Monday, October 20, 2008

Candidates & Energy: McCain Revisited

Before delving into the details of Senator McCain's energy plans, it's worth noting how remarkable it is that our final choice should be between two candidates who view our energy and environmental challenges so similarly, even if their preferred solutions differ markedly, both in execution and in their underlying philosophy. It was not at all a forgone conclusion that the ultimate Republican nominee for President would consider climate change as a problem rivaling energy security, or that he would regard action on the former as a means of addressing the latter. Several of Senator McCain's challengers in the primaries appeared to view climate change as either a hoax or a nuisance issue. In essence, Senator McCain's proposals would create a transition plan for moving the US economy towards using much less imported oil, improving overall energy efficiency and reducing emissions. This would be achieved by ramping up domestic energy production, encouraging new energy and efficiency technology, and putting a market price on greenhouse gas emissions.

If you asked me for the single-sentence summary of the McCain energy plan, it would be nearly identical to one for the Obama Plan: "Make the US more energy independent and reduce greenhouse gas emissions through an emissions cap and trade system and other measures." The energy and climate sections of Senator McCain's campaign website mirror these priorities. Although it has gained considerable detail since I reviewed it in January, it remains less specific than Senator Obama's site. That no longer appears to be an omission, but rather a reflection of a profound philosophical difference in their approaches.

Where Senator Obama's energy plan relies heavily on mandates or incentives for specific technology pathways--electrified vehicles, for example--Senator McCain's emphasizes outcomes and offers incentives based on making progress towards them. For example, his Clean Car Challenge provides consumers with incentives for purchasing advanced technology vehicles based on the reduction of CO2 emissions they achieve, with zero-emission vehicles (tank-to-wheel) qualifying for a $5,000 tax credit. In addition to a tax credit for R&D, he proposes an X-Prize-like $300 million payoff for a quantum leap in vehicle battery technology. He would also end both the subsidy for domestic corn ethanol and the tariff on imported ethanol, forcing US ethanol producers to compete with other fuels, and particularly with more energy-efficient cane ethanol from Brazil and the Caribbean.

This emphasis on outcomes also applies to Senator McCain's approach to vehicle efficiency. Rather than calling for further increases in the recently-enacted 35 mpg Corporate Average Fuel Economy target for 2022, he has proposed strengthening CAFE enforcement by increasing the fines for missing the targets already in place--something that has received scandalously-little attention. This currently amounts to $55 per car for each mile-per-gallon below the standard. In 2006, for example, Daimler Chrysler paid $30 million in fines on 196,000 imported Mercedes Benzes, or $154/car. If CAFE is to be an effective tool for promoting fuel efficiency, rather than just measuring it, it must have sharper teeth than that.

Senator McCain's approach to climate change builds on the first cap & trade bill that he co-authored with Senator Lieberman in 2003 and reintroduced in the Senate in 2005 and 2007. His current version of this proposal would reduce US greenhouse gas emissions by 60%, compared to 1990 emissions, with milestone targets along the way. The first of these would see US emissions return to 2005 levels by 2012. That would make for a relatively soft transition, since 2006 emissions were below 2005's, and a slowing economy is liable to reduce them further. The gradual phase-in of auctioning for emissions permits would also ease the transition into this otherwise radical means of transforming the US energy economy. However, as I noted in my analysis of Senator Obama's plans, cap & trade would still function much like a tax on the entire economy, with potentially serious consequences during a major economic downturn. The odds of enacting and implementing such a system in the next two years have clearly diminished within the last month, no matter how high a priority either candidate deems climate change to be.

The most notable departure from Senator McCain's focus on outcomes, rather than specifying technology, involves nuclear power. He has described nuclear energy as a centerpiece of his energy security and climate change program and proposed building 45 new nuclear reactors in the US by 2030, with a target for eventually building 100 new plants--presumably to counteract the eventual retirement of most of the existing fleet of 104 reactors, some of which date to the early 1970s, with the newest having been completed in 1996. This is a very ambitious goal, and it represents one of the biggest differences between the energy plans of the two candidates. Senator McCain's confidence in nuclear power appears to rely as much on the decades-long experience of the US Navy with nuclear propulsion as on the current power reactor fleet that supplied 19% of all US electricity generated last year. Senator Obama has frequently expressed concerns about the safety, security, waste disposal and proliferation risks of nuclear power, and although he supports it in principle, it is not obvious that any of the nuclear plants for which permit applications have already been submitted would proceed in an Obama administration.

As helpful as more nuclear power plants would be for reducing the emissions that accompany our current reliance on coal-fired power plants, along with enabling truly zero-emission electric vehicles--as opposed to those that merely shift their emissions to a central power plant--nuclear is no quick fix. Considering that the only US nuclear power plant already under construction--following a 20-year hiatus--is not expected to start up until 2013, the 2030 timeline for achieving the 45-reactor goal looks just barely long enough. Perhaps that explains Senator McCain's emphasis on drilling for oil and gas in portions of the US currently off-limits to exploration, as a transition strategy to buy time for renewables and nuclear power to ramp up.

His support for expanded drilling covers the estimated 18 billion barrels of undiscovered potential oil resources and 77 trillion cubic feet of natural gas that were restricted by the recently-expired federal drilling ban, but it apparently does not extend to lifting the ban on drilling in the Arctic National Wildlife Refuge (ANWR.) While the mantra of "Drill Here, Drill Now" may seem overly simplistic, inclusion of conventional energy recognizes two key facts of our energy security challenge: The US still possesses enough remaining hydrocarbons to make a serious dent in our oil imports--though not to displace them entirely--and those hydrocarbons represent a concentrated and efficient energy source (in the energy return on energy invested in producing them, EROEI,) on a scale that renewable energy will not attain for years to come.

Although many of the elements of Senator McCain's plan look sensible, I still struggle with the notion of energy independence that underpins much of his--and Senator Obama's--energy strategies. Although Senator McCain has recently refined his goal of "strategic independence" to encompass backing out Middle Eastern and Venezuelan oil, we might get greater benefits from a more positive strategy of working with our natural hemispheric allies, such as helping Mexico revitalize its flagging energy industry and partnering with Brazil to develop its vast new oil finds, while we expand our own sources and use energy more efficiently. That would enhance energy security in a manner more consistent with the Senator's general espousal of free trade principles.

With regard to energy and the environment, voters face a difficult--and thus extremely fortunate--choice between two candidates who treat the energy crisis and climate change with the seriousness that these closely-connected issues deserve. The proposals of either one would move us much closer to a coherent and practical national energy policy, something that we have not had for far too long. At the same time, the differences in their approaches are significant and merit careful consideration. While Senator Obama's plans may depend too heavily on help from a federal government that could be over-extended by a number of other pressing concerns, Senator McCain's may rely too much on free market solutions that would be a tough sell in light of perceptions concerning the causes of the current financial crisis. And if elected, either one would find himself facing a powerful Congressional majority with its own ideas for solving these problems. The one certainty is that I will not lack for suitable topics on which to blog in 2009.

No comments: