Obama's plan: part clean, part green

Abstract

Among the variety of topics covered in his inaugural address, President Barack Obama mentioned the need for expanding research into renewable energy sources and responding to the effects of global warming. Shortly thereafter, he called on Congress to pass legislation that would, over the next decade, invest $150 billion in constructing a “clean energy economy”, and create five million jobs in this sector. The $825-billion stimulus package unveiled by House Democrats in mid-January included an allocation of $54 billion for renewable energy production and an upgrade of the country's electrical transmission grid, as well as funds for improving energy efficiency. Given the current state of the economy, there is concern over the President's ability to deliver on his pledge to promote alternative energy, and critics' claims that, over the past 15 years, the switch to clean energy sources has been promoted mostly by tax credit-based incentives. The promise of tax credits, however, is a fairly weak option at a time when businesses lack the income to offset their profit losses, since investors need profits to take advantage of them, because the credit is used to offset tax liability. Further, the credit crunch and economic downturn have yet to be reversed by capital infusions of any kind. An alternative to tax credits may be “tax refundability”: that is, making tax money available before profits are realized. Increasing the country's energy efficiency by modernizing 75% of federal buildings and improving the energy efficiency of two million American homes. Providing immediate and substantial investments in alternative energy research and development, with an eye to doubling renewable energy power generation within the next 3 years. Creating five million “green” jobs and investing $150 billion in a “clean energy economy” over the next decade, including investment in the research and development of advanced biofuels and plug-in hybrid vehicles, developing commercial-scale renewable energy (such as solar and wind power), and the construction of low-emission coal plants. Building a new electricity “smart grid”, thereby saving money, protecting US power sources, and delivering clean, alternative forms of energy nationwide. Mandating increased use of alternative energy by implementing a federal Renewable Portfolio Standard requiring 10% of the nation's electricity to be derived from alternative energy sources by 2012, increasing to 25% by 2025. Reducing the use of carbon-based fuels by 10% by 2020 and requiring 60 billion gallons of advanced bio-fuels to be incorporated into the American fuel supply by 2030. Developing and deploying “clean coal” technology through carbon capture and sequestration technologies. Establishing national building efficiency goals (eg by making all new buildings carbon neutral) by 2030 and improving the energy efficiency of both new and existing buildings within the next 10 years. Early prognostications are that the stimulus package may ultimately include, among other policies, revolving loan funds for energy efficiency projects, extending production tax credits for renewable energy, and expanding tax benefits for purchases of plug-in hybrids and energy-efficient retrofits in private homes. Refundable tax credits or credits usable against past taxes are additional possibilities, as is a National Clean Energy Lending Authority. The President also wants to institute a cap-and-trade system to reduce carbon emissions by 80% below 1990 levels by 2050. The cap-and-trade system will require the auction of all pollution credits to ensure that industries are paying for their emissions, with a portion of the receipts from the auction funneled into improvements in clean energy and efficiency technologies. Let us hope that President Obama and Congress respond with immediacy to the energy crisis with a venture – as bold as the original Apollo mission to the moon – to make the US the world's clean energy innovator.