Obama's ambitious energy policy
Apr , 2009 - Patrick E. Meyer - IEEE
Energy is enjoying a renaissance of sorts. The issue dominates political, economic and social debate, garnering the kind of attention not seen since the energy crises of the 1970s. Unfortunately, the circumstances driving the interest — record gas prices, national security concerns, environmental concerns — are no more palatable than they were 30 years ago. The emergence of China, Brazil, Russia and other large players in world economic markets has pushed energy prices to unprecedented levels, having widespread impact on global economies, and forcing governments to take action.
Barring dramatic changes to U.S. energy and environmental policies, the nation's energy outlook is likely to deteriorate. It is estimated that annual world energy consumption in 2010 will surpass 500 quadrillion Btus for the first time (EIA, 2008a). World consumption is estimated to further increase 50 percent from 2005 to 2030. Transportation energy consumption plays a critical role; from 2005 to 2030, North America will account for about one-half of the increase in OECD consumption of liquids and other petroleum for transportation, and the United States will account for about 70 percent of that increase (EIA, 2008b).
The Obama Administration (henceforth “Obama”) has already begun taking strides to address critical energy challenges. The president's stimulus package — the American Recovery and Reinvestment Act (ARRA) — which was signed into law on 17 February, includes more than $42 billion for energy initiatives. Included in the stimulus package is $11 billion for Smart Grid development activities (which includes $4.5 billion for electric delivery and reliability programs, including funding for development of standards and protocols). The stimulus package also contains $21 billion in energy tax incentives for renewable energy and energy efficiency projects, $ 2 billion for battery research for electric and plug-in hybrid electric vehicles (PHEVs), and $3.4 billion for carbon capture and sequestration test projects. Energy research and development is also featured prominently in the ARRA, with $8 billion for energy R&D programs, including $3.4 billion for fossil energy R&D, $2.5 billion for the Department of Energy’s (DOE) Office of Energy Efficiency and Renewable Energy, and $400 million for DOE’s new Advanced Research Projects Agency – Energy (ARPA-E), which focuses on cutting-edge, high risk, high yield energy research.
To further aid in the nation's economic recovery, long-term prosperity and national security, Obama is pushing a comprehensive energy and environmental agenda. The plan, dubbed the New Energy for America, aims to:
Obama's energy plan includes construction of thousands of miles of new power lines, tremendous energy efficiency investments (whitehouse.gov, 2009b), and investments in wind, solar, biofuel, clean coal, and more fuel-efficient cars and trucks.
The president has proposed a cap-and-trade program to addresses the fact that renewable energy, although clean and sustainable, is not necessarily profitable at this time. To fix that, he wants to institute a market-based cap on carbon pollution, making pollution more expensive for companies. In theory, companies will turn to cleaner technologies as a more profitable route for energy production. However, not every one on Capitol Hill shares the president's enthusiasm for a market-based system, with some members of Congress proposing what amounts an emissions tax, as an alternative. As debate on climate change legislation heats up, it promises to be an interesting summer in Washington.
The U.S. transportation sector presents the most challenging revitalization task of all U.S. energy sectors. The electric power sector also needs work, but the electric power sector has evolved and matured in recent decades, staying relatively up-to-date by modernizing both generation and distribution technologies. Futuristic advancements, such as the implementation of a nation-wide “smart grid” may be just around the corner, the success of which can be credited to the hard work of the entire industry over the last decade or two (see Meyer and Vogel (2009) for more information on smart grid developments). U.S. transportation, on the other hand, has steadily fallen behind in terms of technological modernization and relative to other countries.
The U.S. transportation system consumes an average of 6,300 gallons of oil per second (Greene, 2007). Because of this staggering consumption, new fuel economy standards have become a necessary public policy. Corporate Average Fuel Economy (CAFE) standards, which determine the average fuel economy of an auto manufacturer’s fleet, remained stagnant from 1975 until 2007, when congress passed the Energy Independence and Security Act (EISA). The 2007 standards require a fleet-wide average of 35 miles per gallon by 2020, which is a 40 percent increase over current standards. Addressing fuel economy, on 26 January 2009, Obama issued a brief, but important, memorandum to the Secretary of Transportation and the Administrator of the National Highway Traffic Safety Administration (NHTSA) directing them to take the necessary steps to publish in the Federal Registrar a final rule prescribing increased fuel economy for model year 2011 and beyond, as mandated in EISA.
EISA calls for a combined fuel economy fleet average of at least 35 miles per gallon by model year 2020 (Obama, 2009). While some argue that CAFE standards aren't stringent enough — Canada, Australia, China, Japan, and all of Europe will surpass a 35 mpg fleet average by 2012, and Europe and Japan will exceed 45 mpg by 2014 (ICCT, 2007) — there are other critics who don't believe that CAFE is an economically viable solution to our energy woes, citing safety concerns (smaller and lighter vehicles) as well as the added strain the requirements will place on an already-limping U.S. automotive industry.
Obama’s plan also calls for reduced energy consumption and emissions, and seeks to advance technological development in the transportation sector through wide-reaching incentives for PHEVs. In late-March 2009, Obama visited an Edison International electric-vehicle testing facility in Pomona, California, where he announced a $2.4 billion competitive grant program to make electric vehicles more widely available (Reston, 2009). The program could create up to 400,000 jobs in California and help meet the president's goal of putting one million plug-in hybrid vehicles on the road by 2015.
Even before Obama embarked on his first presidential trip overseas, the international community was looking to him to be responsive to the calls of the world. As argued in a recent New York Times article, Obama has changed the international equation, placing the United States at the forefront of the international climate effort, and raising hopes that an effective international agreement might be possible (Rosenthal, 2009). Todd Stern, Obama’s chief climate negotiator, has publicly said that the United States would be involved in the negotiation of a post-Kyoto treaty, to be signed in Copenhagen in December 2009. The general feeling both in the United States and abroad is that the United States will approach the negotiations willing to give more than ever before.
Obama has long-term goals of transforming the nation from one of the world’s leading importers of energy to the world’s leading exporter of renewable energy (Reston, 2009). Obama envisions a future where millions of people will drive alternative-fueled vehicles, the smart grid will connect homes from coast to coast, and dependence on energy from hostile regions of the globe will become a thing of the past.
Just a few weeks ago, Obama challenged Congress that “now is the time to act boldly and wisely — to not only revive this economy, but to build a new foundation for lasting prosperity” (whitehouse.gov, 2009b). Investing in alternative energy, energy efficiency, alternative fuels, advanced technologies, and sustainability-oriented initiatives will build a new foundation for lasting prosperity. Is Congress — and are we — up to the challenge?
EIA. (2008a). International Energy Outlook 2008: Chapter 1 - World Energy Demand and Economic Outlook. Retrieved 22 March 2009, from www.eia.doe.gov/oiaf/ieo/world.html
EIA. (2008b). International Energy Outlook 2008: Chapter 6 - Transportation Sector Energy Consumption. Retrieved 22 March 2009, from www.eia.doe.gov/oiaf/ieo/transportation.html
Greene, D. L. (2007). Testimony to the U.S. Senate Committee on Energy and Natural Resources: Policies to Increase Passenger Car and Light Truck Fuel Economy. Retrieved 4 February 2009, from http://energy.senate.gov/public/_files/greenetestimony.doc
ICCT. (2007). Passenger Vehicle Greenhouse Gas and Fuel Economy Standards: A Global Update. Washington, DC: The International Council on Clean Transportation.
Meyer, P. E., & Vogel, A. (2009). Coverage of IEEE Energy2030 Conference: Development of Smart Grid Builds Momentum Retrieved 24 March 2009, from www.todaysengineer.org/2009/Mar/Energy2030.asp
Obama, B. (2009). Memorandum for the Secretary of Transportation and the Administrator of the National Highway Traffic Safety Administration. Retrieved 4 February 2009, from www.whitehouse.gov/the_press_office/
Reston, M. (2009). Obama unveils $2.4-billion grant program to aid electric cars. Retrieved 24 March 2009, from www.latimes.com/news/nationworld/nation/la-na-obama-pomona20-2009mar20,0,4688845.story
Rosenthal, E. (2009). Obama's signals on climate raising hopes for new treaty. Retrieved 24 March 2009, from www.statesman.com/news/content/news/stories/nation/03/01/
whitehouse.gov. (2009a). The Agenda: Energy & Environment. Retrieved 24 March 2009, from www.whitehouse.gov/agenda/energy_and_environment/
whitehouse.gov. (2009b). Remarks of President Barack Obama -- Address to Joint Session of Congress. Retrieved 24 March 2009, from www.whitehouse.gov/the_press_office/Remarks-of-President-Barack-Obama-Address-to-Joint-Session-of-Congress/