26 October 2008

On McCain, Obama, Energy & the Environment

(This post is the text from a talk I gave today at St. Martin-in-the-Fields Church in Philadelphia, as part of their Election '08 Forum.)

I've spent the past few weeks researching John McCain and Barack Obama on the issues of energy and the environment. I've looked at their published platforms, reviewed their speeches and debate appearances, and scanned the opinions of a gaggle of pundits.

And, after all that research, I'm reminded of a TV commercial from the 70s, the one with the French chef comparing margarine and butter. "There is no differ-ance…" he exclaimed.

Well, there's not exactly no difference between the two on energy and the environment, but the similarities outweigh the differences, with the differences mostly in the details and ideology.

Senators McCain and Obama have been talking the good talk in terms of the environment. And their focus on energy independence has, along with last summer's high gas prices, raised awareness about the need for alternatives, including wind, solar, and even clean coal and nuclear.

McCain and Obama both support a cap-and-trade system on greenhouse gas emissions, which uses a limit on carbon emissions to force reductions and provides emissions permits (or the right to emit CO2) to be traded between sources.

McCain would give away some of the carbon credits, while Obama wants to auction the credits off to the highest bidder. Both would use profits from the sale of credits for investments in clean energy technologies.

Both candidates acknowledge that "human-caused climate change is real and urgent," which has some expecting a sea-change in climate legislation, green energy investments, and leadership on setting a new global climate agreement.

Critics of Senator Obama say that he has not yet put forth any major legislation or initiative on the environment, while Senator McCain was the lead sponsor of the first climate change legislation, McCain-Lieberman, which called for mandatory reductions in greenhouse gas emissions.

McCain is still a leader in this regard, calling for 60 percent reductions by 2050; Obama wants an 80 percent reduction in that same time frame, which is closer to the UN recommendation.

I'm not sure setting the higher target -- or even McCain's lower target – is feasible early in the next administration, so we may see them change their positions once elected.

On a number of issues, McCain and Obama have already backtracked on earlier positions. Obama originally opposed offshore drilling; he later embraced it when it was clear a majority of Americans were in favor. McCain has long opposed renewable energy tax credits, which provide incentives for renewable energy generation, but voted for them in the $700B bailout package. (His objection, apparently, is not to the concept, but the structure of the existing tax credits.)

Back in May, McCain said offshore drilling would have little impact on gas prices; by the convention he was chanting "Drill Baby Drill." Obama also initially supported subsidies for ethanol; in part, to please his corn-rich state of Illinois. He now says he would consider withdrawing that support if it proves to have negative impact on food prices.

Both candidates support drilling in the National Petroleum Reserve on Alaska's Central North Slope – the 23 million acres set aside by President Harding in 1923 as an emergency oil supply for the U.S. Navy. And they both oppose drilling in Alaska's National Wildlife Refuge on the eastern end of the slope. (Governor Palin vows to "work on John" about ANWR, but I don't think she'll get very far with it – he's long been against this political hot potato.)

Surprisingly, Obama and McCain have both come out in support of clean coal technologies. This is something many environmentalists are strongly against and may be another issue where the candidates could reverse their position once elected. "Clean coal" has a lot of baggage – even within the utility industry, with its haphazard approach to exploring options such as Carbon Capture and Storage, Coal-to-Liquid conversion, and scrubbers for existing coal plants.

All three approaches are expensive, unproven propositions; environmentalists argue the money is better spent on renewables.

Then there is nuclear. McCain is calling for 45 new nuclear plants by 2030, with an ultimate goal of 100. Setting aside the unresolved questions about waste storage, which is an area in need of serious investment, in my opinion, this position is not without controversy. (McCain, by the way, supports the Yucca Mountain storage facility in Nevada; Obama opposes it.)

Energy analysts who have looked at McCain's goal think it wildly ambitious, given the costs to build such plants, permitting hurdles, opposition, and the time frame for construction. Obama is willing to consider nuclear as part of the mix, but wants to emphasize renewables.

Obama is equally ambitious when he claims "we can create 5 million new jobs, easily," if we subscribe to his proposed investment of $150B over ten years in clean energy and infrastructure. A worthy goal and one that is not without some research to back it up. But I'm not sure how this can be paid for, especially with recently high levels of government spending associated with the "Surge" and "Splurge" – the war in Iraq and the bailout.

One area that has been only tacitly addressed and could potentially have the largest impact on meeting greenhouse gas emissions targets and stimulating the economy is energy efficiency. Unfortunately, efficiency is about as sexy as Jimmy Carter's cardigan sweater, thus the candidates have not been talking about it on the Campaign Trail. Nevertheless Amory Lovins of the Rocky Mountain Institute and others have argued that efficiency is the fastest and cheapest way to reduce our energy consumption and greenhouse gas emissions.

Obama and McCain both want to set building efficiency goals. Obama proposes weatherizing 1 million low-income homes annually and McCain wants to start by "greening" the federal government, which has over 3.3 B square feet of offices.

Obama also wants to expand the federal grant program to help states and municipalities build more efficient schools, libraries and police stations that adopt the US Green Building Council's Leadership in Energy and Environmental Design (LEED) principles. He also wants to get rid of traditional incandescent lights by 2014, which should be a boon to CFL and LED producers.

Both support efforts to improve the grid and increase percentages of electricity from renewables: Obama envisions 25% of consumer electricity coming from renewables by 2025 (renewables recently topped 10%, according to the Energy Information Association) and McCain has commented that wind could provide 1/5 of electricity supply by 2030 with the right tax credit structure.

On automobiles, McCain has voted against Corporate Average Fuel Economy (CAFE) standards, while Obama supports raising and perhaps doubling those standards (currently 27.5 mpg for passenger cars and 22.2 mpg for light trucks) over the next 20 years.

And, finally, the two candidates don't see eye-to-eye on two environmental tax issues: renewal of the Superfund clean-up tax on polluting industries (McCain = nay; Obama = yea) and Obama's proposed Windfall Profits Tax, taking "excess" profits away from oil companies to support alternatives and offer a "rebate" to individuals and couples ($500/1000) to help offset fuel costs.

In the end, there are a lot of overlaps in their positions, with a few critical differences, mostly in the details or ideology. It is clear that the potential for leadership on energy and the environment is the strongest since Clinton and Nixon.

Both candidates believe that climate change is an urgent issue, are committed to energy independence and investments in alternatives, and want to make green jobs a reality. Senator McCain has long been a conservationist, in the Teddy Roosevelt Republican mold, and Senator Obama has been engaged in environmentally friendly proposals since his time in the Illinois Senate.

The big question is the economy. There are troubling signs that the double edged sword of the economy and war may impede progress on the environment and a new energy economy in the coming administration. Oil could go as low as $50/barrel before it bounces back, which it will, and the financial crisis is likely to drag on, if it hasn't already moved from Recession to Depression.

Unfortunately, the environment and all things green tend to thrive in positive economic times; it is still considered a luxury issue. That may all change if oil and gas supplies have indeed hit peak – Russia, Norway, and Saudi Arabia are all in decline -- if the impacts of climate change begin to be felt more acutely, and, frankly, if we can demonstrate that the best way to rebuild our economy is to do it around something more sustainable than new home sales, consumer spending, toxic mortgages, and credit default swaps.

In my view, the next President must stay the course in his pursuit of a new green economy, but be realistic about costs and timing. Right now, we've heard mostly platitudes.

Practical solutions exist and we need to accelerate the adoption of low-carbon energy sources, raise efficiency standards to spur development of energy efficient products, and improve the electricity grid and energy infrastructure. This will require a laser-like focus on the lowest cost solutions and make trade-offs where necessary.

In the end, policy action is only a partial solution, innovation and entrepreneurship is critical. We can't expect the government to do it all – especially now that they are taking over the entire financial services sector.

Let's hope the next president, whoever he is, heeds the words of Oxford professor Steve Rayner, to paraphrase, "We don't need a silver bullet, but rather silver buckshot" to tackle these issues.

We need to make the environment and energy part of the economic and national security agenda. I think Senators McCain and Obama both realize this; and whoever wins on November 4th will set aside platitudes for pragmatism.

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