New Energy Economy: Part 3, The Next Transition Team

Barack Obama has created a top-notch team to guide his transition into the White House (see “Obama fills key posts on environment, energy teams“). Next, he should create a team to guide America’s transition to a new energy economy.

I’m not talking about the prestigious group of economic advisors Obama already has assembled to help him identify solutions to the economic meltdown. I’m talking about a team that includes experts in sustainable energy technologies, climate mitigation and adaptation, capital investment, state and local government, business, industry and labor.

Their job should be to fashion a deliberate, coherent and intelligent plan to move as rapidly and painlessly as possible from the old carbon-based economy to a brand new and long-overdue economic order powered by sustainable resources, dedicated to natural resource stewardship and striving to achieve a near-zero carbon society.

We have no such plan now. Instead, as I pointed out in Part 2 in this series, America’s de facto energy policy is a hodgepodge of self-defeating laws, programs and subsidies. Congress must make a critical decision: We either have to phase out fossil fuels or abandon any pretense that we care about climate change, despite its profound implications for public health, national security, peace and economic stability.

If we decide we really care, we need a transition plan for the economy — not just a stimulus package, but a program that focuses on long-term investment in a sustainable nation. What might such a program be like? Here’s one scenario:

2009: Congress passes an economic transformation package with these elements:

  • A phase out of fossil energy subsidies over three years, with revenues redirected to the other near-term elements of this plan.

  • A major investment in economy-wide energy efficiency and carbon-cutting breakthroughs, including at least $10 billion annually to research and commercialize clean energy technologies; $2 billion annually in community energy efficiency block grants; $125 million for green-collar job training; $1.4 billion annually to weatherize the homes of low-income families; and $1 billion annually for states to create and implement aggressive “energy and climate security plans”.
  • A major investment in energy infrastructure, including a modern electric grid that reaches stranded renewable energy resources. Funding would come from money now being spent to rebuild Iraq.
  • Substantial reform of the surface transportation program, shifting the emphasis from building roads to building mass transit, high speed rail and transit-oriented neighborhoods.
  • A rescue package for U.S. automakers, tied to firm requirements that they achieve a CAFE standard of at least 50 miles per gallon for passenger vehicles and light trucks by 2025, that they make major improvements in efficiency and alternative fuels for military vehicles, and that they tool up to help meet the market demand for ultra-low emission mass transit systems created by reforms in federal transportation funding.
  • A $3.50 floor on the price of gasoline. When gasoline prices dip below that amount, the federal gasoline tax would increase, producing revenues dedicated to funding local mass transit projects. Meantime, the floor would help guarantee a continuing market for the energy-efficient vehicles Detroit is required to produce.

2009-2012: Congress and the Administration closely monitor the nation’s progress on energy efficiency and renewable energy and make adjustments as needed in federal policy to expedite progress. If states and localities are not making sufficient progress, Congress would begin implementing national standards, including a mandatory national building code, a renewable energy portfolio standard, an energy efficiency performance standard, and a requirement that states allow utilities to earn reasonable returns by helping customers save energy. EPA regulation of carbon emissions would kick in during this period. Congress would rescind and redirect other federal subsidies that promote carbon emissions, generating more investment capital.

2012: The cap-auction-invest mechanism begins, generating $100-$250 billion in new federal revenues. The revenues are divided equally to 1) provide tax or public assistance benefits to each American; 2) invest in clean energy research and commercialization; and 3) fund climate adaptation and equity programs to help those least able to cope with the impact of climate change and climate policy.

2015: U.S. greenhouse gas emissions peak and begin to decline, helped by an annual reduction in the national carbon cap. Infrastructure, carbon mitigation and climate adaptation work continues.

2020: U.S. greenhouse gas emissions reach the target of a 30 percent reduction compared to 1990. All of the revenues from carbon trading are returned to the American people as modernization of the nation’s infrastructure is completed and the new energy economy takes hold.

Is this the right plan? Maybe, maybe not. But it’s the type of coordinated, coherent and aggressive national policy President Obama and the 111th Congress must adopt to end the idiotic policies that have resulted in the crises we’re experiencing today.

Part 4 explores how Obama could creating a tangible vision of the future

— Bill B.

5 Responses to New Energy Economy: Part 3, The Next Transition Team

  1. JCH says:

    The less oil that the United States uses, the cheaper it gets for everybody else.

    How do you address that? The competitive disadvantages are going to multiply like rats.

  2. A Siegel says:

    RE ‘floor’ on price of gasoline, is a “fixed price” what is really required or some statement of certainty that, all things being equal, tomorrow’s price will be higher than today’s?

    I don’t see the path toward a $1.50 imposition, overnight, of a gas tax without a mass outcry.

    On the other hand, what if were to be a 20 cent immediate tax, 2.5 cents month after than (50 cents in a year), and then 1 cent/month for the next decade? This would place gasoline, everything else being equal, $1.70 higher than today. This would drive businesses and (thinking) individuals to plan their lives on a clear understanding that gasoline prices will be higher, in essence no matter what, with far less of a shock into the economhy.

    And, is $125 million enough for green jobs? What about creating/fostering ‘green jobs’ education within the public schools and within universities? At, let us say, $5k per person (after administration), $125 million means 25,000 people trained. Is that anywhere even within the ballpark of the types of numbers we want trained in the near term?

  3. A Siegel says:

    Oh … by the way, JCH — so what? The United States imports the majority of its oil. Every drop of oil less that Americans use means money that can stay in our economy and in our own society rather than being exported to enrich other nations. NOTE: Competitive advantage United States, not others.

    And, as well, if other countries are spending less on oil, that can free more resources that they can use to buy US goods or, in the developing world, lowers their requirements for outside aid (from, for example, the US). Competitive advantage: US.

    Etc …

  4. Alex J says:

    If things really did get out of whack, with other countries (and American outsourcers) going on a fossil binge at relatively low prices, there is the option of linking trade policy with climate efforts. As much as the T-word is avoided in the U.S., uncooperative nations could be subject to a phased-in carbon tariff as a last resort.

  5. Bob W says:

    We can’t get the cart before the horse with mass transit. An almost empty bus or light rail car is much more wasteful than a 40 mpg (or even 25 mpg) car, especially if its powered by fossil fuel or coal powered electric.

    I believe the most GHG efficient mass transit is in greater New York City, with its power mix including nuclear and hydro, and all those trains, buses and subways packed with commuters. In most other areas, converting personal transportation to hybrid, electric and diesel minicars might be more efficient.

    We shouldn’t build mass transit systems that increase GHGs/person-mile. We need the GHG free baseload first.