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A simple but powerful energy policy
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A simple policy that works, not a pile of special-interest give-aways, that's what's needed. Fantastic goals with good intentions bring disillusionment. The trick is to use broad economic incentives to harness the market—consumers and producers—in a myriad of ways no-one can imagine. Not easy, but it's doable: Here's a sketch:
1. Make a half percent commitment: The country should commit to a half percent (of GDP) effort to reduce fossil-energy use. Allow 5 years to reach this level.
2. Better-mileage: Change the CAFE car-mileage penalty so it applies to all below-average cars not just those below an arbitrary standard. Rebate all money collected to better-than average cars.
3. Carbon-free electricity: Extend the 1.9 cent per/kWh wind subsidy to all new non-fossil electricity. Then, eliminate the hidden nuclear and fossil subsidies.
4. FeeBate fossil fuels: Put a fee on oil, gas and coal, but refund all revenues collected twice per year equally to all tax payers.
5. Energy research: Double DOE's clean-energy/conservation research budget and focus on techniques that pay off within 15 years.
6. Simplify: Cut out all the special-interest complications. Feebates and the broad-spectrum electricity subsidy will let the market pick winners an losers way better than ignorant special interests.
This policy is based on economic principles, hard analysis, and some politics. ZFacts explains the science and politics, starting with these basic principles:
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Principle 1. Limit the cost.
Currently we spend less than 2/10 of 1%. The new British study says it will take 1%. To avoid blunders, ramp up gradually. Limiting energy cost will refute the chicken-littles who claim an energy policy will bankrupt the economy. Count the cost of inconvenience.
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Principle 2. Use of market forces, not complex regulations.
Simplify! For example, the wind-power subsidy is simple, but the nuclear subsidies are inscrutable to all by the nuclear industry and lobbyists. Instead of letting special interests fight for special favors, just use a simply subsidy per-kWh of oil-free electricity produced. Let the market will tell us which is better.
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Principle 3. Use correct cost comparisons. We pay $4 (extra) to save a gallon of gas with corn ethanol, about $25 (extra) with wind, and even less with new-car efficiency incentives. The trick is counting costs correctly. Giving billions to coporate farmers cost someone else billions. What's the net effect? The real cost of making corn ethanol is about $7.00/gallon. That's a huge net cost.
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Principle 4. Use revenue-neutral feebates.
Such a feebate collects a fee and then rebates to consumers all the money it collects. It sounds like magic, but it works. Examples are the better-mileage incentive and the fossil feebate above. Don't mix taxes with energy policy.
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http://zfacts.com/p/564.html | 01/18/12 07:19 GMT
Modified: Thu, 18 Jan 2007 21:55:31 GMT
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