February 1, 2009

The Obama Administration’s Energy Challenge

Ronald Fisher

What Does This Mean Specifically?

First, promote and reward energy conservation and efficiency as a national security issue; every barrel of oil we use now is one less that will be available when we need it for strategic purposes. How? Structure power markets and incent suppliers, through accelerated depreciation or otherwise, to invest in smart grids and to permit consumer price transparency. Adopt national policies, similar to those contemplated by certain states, that incent and permit suppliers to grow even if demand falls. Fund research and development (R&D) on more efficient hybrid vehicle technology, appliances, and building materials, and then reward their use.

Second, promote the gradual and rational transition from ultimately finite fossil fuels to nuclear and renewable energy sources as an economic development issue. How? A federal renewable portfolio standard is a good start, provided that it takes into account regional differences in available resources. Stable, long-term production and investment tax incentives for nuclear and renewable power developers, similar to those enjoyed by fossil fuel power producers, are critical. It is important to fund R&D on spent nuclear fuel recycling and storage in order to mitigate security concerns. It also is crucial to recognize that our fossil fuel supplies are a significant strategic asset and that we should use them accordingly, including the development of clean coal alternatives.

Candidate Obama’s energy plan contemplated most of these proposals. At issue is not the what, but the how. President-elect Obama can define the nation’s energy future by effecting policies that promote energy conservation and efficiency as well as the transition from finite fossil fuels to nuclear and other alternative sources. By framing those policies as national security and economic development incentives that resonate with and reward stakeholders, the Obama administration will better position itself to successfully carry them out.

A happy consequence of that success would be progress in achieving the desired reduction in carbon dioxide emissions, without penalizing stakeholders.

— Ronald Fisher (fisher@blankrome.com) is a corporate transactional attorney with Blank Rome LLP and chairs that law firm’s energy industry team. He and his colleagues represent public utilities, their unregulated affiliates, independent power project developers and owners, and the investors who fund them. The views expressed do not necessarily represent those of Blank Rome LLP, its partners, or clients.