Obama's Energy Plan

Yesterday Obama gave a speech on energy and breaking America’s foreign oil addiction. I’ll take heart from this paragraph especially:

If I am President, I will immediately direct the full resources of the federal government and the full energy of the private sector to a single, overarching goal – in ten years, we will eliminate the need for oil from the entire Middle East and Venezuela. To do this, we will invest $150 billion over the next ten years and leverage billions more in private capital to build a new energy economy that harnesses American energy and creates five million new American jobs.

If he is serious about this plan I will be very happy to see him elected. I do question his ability to focus on this issue to the degree that is needed with the other challenges he will face on assuming office, but perhaps energy issues are now broadly accepted enough that it will not take a great deal of political capital to push them along. Maybe there is enough sense of the amount of profit to be made in renewable energy to entice private money with little in the way of government prodding.

I do believe that it won’t take much in order to tip the scales of private investment towards clean energy. Oil is in the ground, and the technology for getting it out has stayed pretty well the same for a century. Sure, we can get it out of more places now because we have learned to drill in more difficult conditions, but the oil that comes out is still pretty much the same. With renewables, we are now starting to see the fruits of earlier efforts. The efficiency of wind and solar, as well as other more obscure technologies like tidal power generation is increasing and unlike with oil, these technologies can be continually improved to generate more power at less cost. Once the cost of generating renewable energy is lower than that of using fossil fuels, there will be no going back.

In the heady days of the IT bubble many people got very rich. The IT market is a small fraction of the value of the global energy market. If the fortunes made during the IT revolution were enough to entice private money by the truckload and an explosion of innovation which was unprecedented. I am very optimistic about the amount of private money that could be brought out, and the speed at which progress can be made in a market where those fortunes could easily have another zero added to the end.

Profits to America, elimination of demand for a commodity supplied by hostile regimes, and the beginnings of the end of our dependence of fossil fuels. What’s not to like?!