Saturday, August 9, 2008

One Potential Energy Compromise

Paris Hilton and the "Gang of Ten" have hinted at it. There is a fairly obvious compromise to be reached on energy, but it is going to require flexibility on both sides of the aisle.

As I see it, the compromise would take the form of something like:
Allow drilling under the following conditions:

  1. Royalty payments in line with what other countries get for similar resources. This includes hiring auditors and checking oil company books for cheating, which is currently costing taxpayers billions of dollars.

  2. Strict enforcement of environmental regulations. (The current framework is a joke, as BP demonstrated in Alaska.)

  3. Use it or lose it. Strict timelines to explore and develop, or the lease goes back in the pot. If you want to push it, companies who want to play in the new playground need to convert their existing leases to a similar framework.

Promote alternative energy:

  1. Restore favorable tax treatment for solar, wind, and geothermal. The period of restoration should be the same as the length of the above-mentioned leases. Funding for this tax treatment should come from the above-mentioned royalties.

  2. Government subsidies for research into improved battery, fuel cell, and other energy storage technologies. Researchers who accept this funding must cut the taxpayer in for a share of the licensing fees on any patents arising from this research. Again, funding to come from those royalties.

Incentives for fission plants:
Create a standard-plan plant (or several standard designs) which would have a fast-track approval, since a lot of the pre-approval studies would be the same between plants. (This isn't as hard as it sounds, since such plans already exist.)

As a practical matter, some incentives may need to be included for "clean coal" and natural gas, though I don't think either is actually necessary or particularly desirable. (Coal because it is a dying technology; natural gas because it doesn't need the incentives to take an increasing share of the energy market.)

I don't like all the parts of this "compromise," for reasons that are probably clear to people who have read my other posts. On the other hand, this is the sort of compromise that could get enough support to pass, and could actually make a difference in preparing the country for the coming changes in the energy marketplace.

(No, this is not the same as the Republican proposal. While they claim that they are "all of the above," they have structured their incentives to benefit the oil companies while providing minimal assistance to people who are deploying and installing the technology. The McCain proposal includes incentives for R&D, but none for installation or deployment.)

The allowance for drilling is not because I believe that drilling ANWR or OCS (Outer Continental Shelf) will have much of an impact on our energy future. It won't. What it gives us is a dedicated funding source to move us to sources of energy that will actually improve our future competitiveness.