Highlights of Obama’s Energy Proposals

I am working on a critique of President-elect Obama’s energy proposals. I am working to complete this before Monday, as I fly back to Europe then and will be quite busy for a few days. While I work on this, I thought I would provide the highlights of his proposals without commenting yet.

I think Obama’s choice of Secretary of Energy is going to be a strong indicator of whether he is going to declare open warfare on the oil companies, or whether he is going to try to work with them. I have seen Pennsylvania Governor Ed Rendell floated as a possible candidate. I think that signals that open warfare is the direction, as Rendell has been quite a demagogue over the oil companies.

As I documented before, Rendell is someone who doesn’t seem to see the connection between the ‘drive anywhere, anytime’ mentality and high gas prices. He wants to have the convenience of hopping in his suburban to drive two blocks, and then he wants to punish the oil companies because prices are too high. By suggesting a rebate (paid by the oil companies) based on how many miles you drove, he actually wants to reward the people who drive the most. This is genius: Reduce supply with a windfall profits tax, while at the same time increasing demand with a reward to those who drive the most. Fundamentally, I don’t think Rendell has an understanding of the nature of the problems we face.

I have also seen Arnold Schwarzenegger floated as a possible candidate. I think he would be a good choice, as would former Energy Secretary Bill Richardson (although my guess is that he may end up Secretary of State). Both are pretty knowledgeable about energy issues.

You can read through all of Obama’s proposals on his website at New Energy for America. Here is a summary, from Obama’s site, of the highlights. One thing that didn’t make the highlights is that Obama reportedly intends to continue to pursue our current ethanol policies.

Provide Short-term Relief to American Families

• Enact a Windfall Profits Tax to Provide a $1,000 Emergency Energy Rebate to American Families.
• Crack Down on Excessive Energy Speculation.
• Swap Oil from the Strategic Petroleum Reserve to Cut Prices.

Eliminate Our Current Imports from the Middle East and Venezuela within 10 Years

• Increase Fuel Economy Standards.
• Get 1 Million Plug-In Hybrid Cars on the Road by 2015.
• Create a New $7,000 Tax Credit for Purchasing Advanced Vehicles.
• Establish a National Low Carbon Fuel Standard.
• A “Use it or Lose It” Approach to Existing Oil and Gas Leases.
• Promote the Responsible Domestic Production of Oil and Natural Gas.

Create Millions of New Green Jobs

• Ensure 10 percent of Our Electricity Comes from Renewable Sources by 2012, and 25 percent by 2025.
• Deploy the Cheapest, Cleanest, Fastest Energy Source – Energy Efficiency.
• Weatherize One Million Homes Annually.
• Develop and Deploy Clean Coal Technology.
• Prioritize the Construction of the Alaska Natural Gas Pipeline.

Reduce our Greenhouse Gas Emissions 80 Percent by 2050

• Implement an economy-wide cap-and-trade program to reduce greenhouse gas emissions 80 percent by 2050.
• Make the U.S. a Leader on Climate Change.

I will have details and comments as soon as possible.

55 thoughts on “Highlights of Obama’s Energy Proposals”

  1. More ethanol – ugh. More coal – ugh. No nuclear – ugh. Windfall profits – ugh. No new domestic production – ugh.

    The reality (and the market is already reflecting this) – we will be leaning even more heavily on nat gas for the forseeable future. California’s energy policy writ large.

  2. That’s an awful energy plan in my opinion. Obama needs some serious help on this matter because he’s apparently clueless about what the real problems are.

    I was reading a short description of his energy plan in Time Magazine this morning and I thought jokingly to myself that his energy plan consists of “Burning diesel and natural gas to make ethanol and then somehow defying the laws of physics.”

  3. I live in California, my electric bill was $12.41 this month. No biggie.

    (Looking at that list I see a lot that he could drop, and more that he could keep to be broadly fulfilling those promises. There is a defensible rational core there, even without meaningful windfall profit taxes. (Would you all disapprove of hand-slap windfall profit taxes? ;-), it might benefit you in the long-run.))

    – odograph

  4. Am I the only one that sees energy efficiency as the most effective starting place? Intelligent resource husbandry by way of smart metering, home energy audits, equipment retrofits etc will grow the economy in new ways, and perhaps build a more educated populace at the same time.

    We are extremely disconnected with the world around us. The Obama interview where he commented on Michael Pollan indicated to me he grasps the complexity of an integrated energy system that impacts everything from food production to health care. What we need are rational pragmatists at all levels of government.

  5. With $10 a barrel oil on the horizon, I am not sure an energy plan matters for the short-run.
    I hate taxes, especially any taxes on productive behavior. A windfall profits tax is a tax on production, and investment. People invest for solid returns, and also hope to hit a home run now and then. We are taking away the home run, in this case. A bad idea.
    Also, if we have to tax an activity, it should be on consumption that is self-destructive. That is gasoline consumption. Obama does not have higher gasoline taxes on the agenda.
    There is even a solid, conservative argument for gasoline taxes: Right now, we subsidize road construction. Gasoline taxes do not cover the cost of construction. They should.
    I am all for efficiency and conservation; the best way to get there is through the price signal, not endless regulations.
    We may wish to magnify price signals when the free market has a blind spot — as in the case of oil. Thug states control oil, and they will control us, if we depend on thug state oil.
    I give the Obama energy plan a “C.”
    All that being said, look for energy policy to be pushed to the back burner, and maybe even taken down and put in the oven: Dated Brent spot down to $56 today, and the Brent price has been leading the market.
    If we have a global recession, we could see $10 a barrel oil. We saw $10 a barrel oil in a stronger global economy in 1998, with just a Far East slowdown.
    When I said we would see $40 a barrel oil again, people laughed at me (more than usual). We are $16 away now, and early into this recession.

  6. “Would you disapprove of hand-slap windfall profit taxes?”

    Anonymous, please explain to me what a windfall profit is? Did you not read RR’s posts about total profits vs. profit margins? I had hoped that Obamam’s windfall profits tax was merely pandering for his campaign. See Russia’s tax on oil and its effect on production for the real outcome of such a plan.

    As for his renewable goals, they seem a little ambitious, and appointing the T-100 as Secretary would only exacerbate the problem as his own state has set ridiculous targets for renewable energy, curbing emissions, etc.

  7. “Anonymous, please explain to me what a windfall profit is?”

    It is clearly a political construct. That said, probably 75% of the country buys the construct. We could probably did out some polls …

    For what it’s worth, I’m an extreme realist on this. That is I just look at the dollar accounting. Total taxes, at the end of the year, on energy companies, are your energy taxes. Of course I expect every penny of them to be passed on ultimately to the consumer. That’s how any tax on business works.

    I also though buy the economic argument that some sorts of taxes are more efficient, and send cleaner signals to the consumer. From this standpoint a carbon tax at the end user is probably the highest form of tax, and a windfall profit tax is probably the most degenerate.

    But … when degenerate taxes are ultimately costing the consumer, and slowing consumption, they might actually be better than not taxes at all.

    (If we can get consumers on a strong road to conservation without tax, or even worse, degenerate tax credits, so much the better.)

    – odograph

  8. Ethanol — boo.

    Nuclear — consider thorium reactors instead of uranium reactors. They’re safer, less of a terrorist threat, almost generate as much power, and can deplete dangerous spent rods and plutonium.

    And does anyone really think we’ll see a gas-electric hybrid mini-SUV that’s affordable and gets 80 mpg? In ten years? No. Do I want that? Yes. But it will never happen for another 60 years.

  9. Transport must shift to electric/biofuel hybrids.

    Efficiency improvements, smart grid, solar, wind, geo, etc. … all good news.


    We need nuclear baseload juice. Too many good options (Thorium, LFTRs, etc.) to produce massive amounts of cost effective electricity, less expensive plant construction, produce a fraction of LWR’s current waste, even consume current waste.

    US MUST pull its head out of the 70’s nuclear sand. Get the R/D restarted, get the pilot plants built. Lets go!

  10. Rendell at DOE would signal a war with the oil companies. Although he might do less damage there than as Gov. of PA. Rendell is upset about oil company profits and wants to enact a Gross Profits Tax on earnings both in and outside PA.

    A windfall profits tax or gross profits tax ultimately won't work. Refining, transportation, distribution and wholesale sales is NOT where the profit is made in the energy business. Upstream E&P is the big money maker. Over the last several decades, US oil companies have invested heavily outside the US. Much of their profit is now derived from foreign investment.

    Any windfall profits or gross profits tax could result in energy companies spinning off their domestic operations from the international ones in order to insulate overseas earnings from the US tax man. They might also sell off assets in states chosing to impose gross profits taxes.

    The original WPT was supposed to generate $400 B in revenues, but actually made only $80 B. During the 1980s domestic oil and gas exploration slowed down considerably, increasing dependence on foreign oil and exporting jobs overseas.

    The other issue with windfall profits is figuring out "good profits" from "bad profits". Back in the days of the WPT, oil companies had floors full of lawyers and analysts trying to figure out which oil produced qualified as "new" and which was "old" for purposes of assessing the tax. Suppose an oil company invests heavily in energy efficiency projects – should that be subject to the windfall profits? Such taxes reduce the incentives for cost-cutting and efficiency.

    Both parties capitalized on voter anger over high energy prices. This particular idea seems to be very 1977, giving more credence to Obama filling out Jimmy Carter's 2nd term. This from the candidate for hope and change.

  11. Wantwealth-
    I don’t understand why you think a high mileage PHEV is not coming. The GM Volt is slated to go 40 miles on the charge and then 50 mpg. More recent advancements in batteries suggest that 80 miles on the charge, and then 50 mpg is possible. Surely, for daily use, that would average more than 80 mpg.
    Is gasoline does become more expensive in decades ahead (and RR says it will), I think you will have the option of a PHEV mini-SUV.

  12. Looks like the markets finally snapped to the fact that ALL of Obama’s policies are bad for the economy. Windfall profits,higher taxes on capital gains and dividends,carbon taxes,protectionist trade policy,and more unions. Did I miss anything?

  13. I drove the big SUV today for the first time in over a month. I hadn’t bought gas for it since Labor Day. I filled up for $1.799. (Up a nickel from Tuesday.)

    Since prices are down so much is there no longer a crisis and a need for the $1,000 Obama tax and giveaway?

  14. Odo:

    The cheerleading for PV solar is missing a key ingredient – lack of a scalable and cost-effective way to store electricity. Solar thermal looks more promising for utility-scale generation, but even there, the energy storage via heat requires a leap of faith. Us pro-nuke guys aren’t anti-solar, but unless these problem is solved, it’s hard to see solar displacing coal for baseload power. And IMO we need to displace coal ASAP.

  15. Ensure 10 percent of Our Electricity Comes from Renewable Sources by 2012, and 25 percent by 2025.

    According to EIA we already get 6% of our power from hydroelectricity and 2.5% from other renewables. That is 8.5%, leaving us 1.5% to go to meet Obama’s goal. Sounds easy doesn’t it?

    In 2006 the US generated 4,065 million megawatt hours of electric power. 1.5% of that is 60.975 MW. Let’s assume that a 1 MW wind turbine can produce full load an average of 50% of the time. That means we would need to install 13,920 wind turbines over the next 4 years to meet Obama’s goal. That is an average of 10 new wind turbine PER DAY, every day (including holidays) for the next 4years. Even if you installed the larger 2.5 MW turbines, you would still need to put in 4 per day. Right now there is a backlog for ordering turbines. Clipper Windpower is completely sold out through 2011. Vestas, GE, Mitsubishi – the same.

    Given the investment and construction timeframe, either this goal is already achieved with existing orders, or never attainable because there is no capacity in the system to expand. I would think tightening of credit will slow wind development as well. We could play the same game with PV or thermal solar. If these plants are not already on the drawing board they likely won’t make it by 2012.

    Achieving the 25% by 2025 would require exponential growth in capacity to produce new energy systems. At some point you would need to address the transmission system as more and more renewable load gets located in the rural midwest or offshore (well except for the Kennedy’s Cape Cod).

  16. Maury-
    I share concerns, but we heard all the doubters before Clinton took office too. Instead the Dow tripled, and we had many years of huge employment growth on the Clinton watch.
    One might have hoped for an even more-impressive boom following the Bush Jr. inauguration (after all, the House and Senate were R-Party also), and instead the Dow is lower now than when Bush took office, and employment growth was never that great. We are now in reverse across a broad front — retail sales, manufacturing, housing, construction.
    Obama seems to be assembling a pragmatic team, not idealogues. They seem to want to work, not go golfing and bike-riding.
    Let’s hope for the best.

  17. “Solar thermal looks more promising for utility-scale generation, but even there, the energy storage via heat requires a leap of faith.”

    Solar thermal, not PV, is the one I’m hoping for right now. From my casual reading molten salt storage works? It’s just expensive?

    I feel like I’d rather pay for that, if it is within reason, than coal or more nukes.

    – odograph

  18. “I think he would be a good choice, as would former Energy Secretary Bill Richardson (although my guess is that he may end up Secretary of State).”

    Bill Richardson? Bill Richardson??

    The same guy who was Energy Secretary more than a decade ago? Whose principal achievement in office was gross mismanagement of the National Laboratories, culminating in the persecution of minority scientist Wen Ho Lee? The Judge took the very unusual step of apologizing to Dr. Lee when he dismissed all the baseless charges that Richardson’s federal goons had brought against him. That Richardson?

    If Obama stuffs his administration with ancient Clinton-era retreads, where’s the “Change”?

  19. If a Windfall Profit Tax is designed like the old one, then a number of the comments made here and elsewhere don’t follow.

    The old WPT was not a tax on refining margins, despite Rendell’s harping on margins and getting them wrong. It was a tax on oil production. Also for that reason, no company can organize itself so as to avoid a WPT. They could shut in production, but that would be, um, counterproductive.

    I do oppose a WPT, for the obvious reasons. It discourages investment without dealing with the problem. We should tax that which we as a society disapprove of; if we tax what we approve of, we get less of it. If we want to reduce imports, then producing more domestically should be something we approve of. Unless there is another motive involved, which a lot of conspiracy-inclined people are fond of claiming.

  20. Anon – you are right that the old WPT was a wellhead production tax, similar to California’s Prop 87. Such a tax today likely wouldn’t work because US wells tend to be higher cost than foreign ones. Marginal production would be shut in and the new tax would be figured into future investment decisions, leading to lower US production.

    What the Dems have been proposing was some kind of gross profits tax and a punitive tax on companies who took advantage of a US Gulf Coast royalty relief program in 1998 when prices were less than $20 per barrel. They are cleary aiming at ExxonMobil and others, not “Joe the Driller” who runs a small production company in Oklahoma.

  21. King –

    I used to file the WPT for Prudhoe Bay. It was price-based, with no consideration for production costs. Price now minus price at some base time period, times volume times 70%.

    Any new WPT should be re-named the “Let’s Blame the Oil Companies Because We Don’t Want to Blame Ourselves Tax”, though LBTOCBWDWTBOT is a mouthful.

  22. For all that are concerned with the energy policies Obama may bring forth. Please goto the website change.gov at this website Obama is requesting people to submit their own ideas.

    Perhaps they will take the input seriously, perhaps not, but it can’t hurt.

  23. >In 2006 the US generated 4,065 million megawatt hours of electric power. 1.5% of that is 60.975 MW. Let's assume that a 1 MW wind turbine can produce full load an average of 50% of the time. That means we would need to install 13,920 wind turbines over the next 4 years to meet Obama's goal.

    Going with your numbers, a 1MW wind turbine will produce 500,000 watts on average or 500 kilowatt hours per hour. There's 8,760 hours in a year so that's 4,380 megawatt hours per year. To produce 61,000 megawatt hours per year would require 15 such turbines.

  24. King-
    Venture capitalist Tim Draper is high on mini-nuke plants. Add to that a dose of geothermal, some wind, and some solar, and we might get to the Obama goals.
    We have to increase our capacity to produce energy plants. But during WWII, if my memory serves, we were producing a Liberty Ship every day down by Long Beach, CA.
    Surely, with three times the population today, we can produce a several wind turbines a day (if we shoot all the lawyers).
    My complaint is that producing electricity is not the trick. We can do that. We’ve been building nukes for generations, now.
    The trick is producing liquid fuels or using much less of same, so to reduce our dependence on thug state oil producers.
    Now, that will be hard to do. Not impossible, but that will take some work and sacrifice (dirty words, I know, but there you have it).

  25. Anon – I didn’t file for the tax but I used WPT in economic calculations. It was strictly a price based tax, based on some baseline imputed “fair” price for oil compared to the current market price.

    For many wells the actual costs plus the phony WPT rose so high that the wells lost money, and were shut in, even though they would have operated without the WPT. Towards the end of the WPT the Gov. wasn’t collecting much in taxes because over time the wells depleted.

  26. Robert – that was 61,000 MILLION MWh. I forgot to bring the million down in the calculation.

    Think of it this way, the wind installed since 1979 generates virtually all of the 2.5% alternative energy we have now. Over the next 4 years we would need to install almost as much capacity as we’ve done the previous 30 to achieve Obama’s goal.

  27. My change.gov idea:

    There was an old rule that the US government could not own intellectual property. That was why things like Bowditch (The Practical American Navigator) were public domain.

    I think we started to go wrong, sometime in 70’s or 80’s, with more and more government funded work ending up as someone else’s intellectual property. NASA funded research became private intellectual property. In a somewhat more defensible move, universities started to stake out intellectual property based on their publicly funded research.

    I think we now know that was a mistake. It created less than the self-funding bonanza imagined, and at the same time a mess of crossing intellectual property claims. It has been the subject of a recent work, The Tragedy of the Anti-Commons.

    Claims from a dozen universities may block a valuable drug from reaching the market. That was an unintended consequence to say the least.

    My suggestion is to blow those publicly funded patents, and copyrights, back into the public domain. That should free up much knowledge, and kick-start much business activity … for free.

    It corrects a wrong, and provides economic stimulus at the same time.

    – odograph

  28. I love
    . I’d put one in my backyard if my HOA would let me! But I don’t think that counts against Obama’s goal.

    Yes, we USED to produce a lot of things. At the BethShip yard in Baltimore iron ore and coal went in one end and ships popped out the other!

    Yes, we CAN solve this problem if the environmentalists and lawyers would get out of the way.

    Here is the solution. Car manufacturers produce “open fuel” cars which can run on gasoline, methanol, or ethanol or DME and diesel. Next we gasify coal and turn the syngas into either methanol or ethanol. Some of the methanol can then be converted directly into gasoline, and some to DME.

    We take the CO2 from the gasification process and pipe it to the US Gulf Coast and to Oklahoma. That CO2 is then recycled in Enhanced Oil Recovery operations which will produce 2-3 million barrels of additional crude oil, raising the oil in place recovery from 50% to something like 80%.

    When the EOR fields are saturated with CO2, we drill into the deeper saline formations for permanent CO2 storage.

    To replace 10 million barrels of imported crude by 2030 we would need to build and open 1 gasifier train per week from 2015 through 2025, and open 10 new mines per year.

    At the same time we convert the auto fleet to plug hybrids, raising fuel economy to 40 MPG and reducing demand back to 10 million barrels per day, which now is all produced from domestic coal and oil and oil sands from our friends in Canada.

  29. King:

    I want to change my vote for President, from Obama to you. I like your plan.

    PS: If you go greencarcongress.com you will see a Brit chemist says he can convert glycerol to methanol, without to much to-do. Glycerol is a abundant byproduct of biodiesel production.

  30. There seems to be little or no indication that Obama grasps PO and the immediate and dire consequences in the face of a liquid fuel crisis. On the other hand, is it simply too dire a situation to draw attention to?

    Could this change with the IEA report? Whereas the credible information on PO from solid organizations like ASPO don’t seem to get beyond the Internet and into the front pages of the MSM, the upcoming IEA report will undoubtedly be taken seriously, as we have seen with the attention it got from The Financial Times.

    If what we have seen from the leaked IEA report is indicative of the forthcoming report (November 12, wasn’t it?), Obama will have to change his plan to address the depletion rates/ investment rates. Could a basement on the price of crude and a higher gasoline tax be implemented by the Obama admin? Will we at least see recognition of PO and a attempt to convey to the public the reality of the situation. So far, with exception of Boone Pickens and Matthew Simmons, PO is still branded “a theory” and phrases like “running out of oil” are still bandied about. The ignorance on the part of the general public and MSM is astonishing.

    Will we see a change in governmental policy once the IEA report is made public? Will any of the MSM, e.g., NY TIMES, have the guts to put the story on the front page where it belongs? And, if so, how will Obama’s policy change? Will there be a much greater push towards 3rd generation biofuels, even higher CAFE standards, mass transit initiatives, and other niche policies, e.g., LPG/CNG in smaller markets like Utah, and conservation.

    It seems now that an unambiguous IEA report given serious attention in the MSM may force the issue of a looming liquid fuel crunch front and centre in public policy.

    KingofKaty–no mention of CNG vehicles there–surprising, given the ease with which conversions can be done and the availability of natural gas in many areas of the US. Also, urban areas could easily benefit from low-cost, easy-to-manufacture neighbourhood EVs, and bicycles.

  31. The reward of intellectual property is an incentive for bidding on government research contracts. Otherwise companies would bid a lot more. I’m not going to defend the current system but just want to say that stripping universities and companies of their intellectual property would require incentivizing them to do the research you want.

  32. That’s the theory, but I think they actually had it both ways Robert. It was “cost plus” … and then IP.

    I mean, certainly the university research I’m focusing on was often 100% funded, and certainly not underbid, and they still retained full IP.

    When you talk “companies” you might be talking further afield, in some partnerships or other. When a company puts up their own capital, sure they should have a claim to rights.

    Ideally though, a private company would have to put up 51% of total funding to earn that.

    – odograph

  33. Stuck – I like CNG too. But not for widespread use. Limit it to local fleets. I can convert natural gas to methanol or ethanol pretty easily. Then you get an energy dense fuel, albeit less energy than conventional gasoline.

    For those who don’t think I’m much of an environmentalist, I would propose a cap and rebate program for CO2 (or better yet a CO2 tax). I would tax the carbon as it enters the system, but I would report the costs down to the retail level. When you filled up your car the receipt would tell you how much you paid for the carbon required to produce your gas. That is so the politicians can’t blame high prices on energy companies.

    I would require that 100% of the net proceeds of any tax or auction be rebated equally to every legal resident of the U.S. less the cost of administering the tax. Odograph, who uses little electricity would get the same rebate as me. I could then use the money to offset my bill or to invest in energy efficiency. I’m not sure what Odograph would spend his since he doesn’t buy much electricity.

    I would get rid of all energy subsidies and EVERY method of removing carbon (deep injection, EOR, biosequestration, etc.) would qualify equally for a credit under my system. No more Gov’t picking winners and losers.

    My system sends the right price signals to the marketplace and avoids creating some new big gov agency. It makes carbon taxes mostly voluntary. The more carbon you burn the less you pay. Would hurt energy intensive export businesses, but we don’t really have many of those any more.

  34. It’s possible that what I dislike was added, as part of:

    35 U.S.C. §§ 200 – 2121

    in 1980.

    “Patent Rights in Inventions Made Under Federal Funding Agreements”

    I’m a conservative, I don’t like such recent innovations 😉

    – odograph

  35. http://www.abanet.org/contract/federal/randcomm/Bayh-DoleActpro.pdf

    You’re referring to the Bayh-Dole act.

    1) Before 1980 the federal government made little use of its patent portfolio.

    2) 100% funding plus some small profit margin (if the project is completed on schedule) sounds more generous than it really is. If we weren’t working on a government priority, we’d be creating or improving our own products. (i’m in private industry not academia) with subsequent improved profits. The model my employer follows is to do government contracts to acquire intellectual property and then commercialize our inventions to make money.

  36. Well, it really comes down to this … why should I, as taxpayer, pay twice?

    It’s certainly not necessary. This is government largess, and if those are the terms, they’ll be taken. No one is going to say “I’m not going to be a physicist anymore, because my institution can’t sit on unused patents.”

    That or researchers will find private sector funding, which is where they really should be if they have an intellectual property focus.

    Science was public domain, and should become so again.

    – odograph

  37. To be restate: I’m looking for a clean distinction between public science (public domain) and private science (intellectual property).

    It is the unhealthy mix that is increasingly dogging us. See The Tragedy of the Anti-Commons.

    – odograph

  38. King, don’t forget the energy efficiency program Obama’s proposed. If we can cut our usage of electricity by 10% and all of that came from eliminating fossil sources, the renewable share of what’s left would rise to about 9.5% of total generation even if we built no new capacity. Now you’d only have to build about…um…4600 wind generators. Shucks, you’re right, it’s gonna be hard. Plus we’re unlikely to reduce any current usage in the face of a still-rising population and especially if vehicle miles are moved to the grid. And of course your 50% capacity factor is unrealistically high as you well know.

  39. anon – yes, 50% is too high, but I wanted to be conservative to show how difficult it would be. It is a lot of turbines to install every day.

    We may get there through happenstance. If the economic slow down hits big power users, we might see a few percent decline in electric demand. Since wind is usually dispatched 100%, as you say, the denominator changes and the % renewable goes up. If there is a big drought in the northwest hydro drops could push the number lower.

    Either way a 2012 goal is pretty meaningless since there is little in the way of Gov’t policy today that could INCREASE that number. Credit problems could cause projects to get delayed or abandoned though.

  40. Over the next 4 years we would need to install almost as much capacity as we’ve done the previous 30 to achieve Obama’s goal.

    You’d be great in politics. You make “almost doubling” our wind output in 4 years sound impossible. In reality we’re on pace to more than double in less than 3 years. Your 30 years timeframe is a red herring because 30% of our wind was installed in the last 12 months alone.

    Rolling 12 month data:

    Hydro 6.1%
    Wind 1.0%
    Other 1.7%
    Total 8.8%

    Hydro has fallen almost 30% in a decade, I don’t know how much of that is climate vs. dam retirement. Assuming hydro and other hold steady, wind would need to grow to 2.2% by 2012. That’s pretty much in the bag.

    25% by 2025 would require a slowdown in wind growth from 30% to 18%. Slowdown will occur — geometric progressions forge their own anchors. But wind doesn’t have to carry the whole load. Solar’s numbers are too small to matter now, just as wind’s were a decade ago, but solar is growing even faster than wind. A 2025 mix of:

    Hydro 6%
    Wind 12%
    Solar 5%
    Other 2%

    is realistic. In fact, it requires dramatic slowdowns in both wind and solar growth rates.

  41. Eliminate Our Current Imports from the Middle East and Venezuela within 10 Years

    This is total crap. It doesn’t matter where we buy our oil. If we buy from Norway and Russia instead of Middle East and Venezuela it just means Europe has to buy from Middle East and Venezuela. The only thing this would achieve is to make a bunch of tanker companies wealthy.

    Cutting oil imports in half while continuing to import the exact same amount from ME and VZ would have a much bigger effect.

  42. I’m ok with all of these broad stokes except:

    1. Ethanol, and
    2. Reliance on tax credits and deductions as incentives generally.

    Both of these are incredibly inefficient. Ethanol is now a major agro-politics-bloc issue, so we know where that comes from. Scrapping the tax code and starting fresh needs to become a priority right away, and nobody is talking about that.

  43. Obama’s choice for this post may be the most important one he makes, in terms of long-term impact.

    Since its creation, the Department of Energy’s main tasks have been to run the civilian side our nuclear weapons program through the National Labs. Through that we get some nuclear power plants and some auxiliary basic research at those labs.

    The model for what the Department of Energy COULD be is the Lawrence Berkeley National Lab, which performs essentially no nuclear research and has been responsible for keeping California’s per capita energy usage constant since the 70’s (while the rest of the country, buying lots of energy-hungry gadgetry, has gone way up). Its director, Steven Chu, is a Nobel Laureate who became a bureaucrat so that he could continue the lab’s dedication to reducing America’s energy use. Today, despite massive cuts to basic research at the labs, LBNL is putting its scarce discretionary dollars towards cellustic ethanol and wind research.

    If Obama wants to send a message that America is serious about energy policy, how about appointing someone like Steven Chu who will turn the department’s focus away from bombs and actually knows exactly what needs to be done to combat climate change and how to do it?

  44. doggy – my energy plan calls for the sun to come up tomorrow.

    That makes about as much sense as Obama’s 2012 renewable goal. Either we are well on our way to reaching this goal (which is what you believe) without any help from Obama, or we won’t make it as lending for wind farms dries up. There is nothing POSITIVELY that Obama can do to change this.

    When he runs for re-election he’ll take credit for it if it happens and blame Bush if it doesn’t.

  45. @jtwright

    So the US should follow California’s plan to keep per capita energy use stable?

    So you want to run all the jobs out of the US? The year I left California, several million left with me. California and they called called that conservation. LBNL only accomplishment has been spending tax dollars. I would be willing to discuss particulars but I do not think California is particularly energy efficient compared to other similar climates like Spain.

  46. California’s per-capita energy usage has been constant – because we’ve been busily forcing energy-intensive business out of the state (and, frankly, out of the country) for decades! Yet naturally we still import the products of those business, but they are now guilty of the higher energy consumption and emissions – nifty plan, huh?

    Our power grid (I live here) is more heavily reliant on nat gas than the rest of the country. Is that going to be the answer nationwide, we’re all going to try to outbid each other for nat gas supplies as they ultimately go into decline? Worse still, we’ll bid against all the nat-gas powered vehicles the great minds want to put on the road? All the while, we are burning up an easily-delivered fuel that is a great source of heat for homes, businesses, etc. Once it becomes harder to come by, we’ll ultimately have to meet those other needs (inefficiently) through electricity, in the long run using up even more of whatever we ultimately power our grid with.

    California has some of the most expensive power in the nation as a result of our policies. It’s cheap only if you can keep your consumption waaaay down because we have a tiered rate structure. Few families can do this (I’m single and have managed it, and I give props to odo for using even less than I do).

    It’s all well and good to diss nukes and talk a good game about wind and solar. But we need look no further than Germany to see where that road leads to. Absent a really solid way to store excess energy from renewables, some kind of hard-path solution will be used to provide baseload. The German greens are, incredibly, considering more coal because of the zeal to shut down the nukes. We’ll use nat gas and claim it’s only a bridge solution. Europe as a whole is now finding out just how great it is to be dependent on the Russians for a steady supply of nat gas.

    Mind you, it could work, but it’s a gamble; the gamble is that we’ll lick the energy storage problem before we start to run out of nat gas. If we don’t, we’re going to wish we’d broken ground on some nukes while we still had time to avoid blackouts.

  47. jtwright,
    Nice call on Steven Chu leading the Dept. of Energy. I have had the pleasure of hearing him speak, and I think he would be great.

    Or, to please the people who get their news from Entertainment Tonight (about 80% of the population). We could have Arnold be the Secretary of Energy and have Dr. Chu stand behind him and do all of the talking (and the thinking, but that goes without saying).

    Think of the synergy, Dr. Chu can do the math and Arnie can come up with idiotic catch phrases. We will have everything covered.

  48. I just gor through calculating how much it will cost to add one Kilowatt of 24 hour a day renewable electricity to the Texas Grid during the next decade. The cost comes to the truly amazing figure of $25,000. Estimates of the cost of adding one Kilowatt of nuclear run from $8 to $12 billion. That is one third to one half of renewables. The problem is simple, the sun does not shine at night, and the wind does not blow on summer days. If you have to put both of them together it becomes very expensiv.

  49. odograph:

    re: windfall taxes. Yes, I would object. If you want less of something, tax it.

    Taxing domestic oil companies for making profits during the boom of a boom/bust industry will reduce domestic investment in future production.

    Of course, this is equivalent to subsidizing foreign production for sale in the United States, thus increasing imports.

    dumb, dumb, dumb.

  50. Steven Chu looks to be a very qualified candidate for the head job at DOE. My first impression reading an interview was more California BS. Then he did something very sneaky. He interject science into the debate and came to the same conclusions that I have. There of the best ways to reduce AGW impact is anaerobic digestion of biomass wastes, ethanol, and nuclear power.

  51. That program was written before the events of the last couple of months. We will have to see how much of it still gets through.

    Some of it will get done. Keyenisian economists like Krugman are pushing for very bold fiscally stimulative, nation-building, job-creative actions. It makes sense: the private sector is in a credit seizure, while the funding costs to the Federal Gov are still spectacularly low (below 4% on the 10 year bond). The Feds should be spending and you could safely assume that some of this job creation will go towards energy-related goodies.

    The problem is, the trough is getting crowded: financials, auto industry, state and local govs, home-builders. How much longer will the U.S. be able to borrow cheaply from abroad?

    Higher tax on oil cos. makes sense if you think the govt. has a better idea of how to invest the money than the oil majors. At the end, it does not matter that much whether you hike the gas tax or you hit directly the oil companies, it has the same end effect, however, the latter is more politically plausible in this climate.

    On the balance, I would advise a wait-and-see approach. This is an extraordinary economic crisis, nobody would hold Obama strictly to his promises from before Lehman. There will likely be modifications.

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