Energy Innovation Under Romney and Obama
The energy positions of the presidential candidates and their respective parties have come into focus more sharply over the last two weeks. The Republicans and Democrats have both published their platforms, and the Republican nominee, Mitt Romney has published his energy plan.
For campaigns that have been at each other’s throats on many issues, there’s a surprising overlap between the rhetoric of Romney and President Obama on energy—both favor “all-of-the-above” approaches that include domestic energy sources such as fossil fuels and renewable energy. Both support funding energy research and development through organizations such as the Advanced Research Projects Agency for Energy (ARPA-E). Both talk up the possibility of energy independence, and bewail the inability of every president since Richard Nixon to achieve it.
The candidates differ markedly, though, when it comes to creating a market for new energy technology. Obama supports policies that would create markets for new technologies, and Romney, by and large, doesn’t.
Specifically, Obama supports clean energy standards, fuel economy standards, and U.S. Environmental Protection Agency regulations covering carbon-dioxide emissions, all of which would create markets for new technology, whether it be solar panels, more efficient engines, or technology for reducing smokestack emissions. (See his “Blueprint for a Secure Energy Future.”) This is all justified in part by the desire to create jobs but also by concern over climate change—something Obama doesn’t emphasize in speeches, but has emphasized in key policies designed to lower carbon-dioxide emissions.
His party’s take on climate change is even more emphatic. The Democratic platform released this week strongly emphasizes climate change. “We know that global climate change is one of the biggest threats of this generation—an economic, environmental, and national security catastrophe in the making. We affirm the science of climate change, commit to significantly reducing the pollution that causes climate change, and know we have to meet this challenge by driving smart policies that lead to greater growth in clean energy generation.” (See the 2012 Democratic National Platform.)
Romney, in contrast, opposes a number of policies designed to create markets for new energy technology. He urges Congress to remove the EPA’s mandate to regulate carbon-dioxide emissions, and he’s come out against new fuel-economy standards issued by the Obama administration, arguing that they might require consumers to buy technology they don’t necessarily want.
Based on what he says in his energy policy paper, Romney would promote markets for new energy technology only indirectly—by funding research and reducing regulation that could make some technology cheaper, and perhaps fuel demand. (See “The Romney Plan for a Stronger Middle Class: Energy Independence.”) Clearing the way for more oil drilling might help decrease prices—although prices are influenced by many factors. If prices were to drop, that could increase the market for oil and, by extension, for novel drilling and extraction technologies used to get at unconventional sources such as shale oil.
Renewable energy would have a harder time of it. Solar and wind power are generally more expensive than the fossil fuels they compete with. These renewable industries have grown because of government help—tax credits and renewable energy standards, for example—that have created a market and helped offset the price difference. Romney has been critical of grants and tax incentives for such technology.
Romney also comes out against federal loan guarantees to help bring technology from a small-scale demonstration phase to large scale commercial production—the sort of funding that went to Solyndra, the failed solar panel maker. “There is a place for government investment when time horizons are too long, risks too high, and rewards too uncertain to attract private capital. However, much of our existing energy R&D budget has been devoted to loan guarantees, cash grants, and tax incentives for projects that might have gone forward anyway,” his policy paper says. Instead, he urges support only for basic research and small-scale demonstrations.
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