Energy Independence Vital to Long Term Economic Health
Posted by Michael A. Kamperman on November 19, 2009
One of the
One of the interesting developments to come out of President Obama’s trip to Asia is the declining momentum internationally for climate change legislation. The Asian countries refused to agree to an 80% reduction in carbon emissions by 2050. Instead they supported a 50% reduction and stated they were not ready to sign any agreements in Copenhagen next month, which was initially touted as a potential replacement to the never implemented Kyoto Treaty. In the U.S. it looks like cap-and-trade/global warming/climate change legislation has fallen off the rails and it is doubtful anything meaningful will be passed by Congress between now and the mid-term Congressional elections in November of 2010. The political difficulties in addressing health-care legislation have pushed back all other significant initiatives in Congress. The President has already stated the new politically driven focus for the Whitehouse based on recent exit polls will be both deficit reduction and job creation. To me the Whitehouse is beginning to look like a deer in the headlights shocked by the rise in unemployment and their inability to get things passed in Congress despite huge majorities in both houses in Congress. I believe we should rethink cap-and-trade and start over on a new long term energy independence bill. Cap-and-trade had three big problems. First it introduced a bunch of new taxes and costs on the economy in the middle of a depression. Second, the people living near the worst polluting coal plants would see their electric bills go up, yet they would still get the pollution. Finally, the bill is being sold around global warming which is politically divisive. We need to attack the problem from a different angle that creates a buy-in by a vast majority of the America people. A new initiative to create long term energy independence should be focused on the economic benefits, the geo-political security benefits, and on reducing pollution for all Americans.
A couple of years ago I was in a brainstorming session and was asked where I thought the best long term opportunities were for investments in emerging economies. My answer was Brazil because it will be self sufficient in both agriculture and energy. The U.S. is already self sufficient in agriculture. To become self sufficient in energy we will need to wean ourselves off of oil. The single biggest reason we run huge trade deficits is not the strength of the dollar, it is our voracious appetite for oil. We will not be able to replace all of our oil usage in the near term. But we can significantly reduce it. The easiest thing would be to switch our trucks and buses to run on natural gas rather than on diesel. There is already a bill in Congress to do this and it would create jobs. But we need even bigger and bolder ideas.
We should change the building code starting in 2011 and require all new construction of homes and commercial buildings to be equipped with the most advanced forms of insulation and with a renewable energy source such as wind, solar, or geothermal energy that is connected to the grid. This will create a competitive market for alternative energy products without tax credits. It will also move us toward energy independence and leave us with a cleaner planet. The second thing we should do is not waste out time and money trying to weatherize old dilapidated houses. We should knock those houses down to rebalance the supply and demand for housing. This will help to stabilize the prices of homes. It will also create a greater demand for new homes that will have to be built up to the specs of the new building code. President Obama wants to create jobs on the cheap. This idea will not end the depression, but it will soften its impact.
