Staying with the Monday Is Obama Day theme, here are a few thoughts on Obama's energy plan. (Full plan here; speech introducing the plan here.)
Overall, I'm pleasantly surprised -- even shocked -- at its quality. It's a deft mix of good politics and strong, substantive policy. Here are what I see as the three headlines:
- 100% auction of cap-and-trade credits. This is a home run, a real act of standard-setting boldness (the kind that Obama always promises but rarely delivers). The green community should immediately use it to push Clinton and Edwards into making the same commitment, insuring that it's the new baseline for any cap-and-trade program.
- Smart investment. The revenue from auctions will be considerable, up to $50 billion a year, and Obama's smart about putting it to work, dividing it between energy R&D, protections for low-income workers, and market deployment of existing clean tech.
- A focus on efficiency. Clearly Obama gets that efficiency is the easiest route to emission reductions, and he's got a set of thoughtful, detailed initiatives to make it work.
More detailed thoughts below the fold.
Much has been said about Edwards' important role in this campaign: pushing the other candidates toward stronger, more ambitious policy. You can see it at work here -- in several respects Obama's energy proposal echoes Edwards'.
However, with his promise to auction 100% of cap-and-trade credits, Obama has put himself out ahead of all the other frontrunners. He deserves the praise he'll get for it.
As for investing the auction revenue, Obama gets it absolutely right:
Some of the revenue generated by auctioning allowances will be used to support the development and deployment of clean energy, invest in energy efficiency improvements and address transition costs, including helping American workers affected by this economic transition and helping lower-income Americans afford their energy bills by expanding the Low Income Home Energy Assistance Program, expanding weatherization grants for low-income individuals to make their homes more energy efficient, and establishing a dedicated fund to assist low-income Americans afford higher electricity and energy bills
Note that Obama is neatly transcending the faux-controversy between Shellenberger & Nordhaus and their critics: He's putting regulation and investment on equal footing.
He's smart on investment, too -- some of it is for basic R&D, some of it for green jobs programs, and some for pushing existing technologies to market. I particularly like this:
The Clean Technologies Deployment Venture Capital Fund will be modeled on the highly-successful Central Intelligence Agency In-Q-Tel program. In-Q-Tel is a non-profit, independently-managed venture capital fund led by seasoned venture capital professionals to develop new intelligence technologies for the CIA. The first five years of In-Q-Tel funding led to 22 new technologies being used in 40 government programs.
The CTDVCF (which needs a better acronym) would be specifically designed to get technologies across the "valley of death" that separates the lab and the market. This is a creative way to spur rather than replace market incentives.
Naturally I'm not too excited about the ethanol business, but if you must have ethanol, this is about as good a balance as you could as for. It's frank about the limitations of corn ethanol and promises plenty of research money for cellulosic. Most importantly, it specifically calls out the importance of local ownership of biofuel refineries, and promises some incentives that would encourage it.
Here's the wording on dirty coal plants:
Obama will use whatever policy tools are necessary, including standards that ban new traditional coal facilities, to ensure that we move quickly to commercialize and deploy low carbon coal technology. Obama's stringent cap on carbon will also make it uneconomic to site traditional coal facilities and discourage the use of existing inefficient coal facilities.
Sounds like he's proposing more or less what Edwards is: requiring that new coal plants be IGCC. As I said in this post, that's a big risk, and not anything close to as bold as requiring working CCS. Combined with the price on carbon, though, it certainly sends the right signal to coal companies: old-fashioned dirty coal is on the way out. Greens should push Clinton to go at least this far.
On efficiency, some highlights include making all new buildings carbon neutral by 2030, decoupling in the utility sector, and my personal favorite, investing in the smart grid.
The transportation stuff contains the usual promises to boost CAFE standards and mandate flex-fuel vehicles, but -- praise be -- it also contains several measures to reduce driving. Listen to this sweetness:
Barack Obama believes that we must move beyond our simple fixation of investing so many of our transportation dollars in serving drivers and that we must make more investments that make it easier for us to walk, bicycle and access other transportation alternatives.
There's a limited amount the federal gov't can do on this score, but Obama has been thoughtful about how to use those tools.
Finally, Obama says all the right things about the international effort -- re-engage with the UN process, bring developing countries in, etc. etc.
There are certain areas where the plan is vague, and a few others where I'd disagree on details, but overall I think greens should be happy with its comprehensiveness and boldness. It's just stunning how far the energy policy discussion has come in the last couple of years.
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Comments
View as Flat
Jon Rynn Posted 6:50 am
08 Oct 2007
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Sean Casten Posted 6:50 am
08 Oct 2007
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Gar Lipow Posted 9:11 am
08 Oct 2007
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sasquatch Posted 12:47 pm
08 Oct 2007
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Delay And Deny Posted 1:15 pm
08 Oct 2007
H. Clinton who uses the backs of children to gain power?
Or Obama, who is in fealty to the corn (syrup) industry.
Either way, don't vote Democrat.
John Bailo
Sutext:
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ids Posted 2:10 pm
08 Oct 2007
Umm . . . isn't solar and wind the most abundant energy source? BO is an ignorant pimp for coal, make no mistake about it.
It's stunning how far global warming has come in the last few years (as runners drop like flies in Chicago from the heat). Greens should be as happy with this BO plan as someone dying of thirst is happy getting spit in the face.
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jackburden Posted 10:25 pm
08 Oct 2007
From a message point of view, if Obama becomes the Democratic nominee, I'm confident he'll talk more about investing in clean energy and creating new jobs than he will about limiting carbon emissions. Why? Because it's a much better message than limiting emissions. And it will build the kind of political capital necessary to pass substantive cap and trade.
But David clearly has something personal against S&N. First comparing them to Bjorn the denier, and then, when a major Presidential candidate proposes damn near precisely what they've been proposing (linking emissions reductions and investment), you use it as an opportunity to set them up as straw men once again.
What gives?
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clweber Posted 11:19 pm
08 Oct 2007
The whole point of Cap+Trade or Cap+Auction is the cap. Ignoring for a minute the debate between carbon taxation and C+T or C+A (this is where the real debate should be, as the Stern Report elegantly argues) the cap in either system is arbitrary and the major lever of the entire policy. Permits cannot simply be "bought as needed" unless the cap is unreasonably high. Most of the proposals out there, including Obama's, talk about capping at some moderately reduced level in the short-term (up to 2020) and reducing it drastically in the long-term (mostly defined as 2050), as investment and R+D make it more economically feasible to move away from current energy and production practices. Thus, with limited amounts of emissions allocations available, buyers are forced into secondary markets. This is the entire point of either C+T or C+A--the difference between them lies in initial allocation of emissions, again as argued by Stern.
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Sean Casten Posted 12:05 am
09 Oct 2007
The trade is implicit in the cap structure. The auction simply refers to whether the starting value of the cap is set by auction or allocation. Once established, all the models include a way to trade, essentially modeled on what we've already done with the tradeable sulfur market. And an auction is VASTLY preferable to an allocation. Again, the sulfur experience is instructive. In that case, we allocated, with the historic emitters being given a free pass. The result was that new, low (but non-zero) sulfur plants faced an economic hurdle to build their plants, even while the old, dirty plants faced no economic hurdle to continue operation. The price of sulfur did eventually come down through trading, but it took much longer than it need to have because most of the market had no incentive to participate.
Additionally, an allocation system creates a huge incentive to over-allocate, as the folks with the allocated gift - who represent the established, status quo - have big lobbying arms that push hard to maximize the size of their gift. This means that the cap is too high, and those big polluters end up not only not having to pay, but also having extra permits that they don't need, which they can sell to the market. In other words, the biggest carbon sources not only have no incentive to control their carbon, but find themselves making a lot of money trading carbon credits they got for free... all in the name of carbon control, of course. (This has happened in Kyoto, where one of the biggest economic beneficiaries of the agreement has been the coal-fired power industry. If you need a test of whether your carbon policy worked, NOT incentivizing coal-fired power seems like a good test... and yet this is exactly where an allocation framework leads.)
Bottom line is that while the universe of carbon legislation certainly has more options than are currently in the public debate, once we decide on a cap & trade framework, we ought to push very hard for an auction rather than allocation methodology. The latter simply defers the time until we get serious about carbon reduction. Time which Hansen seems to think we don't have.
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Jon Rynn Posted 12:06 am
09 Oct 2007
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Sean Casten Posted 12:32 am
09 Oct 2007
For what it's worth, my personal feeling is that this is the right approach, as it's really hard to see how you would monitor carbon emissions from every tailpipe and figure out whether some individual had a credibly defensible amount of carbon to buy/sell. (As a friend recently put it, there are four thing that matter for automotive carbon emissions: what fuel you use, what car you drive, how you drive and how much you drive. Of those four, the last two are really hard to regulate - but if you only regulate the first two, you miss half of the problem.)
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Sean Casten Posted 12:38 am
09 Oct 2007
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Jon Rynn Posted 12:55 am
09 Oct 2007
The other reason to worry about cars, of course, is peak oil -- according to my calculations, something like 90% of oil use is for internal combustion engines (I should do a post on that). So there are two main reasons to be aggressive about autos, but the cap or res initiatives can go forward without necessarily solving the transportation one, I suppose, as important as that one is.
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zacaroni Posted 1:06 am
09 Oct 2007
Coal and corn are this man's interests. Obama is only implementing strategies that will allow these industries to continue taking from the future for the sake of a luxurious present. It will be old fashioned industrial practices with a new coat of paint.
How does Obama define green tech? He defines it as coal with a filter. But let's face it: in 19 states it's unsafe to eat fish because of mercury contamination due to coal. Asthma, multiple-chemical sensitivity, and cancer are epidemic - ask any health care professional living in the coal belt. And we call this green? (Don't even get me started on the VAST expanse of subsidized, barely-profitable, overproduced monoculture that is industrial corn farming in the midwest! Apparently this passes for green tech, too!)
There's no such thing as clean coal.
EVERYONE! SAY IT WITH ME, NOW!
There's no such thing as clean coal!
There's no such thing as clean coal!
There's no such thing as clean coal!
How about this one, for Obama:
Ring around the rosie
A pocketful of coal, see?
Ashes, Ashes
We all fall down!
There's nothing "ambitious" about these policies, and there's nothing green about Barack Obama.
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Sean Casten Posted 1:45 am
09 Oct 2007
Indeed, we're already seeing the limits of the RES approach (witness the USA Today article last week about how the prices for RPS credits are going up because they are almost all supply constrained. This isn't because we don't have lots of options for clean energy, but rather because the existing regs have only granted eligibility to a narrow list of clean energy techs.) Which is fine if our intent is to create new industries, favor specific techs, etc., but is a sloppy way to do carbon. Controlling carbon will take conventional solar-wind-hydro renewables, but will also need the full participation of biomass, efficiency, nuclear, conservation and lots of other techs we haven't yet thought of. RES policy, being based on paths rather than goals is by design unable to be all-inclusive.
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Jon Rynn Posted 2:05 am
09 Oct 2007
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Sean Casten Posted 2:13 am
09 Oct 2007
Far better simply to provide an incentive for controlling carbon to everyone. If utilities want to participate, that's fine. If they'd prefer to follow their past century of behavior, that's fine too, but let's make sure that they feel a lot of financial pain for doing so. But for goodness sake, let's put the varsity on the field.
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Jon Rynn Posted 2:28 am
09 Oct 2007
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Jason D Scorse Posted 2:18 pm
09 Oct 2007
http://www.barackobama.com/
J.S.
I teach environmental economics and blog at http://www.voicesofreason.info.
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Jesse Jenkins Posted 2:24 pm
09 Oct 2007
Actually, almost all proposals due in fact include the transportation sector (at least all federal proposals plus CA's AB 32) by including oil refineries (and sometimes importers) "upstream" in the cap. That is an oil refinery or oil/refined product importer would need to submit emissions allowances for each ton of carbon in the fuel that they sell, in addition to the emissions that actually come out of refinery smokestacks. The cost of those emissions is therefore passed "downstream" to consumers in the price of fuel, essentially implementing a carbon content-based fuel tax that should hopefully reduce demand by encouraging conservation and fuel efficiency.
That's the idea anyway, and is how you wrap the transportation industry (both freight and light vehicles) up in the cap.
Check out World Resource Institutes's excellent side-by-side comparison and analysis of the current federal climate proposals here.
Jesse Jenkins
_____________________
WattHead - Energy News and Commentary
http://watthead.blogspot.com
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Sean Casten Posted 11:15 pm
09 Oct 2007
My personal belief is that you probably have to have some kind of technology mandate on the transportation side, simply because the relatively low annual capacity factor on a vehicle means that energy costs are a small fraction of total ownership costs, and therefore taxes on fuel aren't going to do much to shift demand - as the run up in gasoline prices over the last 5 years shows all too well.
But that's personal theorizing - not necessarily what the policies say.
Anyway, thanks for the correction.
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