Obama’s Energy Plans and What They Mean

The big news story of last week was President Obama’s address to Congress on his plans for economic recovery. In his speech, Obama focused on three main areas that he deemed “critical to our economic future”: education, health care, and energy.

His comments on energy policy were consistent with positions he staked out during his presidential campaign and included encouraging investment in renewable energy sources, creating initiatives aimed at energy conservation, and reducing carbon emissions. What made his statements about energy policy remarkable was their specificity. In a matter of minutes, Obama laid out five specific goals for our energy future. What follows is a brief explanation of each goal and how it might be achieved.

1) “(W)e will double this nation’s supply of renewable energy in the next three years.”
America currently gets about 7 percent of its energy from renewable sources like wind, solar, hydroelectric, and geothermal. Doubling that percentage will take a lot of money (see goal #4) and a flurry of activity in the private sector. Presumably, the combination of direct investment of government funds and the offering of tax incentives will make that goal more attainable. However, it will be “a tough task,” according to National Public Radio reporter Richard Harris.

2) “We will soon lay down thousands of miles of power lines that can carry new energy to cities and towns across this country.”
The Obama Administration (most recently, the Secretaries of Interior and Energy) has consistently stressed the importance of upgrading the power grid to be smarter and stretch farther. Storage and long-range transmission of renewable energy are major obstacles to widespread development. Thousands of miles of new power lines would provide access to renewable energy to regions that do not have nearby renewable resources. Senate Majority leader Harry Reid has identified power grid expansion as the second part of a three-pronged plan to legislate Obama’s energy targets, according to the New York Times. Grid expansion will also be difficult, however, due to the fact that many citizens will resist the building of unsightly support towers and power lines in their communities.

3) “…I ask this Congress to send me legislation that places a market-based cap on carbon pollution and drives the production of more renewable energy in America.”
Although Senator Reid has already identified the implementation of a cap-and-trade system to restrict carbon emissions as the third prong of his legislative plan, it will most likely face the most political resistance of any of Obama’s energy goals. Heavy industry would take a big financial hit under a cap-and-trade system, and since most American industry is concentrated in a few regions of the country (the Midwest, West, and Rust Belt), members of Congress who represent those regions, regardless of party affiliation, will put up a fight. A so-called “Gang of 15″ moderate senators from heavily industrial regions have already voiced their dissatisfaction with a “climate debate [that] to date has not taken their interests into account” (New York Times). Senator Jay Rockefeller of West Virginia, the heart of the U.S. coal industry, made his position on carbon regulation abundantly clear when he said, “Cap and trade won’t work.” Political compromise appears to be the only path to implementation of any kind of carbon regulation system. The realization of cap-and-trade will most likely contribute, at least in the short-term, to higher energy prices for consumers. Nobody likes paying higher bills, so the possibility of direct opposition from average Americans is also very real.

4) “(W)e will invest fifteen billion dollars a year to develop technologies like wind power and solar power, advanced biofuels, clean coal, and more fuel-efficient cars and trucks built right here in America.”
According to a New York Times editorial, nearly 10 percent of the funds in the $787 billion American Recovery and Reinvestment Act have been allocated for investment in the areas listed above. This funding has come at a crucial time; recent drops in the price of fossil fuels have detracted from the private sector’s interest in alternative energy and biofuel development. Meanwhile, the American auto industry continues to teeter on the verge of collapse. An injection of new funding could help achieve important breakthroughs in both industries, such as large-scale production of green crude oil and plug-in hybrid vehicles. For heating oil users, expanded development of biofuels would help increase the availability of heating fuel that is a blend of biodiesel and conventional petroleum-based heating fuel, often called bioheat. This blended fuel burns more cleanly than 100% heating oil and is known to help keep heating systems clean. The purchase of bioheat will likely be subsidized by federal and/ or state tax credits, providing a rebate of several cents per gallon to bioheat users.

5) “(W)e will put Americans to work making our homes and buildings more efficient so that we can save billions of dollars on our energy bills.”
President Obama clearly understands the power of weatherization! A few simple and affordable steps can save a family hundreds of dollars a year on energy costs by reducing the need for heating and air conditioning and making all forms of domestic energy consumption more efficient. Multiply those savings by 1 million homes, add savings gained by weatherizing offices and government buildings, and Americans can collectively save hundreds of millions or even billions of dollars a year. Furthermore, this massive effort could employ hundreds of thousands of Americans to install weatherstripping and insulation and make electrical appliances more efficient. The simplicity and relative affordability of this goal makes it the most likely to be achieved first.

In his speech last week, President Obama showed his unwavering dedication to sparking what Interior secretary Ken Salazar called “an energy revolution.” Like most of the goals the President laid out in the address, his energy goals will be difficult to achieve, but even partial success would mark historic progress in U.S. energy policy.

The effects of the new energy programs outlined in the speech on Americans’ daily lives are difficult to predict. There are many unknowns, all of which President Obama is willing to accept in order to lead America’s new energy revolution.

This article first appeared in the February 27, 2009 edition of the HEAT This Week newsletter