This post is the second in my review of Sens. Clinton’s, Obama’s, and McCain’s policies on the economy. The first installment, posted yesterday, was on tax policy. The subject of today’s post is energy policy. All (or nearly all) of the information in this post is taken from the candidates’ official web sites, cited in the first post in this series.
Energy policy is a central focus of both Sen. Clinton’s economic proposals and Sen. Obama’s.
One of the keystones of Sen. Clinton’s economic policy proposals is something she refers to as a “Strategic Energy Initiative”, presumably a play on Strategic Defense Initiative AKA “Star Wars”, essentially a subsidy for ethanol and biodiesel. I wonder what she thought of the World Bank’s criticisms last week of the use of food crops for energy production? I’m very much opposed to subsidizing alternative fuel production in any form since I believe that the adverse effects of market distortion overwhelm the positive effects of the subsidy.
Energy policy is important to Sen. Obama’s economic policy plans, too:
* Invest in U.S. Manufacturing: The Obama comprehensive energy independence and climate change plan will invest in America’s highly-skilled manufacturing workforce and manufacturing centers to ensure that American workers have the skills and tools they need to pioneer the first wave of green technologies that will be in high demand throughout the world. Obama will also provide assistance to the domestic auto industry to ensure that new fuel-efficient vehicles are built by American workers.
* Create New Job Training Programs for Clean Technologies: The Obama plan will increase funding for federal workforce training programs and direct these programs to incorporate green technologies training, such as advanced manufacturing and weatherization training, into their efforts to help Americans find and retain stable, high-paying jobs. Obama will also create an energy-focused youth jobs program to invest in disconnected and disadvantaged youth.
* Boost the Renewable Energy Sector and Create New Jobs: The Obama plan will create new federal policies, and expand existing ones, that have been proven to create new American jobs. Obama will create a federal Renewable Portfolio Standard (RPS) that will require 25 percent of American electricity be derived from renewable sources by 2025, which has the potential to create hundreds of thousands of new jobs on its own. Obama will also extend the Production Tax Credit, a credit used successfully by American farmers and investors to increase renewable energy production and create new local jobs.
While I’m totally behind the idea that we need to be more efficient in the way we use energy, I’m skeptical that energy policy will become the driving force behind the U. S. economy. How many jobs in weatherization will be created?
I’m further skeptical that mandates for renewable energy will be a net creator of jobs. There are two ways to satisfy the mandate: use more renewable energy sources and move industries that consume a lot of energy elsewhere, reducing the energy needs but reducing the use of non-renewable sources more. The latter is probably easier but probably isn’t a winning formula for creating more jobs here.
Energy policy doesn’t have the primacy in Sen. McCain’s economic policy proposals that it does in the two Democratic presidential contenders’. He’s mentioned reduced dependence on imported oil as a national security priority. I’ve written on this subject before and IMO the notion relies on a fundamentally flawed view of the world market for oil. To his credit he’s also mentioned the idea that nuclear power needs to play a greater role in our total energy future than it does now. This is something the federal government could actually do something about since two of the biggest stumbling blocks to building nuclear power plants are excessive regulation and lack of a regulatory framework which can be relied upon to be stable for the life of the project.
Update
I neglected to mention that both Sens. Clinton and Obama support a “cap and trade” system to reduce carbon emissions. This approach has had notably mixed results in Europe. Additionally, I’m not sure how you can disaggregate the effects of a cap and trade system from the results of offshoring manufacturing to China. If you want to go that way I think that a carbon tax is probably a better idea. I think that politicians are on the horns of a dilemma on this issue. On the one hand I don’t believe that major reductions in carbon emissions will be pain-free. On the other if you try to tell the truth about it the voters won’t want to go along with the plan.
Sen. Obama has his own program of subsidies for biofuels ($150 billion over ten years). I also note that his plan has welcome mentions of next-generation biofuels and modernization of the power grid.
Sen. Clinton’s energy proposals in addition to the subsidies mentioned above has provisions for mandates for energy efficiency in vehicles, utilities, and other energy users.
So nobody is proposing pigovian taxes? I’m shocked. Nothing here sways me. In an energy policy, I want to know what we are trying to accomplish.
Clinton: Is it your goal to convert our fleet to bio-fuels? You know that’s not possible. If we convert every piece of vegetation in America to fuel, we won’t have enough. What’s the end game?
Obama: Do you have an energy policy or a jobs policy or do you just like to play Santa? Won’t the jobs you create simply be the same type of highly-educated professionals that most regulations create? Won’t it result in the elimination of jobs in the coal and gas industry? Won’t those workers be bitter?
McCain: You have supported a number of laws that promote nuclear power with permit subsidies, fast-track approval of pre-accepted European designs and simplified regulation. The Energy Policy Act of 2005 was one of these. What evidence do you have that these have changed the demand for nuclear power and what laws do you think are still needed?