailout passed, some “sweeteners” were added to the package by the Senate to attract votes from certain constituencies. Among them were $18 billion in tax breaks for businesses and individuals who want to make their homes anLacking an overall strategy and insufficient funds for the job, the “sugar high” will have little lasting impact. So goes the quest for “energy independence” touted by Congress and the presidential candidates.
While Congress steadfastly declines to increase taxes on an oil industry making record profits — taxes which could be used to develop alternative energy — Europe and other nations, including China, forge far ahead in weaning themselves from dependence on petroleum. While the government stumbles all over itself to hand hundreds of billions to reckless speculators, only grudgingly does it support alternative energy.
And although Democratic presidential candidate Barack Obama is likely to be more supportive of alternative energy than Republican John McCain, neither party’s platform includes the sort of aggressive plan that America really needs.
Innovation from Abroad
On Friday, August 1, when most of the world’s attention was focusing on the Beijing Olympics, The Guardian reported that China became the world’s leading producer of renewable energy, according to a report by the Climate Group. Not only that, the Guardian observed, but China “is on the way to overtaking developed countries in creating clean technologies.”
In fact, the Climate Group report says that China is the world leader in installed renewable capacity, and within the next year it is expected to become the world’s leading exporter of wind turbines. The report says that China’s investment in renewable energy is almost level with world leader Germany as a percentage of gross domestic product.
“For too long, many governments, businesses and individuals have been wary of committing to action on climate change because they perceive that China — the world’s largest emitter — is doing little to address the issue,” Steve Howard, chief executive of the Climate Group, told The Guardian. “However, the reality is that China’s government is beginning to unleash a low-carbon dragon which will power its future growth, development and energy security objectives.”
Can this be the same China that the administration of President George W. Bush cited as a reason not to sign the Kyoto Protocol on global warming? Yes, but not as portrayed by American TV Olympics commentators, who at times seemed fixated on Beijing’s smog. In 2007, China emitted 5.1 tons of carbon dioxide per capita. The United States spewed out 19.4 tons.
America may excel at pollution but it hasn’t gone too far towards becoming “energy independent,” even though candidate after candidate has promised to strive toward that goal. Other countries are making much bigger strides.
The European Union mandated renewable-energy standards and greenhouse gas emissions limits to be achieved by all its members by 2020. New Zealand committed itself to supplying 90 percent of its electricity from renewable sources by 2025.
Sweden set an even more ambitious goal: to become the first country in the world to break the dependence on fossil energy. Sweden plans to stop using oil by 2020 and gradually get rid of gasoline-run cars and oil-heated homes, Minister for Sustainable Development Mona Sahlin declared in 2006.
The U.S., meanwhile, has nothing like a Minister for Sustainable Development. What passes as energy policy in America is a piecemeal, stops-and-starts approach that is often ill-conceived and just as often more rhetoric than action. In late 2007, Congress called for the nation to pursue 25 percent renewable energy by 2025.
But Dan Arvizu, director of the U.S. Department of Energy’s Colorado-based National Renewable Energy Laboratory, told a Harvard University audience such a goal is laughable to Germany, where 25 percent is a business-as-usual mark. One hundred percent renewable by 2025, Arvizu said, is cited by the Germans as their “stretch goal.” In fact, Arvizu said, U.S. public investment in renewable energy research has fallen 78 percent since 1978.
Germany and China aren’t the only countries far ahead of the U.S. in the renewable energy race. Iceland is already at about 80 percent. All electricity on the island is generated through geothermal or hydroelectric sources, which produce low emissions and don’t use fossil fuels. Prime Minster Geir H. Haarde told Newsweek, “The only uses of fossil fuels in Iceland are people using cars and the fishing fleet.”
Meanwhile, Iceland is exporting its geothermal acumen. Reykjavik Energy Invest is working on a project in Djibouti that could provide electricity and water for drinking and irrigation. Enex is in a joint venture with Chinese energy company Sinopec to build and manage a geothermal district heating system in Xianyang. Iceland America Energy, a subsidiary of Enex, is developing a geothermal plant in the Truckhaven area in Southern California.
What Energy Independency Looks like at Home
Spending $18 billion toward alternative energy as “sweeteners” for votes on a $700 billion bailout is not part of a coherent national energy strategy — and not surprisingly, even these sweets have a bitter lining. Read the fine print and you’ll find that this $18 billion represents extending wind-power tax credits for one year; other types of renewable energy, such as small-scale hydro or tidal power, for two years, and solar tax credits for businesses and residential installations for eight years.
Although the eight-year extension for solar power was rightfully welcomed by that industry, this “good for a limited time only” approach does little to grow alternative energy because people looking to invest in growing businesses want at least a little security in their investments. When a business’s tax picture can change significantly next year or the year after, it makes attracting funds unnecessarily difficult — and works against developing alternative energy in long-term, thoughtful ways. Many wind projects, for instance, require a year or more of monitoring to ensure the most efficient turbines are installed at the proper height to generate the most electricity.
As Forbes.com observed, “The government’s inability to head in the same direction for more than a couple of years at a time is crippling the capital-intensive business, where a single project can cost hundreds of millions to billions and take years to complete. Yet even as concerns about the price of oil and global warming have intensified — along with cries that the industry do something about it — U.S. energy policy has become increasingly impossible to count on, causing major problems for companies.”
Barbara Lockwood, Arizona Public Services manager of renewable resources, says the utility is committed to making Arizona “the solar capital of the world and bringing affordable renewable energy to all of its customers.” But APS has installed only 5 megawatts of solar power in the last 20 years, and a planned $1.5 billion solar plant near Gila Bend will be built and operated not by an American company, but by the Spanish firm Abengoa Solar Inc.
Arizonan John McCain, the Republican presidential nominee, advocates an energy policy of “all of the above — alternative fuels, wind, tide, solar, natural gas, clean coal technology.” But his policies are likely to be tilted heavily toward petroleum and nuclear power, according to Environmental News Service.
They also fly in the face of reality. The U.S. consumes nearly one-fourth of the world’s oil but produces only about 10 percent, and it ranks only 11th in the world in proven oil reserves. Unless offshore exploration reveals some very big deposits, those numbers aren’t likely to shift much. Moreover, offshore drilling and extracting oil from shale, which McCain and the Republicans also tout, would require years of effort and a great deal of capital at a time when even Big Oil says the worldwide economic implosion is causing it to cut expenditures. Nuclear energy would not only face similar hurdles but also have to overcome American skepticism. No new nuclear plants have been built in the U.S. since 1979 and a recent Harris Poll found that 49 percent of Americans now support building more nuclear plants — an increase of only 2 percent in 30 years.
The Republican Party platform echoes McCain’s smorgasbord approach with drilling for oil and building nuclear plants as the main courses. It also advocates “a long-term energy tax credit equally applicable to all renewable power sources.” That may sound good to those still enamored of classic capitalism, but the country — and the world, considering energy’s impact on global warming — may not have time to let the market determine alternative energy winners and losers. The GOP also calls for easing the regulatory burdens on nuclear power, which could be a hard sell in the wake of deregulation’s role in the current financial crisis.
Perhaps just as revealing as the Republicans’ platform planks is its introduction to the energy section: “The ongoing transfer of Americans’ wealth to OPEC — roughly $700 billion a year — helps underwrite terrorists’ operations and creates little incentive for repressive regimes to accept democracy, whether in the Middle East or Latin America.” McCain made similar remarks in the second presidential debate. But the Associated Press reports “the figure is inflated and misleading. The U.S. is not spending nearly that much on oil imports and roughly one-third of what it does spend goes to friendly countries such as Canada, Mexico and Britain.”
The Democratic Party’s platform is more ambitious and explicit in terms of alternative energy. It calls for making the United States 50 percent more energy efficient by 2030 and to get at least 25 percent of its electricity from renewable resources by 2025. In the second presidential debate, Democratic presidential candidate Barack Obama said, “Our goal should be, in 10 year’s time, we are free of dependence on Middle Eastern oil. That would be priority number one.” Obama called on Americans to “save energy in our homes, in our buildings” and promised “incentives so that you can buy a fuel efficient car that’s made right here in the United States of America, not in Japan or South Korea.”
Obama’s energy plan calls for increased oil production, but noted that “includes telling the oil companies, that currently have 68 million acres that they’re not using, that either you use them or you lose them.” He also acknowledged that coal and nuclear energy can play roles in an American energy transformation, but only as the country develops “clean coal technology and safe ways to store nuclear energy.”
Obama also said that he would commit $15 billion a year for 10 years toward becoming energy independent. That certainly sounds good to the millions of Americans worried about high energy costs, would-be energy entrepreneurs and investors, and unemployed people who might find jobs in a growing alternative-energy sector.
But to put things into proper perspective, the $150 billion total cost of Obama’s proposal is only about one-fifth of what Congress recently approved for the Wall Street bailout and one-quarter of this year’s defense budget. What Obama is pledging to spend each year is slightly more than what we are currently spending each month for the wars in Afghanistan and Iraq. And Obama’s $15 billion a year would be devoted mainly to developing American energy alternatives like solar power. China already has six solar companies up and running that are worth a combined $15 billion.
If Obama wins the presidency, the United States may finally enter the alternative energy race in a more realistic way. If McCain wins, America may join in halfheartedly. Either way, it will be starting from far behind.
Article by: John Beckett
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