The Obama-Biden comprehensive a New Energy for America Plan is designed to:

1. Help create five million new jobs by strategically investing $150 billion over the next ten years to catalyze private efforts to build a clean energy future.
2. Within 10 years save more oil than we currently import from the Middle East and Venezuela combined.
3. Put 1 million Plug-In Hybrid cars -- cars that can get up to 150 miles per gallon -- on the road by 2015, cars that we will work to make sure are built here in America.
4. Ensure 10 percent of our electricity comes from renewable sources by 2012, and 25 percent by 2025.
5. Implement an economy-wide cap-and-trade program to reduce greenhouse gas emissions 80 percent by 2050

The Obama energy agenda focuses on - and these are not mutually exclusive - efficiency, electrification, and the promotion of alternative energy resources. Its five main goals are set up in a way so that success in any one of the five individual areas will reinforce the other 4, helping the overall agenda achieve success. For example, creating 25% of the U.S. electricity production from renewable resources (goal #4) will aid in decreasing the U.S. greenhouse gas emissions by 80% (goal #5).

The energy agenda is a welcomed change showing a future outlook that is based, at least to some [small] extent, on the physical realities of the natural resource world. However, from the perspective of net energy, some potential problems do exist. My goal here is to discuss some possible shortcomings of the new administrations energy agenda from the perspective of net energy.

This article is one of a series of articles, offering energy advice to President Obama and his administration.

The incoming Obama administration has promised a much-needed change in the direction of US energy policy (or non-policy, as some see the current situation).  However, some of those changes appear to be campaign gimmicks or aimed at satisfying special interests rather than solving our various problems.  (The heavy-for-light crude swap in the Strategic Petroleum Reserve proposed in the Obama-Biden energy proposal appears to be one such gimmick.)

For much too long, US energy legislation (I hesitate to call it policy, because it lacks the coherence to justify the label) has been aimed at short-term patches on problems which have only gotten worse.  CAFE regulations have barely held fuel economy steady, while low fuel prices caused consumption to skyrocket.  "Free trade" allowed cheap oil imports to kill movement toward efficiency and substitutes.  The auto industry lobbied against fuel taxes to promote its short-term interest in selling profitable trucks, with the long-term result that all 3 US automakers will go bankrupt in the next year if nothing is done.

We've had change before, but the results put us where we are now.  It's time for the right change. 

A new study has been issued by the Manhattan Institute, called TAXING ENERGY IN THE UNITED STATES: Which Fuels Does the Tax Code Favor? The study was written by Gilbert Metcalf of Tufts University. I also participated in a conference call with Metcalf regarding the report. A couple of Metcalf's findings:

• The tax code is not at all generous with respect to investments in the electric grid. The effective tax rate on these investments is very close to the unadjusted statutory tax rate of about 39%. If investment is to be encouraged in the electric grid, Dr. Metcalf believes that this tax rate must be lowered.

• The current tax code, especially since enactment of the Energy Policy Act of 2005, strongly encourages investment in nuclear, wind, and solar power, which enjoy tax subsidies ranging from nearly 100 percent, for nuclear, to more than 200 percent, for solar. In other words, tax subsidies for these forms of energy generation are sufficiently generous that investors may use them to offset tax liabilities for capital gains and income derived from non-energy investments. The telephone discussion indicated that these provisions are not currently working as intended for wind and solar, because of lack of "tax appetite".

One of my most enduring memories of Washington D.C. occurred while attending a meeting on Geothermal Energy Development, back in the days before the Iron Curtain fell. In the evening after dinner, I took a colleague from Eastern Europe, on his first American visit, for a walk down the Mall. We walked, almost alone, on a still, bitterly cold, dark evening with fresh snow on the ground, and stars peppering the sky above us to see the sights, including the Lincoln Memorial. We stood staring, like backwoods tourists, through the windows of the Air and Space Museum.

We came back to the hotel for alcoholic refueling, thinking that the energy problems of the time would guarantee unending research funding into new forms of energy, and that our future was assured. That was about thirty years ago, and we were, of course, wrong, at least in terms of the funding and sustained interest in unconventional energy sources. Now we are walking back over some of the same ground. Again, fluctuations in oil prices have removed the immediate perception of the need for alternate supply, and have also weakened the credibility of those of us who try to suggest how to deal with the problem.

Prophecy, particularly when it deals with the near term future runs the risk of being corrected by the actual turnout of events. The ups and downs of energy demand, and available supply–-particularly when tied to the economic fortunes of nations, can make logical projection under one condition, but become apparently hopelessly in error when that condition doesn’t happen. Thus, at the moment, with the declining price, and apparent glut of oil, the public no longer feels that there is a crisis; the credibility of those forecasting a crisis is damaged, and can only be reconstructed over a longer period of time and changing circumstance.

Author's note: I have added a comment to the bottom of the post.