Posts tagged “energy policy”
Following Mitt Romney’s release of his energy plan, I intended to offer a detailed critique. However, there are already numerous critiques out there that would not differ much from my own. My critique would have been a near mirror image of Michael Levi’s Pipe Dreams at Foreign Policy, so instead here I offer some qualitative comments on the plan — as well as how I feel it could be strengthened.
In a nutshell, Romney’s plan looks to me like half a plan due to all of the things it does not address. It is mostly a series of Republican talking points, some of which make sense, some of which are over-reliant on dreams of U.S. energy independence, and some of which, in my opinion, should be modified. The highlights of the plan are:
- Empower states to control onshore energy development
- Open offshore areas for energy development
- Pursue a North American Energy Partnership
- Ensure accurate assessment of energy resources
- Restore transparency and fairness to permitting and regulation
- Facilitate private-sector-led development of new energy technologies
Welcome to “Banking Energy”. This is a new column and in it I will be writing and facilitating articles and discussions about the uniquely challenging world of finance for energy projects and technologies. The column will cover the spectrum of energy types and technologies, with some special attention paid to the challenges of financing new energy technologies and new applications of old energy sources.
The column will include some review of established aspects of energy finance, but I will focus primarily on emerging issues and how energy finance affects things like market development, project development and adoption of emerging technologies.
I plan to have regular guest contributors and co-authors who can help add relevance, expertise and context. Additionally please don’t hesitate to make suggestions for future topics.
My background (at least the relevant bits) is a mix of finance, law and policy, primarily helping companies and investors find innovative and efficient ways to put energy deals together. I currently lead the clean energy practice at a large international law firm, have held a similar role for another law firm as well as one of the Big 4 accounting firms, and have also taught international energy policy at Georgetown University.
The focus here will be energy finance, but I expect to incorporate many aspects of energy law and energy policy, for the simple reason that energy finance, energy policy, and energy law are inextricably linked. Successfully navigating energy deals requires an understanding of the intersection and intricacies of finance, law, and policy. Direct government financial supports, from tax credits for solar power, to special deductions for oil drilling, exist in some form across virtually every energy source and technology. Indirect supports also influence the competitive landscape. Whether direct or indirect, fully realizing the value of government-based economic support is vital in making project economics work for energy projects. Similarly, legal and policy issues how energy can be sold, the regulation of prices, and, of course the environmental aspects of energy production overlay every part of the industry. How these regulatory programs operate, when they apply, and how they come into and out of existence can be vital to the financial viability of a project.
In last week’s post — If We Only Had a Stable Energy Policy — I mentioned three specific examples of legislation under consideration that create uncertainties within U.S. energy policy. These uncertainties increase the financial risks for those trying to develop energy projects — both for conventional fossil-based projects and for renewable energy projects.
One piece of energy legislation that was recently introduced is called the End Polluter Welfare Act. It was introduced by Senator Bernie Sanders, an Independent from Vermont, along with Minnesota Democratic Congressman Keith Ellison. CONTINUE»
House Ag Committee Holds Hearings on Energy
On May 18, 2012 the House Committee on Agriculture held hearings on retaining Energy Title funding in the 2012 Farm Bill. Written testimonies and the video of the hearing are available at Formulation of the 2012 Farm Bill: Energy and Forestry Programs.
The hearings were held as Congress prepares to write the next Farm Bill. The purpose of this particular hearing was to discuss the renewable energy development provisions of the current Farm Bill, whether particular programs are achieving the desired results, and whether specific programs should be continued.
There were some comments during the hearing that warrant further analysis. CONTINUE»
I often hear the comment — “If we only had an energy policy” — but what does that really mean? In this column I will provide three examples — originating with both Democrats and Republicans and impacting both renewable energy and fossil fuels — of how constantly shifting legislation makes it very difficult to plan and execute energy projects.
Imagine that you were considering buying a home. However, let’s say your income is inclined to wild swings and the mortgage interest deduction is only approved on a year by year basis. Perhaps it is allowed to expire on occasion. In a situation like this, you would be wise to be very conservative with your purchase, or to even forego the purchase altogether.
This is analogous to the way energy companies plan and execute projects. Decisions hinge on the economics of the project. These projects are large capital expenditures and they only pay out over many years. Thus, when considering the economics of a project, it is important to have a stable environment around regulations and tax policies. Failure on these two items makes for dysfunctional energy policy.
My new book — Power Plays: Energy Options in the Age of Peak Oil — has been published. A press release issued last week describes the book in some detail:
Here I want to describe a bit about the evolution of the book, discuss what’s in it, and finally provide contact information for reviewers who would like a copy.
It was less than a year ago that I was contacted by Jeff Olson, a Senior Editor at Apress, which is a division of the large global publisher Springer about writing “a book for educated laypeople on today’s energy issues.” I had been contacted a couple of times previously about writing a book, but the timing wasn’t right for various reasons. This time, I felt like I could pull it off, and around the first of August 2011 I actually sat down to write the first words. Eight months and 272 pages later, it was published. CONTINUE»
As I wrote yesterday, I believe that the U.S. is moving fundamentally towards a point where it will be a major net exporter of energy, especially of refined oil products.
Everything we’re hearing now in the political sphere and in the press is about how bad the spike in gas prices is for the American economy. But – if we are to become a major energy producer – that cannot be true. It is no longer the case that high oil prices are unrelentingly bad for our economy: they’re only bad for oil consumers. Here in DC, we’re pounded by API’s ad campaign that three are over 9 million people directly employed by the oil and natural gas industry. In a total national workforce of 154 million, that means that almost 6% of the workforce is employed by the industry.
Certainly, we’ve seen the low unemployment rate in North Dakota as proof that an energy boom can create jobs. Last fall, the Wall Street Journal ran a very widely read article, “The Non-Green Jobs Boom” saying how clean energy was failing to produce jobs, but there were lots in traditional energy sources.
A Changing U.S. Energy Picture
This weekend, Thomas Friedman posed a question in his Sunday New York Times column: “Should the US join OPEC?” I generally don’t like to get into Friedman’s columns, as his name-dropping and taxicab reporting will drive you crazy. However, he probably has the widest readership of anyone in this field, and he does a good job of simplifying complicated issues.
Friedman says the “debate we’re again having over who is responsible for higher oil prices fundamentally misses huge changes that have taken place in America’s energy output, making us again a major oil and gas producer — and potential exporter — with an interest in reasonably high but stable oil prices.”
I hate to say it, but he’s right – although we’re nowhere near being a petroleum exporter today (a clear requirement for membership in the Organization of Petroleum Exporting Countries), I believe that fundamental changes in America’s supply and demand over the next 20-30 years mean that we’re moving towards a world where the U.S. has a real interest in exports – probably not of unrefined crude oil, but of all energy products.
Two Sides of a Coin In a recent video blog about energy politics, I stated that in my opinion each of the major political parties in the U.S. only gets half of the energy picture. Democrats tend to demonize oil usage, with many believing that we can shift to renewables for our energy needs. To be clear, we can — but not in the way they imagine. They simply underestimate the role oil plays in our lives, and therefore overestimate the ease of a transition. As a result, they feel they have little use for oil companies, and so they are perpetually at war with the oil industry. Of course renewables certainly have a role, and must be the long-term… Continue»
This week’s episode of R-Squared Energy TV considers the following viewer questions: What do you think about the company Joule Unlimited? Who are the best politicians on energy policy? Who are the worst? In this episode I explain the single-most important question to ask when conducting due diligence on a renewable energy company. I will also discuss why Republicans and Democrats each only get half of the picture right when it comes to energy policy. Two notes on the video. I did make a misstatement at about the 4:25 mark when I said “the importance of getting off energy.” I meant to say “oil” and not energy. Also, when I was mentioning politicians who are knowledgeable about our energy predicament,… Continue»