Wednesday, November 24, 2010

Business and the US Energy Policy- What a beautiful relationship

The Wall Street Journal had its Annaul CEO Council Meeting. Among many issues discussed at this summit was energy. The following five recommendations came out of the those discussions:

1. Develop Domestic Energy: Clearly, this is a no-brainer. They want to promote development of domestic resources with appropriate environmental safeguards and a regulatory system that is timely and predictable and avoids a back-door, de facto moratorium. They also do not want to develop a system that picks winners. Instead, the business sectors prefers a diversified solution.

I believe we are all in agreement that we need to develop our own domestic energy resources; however, it seems to me our business leaders have contradictory policy. They say they want environmental safeguards, but want to limit the government's the ability to put in place moratorium in situations, such as off-shore drilling. We still need government to quickly intervene where we do not have time to hash out issue until Congress has multiple panels to discuss whether or not a new environmental or existing method is more detrimental to the environment than it is positive to our energy solution. This is an issue that Pennsylvania is facing with shale gas drilling where the methods of drilling have raised questions on the negative impact the drilling is having on the enviroment and in some cases in releasing natural gas into the water system where a person can litterally light on fire his or her running water from the sink faucet. The governor of Pennsylvania initiated a moratorim on this drilling until it can be further analyzed with respect to the level of safety. Most likely, that moritium will end with the new addministration coming into office next year. That administration was heavily supported by the US Chamber of Commerce in the most recent election. I wonder if part of their support was due to the newly elected adminstration's unwillingness to issue these type of moritoriums. In fact, one of it biggest supports were companies doing this shale gas drilling.

2. Support R&D: Business is requesting government involvement in promoting research and development in carbon capturing technology and new energy storage devices, which is something that we need if we really want to expand solar energy on a massive scale. They prefer R&D to reduce cost over mandates and subsidies.

Unfortunately, I believe you need a balance between the two in order for the US to quickly enter into this green technology revolution similar to the same way we did with the Internet.

3. Consistent Federal Regulation: They want a uniform federal policy on energy and setting certain standards, such as fuel cell efficiency in cars. They want to avoid the patchwork state by state solution. At the end of the day, they do not want states like California dictating the country's energy policy in the same way it has done setting certain car standards and other requirements.

I believe one way to solve this is for Congress to pass a comprehensive energy bill, which currently has been passed in the House and not sits in the Senate where it most likely flicker out at the end of this year. This is going to be a more difficult achievement at this time and the solution will be at the state level with the most innovative and job creating and business promoting states setting forth our future energy policy.

4. Competiviness: They want us to be the leaders in energy technology and export this technology to other countries. Unfortunately, we are way behind in this technology. Countries like Germany, South Korea, Japan and China are the current leaders in this technology. Ironically, back in the seventies the US was the leader in solar technology. In fact, President Carter put solar panels on the White House roof. Unfortunately, our competiveness edge in this technology disappeared when the Regan administration came in and removed those solar panels. That action was a message to the business world that the Government had no real interest to invest in this technology, which meant business concentrated on other potential opportunities, such as desktop computers, walkmans and the Delorian. Well, two out of three were good investments. And America continued its dependence on foreign oil. We lost ground over 30 years to Asia and Europe so it is going to take some time to catch up.

5. Energy Efficiency: They want to US to be leaders in energy efficiciency technology. This should include development of building codes, appliance standards and incentives to employ new energy efficient technology.

Actually, I believe this is a real winner. The US has become a leader in this technology and it continues to grow. Also, Americans are demanding this type of technology. We want to be able to consume more without suffering the cost for it; therefore, energy efficiency technology is the solution. This technology is the diet food for the voracious American energy appetite. There is nano technology out there now that will enable cellphones to be used for an entire month with only one charge. Furthermore, there is a big push to promote energy efficient buildings. Cable channels like HGN, DIY and Planet Green are making it trendy to have an eneregy efficient homes with the I-Pad that runs on one monthly charge. There is the drive and, more importanlty to the business sector, there is strong domestic demand for this technolgy.

The end result of this summit is that the business sector has good ideas, but they still have some steadfast contradictory principals, such as less government involvment, that may make it difficult for the US to have a comprehensive and competive energy policy. We might have to rely on the free-market to dictate the policy. I think for the most part that having the free market set policy has been a good thing. That is if you just exclude the little hicup we had with the financial meltdown in which we turned the financial regulatory reins over to the free market to set our policies. It was not too bad. It just cost us about One Trillion Dollars to get out of that mess.

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