The New Energy Economy - Is It Possible?

Except for the soft hydraulic whir of expectations being raised, the first week of the Obama transition was a quiet one. Indeed, the big news came from neither Chicago nor Washington but from Detroit and Beijing. In Detroit, General Motors — the stupendously clueless automaker — begged for a bailout lest it go bankrupt, thereby raising the question: If our resources are limited, why should we invest in the failed corporate past rather than in the technologies of the future? The obvious answer was to protect jobs. But how long would those jobs last without a significant overhaul of the company's management and priorities? Was it even possible that the Federal Government could demand or supervise such a radical makeover?

There was even bigger news from China, where the government announced a $586 billion stimulus package in an attempt to soften the blow of the coming recession. The China package was big and bold — and a tacit challenge to the Obama Administration. It represented 18% of the Chinese gross domestic product, the equivalent of a $2.4 trillion program in the U.S. Of course, China has bigger problems to solve than America does.
And that's where the challenge is: if US does not want to be left behind, it will have to do something similar. Obama has said building an alternative-energy economy will be his top priority. The question is, How bold is he willing to be about that? Actually, there are a lot of questions: How much of the stimulus plan he proposes in January will be devoted to immediate middle-class tax relief, and how much to investing in the future? What would a plausible alternative-energy plan look like?

The Center for American Progress (CAP) — the think tank run by Obama's transition chief, John Podesta — which has drafted a green-energy stimulus plan of its own. "We identified $50 billion in programs that are ready to go immediately," says Bracken Hendricks of CAP. "The package would create 2 million jobs across the skill spectrum, from blue collar to high tech, and in almost every area of the country. There was huge congressional appetite for this even before the economic crisis hit."

The package — which could easily be doubled to $100 billion — would have five components:
• A green bailout for the automakers, with a quid pro quo: they would have to increase fuel-efficiency standards in their cars at least 4% per year and make major investments in new battery technology for plug-in hybrids.

• A green-infrastructure fund to make existing public buildings more energy-efficient and provide homeowners with tax breaks to do the same. "This could help revive the construction industry," Hendricks says.

•Tax credits for companies that produce wind and solar energy and energy conservation products like fiberglass insulation. According to Hendricks, there are companies ready to build wind farms in the Midwest and solar farms in the Southwest if they can be guaranteed that there will be a market for their products even if oil prices drop.

• Construction of a new "smart" electric grid to deliver the power generated by wind, solar and geothermal plants in rural areas to the major population centers. This would be a down payment on the $400 billion over 10 years that Al Gore has estimated the new grid will ultimately cost — although, Gore says, the savings in energy efficiency could pay for the grid in three years. The new smart technology would figure out the cheapest and most efficient times to run everything from major heating and cooling systems in public buildings to your clothes dryer.

• Increased investment in mass transit. Hendricks says there are $20 billion to $30 billion in local-rail and alternative-energy bus projects that have already been approved by Congress but not yet funded by the Federal Government.

It is difficult to make public poetry out of wires and fiberglass insulation. "We will send a man to the moon" is a far more romantic proposition than "We will have a gadget in your basement that will help you use electricity more efficiently." But if there is creativity lurking amid the destruction of the economic crisis, it exists at the intersection of national security, economic stimulus and climate change — the gust of innovation and economic growth that will come from breaking our dependence on fossil fuels. Along with finding the right people to staff his Administration, Barack Obama's most important job now is to find the right words to inspire the nation to undertake this next great cause.