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How to claim the energy battleground

The Democrats have lots of good ideas on energy and climate change - and lots of good people pushing them. We all now about Jerry McNerney's big upset against Pombo. Harry Reid has put up a website called Energy Independence 2020. Most recently, Bill Richardson signed an executive order to cut greenhouse gas emissions in NM.

Despite all this, I worry that energy policy will end up being captured by the right, because they still hold on to a major asset: their closeness to the corporate world, and, more to the point, the perception by the business world that they are more friendly to them, and thus that they are more likely to bring about less painful (for the corporations) energy plans.

Until not so long ago, this was not such a problem, because the debate was (to simplify) between big industry and the greens, and the sides and the parties were easy to identify. The main area of dispute was whether to focus on industry as polluter or as provider of jobs.

But now, two things have changed:

  • renewable energy has suddenly become a pretty big industrial sector, and has attracted a lot of investment money: it's good business, it's good jobs, and it's a nice prospect for significant growth and activity in often neglected areas (rural areas, the rust belt);
  • energy is becoming a national security issue, for very obvious reasons - global warming becoming unescapable, increasing gas prices, the war in Iraq, the beginning of a public debate on peak oil.

The terms of the debate are suddenly shifting. The first item creates a golden opportunity for the Democrats to reconcile the two main constituencies on energy: the environmentally minded, worried about pollution, warming, and waste of energy, and the workers, that worry about job losses in traditional industries (notably those linked to the oil sector). If renewable energy can create lots of jobs (and it can) while helping to solve the energy crisis, it's an obvious win-win. But the second change brings in a topic, national security, which more traditionally belongs to the sphere claimed by the right.

This creates an opportunity for both sides: for the Democrats to grab the national security mantle by solving energy issues; and for Republicans to turn green by building on their national security credentials. But that does not mean that there is a consensus on what needs to be done - or, if there is, that such consensus is appropriate to solve the problems at hand (more on that below).

That battle is now fully joined, with both sides bringing up their arguments to grab the limelight. But one battlefront is, in my view, neglected to a large extent by the Democrats: that of big business.

This matters, because we know the lobbying power of that group, and its ability to influence policy. While we can hope that such influence will be less under a Democratic Congress, it is silly to expect that it will become negligible. But conversely, if big business can be brought around to support reasonable policies, then it improves the chances of getting good policies enacted - and of bringing actual change on the ground.

As I see it, beyond the direct lobbying in Washington and debate within each industry, one of the best ways to influence the corporate world is to address them via the business press. As I see it, as a regular reader of these papers (Fortune, the Wall Street Journal, the Economist, or the Financial Times in Europe), they function as 'distilleries' of common wisdom: opinions are brought forward by politicians and by opinion pieces or by the contacts of the journalists (which are likely to come from investment banks or the think tanks of the right), and become undisputed background "facts" in supposedly factual pieces. It is thus essential to participate to the debate in these press organs, especially as, in today's world, which is totally dominated by economic and financial values (if something cannot be measured in dollars, it is worthless), the common wisdom of the business press quickly becomes the background color of the regular mainstream news.

Thus Democrats need to bring up their ideas to the business press. Remember how Jim Webb brought populism to the editorial pages of the Wall Street Journal? Well the same must be done about energy, because the solutions of the Democrats and the Republicans could not be more different.

Republicans will focus, as usual, on ways to bring more supply to the market: drill more, subsidize big oil (to bring more oil), or big agribiz (to grow biofuels), or Detroit (to provide more public R&D on hydrogen engines), or lead aggressive diplomacy to force other countries to open up their reserves to us (to let "us" extract "our" oil under "their" sand/toundra). These things cannot solve the energy crisis we're entering, but they look like they do, and, more importantly, they require minimal effort while making select groups extremely happy.

Democrats need to bring up actual solutions, in ways that can be appealing to the corporate world, and make that case where it can be heard: in the business press.

  • Renewable energy is a job-rich, technology-rich industry, and it is close to being competitive on its own: smart, consistent support, even on a limited scale, can have a big effect.
  • Energy efficiency and savings are a tougher nut to crack, because utilities don't appear to benefit, but it also involve non-offshorable jobs, high tech, and rapid returns, so business constituencies should be easy to build, including with the utilities if they can be made to profit from savings they bring to their consumers
  • Fuel efficiency should be a no-brainer, but bumps against the fact that Detroit is late to the game. The smart solution would be to offer a grand deal whereby much tougher requirements are put in place, but within a timeframe that allows the Big Three to catch up (say, 4 years for new CAFE standards or equivalent to be in place for new models), and accompanied by a support plan (R&D subsidies, worker training, and the like)
  • Altogether, the importance of consistent, stable, long term regulation should be emphasised. Many businesses know that things need to be done (wrt to global warming, for instance), and would rather do it under rules that apply to all, and across all States, than under locally pushed rules that differ in scope and intensity according to the location. Promising - and delivering - stable regulation to business would do much to make Democrats popular with the energy-intensive business world.

All of the above can - and should - be sold to the business world via the channels they listen to. Thus it dismays me to see that I never seem to read prominent Democrats in the WSJ and that that territory is claimed with increasing frequency by smart Republicans, who use national security credentials to push their version of a solution.

For instance, today, we have James Woolsey, pushing biofuels and plug-in hybrids:

Gentlemen, Start Your Plug-Ins [WSJ]

The change is being driven by innovations in the batteries that now power modern electronics. If hybrid gasoline-electric cars are provided with advanced batteries (GM's announcement said its choice would be lithium-ion) having improved energy and power density -- variants of the ones in our computers and cell phones -- dozens of vehicle prototypes are now demonstrating that these "plug-in hybrids" can more than double hybrids' overall (gasoline) mileage. With a plug-in, charging your car overnight from an ordinary 110-volt socket in your garage lets you drive 20 miles or more on the electricity stored in the topped-up battery before the car lapses into its normal hybrid mode. If you forget to charge or exceed 20 miles, no problem, you then just have a regular hybrid with the insurance of liquid fuel in the tank. And during those 20 all-electric miles you will be driving at a cost of between a penny and three cents a mile instead of the current 10-cent-a-mile cost of gasoline.

Utilities are rapidly becoming quite interested in plug-ins because of the substantial benefit to them of being able to sell off-peak power at night. Because off-peak nighttime charging uses unutilized capacity, DOE's Pacific Northwest National Laboratory estimates that adopting plug-ins will not create a need for new base load electricity generation plants until plug-ins constitute over 84% of the country's 220 million passenger vehicles.

(...)

Since OPEC cannot drive oil prices low enough to undermine our use of off-peak electricity, it is unlikely to embark on a course of radical price cuts at all because such cuts are painful for its oil-exporter members. Plug-ins thus may well give investors enough confidence to back alternative liquid fuels without any need for new taxes on oil or subsidies to protect them.

Environmentalists should join this march with enthusiasm. (...)  replacing gasoline with electricity further brightens the environmental picture. The Environmental and Energy Study Institute has shown that, with today's electricity grid, there would be a national average reduction in carbon emissions by about 60% per vehicle when a plug-in hybrid with 20-mile all-electric range replaces a conventional car.

Subsidizing expensive substitutes for petroleum, ignoring the massive infrastructure costs needed to fuel family cars with hydrogen, searching for a single elegant solution -- none of this has worked, nor will it. Instead we should encourage a portfolio of inexpensive fuels, including electricity, that requires very little infrastructure change and let its components work together: A 50 mpg hybrid, once it becomes a plug-in, will likely get solidly over 100 mpg of gasoline (call it "mpgg"); if it is also a flexible fuel vehicle using 85% ethanol, E-85, its mpgg rises to around 500.

deathsinger asked me yesterday if dKos would ever support a carbon tax, if brought about by Dubya - in an indirect response, let me laud here what Woolsey proposes: plug-in hybrids would indeed be an excellent solution: they would bring about a significant reduction in oil use and thus work on the demand side of the balance, exactly what is needed; as he points out, it is a solution that can be implemented using today's infrastructure.

What is not clear in his proposal is how we will get there: he seems to be saying that no government intervention will be needed, and that "markets" will bring this about on their own. That's where I disagree, and where Democrats need to take their stand and make their proposals, to bring on board both utilities and Detroit to actually get it done on an accelerated - and coordinated - basis, as part of a deal whereby the goal should be to reduce significantly overall consumption, and not just allow people to drive ever more because it's suddenly become easier to do so (thus only pushing the problem back by a few years once again).

They should grab the reference document Woolsey uses as his starting argument:

An oil and security task force of the Council on Foreign Relations recently opined that "[t]he voices that espouse 'energy independence' are doing the nation a disservice by focusing on a goal that is unachievable over the foreseeable future . . ." Others have also said, essentially, that other nations will control our transportation fuel -- get used to it. Yet House Democrats have announced a push for "energy independence in 10 years," and last month General Motors joined Toyota and perhaps other auto makers in a race to produce plug-in hybrid vehicles, hugely reducing the demand for oil. Who's right -- those who drive toward independence or those who shrug?

Bet on major progress toward independence, spurred by market forces and a portfolio of rapidly developing oil-replacing technologies.

This is a transparent attempt to prevent Democrats to claim the national security mantle (and another reason why this fight needs to be engaged in the columns of the same paper), but it is also a very partial reading of the paper by the Council on Foreign Relations: National Security Consequences of US Oil Dependency (pdf!), which states the following:

A popular response to the steep rise in energy prices in recent years is the false expectation that policies to lower imports will automatically lead to a decline in prices. The public’s continuing expectation of the availability of cheap energy alternatives will almost surely be disappointed.

While oil prices may retreat from their current high levels, one should not expect the price of oil to return, on a sustained basis, to the low levels seen in the late 1990s. In fact, if more costly domestic supply is used to substitute for imported oil, then prices will not moderate.

Yet the public’s elected representatives have allowed this myth to survive, as they advocate policies that futilely attempt to reduce import dependence quickly while simultaneously lowering prices. Leaders of both political parties, especiallywhen seeking public office, seem unable to resist announcing unrealistic goals that are transparent efforts to gain popularity rather than inform the public of the challenges the United States must overcome.

and make the following proposals:

  • A tax on gasoline (with the tax revenue recycled into the economy with a fraction possibly earmarked for specific purposes such as financing of energy technology research and development [R&D]);
  • Stricter and broader mandated Corporate Average Fuel Economy standards, known as CAFE standards; and
  • The use of tradable gasoline permits that would cap the total level of gasoline consumed in the economy.

Used singly or in combination, these measures would not only encourage higher-efficiency vehicles (although these will take time to find their way into the fleet), but also encourage the introduction of alternative fuels, as well as promote changes in behavior such as the greater use of public transportation. While there are other domestic policies that could be adopted to limit demand for fuels, no strategy will be effective without higher prices for transportation fuels or regulatory incentives to use more efficient vehicles.

There it is. The CFR is as insidery a body as can be found in Washington, and they are specifically saying that demand reduction is paramount, and that regulatory intervention is required. I don't want to focus on the gas tax here, we've discussed it enough before, but the other ideas would be distinctively Democratic while being supported by a highly respected Washington bipartisna body.

It's time to make the Democratic case for a new energy policy - and to make it where it matters to convince big business to join in.

Editorial Notes: I think Jerome is right that Democrats have no monopoly on new thinking for energy policy. Despite the Democrats cited by Jerome who are strong on energy, the bulk of the Democratic Party is behind the curve. The default Democratic position seems to be mileage standards for new cars and ethanol production, blaming the entire problem on Big Oil. For some reason, many groups who are traditionally conservative seem to "get it" more quickly than Democrats - especially investors and military/intelligence experts. California Arnold Schwarzenegger shows how quickly a savvy Republican can take the lead away from Democrats on energy and climate change. Chris Nelder, like Jerome, see the CFR report (PDF) as very significant (Renewable Energy Set to Explode...with Government Backing):
A bomb went off in the renewable energy world two months ago, but almost nobody heard it. It has stunning implications for the energy business, both the traditional hydrocarbon side and the renewable side. Maybe it’s because it was in the form of a 90-page policy paper from the Council on Foreign Relations (CFR)—the kind of stuff that makes a normal person’s mind wander and eyes glaze over after a few minutes. Well, I’m not a normal person (ask anybody!). Despite its pedantic prose and lugubrious language that only a policy wonk could love, I read it. And after reading it, you could have pushed me over with a feather.
-BA

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