The State of Our Energy Policy

This is what I wish President Bush would say about energy in his State of the Union message:

In 2001 I said we needed to increase energy supplies, and in my State of the Union speech in 2002 I said we needed to increase energy production at home to make America less dependent on foreign oil. That was wrong. I’m sorry. The United States has only 3 percent of the world’s oil reserves, so it’s obvious that we need to reduce demand at home. On my watch, we’ve become more dependent on imports. Six years ago, when I came into office, we were importing 11 million barrels of oil a day; last week we brought in 14 million barrels a day. Meanwhile, federal funding for energy efficiency programs has fallen by a third.

In 2003 I promised that a child born that year would have a hydrogen car as his or her first car. I’m sorry — it’s just not clear that hydrogen fuel, fueling stations and cars will be ready by that date. Or ever, for that matter.

In 2004 I spent more time talking about the problems of steroids in baseball players than about energy. But between January 2002 and today, Americans have paid nearly a trillion dollars more for energy — oil, gasoline and natural gas — than during the previous five years. Obviously, if I’d stopped to think about the implications of this in 2004, I would have realized that these increasing energy prices were outstripping my tax cuts, and that they’re symptoms of what’s been called an “energy straightjacket”: in which our delivery infrastructure is stressed, world supplies are tight, and we’re vulnerable to political and weather events over which we have no control.

In 2006 I promised to make our dependence on Middle Eastern oil “a thing of the past” by 2025. Unfortunately the latest projections show that by 2030 we will actually import 40 percent more of our oil from that region. I then said that “Americans are addicted to oil,” which suggested that we need to give up petroleum cold turkey. Obviously impossible. Better, I suggested, to simply wait for labs to make the equivalent of methadone for oil — cellulosic ethanol — which I said would be a practical and competitive fuel within six years, because we are on the “threshold of incredible advances.”

In short, I made a series of promises that wasted valuable time and money, while our uncontrolled energy demand chewed away at the underpinnings of our prosperity, jeopardized the security of our environment, and limited our foreign policy and strategic vision. At the same time, I suggested that the American people should remain passive, waiting for answers from science, from the energy industry or from the government.

Now I’ve had an awakening, and I’ve decided to announce a very different energy policy. This one contains no promises, no wild breakthroughs and no passivity. Now all I have is a plan.

Starting tomorrow, we’re going to cut back on the oil we use, stimulating our economy to become more energy-efficient, and we’re going to phase in alternative fuels in a way that lets the market decide which ones are best. Of course, we’ll invest in research — billions, in fact, far more than the $29 million I proposed last year to investigate cellulosic ethanol.

On conservation:

The 2005 Energy Bill contained a $450 million fund for public education, but the money has never been spent. We’ll use it to pay for a campaign to teach American drivers to save fuel by changing the way they drive. Driving 55 and changing our habits could save more than 7 billion gallons of gasoline a year. The next thing we’ll do is change the timing on 330,000 traffic signals, which could save as much as 17 billion gallons. Then we’ll help the nation’s long-haul truckers install aerodynamic kits on their trucks to save another billion or more. If we get to the point where we’re saving just 3 percent of what we now spend on gasoline, we’re likely to see the price of gas, as well as the worldwide price of oil, fall. And that will give every household, as well as our foreign policy leaders, a bit of breathing room.

On efficiency:

For the past 30 years, efficiency has been America’s largest and cheapest new energy resource; since 1970, increasing efficiency has met three-quarters of our new energy needs. But we can do much more, and we must do more to reduce greenhouse gases and stay competitive with China and Europe. So we’re going to start an initiative to make every aspect of the American economy better at turning energy into gross domestic product.

We’ll set tough standards for motor vehicles and utilities — our two biggest energy users — so that they reduce total energy demand while delivering more services. We’ll also add a market mechanism so that corporations, cities and other organizations can buy and sell efficiency credits, so-called “white certificates” — something Europe and several American states are already doing. In the meantime, we’ll fix policies that discourage efficiency. (Now, for example, we allow landlords to write off their cost of energy yearly, but we require that they write off investments in energy efficiency over a 30-year period.) We believe this combination of tough standards and an efficiency trading system will speed up the commercialization of cutting-edge technology and, at the same time, improve the lives of people around the world. If you want proof, look at how three decades of refrigerator standards have made for better, cheaper fridges that use 70 percent less energy. With the right policies, we can reduce energy demand by more than 15 percent over the next 10 years, while making our economy more productive and more resilient.

On alternative fuels and vehicles:

In the past I’ve overestimated the potential of alternative fuels. We need to scale back our expectations, so that we develop the smartest fuels, not the most politically convenient ones. For starters, we’re going to stop subsidizing alternative fuels. At the same time, we will put a small tax on fuels that pollute, and as time goes on, we’ll increase that tax. Then we’ll copy a model for renewable energy that’s already working in 20 states. It requires that utility companies meet a “renewable portfolio standard” by making sure that a percentage of their electricity comes from renewable sources like solar, wind and biomass.

We’ll extend that to all states, and we’ll start a similar scheme requiring that a small percentage of renewable fuels be mixed in with gasoline and diesel. We won’t dictate what that fuel is, or how it’s made — that’s a decision best left to the market. Investors will build renewable fuel plants because they’ll know there’s a market, and fuel dealers will buy the best mixture of quality and price. The government’s role here isn’t to pick winners, but to foster research and collaboration between the public and private sectors. Already, the Environmental Protection Agency, Eaton Corporation and U.P.S., among others, are cooperating on the production of a new kind of hydraulic hybrid delivery truck. When it’s ready, it’ll have 70-percent better fuel economy and 40-percent fewer greenhouse gas emissions, and it will pay for itself in just three years.

As we start to experiment with new fuels and vehicles, we must remember that innovation takes time. Even petroleum didn’t fully catch on for the first 50 years of its use. Expecting ethanol in five years or hydrogen in 10 is a foolish and expensive mistake.