Energy's on the Senate Agenda. Is Economic Growth?

Commentary by Pete du Pont

In the light of events of the last year - rolling blackouts in California, ongoing electricity deregulation in numerous states, volatile price fluctuations for electricity and gasoline and the continuing war against terrorism - the debate over America's future energy needs has taken on heightened importance.

In the United States Senate, this debate has centered on two competing bills. One bill, a modified version of President Bush's energy proposal, has already passed the House of Representatives after extensive debate. A second bill, largely drafted by Senator Majority Leader Tom Daschle, has yet to have a full hearing anywhere.

The two bills offer very different visions. Bush's proposal focuses on increasing the supply of energy from diverse sources and maintains consumer choice. Daschle's bill, on the other hand, institutes many of the demand-side control policies that led to energy shortages and sky-high prices in California.

Daschle's central tenet seems to be that America can meet most of its energy needs through conservation and consumer sacrifice - a "just use less" approach. His bill is packed with government mandates, including instituting increased energy efficiency standards for homes and household appliances; forcing utilities to purchase or generate a percentage of their energy from so-called "green power " (purportedly cleaner energy sources like solar and wind power); continued subsidies for clean green power; and an increase in the corporate average fuel economy (CAFÉ) standard on automobiles.

These provisions have a number of points in common; they would result in reduced consumer choice by limiting the types of vehicles and appliances available in the marketplace. For example, they would force consumers to either purchase higher priced energy efficient appliances, homes and vehicles; maintain and repair older appliances and vehicles; or do without certain luxuries, such as air conditioning and heating entirely. They would also cause higher energy prices by forcing utilities to purchase higher priced green energy that is not only expensive, but is only intermittently available. Tragically, Daschle's mandates could also result in thousands of premature deaths, as consumers are forced into smaller, fuel efficient but less safe vehicles, and as the poor and elderly attempt to cut cost and forego using their heaters during the winter and air conditioners during the summer.

In short, Daschle's bill largely attempts to increase energy supply by decreasing demand. It is a recipe for energy shortages and economic decline. For proof one need to look no further than California, which was the nation's leader in reducing energy demand through conservation and energy efficiency. They had green power mandates and required automakers to sell low-emission/zero-emission, high mileage vehicles. But, despite their best efforts, California was unable to meet energy demands through conservation alone. Neither can the rest of the nation.

While the Bush Administration's plan is not perfect, his energy task force did several things right. First, the task force promoted innovative technologies intended to satisfy America's long-term energy needs while improving environmental quality. Second, it developed a balanced, comprehensive plan.

Of the 105 recommendations in the plan, 42 encourage conservation and promote environmental protection, while 35 of the recommendations would diversify the U.S. energy supply and modernize its antiquated infrastructure.

The conservation and environmental proposals include improved efficiency standards for home appliances; tax incentives for improving the energy efficiency of homes and offices; tax credits for purchaser's of hybrid or fuel cell vehicles, and tax credits for producers of energy from wind power and biomass resources. It also provides tax credits for the purchase of residential solar energy panels and for the energy produced by burning methane gas from landfills.

Importantly, in addition to encouragements for energy conservation, the President's plan also proposes ways to increase energy production, including tax credits for clean coal technologies and opening a small portion of the Alaskan National Wildlife Refuge to environmentally responsible oil and gas production and delivery.

Differences between the modified Bush plan that passed the House and Senator Daschle's plan, which is likely to pass the Senate, will have to be worked out in a conference committee. Politics being the art of compromise, neither side will get everything that they want. One can only hope that the legislation that finally emerges will balance the nations needs for increased production and conservation, rather than following the limited demand-side path formulated behind closed doors in the Senate.