Thursday, December 20, 2007

New Energy Bill

The US Congress passed an energy bill yesterday and Bush signed it into law. It is both a step backward and forward for energy policy. See this CS Monitor article for a synopsis.

Creating a higher CAFE standard to get to 35 mpg by 2020 is certainly a good step forward, and it has been a long time coming. The biofuels mandate is a marginally good idea. The emphasis on corn ethanol is not the greatest due to the environmentally unfriendly aspects of using a tremendous amount of irrigated water (200-2,500 gallons of water for every gallon of ethanol) consumed and fertilizer runoff into the Gulf of Mexico. To most engineers who study the problem, I would say they believe biofuels must be non-irrigated and farmed in a way that sustains the nitrogen cycle, and not only the carbon cycle we hear so much about.

The removal of the renewable energy production tax credits for wind, solar, etc. is disappointing, but it has lapsed and been restarted three times already in its brief history. What we really need is a PTC scheme that sets it at a medium to high level (note: it was 1.9 cents/kWh) and has it steadily decrease in a set manner which cannot be changed. This gives businesses the ability to know the future of this kind of incentive such that they can invest in infrastructure that must be amortized over several decades.

The CS monitor article mentioned above does point out one thing that I think is good: energy policy might now be, as it should, a perennial subject. That doesn't mean that energy policies should change every year, it just means they should be evaluated every year.

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