Obama’s Energy Plan

OBAMA’S ENERGY PLAN….Knight Ridder reports that Barack Obama has proposed a deal with the auto industry:

The federal government would pay 10 percent of the $6.7 billion in annual health costs for retirees that are weighing down General Motors, Ford and Chrysler if they’ll commit to building more fuel-efficient cars, Obama proposed in a speech Tuesday before a panel at the National Governors Association conference. He called it a “win-win proposal for the industry.”

That’s a little cryptic, though. What exactly does “more fuel-efficient cars” mean?

A quick hop over to Obama’s website provides a transcript of his speech, and apparently the answer is that he proposes to “raise fuel economy standards by 3% a year over the next fifteen years, starting in 2008.” At a guess, that means he’s proposing to increase CAFE standards from the current 27.5 mpg to 40 mpg by 2023. That’s a very cautious proposal, but at least it’s a proposal ? although I’d like to know whether his legislation adds SUVs to the CAFE regime too. I’d also be curious to know what he thinks of tradable fuel economy credits, which strike me as an intriguing idea.

Obama’s plan also includes a new focus on biofuels, primarily cellulosic ethanol. His plan has five components:

  • Ramp up new fuel standards that will result in production of 65 billion gallons of alternative fuels per year by 2025.

  • Mandate that the federal government buy only flex fuel vehicles.

  • Within ten years, mandate that every car in America is a flex fuel vehicle. Include a $100 tax credit per vehicle to ease the pain.

  • Put yellow gas caps on all flex fuel vehicles.

  • Provide a $30,000 tax credit to any gas station that installs E85 pumps (i.e., a blend of 85% ethanol and 15% gasoline).

Overall, this is a very moderate proposal, but that might be exactly what makes it politically doable. And nothing says we can’t use it as the basis to do more in the future.

In any case, it’s nice to see Obama picking this as an issue to get out in front on. It’s wonky and earnest, it has bipartisan appeal, it has pork appeal (lots of farmers in Illinois), and what’s more, it’s genuinely worthwhile. And it’s a damn sight more than President Bush has put on the table, that’s for sure.

Now let’s see if anyone bothers talking about it.