20 Nov 2008: Analysis

Obama is Ready to Move
on a Clean-Energy Economy

For four decades, American politicians have talked about ending U.S. dependence on foreign oil. But during the campaign and since his election victory, Barack Obama has made it clear that he finally intends to change the way America powers itself.

by keith schneider

Just as he did from the very start of his campaign, in informal town hall settings and in nationally-noted speeches, President-elect Barack Obama is using the weeks between the election and the inauguration to stress his determination to switch from fossil fuel to clean energy. His goal: to fix, once and for all, the problem that started America’s economic emergency.

As he said on 60 Minutes on Nov. 16, “We go from shock to trance. Oil prices go up. Gas prices at the pump go up. Everybody goes into a flurry of activity. Then the prices go back down and suddenly we act like it’s not important and we start filling up our SUVs again. As a consequence, we never make any progress. It’s part of the addiction that has to be broken. Now is the time to break it.”

Two days later, he told a climate-change conference that his energy plan would cut oil imports, create jobs, and reduce the pollution causing global warming. “Now is the time to confront this challenge once and for all,” Obama said. “Delay is no longer an option. Denial is no longer an acceptable response.”

If there’s one truly audacious idea that Obama rode to the presidency, it’s

Never had environmental principles played such a prominent role in a winning campaign for the American presidency.

the notion that the United States can produce a new era of prosperity by changing how it powers itself. The basic details of his New Energy For America plan – a 10-year, $150 billion investment in wind, solar, biofuels, energy efficiency, transit, and conservation to create five million jobs – became one of his campaign’s core messages.

Never had environmental principles played such a prominent role in a winning campaign for the American presidency. “Even as we celebrate tonight,” Obama said in Chicago’s Grant Park an hour after his victory, “we know the challenges that tomorrow will bring are the greatest of our lifetime — two wars, a planet in peril, the worst financial crisis in a century. There is new energy to harness and new jobs to be created.”

There is, of course, no shortage of rhetoric during an American presidential campaign. And certainly, energy security and alternative energy have periodically risen, and then just as quickly disappeared, in campaigns since the early 1970s. Those among us with gray in their hair may recall that on Nov. 7, 1973, President Nixon told a country anxious about gas lines: “Let us set as our national goal, in the spirit of Apollo, with the determination of the Manhattan Project, that by the end of this decade we will have developed the potential to meet our own energy needs without depending on any foreign energy source.”

Thirty-one years later, in July 2004, oil topped $50 a barrel, the price of gasoline was $2.10 a gallon, and Senator John Kerry told the Democratic National Convention: “Our energy plan for a stronger America will invest in new technologies and alternative fuels and the cars of the future — so that no young American in uniform will ever be held hostage to our dependence on oil from the Middle East.”

Nor is there a shortage of skepticism that Obama can chart a new course for the U.S. economy that veers away from oil and coal. Republican Senator James Inhofe of Oklahoma, who during the campaign questioned whether the president “really loved his country,” snarled after the election that the Senate would not be an easy place for the administration to pursue its clean energy agenda.

But in his campaign speeches and in public statements since the election, Obama has consistently emphasized two points that have convinced him that the transition from fossil fuel to clean energy is not just an economic and environmental necessity, it’s also politically practical.

The first is that a confluence of history, economics, technology, and deteriorating environmental conditions is steadily pushing the nation to switch fuel sources. Eighteenth century America was powered by oats and wind; the 19th century by wind and coal; the 20th by coal, oil, and nuclear power. Clean energy, a nearly $30 billion industry in the United States, is the nation’s fastest growing industrial sector and has had little help from government other than federal tax credits. A sizable national investment would accelerate the industry’s development, business executives say.

“The evidence is much clearer for action on energy,” said Representative Jay Inslee (D-WA), a member of the House Committee on Energy and Commerce, and one of Capitol Hill’s foremost experts on the subject. “With gas prices and climate change and the middle-class crisis, many more people understand how these things are tied to energy.”

Just as crucial is Obama’s insistence that the moment to act is now. Throughout the 20th century, one of the basic underlying principles of the

Since the election, Obama has consistently emphasized that the transition from fossil fuel to clean energy is not just an economic and environmental necessity, it’s politically practical.

American economy was that the more fossil fuel we used, especially oil, the wealthier we became. Clearly, that is no longer the case. The more fossil fuel we use the poorer, more diminished, and more endangered we are. This new fact of American economic life is due not just to the security risks fostered by our petro dollar imports, or to the climate weirdness made worse by our coal and oil pollutants. It’s also that our fossil-fuel, drive-through economy of convenience has crashed through market barriers that few anticipated except peak oil experts and writers like James Howard Kunstler, author of the 2004 The Long Emergency.

The extent of the damage is more than breathtaking. It’s scary. On Sept. 4, for the first time in history, the National Highway Trust Fund, which finances highway construction, was empty, the consequence of Americans driving billions of fewer miles each month and paying less in gas taxes that replenish the fund. Two days later, Fannie Mae and Freddie Mac, the largest holder of mortgages for suburban home and office development, announced they were insolvent.

Though Congress quickly passed legislation to temporarily fill the highway fund, and rescue the mortgage banks, the significance of what occurred was quickly recognized by world financial markets. The three most important national accounts for building the gas-guzzling, highway-dependent, suburban, cul-de-sac, shopping-mall car culture that has been the American economy since the 1950s, were insolvent.

America’s spread-out civilization, made possible by the market trends of the 20th century, especially cheap energy, was crashing. New homes in distant suburbs made sense when government was rich enough to build the highways, incomes were rising, and homeowners could commute long-distance in expensive cars using cheap fuel. But rising gas prices the last two years made the personal math more difficult. Incomes stagnated. That extra $200 to $300 a month that paid for fuel was the money homeowners really needed to pay the mortgage. The mortgage crisis erupted first and worst in the newest and most distant suburbs, and the tide of foreclosures swamped Wall Street.

On Sept. 17, Lehman Brothers, which held nearly a trillion dollars in assets connected to bundling bad mortgages, collapsed. Two days later the government poured $85 billion into AIG, the world’s largest insurer. Two days after that, on Sept. 19, the White House proposed a $700 billion financial rescue plan.

It’s not enough. By early November, General Motors, once the signature industrial institution of America’s drive-through economy, said it was close to collapse, and the Big Three U.S. automakers said they were in need of a $25 billion bailout.

Even as Republicans and the Bush White House signal their opposition, Obama and Democratic Congressional leaders, especially Michigan Senator Debbie Stabenow, have made it clear they want to rescue the industry. But some environmentalists are maintaining that any assistance package must include a mix of fuel efficiency standards, requirements for producing alternative-fuel vehicles, and incentives for using manufacturing equipment and practices that save energy.

This point is crucial. Since the 1960’s, environmentalists have well understood how economic principles influenced the environment. Economic development produced growth, pollution, toxins, and ill-advised construction and sprawl that threatened species, babies, wild lands, and communities.

The Obama campaign turned that 40-year-old frame around. The president-elect described a cleaner and more prosperous world made possible when environmental principles influence the economy. The old economic order is crashing. A new economic development strategy is needed.

“We simply cannot pretend that we can drill our way out of this problem,” Obama said in introducing his New Energy For America plan in Michigan in August. “We need a much bolder and much bigger set of solutions. We have to make a serious, nationwide commitment to developing new sources of energy, and we have to do it right away.”

POSTED ON 20 Nov 2008 IN Business & Innovation Climate Energy Energy Policy & Politics Policy & Politics North America North America 

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