President’s Energy Initiative Falls Short

In his State of the Union Address this week, President Bush offered a declaration few expected; the U.S. is addicted to oil. He then went on to propose an outwardly broad energy initiative aimed at reducing our reliance on foreign sources of energy. His suggestions included an accelerated use of renewable energy, including solar, cellulosic and switchgrass-derived biofuels, wind power, and even increased research into plug-in hybrid-electric vehicles. The plan however, was widely received as long on rhetoric but short on substance.

“The statement that the U.S. is addicted to oil has been resonating all over the world,” said John Coequyt, Energy Policy Specialist for the environmental organization Greenpeace. “But most of the rest is pretty insignificant. The bigger picture issue here is that there’s no long-term push. In fact, he spent years offering policies that fed the oil industry, then now makes a statement that this is a problem and offers limited solutions.” Energy Efficiency and Stability for Renewable Energy Businesses Coequyt, along with a wide cross-section of renewable energy industry experts, believes one of the most critical areas where the President’s initiative could have made a difference would be in promoting a longer term extension of federal energy tax credits for wind, solar and other renewables, which were enacted in last year’s comprehensive energy legislation but are designed to expire in two years. “Fixing that would have been a lot more powerful,” said Coequyt, who added that the solar industry’s current silicon raw material shortage appears on target to be resolved just as the solar tax credits expire. “The tax credits have been on again and off again. The central challenge should be in ensuring clarity in the long run as to what support will be there so that businesses can respond.” Coequyt also found it incredible that the President would put forward a plan for reducing our use of oil without addressing vehicle fuel efficiency standards. The president, he says, is proposing to decrease oil imports from the Middle East to around 4.3 million barrels a day through his plan. Coequyt believes that better progress can be achieved towards this goal by raising the fuel efficiency standards to 40 MPG up from the current 27.5 miles-per-gallon, a level that it has been stuck at for two decades. According to Coequyt, this alone, would save 5.4 million gallons per day. “Energy efficiency is the cornerstone of any clean energy future,” said Bill Prindle, Deputy Director of The American Council for an Energy-Efficient Economy (ACEEE). Without it, we won’t be able to grow enough biofuels, or build enough solar, wind, or coal gasification to keep up with the runaway demand. The administration needs a more balanced energy research and policy portfolio, with more funding and real policy action on efficiency while it is still in office, so that its vision of a clean energy future will have a chance.” The President’s plan, officially called the Advanced Energy Initiative, is mostly a series of budget proposals that will need to be agreed upon and voted on by Congress. Plan Hides Budget Woes Perhaps the most unanimous and vociferous critique of the President’s plan is in its positive rhetoric on promoting renewables while the administration’s budget requests have repeatedly tightened — if not downright slashed — some of these technology research areas under the Department of Energy. “The President’s call for reduced oil dependence and new energy technologies is laudable, but to be credible, the Administration must reverse its record of cutting overall funding for energy efficiency and other clean energy technologies,” said ACEEE Executive Director Steven Nadel. “Next week’s budget must show major increases in total funding for clean energy, not just more of the program reshufflings we’ve seen for the last five years.” Scott Sklar, a renewable energy industry consultant with the Stella Group, agrees. “The budget comes out Monday and there are going to be some serious losers in the renewable energy camp”, Sklar said. “The President’s proposal to accelerate hybrid vehicles, biofuels, hydrogen, and advanced photovoltaics and wind technology is a solid, laudable step. However, the FY’07 budget, to be released next week, closes down or sharply curtails RD&D and deployment programs for Concentrated Solar Power, Geothermal, Hydropower/Water Energy RD&D programs and State weatherization programs – which is shortsighted and misguided.” “We’re concerned about there being a robbing ‘Peter to pay Paul scenario,” said Carol Werner Executive Director of the Environment and Energy Study Institute, which has closely monitored the shrinking budgets for renewable energy on Capitol Hill. “This plan is not as good as it’s cracked up to be,” Werner said. “Our concern is the huge focus on nuclear and coal and we didn’t see anything about energy efficiency. “I think it is a very incomplete plan and therefore it’s a real opportunity lost in terms of looking at the future direction and well being of this country. Hybrid Research One person who disagrees with the portrayal of there not being an energy efficiency component to the President’s plan is Bill Gouse, the Executive Director of the United States Council for Automotive Research (USCAR), an umbrella research organization created by DaimlerChrysler, Ford and General Motors in 1992. It may not be increased mileage standards but according to Gouse the President’s proposal to increase funding for research into advanced batteries, hybrid electric, and plug-in hybrid electric vehicles is a strong component of vehicle energy efficiency itself. The 2007 Budget includes $30 million – a $6.7 million increase over FY06 – to speed up the development of this hybrid-electric and plug-in hybrid electric battery technology, and to extend the range of these vehicles. Gouse believes that government support in these directions will be helpful for an industry that can find it hard to justify spending research dollars in wide range of directions. “It’s a horribly competitive industry with increasingly thin margins,” Gouse said. “It doesn’t come close to profit per unit sales of other industries so R&D dollars are very precious, and the further out the investment, the tougher it is to get the dollars for it.” Solar PV Victory While the President’s plan may offer some marginal benefits toward helping the U.S. automotive industry improve their R&D on cleaner, more efficient vehicles, the solar photovoltaic (PV) industry, represented by the Solar Energy Industries Association (SEIA), considers the plan a major victory. The plan includes the “Solar America Initiative”, which SEIA says is the largest funding increase proposal for solar energy research in US budget history. The Initiative will add $65 million to the solar program at the Department of Energy – a 78% budget increase – to foster R&D for rapid commercialization of new technology. The funding boost will accelerate the progress of several different public-private sector solar research partnerships, including the Thin Film Partnership and the Crystalline Silicon Initiative. These initiatives seek to reduce costs, increase system efficiency, and improve the manufacturing of solar power. It does not, however, include any funding for solar thermal hot water or Concentrating Solar Power. Biofuel, Wind, Others Another clear winner in this specific proposal was the biofuels industry. The President’s 2007 Budget will include $150 million – a $59 million increase over FY06 – to help develop bio-based transportation fuels from agricultural waste products, such as wood chips, stalks, or switch grass. These funds will also go into accelerating research into “cellulosic ethanol,” a promising variation on biofuels production. The President’s plan, via his Budget proposal for next year, includes a relatively modest $44 million for wind energy research – a $5 million increase over FY06 levels. It also will provide $289 million – an increase of $53 million over FY06 – to accelerate the development of hydrogen fuel cells and hydrogen-powered cars. This technology favorite of the administration has been frequently blamed for putting budgetary pressures on renewable energy technologies. The remainder of the plan — in fact, the focus of the plan — involved major funding of so-called “clean coal” technologies, which many critics, environmentalists, and scientists alike might consider unfit to be grouped under the subjectively and often loosely defined category of clean energy. Likewise, the plan mentions accelerating research into the contentious topic of nuclear energy, calling it “safe and clean,” again a debatable and contentious topic. One thing is clear, over the coming days and weeks, scientists, stakeholders, energy industry players and renewable energy advocates alike will continue to voice their varied opinions and analyses of the President’s Advanced Energy Initiative. Afterall, as Mr. Gouse of USCAR put it, the country’s energy decisions are increasingly important to everyone. “Everyone in the country uses energy and has too. They can’t get to work without it, either in their cars or in public transportation. Home heating is going up, everything is tilted to that rise. It affects us all and we all have a stake in it.”
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