Finally: Energy Policy To The Forefront

A much-needed debate on our national energy policy is finally moving into full-swing. The discussion promises to be messy, and of course, political. Some good is bound to come out of it.

A large majority of Americans are now convinced that global warming is real, that it's a threat, and that it's caused, at least in significant part, by human activity. That belief will no doubt be reinforced in a couple of weeks when the Intergovernmental Panel on Climate Change, an international body of experts, issues its Fourth Assessment Report on global warming. This will be the IPCC's first comprehensive report since 2001, and advance chatter suggests it will ring the bell loudly for increased evidence of faster than expected global warming and its adverse effects. (See, e.g., Global Warming, The Final Verdict, in Sunday's UK Observer.)

Many states, frustrated with the Bush administration's complete lack of focus on the problem, have already started pushing policies to reduce carbon emissions. That, in turn, has prompted industry--which prefers uniform federal policies to a hodge-podge of conflicting state and local laws--to begin agitating for a comprehensive national policy.

Likewise, the new Congress includes many Democrats who are fervent about the need to address global warming, as well as issues of energy independence (as we've recently pointed out, these are two different issues that require different, but overlapping, policies). Clearly, however, while there is an emerging consensus that something needs to be done (even Bush the denier will supposedly fess up to the need in his State of the Union address tonight), there is a raging debate about HOW to do it.

Bush will probably pay only lip service to the issue of global warming--he'll say we need to do something, but he won't propose anything meaningful. Kind of like when he said we were addicted to oil and should raise corporate average fuel economy targets, but then never submitted any legislation to do so.

Industry is increasingly getting in on the debate. Yesterday, a diverse group of utilities and manufacturers, led by General Electric, urged Congress to implement a "cap and trade" program, whereby businesses would have their carbon emissions capped, and then would have to meet targets for reducing emissions, either by installing new technology, or by purchasing emission credits from other more efficient businesses. (See CEO's Urge Bush To Limit Greenhouse Emissions.) [Actually, the CEO's are urging Congress to act--they realize Bush is pretty marginal at this point.]

Of course, other businesses have different views on the issue, all depending on the types and amounts of energy they currently use. For example, the steel industry, which is a big carbon emitter, opposes caps on the ground that it will just help foreign manufacturers who are not subject to such caps (there are ways to level that playing field, however). Since different Democrats are beholden to different industries and the unions employed by those industries, they are having a hard time coming up with a unified strategy. (See Internal Rifts Cloud Democrats' Opportunity on Warming).

One good sign: editorial pages are devoting significant column space to the debate now that pretty much everyone has had a chance to denounce Bush's Iraq surge plan. For example, today's WSJ has an op-ed piece from energy expert Daniel Yergin on "Energy Independence" pointing out just how far we are from achieving such a goal, and another piece from venture capitalist Vinod Khosia ("The War on Oil") making the point that we've already gone about as far as we can with corn-based ethanol, but promoting cellulosic biofuels as the wave of the future.

We can't imagine that a great piece of legislation is going to come out of all this, but we can hope for at least a decent start. Big Oil is likely to be the initial big loser, while just about everyone else will, at least in the short term, get a bag of goodies from Congress, whether they deserve it or not. (E.g., powerful House Energy Committee Chairman John Conyers will make sure the Big Three automakers get showered with subsidies to develop next generation cars that they should've already developed on their own.)

The ultimate goal, however, should be a strong cap and trade system, which ultimately leaves to businesses the best way to lower their emissions while unleashing powerful market forces to drive the most promising technologies forward. That, combined with elimination of tax breaks and subsidies for oil, natural gas and coal should go a long way to getting the U.S. headed in the right direction.