Candidates Promote Energy Policies


October 2008

Candidates Promote Energy Policies


With gasoline hovering at $4 a gallon and concern about global warming on the rise, energy has become a lightning-rod issue in the race for president. Both John McCain and Barack Obama have devoted significant time in speeches and space on their campaign Web sites to detailed homilies on the future of energy in America.

VoteMcCain's Lexington Project—named for the Massachusetts town "where Americans asserted their independence once before"—centers on global competition and national security and seeks to achieve "strategic independence" by 2025. Obama's New Energy for America focuses on the impact of energy policy on the middle class, offering short-term relief to Americans "facing pain at the pump" and longer-term assistance to ease the financial impact on consumers of implementing new means of energy production.

Here are highlights of McCain's and Obama's plans to address the nation's growing energy needs:

Reducing dependence on foreign energy resources: Both McCain and Obama support exploring and expanding domestic sources of oil and gas. McCain would lift the ban on drilling in the Outer Continental Shelf and put in place the infrastructure necessary to transport this fuel around the country. Obama would create a process for early identification of any infrastructure shortfalls or federal permitting delays related to drilling. He would also maximize land dedicated to drilling by requiring oil companies to develop their leases or turn them over. Obama has also pledged to facilitate construction of the Alaska Natural Gas Pipeline, which was proposed in 1976 and authorized to receive up to $18 billion in loan guarantees in 2004.

Producing cleaner energy: Both candidates are in favor of gradually reducing greenhouse gas emissions, although Obama's plan includes an ambitious 80% reduction in greenhouses gases by 2050 to McCain's 60%. (Both plans use 1990 emissions levels as a baseline.)

As the leading energy source for the production of electricity in the U.S., coal is a primary focus of clean-energy technology. McCain would provide $2 billion for science, research, and development of clean-coal technology and would then export this new technology to other coal-dependent countries such as China. Obama would provide incentives to accelerate private-sector investment in commercial-scale zero-carbon coal facilities. To further speed the implementation of clean-coal technology, he would also instruct the Department of Energy to enter into public-private partnerships to develop five "first-of-a-kind" commercial-scale coal-fired plants with carbon capture and sequestration.

To encourage the development of renewable energy sources, McCain would continue temporary tax credits for wind, hydro, and solar power until the market will support renewable energy unaided. Obama would require that 10% of electricity come from renewable sources by 2012. He would also extend the federal Production Tax Credit for five years to encourage the production of renewable energy. Both candidates support a cap-and-trade system, where polluters would be issued permits equal to the cap on greenhouse gas emissions. Entities that invented, improved, or acquired a way to reduce their emission could sell their extra permits for cash. The financial incentive would encourage the development of cost-efficient technology to further reduce emissions.

Developing alternate sources of energy for transportation: Cleaner cars are a large part of both candidates' platforms. McCain has issued a "Clean Car Challenge"—a $5,000 tax credit for those who buy zero-carbon-emission cars and a graduated tax credit for those who purchase low-emissions vehicles. Obama would provide a $7,000 tax credit to consumers who buy advanced-technology vehicles, with the aim of having 1 million plug-in electrical vehicles on the road by 2015. These tax incentives are also intended to encourage automakers to develop increasingly clean cars to capitalize on consumer incentives. Additionally, Obama would provide $4 billion in retooling tax credits and loan guarantees for domestic auto plants and parts manufacturers to ensure that the new cars could be built in the U.S. Both candidates are also seeking to improve the battery technology that would power plug-in hybrids or electric cars.

Conspicuously absent from McCain's energy platform is the gas tax, despite his sponsorship of a bill this year that would have provided a "fuel-tax holiday" from May 26 to September 1, 2008. (The measure was roundly defeated because it would have deprived the Federal Highway Trust Fund, which is the main source of funding for highway construction and repair and mass transit, of an estimated $9 billion when it is already heading for the red.) Obama, who favors the gas tax, has called the fuel-tax holiday a "Washington gimmick." Experts have suggested that suspending the fuel tax would have benefited oil companies more than consumers.

Also absent from McCain's energy plan is one of Obama's primary strategies: providing immediate relief from gasoline prices to consumers. Obama has said that he would offset gas prices by providing an emergency energy rebate of $500 per person or $1,000 per married couple. The rebate would be funded by a "reasonable share" of oil companies' profits. Obama has also proposed providing permanent tax relief of $1,000 a year to middle-class families.

At this point in the race, the candidates' energy goals are similar; the devil is in the details.