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Like most of his speeches, Bush's State of the Union address was full of sweeping generalities and a lack of details. Nothing too special about this one, but I did find this little gem amusing:
To keep our economy growing, we also need reliable supplies of affordable, environmentally responsible energy.
Nearly four years ago, I submitted a comprehensive energy strategy that encourages conservation, alternative sources, a modernized electricity grid and more production here at home, including safe, clean nuclear energy.
Well, I certainly agree with the first part. A serious overhaul of our national energy policy is overdue, and we need to immediately begin investing in the energy technologies of the future. But as for that Republican energy plan, it doesn't quite accomplish the lofty goals Bush laid out in his speech.
During the debate on the bill, Sen. Ron Wyden called it "a hodgepodge of subsidies for the politically well-connected." That's a bold statement, but Bush's energy bill managed to live up to it. The bill would have provided
$23 billion in new tax breaks, with two thirds going to the fossil fuel industries. On paper, the bill would provide $5 billion to renewable energy, hence Bush's noble promotion of the bill as a boon for the environment. But this is misleading, as a good chunk of the five billion goes to the production of ethanol, which is probably the most wasteful farce in government spending today. A full list of the problems with Bush's energy bill can be found
here.
Even if the $5 billion were legitimate, it is still outweighed by the $15.5 billion going to the oil, gas, and coal industries. And that's on top of the subsidies already given to the fossils fuels industry. And to really make me angry, the government often includes nuclear power as part of its "green" investments, with nuclear power receiving the majority of available funding. So the federal government is still actively encouraging Americans to choose traditional energy source over renewable energy sources. Not a very effective way of promoting the energy sources of the future.
But let's imagine, for a minute, that we live in an alternate world, one where our representatives actually created legislation that was in the best long-term interest of our country. What would a progressive energy plan look like in such a scenario?
Well, let us assume for the moment that we all agreed on the necessity of ending our dependence on oil and other fossil fuels. I will put that debate aside for another day. For now, let me just focus on what it would take to actively promote the use of renewable energy in this country. While wind power in particular is growing rapidly, renewable energy still makes up a tiny percentage of overall energy use. Primarily, this is a factor of price, as renewable technologies are still not cheap enough to compete with traditional energy sources.
Wind power, now priced at 4-6 cents/kwh, has fallen in price to the point where it is competitive in many areas of the country. Solar power, on the other hand, at 36 cents/kwh, is still too expensive, which is unfortunate, as I am more excited about solar power than any other renewable energy source. It is the only energy source that offers the potential of a completely decentralized energy distribution system, in addition to its environmental benefits. Take the above numbers with a grain of salt, as rates can vary widely for alternative energy sources, depending on location, technology, etc. But they're in the ballpark, at least. So what can be done to lower the price of solar panels, in order to make it more competitive with other sources? By the way, I would have included rates for traditional energy sources, but could not find the necessary data at the Energy Information Administration. I'll update this post once I can find the information.
Well, there are efforts out there to promote renewable energy and energy efficiency at the federal level, such as the Apollo Alliance, which advocates for subsidies and tax breaks to foster the growth of renewable energy. However, much of their plan consists of subsidies that go directly to industry, which I do not believe to be a very effective method at lowering the price of renewable energy. It's just more corporate welfare, a concept that makes me twitch violently whenever I hear of it. Frankly, I think it would be best to simply end all energy subsidies to industry, renewable or traditional. As stated above, the fossil fuels industry receives far more in subsidies than renewable energy sources, so overall this would be a boon to the growth in renewable energy.
So I would rather address the problem in two ways. First, any tax breaks should be aimed at the consumer, not the producer, of renewable energy. This would directly lower the price of all renewable energy sources, thus spurring demand. If demand goes up, companies will fill the void of producing renewable energy, whereas industry subsidies have no guarantee of creating additional demand or lowering price. Now, some of this is already being done at the state level, most notably in California, where solar panels have been aggressively promoted through tax breaks to consumers. But action at the federal level could easily swamp any state effort, and create a real market for renewable energy. Just look at the success of the wind production tax credit, which helps lower the cost of wind power by 1.8 cents/kwh.
The other piece of the puzzle lies in additional research, to create more efficient and cheaper methods of harnessing renewable energy. Like any product, the laws of supply and demand determine the price of solar panels. Well, in a technical sense, the supply of solar energy, like any renewable source, is limitless. Unlike traditional sources of energy, such as oil, where supply is a very real concern, the only obstacle to cheap renewable energy is the effectiveness of the technology used to supply the energy. Which is good news, actually, because throughout the history of mankind, any given technology has always both fallen in price and increased in effectiveness. All it takes is more research, which can be most easily accomplished through funding at the federal level.
I have no doubt that with more research, photovoltaic cells can become as cheap as computer chips. Keep in mind that while today's prices for solar energy are about 10 times as high as prices for fossil fuels, a decade ago that ratio was 50 to 1. Once prices for renewable energy become competitive with fossil fuels, I fully expect demand to explode, leading to a viable market for renewable energy. And as demand rises, more companies will seek to satisfy that demand, leading to further breakthroughs in design and price. Which will lead to further growth, etc. Fun for the whole family.
Ok, back to reality. Clearly there will be no such plan at the federal level, at least not for several years. But I am still optimistic and confident of the future, for even without support from the government, prices will continue to fall for renewable energy sources, as research continues to produce cheaper and more effective technologies. Over the long-term, prices for fossil fuels, particularly oil, will be constrained by dwindling supplies. Renewable energy, on the other hand, will only be constrained by technology. Eventually, I think a completely decentralized energy system will be developed, through improvements in solar panels and gains in energy efficiency. Which, of course, would mean no more concentration of energy production, and no need for utility companies. What a bright future indeed.