Obama’s energy plan

America’s President-elect
Barack Obama
6 November 2008 – America’s President-elect Barack Obama may speed up the introduction of renewable energy sources, but at the expense of the fight against climate change, it has been reported this week.

High unemployment rates have increased the need for the creation of jobs and efforts to promote solar and wind power (and the accompanying jobs) will most likely received top priority according to energy analysts and lobbyists.  However, a dramatic climate change bill may have to wait until the economic climate improves – possibly until 2010.

According to Kateri Callahan, president of the Alliance to Save Energy, Obama will put a energy bill ahead of the climate change bill as the energy bill “will stimulate the economy toward development and use of energy efficiency and clean energy sources and technology.”

However, advisers in the Obama office haven’t committed themselves to saying which of the initiatives the future President will push first.  Jason Furman, campaign adviser, has however revealed Obama has proposed a US$175 billion economic stimulus package and plans to revamp the energy economy as part of a separate climate bill.

Green job and a climate plan are called ‘mid- to long-term solutions’ on the Obama campaign website and figures of US$150 billion in investment have been mentioned, over the next 10 years, to create 5 million jobs in the auto and clean-energy sectors.

In addition to the use of renewable energies, the Obama administration is likely to encourage the use and design of plug-in hybrid or ethanol fuelled cars.  There are plans for a US$4 billion tax incentive to retool factories, in addition to US$25 billion in loans that have been enacted for that purpose.  A tax incentive of US$7 000 will be given to consumers for buying ‘advanced’ cars.

Says Friedman Billings Analyst, Kevin Book, Obama has “found a formula that he’s been pitching to the American people that I think would get a lot of traction in Congress, which is to get unemployed manual labor allocated to installing solar panels,”

Eight percent of US electricity is accounted for by renewable energy but Obama wants to raise this to 10% by 2012 and 25% by 2025.

According to Callahan, “A climate bill will be a massive piece of legislation with such far-reaching impacts and Obama understands the need to take some time with it.”

Obama’s proposed climate plan would cut emissions of greenhouse gases by 80% by 2050.  Emission credits would be sold in an auction under a cap and trade programme.  Companies exceeding their emissions targets would have to purchase additional credits.

“Barack Obama could well put off a costly and regressive surcharge until later in 2009 or 2010, leaving Congress to shoulder the burden,” said Book. “On the day that he is elected, cap and trade will fall to No. 10 on his list of top 10 priorities and won’t come back until the economy does.”

However, Michael Morris, chief executive of American Electric Power Corporation says that the cost of electricity produced via renewable sources is much more expensive than traditional sources.

“I do think there are a few things there that a president Obama doesn’t have right,” he said.

“He’s a big believer in green energy and the jobs that might be created by alternate energy forms, wind and solar,” Morris said. “We think that’s a good thing.”