Kerry's High-Wattage Energy Plan
By John Carey
John Kerry's blueprint for energy independence doesn't suffer from lack of ambition. In early August, he'll unveil an energy plan that he says can break America's addiction to foreign oil, revitalize the U.S. auto industry, help farmers and coal miners, fight global warming, and create jobs -- all for just $2 billion per year. "We can live in an America that is energy independent," Kerry promises.
Dream on. Americans burn 20 million barrels of oil a day, 11 million of which are imported from the Middle East and elsewhere. And virtually every President since Richard M. Nixon has talked about energy independence -- but none has put enough political muscle behind it to keep imports from rising. "As long as we depend on oil, we will depend on Middle East oil," says Fareed Mohamedi, chief economist at PFC Energy.
Yet strip out the over-the-top rhetoric, and Kerry's emerging plan is both a good starting point and a welcome contrast to the Bush Administration's focus on drilling for more oil. Kerry sets the right goals: significantly increase energy efficiency and use of alternative fuels. And he uses tax incentives, rather than relying solely on regulations, to help meet those goals.
Any energy plan has to start with cars. In the Senate, Kerry co-sponsored a 2002 bill to raise fuel-economy standards to 36 miles per gallon by 2015, up from the current fleet average of 24 mpg. But higher standards are unlikely to win votes in Michigan, a key swing state. So Kerry's policy will offer a carrot: tax incentives and federal dollars to help Detroit develop and build high-mileage cars, such as hybrids and advanced diesels.
The goal is to help U.S. auto makers pass the Japanese, who have the lead in the hybrid market. Moreover, boosting the average gas mileage of all U.S. vehicles to 36 mpg would save nearly 2 million of those 11 million barrels of imported oil every day -- and reduce carbon dioxide emissions, which cause global warming. If carmakers don't agree to move quickly, Kerry could pull out the stick: the threat of higher fuel-economy standards.
Kerry will also push for alternatives to oil. Replacing gasoline with ethanol made from corn and other biofuels made from crop waste can slash oil needs while helping farmers and slowing climate change. And the senator is setting a goal of getting 20% of America's electricity from wind, solar, biomass, geothermal, and other renewable sources by 2020, up from the current level of about 2% (not including hydropower).
WINDOW OF OPPORTUNITY.
The plan doesn't stop there. Kerry would work to increase supplies of natural gas by pushing for a pipeline from Alaska and for new ports where liquefied natural gas (LNG) can be unloaded. He'll support use of coal -- the most abundant fuel in America -- by promoting efforts to burn it more cleanly.
Intending to lead by example, Kerry vows to cut the government's own energy bill by 20% in 10 years -- and to raise efficiency standards for everything from appliances to buildings. "The trick is to make oil less important to the economy," says a member of the Kerry energy team. Efficiency gains mean that energy costs will take a smaller bite out of the economy, so business and consumers will be more insulated from instability in the Persian Gulf and from future price spikes.
Kerry's call for energy independence just might resonate with voters in November. Democratic polls show that a majority of Americans believe the Iraq war proves the country needs to become less dependent on the Middle East. "Fairly or unfairly, the Iraq war has created a window to talk about energy," says Joseph Romm, a former Energy Dept. official.
Bush supporters will argue that the President also talks about energy independence and new technologies. But Kerry's plan has a better chance of making America more energy-efficient than any effort we've seen from the two oilmen in the White House. More important, it could make a real difference to America's future.
Carey is a senior correspondent in BusinessWeek's Washington bureau
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