Conservative Blog

Comparing the Differences Between Democrat and Republican Energy Strategies

For the purpose of this piece we are going to use the plans put forth by the presidential candidates, Barack Obama (Democrat) and John McCain (Republican), as these are the presumptive de facto leaders of their parties.


Sources: http://www.barackobama.com/ , http://www.johnmccain.com/


Both plans have as their eventual goal American energy independence and a move to clean energy, and both plans begin by addressing the current energy crisis.


Current Energy Crisis


Republican Plan:


The Republican plan for addressing the immediate crisis places emphasis on allowing new oil and gas exploration, reducing or eliminating tariffs and subsidies for alcohol-based fuel, and reforming the laws and regulations governing the oil futures market


Allowing new oil and gas exploration: This is almost certainly the most effective, short-term solution to driving the oil markets down. America has somewhere between 60 and 200 years worth of untapped oil depending upon the estimate you use (it probably lies somewhere in the middle). While it is true that it would be from 2 to 7 years before a lot of this oil could start hitting the market, the mere intention to drill would decimate the oil futures and bring prices down significantly.


Reducing or eliminating tariffs and subsidies for alcohol-based fuel: Some of the problems we have in the food and ethanol market right now are that we are protecting our corn farmers via subsidies. While this seems like a noble idea, it is causing vast amounts of corn to be grown and sold at inflated rates. Countries like Brazil have the capacity to provide significant amounts of ethanol at cheap prices and create true market-based competition in the ethanol market. Today there are already many flexible fuel vehicles on the roads in the U.S.


Regulations governing the oil futures market: For Republicans, this means that they want to reform the laws and regulations governing the oil futures market, so that they are just as clear and effective as the rules applied to stocks, bonds, and other financial instruments. There are serious questions as to whether this would actually make any significant change. Most trading will still take place and as long as there are fears of a supply and demand problem the oil futures are going to rise.


Gas tax holiday: This plan would most likely reduce the price of gasoline briefly; however, critics think it would likely cause more consumption without creating greater supply, thus causing prices to go even higher in the long run.


Democrat Plan:


Though there are no plans on Barack Obama's official site to address immediate energy concerns, there have been talks for a windfall profits tax of the oil companies and looking at the regulations governing the oil futures market.


Windfall profits tax: This is only getting minor support from some quarters as it is generally recognized that punishing the oil companies will diminish their ability to improve infrastructure and increase production. The companion idea is that you could use the "extra" tax income to aid the consumer. One problem with this would be that due to deficit spending, the "extra" money would be imaginary.


Regulations governing the oil futures market: (see above)


Intermediate and Long-Term Plans


Democrat Plan:


The intermediate and long-term plans laid out by Barack Obama have a primary emphasis on reducing carbon dioxide emissions and addressing global warming. The plans are copious and varied. The principle goal being to address global warming, most of the proposals are a sort of "tough love" program designed to move us away from fossil fuels as quickly as possible with a target of reducing carbon emissions 80% by 2050. It is difficult to determine at what point we might reach a threshold and expect to see a positive impact on energy prices because the worldwide demand for energy is expected to rise exponentially through the intervening years, playing as a sort of counterbalance to our initial efforts to conserve.


Cap and Trade: This is being proposed by both presidential candidates. There are a variety of problems with Cap and Trade. One is that it is essentially a business tax and therefore not conducive to companies making efforts to convert to green energy. In Europe, where cap and trade programs have been under way for years, there have been zero reductions in carbon emissions. People who are trying to redesign the program are looking at making energy costs much more prohibitive, thereby creating a greater incentive for going green. Critics argue that this new reformulation will cause an economic drain and inflation. Additionally, quickly developing countries with enormous populations, such as China and India, are putting out much more CO2 every year. All in all, this is widely viewed as a failed program.


Invest $150 Billion over 10 Years in Clean Energy: Rather expensive, yet somewhat effective--this plan has a variety of components that would encourage research, the development of greater biofuel infrastructure, and the advancement of such technology as plug-in hybrids. If affordable within the constraints of the budget, this is likely a plan that will work in the long term. Critics, however, say that the private sector is already moving in this direction and these types of financial incentives are unnecessary and tend to limit the private sector's creative ability to problem solve. Also, you will have critics of how the money is spent and who gets it.


Double Energy Research and Development Funding: This is primarily for biomass, wind and solar. Most feel that these technologies need increased governmental support to realize their potential. Others believe in letting the market take care of it naturally.


Convert our Manufacturing Centers into Clean Technology Leaders: This proposal is somewhat vague, yet appears to be a sort of tax credit for adopting green practices. This would be almost a necessity if great changes are to be expected from America's businesses without putting them at a trade disadvantage.


Clean Technologies Deployment Venture Capital Fund: A $50 billion venture capital fund for developing green technology companies. Again, this depends upon whether you have the $50 billion and your view on governmental involvement in developing private sector companies. I can imagine that critics will question who gets the money and why. For instance, will it always go to the most promising young tech companies or will it sometimes go to companies because they are minority owned? This is a massive distribution of money that could, like the $150 billion above, lead to serious ethical questions.


Require 25 Percent of Renewable Electricity by 2025: With our current levels hovering in the low single digits and electricity demand rising, this will take some work but is doable. Perhaps with all the investment money in the programs above some new technology will lead the way to make it easier.


Develop and Deploy Clean Coal Technology: It includes provisions for halting production on new "non-clean" coal facilities to encourage bringing the clean facilities online. The difficulty is that it is anticipated that clean coal technology will take 15 years to come online. If building traditional plants is halted, it could create a serious electricity crisis if not replaced in some way.


Deploy Cellulosic Ethanol: Cellulosic ethanol is generally seen as more efficient and less costly to food production since it is produced from non-edibles. The plan is to get a small amount online by 2013 and continue to grow the resource from there. This seems to be moving in a good direction to solve some of the current problems with ethanol. Critics may wonder what the purpose is as the car makers are turning to electric and hydrogen.


Expand Locally-Owned Biofuel Refineries: This would be the old type of ethanol, not the cellulosic mentioned above. Again, critics will complain of a scattershot method. This would be, as the entire ethanol movement has been so far, very good for farmers.


Confront Deforestation and Promote Carbon Sequestration: According to the Obama website, "Obama will develop domestic incentives that reward forest owners, farmers, and ranchers when they plant trees, restore grasslands, or undertake farming practices that capture carbon dioxide from the atmosphere." That is as specific as the plan gets right now. There are too many questions to really comment on it at this time.


Establish a National Low Carbon Fuel Standard: Sets a goal of reducing fuel carbon emits by 10% by 2020. If this doesn't include biofuel additives, it will require special blends that will further assist reducing emissions by driving up gasoline prices.


Increase Renewable Fuel Standard: Requiring 36 billion gallons of cellulosic ethanol by 2022. By current fuel usage, that would amount to about 20% of all gas used. One would assume that in combination with other programs designed to improve mileage this could potentially represent an even greater percentage in 2022.


Increase Fuel Economy Standards: Doubling fuel economy in 18 years with an emphasis on helping American car companies meet these goals. I'm not certain what the conditions of this will be, whether it be by fleet or by class. It does seem feasible as an average with many companies planning on bringing all-electric vehicles online soon.


Set National Building Efficiency Goals: Making all new buildings carbon neutral, or produce zero emissions, by 2030. Democrats will also establish a national goal of improving new building efficiency by 50 percent and existing building efficiency by 25 percent over the next decade to help meet the 2030 goal. Critics will argue that building costs will soar, but this could be a key component to aiding the requirement, "Require 25 Percent of Renewable Electricity by 2025", above (or surpassing the requirement). Additionally, the construction business has always adapted to new building standards before, such as earthquake and hurricane codes.


Establish a Grant Program for Early Adopters: This is for states and localities that adopt the above building codes early. This will help to keep early adopters competitive with late adopters as far as economic recruitment, etc. Likely this is necessary to get any significant early action on the above proposal.


Invest in a Digital Smart Grid: Will pursue a major investment in the utility grid to enable a tremendous increase in renewable generation and accommodate modern energy requirements, such as reliability, smart metering, and distributed storage. I think nearly everyone would agree that this is far overdo, though some might claim the benefits don't justify the cost.


Create New Forum of Largest Greenhouse Gas Emitters: By wanting to include China and India, Democrats have the right idea. Unfortunately, neither China nor India have shown an interest in doing a lot in this regard.


Re-Engage with the U.N. Framework Convention on Climate Change: Though worded vaguely, I assume this means accepting more U.N. environmental plans than we have in the past. Positives and negatives would depend upon which plans we agreed to.


Republican Plan


Called the Lexington Project, the Republican plan does not have nearly as many components as the Democrat plan, though it does include plans to quickly drop energy prices (above) and has similar overall goals to the Democrat plan and some of the same features.


Cap and Trade: (see under Democrat Plan above)


Clean Car Challenge: "will commit a $5,000 tax credit for each and every customer who buys a zero carbon emission t car, encouraging automakers to be first on the market with these cars in order to capitalize on the consumer incentives. For other vehicles, a graduated tax credit will apply so that the lower the carbon emissions, the higher the tax credit." As a tax credit instead of spending, this might win over some conservatives. Critics might say that it will encourage businesses to price gouge, though such a coordinated effort would be unlikely.


$300 Million Prize To Improve Battery Technology: This is like the space related X-Prize on steroids. That kind of money would almost certainly draw interest and have an impact. Critics have already said that the money could go to advanced technologies just now coming onto the market; however, these technologies would fall under the "current technologies" heading and thus be the score that must be beaten.


Flex-Fuel Vehicles Should Play A Greater Role In Our Transportation Sector: This would be biofuel vehicles like ethanol and biodeisel. Unfortunately, if there is a plan here, it isn't listed. This is more a statement of belief.


Alcohol-Based Fuels Hold Great Promise As Both An Alternative To Gasoline And As A Means of Expanding Consumers' Choices: See above on the 'no plan listed'. However, it should be pointed out that Republicans are in favor of aiding alcohol based fuels by removing restrictions, tariffs and subsidies which may make the ethanol business more competitive.


Effectively Enforce Existing CAFE Standards: Believes in substantially increasing the penalty to car manufacturers who fail to meet the standard. Today companies pay a nominal fee. It is difficult to argue against this. If you are going to have CAFE standards, they need to be enforced. As it is now, the program is more a source of revenue (taxes).


Become A Leader In A New International Green Economy: No plan for this is given.


$2 Billion Annually To Advancing Clean Coal Technologies: This plans to help bring the technology online sooner than the 15 years analysts say. Critics may claim this is an insufficient investment and does nothing to curb the continued build-out of traditional coal plants.


Construct 45 New Nuclear Power Plants By 2030 With The Ultimate Goal Of Eventually Constructing 100 New Plants: This is the biggie besides drilling for new oil. Nuclear energy is the obvious answer to CO2 emission problems from power plants. Critics will say that it is dangerous and that the waste is difficult to store; however, America is about the only developed country that still clings to these nuclear energy wives' tales. We are way behind the rest of the industrialized world.


Establish A Permanent Tax Credit Equal To 10 Percent Of Wages Spent On R&D: This does not appear to be related only to energy/clean energy fields. Critics might say it isn't directed enough, yet it does eliminate the problem of who gets the windfall. Everyone with R&D will get it.


Encourage The Market For Alternative, Low Carbon Fuels Such As Wind, Hydro And Solar Power: Again, instead of money going in, Republicans want to keep the money from going out in the first place, suggesting modest tax incentives to companies in these industries. And, again, critics will likely argue that it won't be enough.


Conclusions


Despite being extremely partisan, myself, I have tried very hard to present an honest and unbiased review, above, of the two plans. Hopefully you can mull it over and make your own conclusions.


For me, the Democrat plan is scattershot and wild with its money, throwing many hundreds of billions of dollars in all different directions, seeming even to have redundancy built in. For instance, requiring 25% renewables for electricity and new building codes that will make buildings zero emission. A great difficulty, however, with the Democrat plan is that it has no solutions to the current crisis and ignores obvious and currently available solutions like drilling for oil and building nuclear power plants. An even greater difficulty, however, is that the plan is likely to increase the current crisis by making the use of oil and electricity more difficult and expensive.


Republicans, on the other hand, favor easing into the renewable/green era by creating a greater supply of energy now while encouraging development of new businesses and technology through tax incentives and structured goals. Meanwhile, by embracing nuclear power, they hope to drastically reduce the amount of renewables needed and create a cheap and clean energy source.

Both plans get us where we want, or need, to be, but the Democrat plan does it with only the environment in mind, heedless of the economic and social destruction the plan would leave in its wake. Even the vast amounts of deficit spending proposed will cause energy prices to go up as the falling dollar continues to buy less and less of the foreign oil they will force America to continue to rely upon.


My grades: Republican = B+. They have most of the bases covered but should be pushing harder for the opening of the oil shale fields or ANWR. The plan will greatly benefit the struggling economy and cause an immediate and drastic reduction in the cost of gasoline while still leading us to clean, renewable energy. It should be pointed out, however, that a windfall of new oil should not be allowed to stop the progress currently being made toward renewable/green energy. Whatever your views of global warming, this is the direction of the world economy and America cannot afford to stay put with old technology.


Democrat = D. They leave the economy to potentially collapse under the burden of ever increasing energy costs and environmental demands. As for the long term, they have covered too many bases, taking an almost hysterical approach that includes redundant plans and vast amounts of give-aways that are likely to become more political than practical. Nevertheless, there is little doubt that a significant shift to renewable/green energy would occur.

Cross Posted to American Sentinel

2 comments | Posted in » Energy, Global Warming, Oil, Paul Zannucci