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Mending the Nation’s Patchwork Energy Policy

October 04, 2012 By Will Nissen, Fellow

It's easy to say we need a nationwide energy strategy. It's a lot harder to accomplish. Think about our conflicting regional goals and politics. It's in Minnesotans' best interest to focus more on wind, solar and other renewables. From a jobs perspective West Virginia, Wyoming, and North Dakota have a lot riding on coal and natural gas.

Places like Arizona, California and southeastern states have their own unique resources and needs, making a balanced, comprehensive nationwide energy policy a political nightmare.

Conservative House leaders (with coal state Democrats) recently passed the Stop the War on Coal Act, responding in part to a series of nationwide coal plant and mine shutdown announcements. They touted their job saving prowess on this end, yet refuse to extend the wind production tax credit (PTC) that has already resulted in layoffs and could lead to thousands of additional job losses in an innovative and fast-growing American industry.

The two major party presidential candidates also disagree on the wind PTC, with President Obama seeking to extend it and Mitt Romney saying he’d let it expire if elected. Flip the coin and you have Romney looking for immediate approval of the Keystone XL pipeline, while President Obama has delayed the decision.

This lack of clarity on federal energy policy has implications for businesses around the country and for the nation’s economy. For example, a coalition of 240 chapters in the U.S. Chamber of Commerce has asked both presidential candidates to prioritize clean energy as an economic development solution or risk job losses, reduced market shares and ceded U.S. leadership in clean energy industries to other countries. As current inaction and past extend-expire cycles for the wind PTC has shown, short and long-term uncertainty wreaks havoc on business models.

Until we have a national consensus, states will take command of their own energy policies. On one hand this is particularly effective at capturing the unique geographic, demographic and institutional characteristics of each state, as well as providing for the specific interests and goals of their people. If it looks increasingly beneficial for a state to adopt renewable energy standards, for example, in a time when there is no traction for such a movement at the national level, states can and should go down this road. Currently, 30 states have mandated renewable energy standards in place and seven have adopted renewable energy goals.

However, here's a downside. For some states renewables aren't a priority. Since our air and water doesn't say within a political border, one state's regressive energy policy could impact a more progressive neighbor's anti-pollution efforts. 

In some cases, regional efforts to coordinate and maximize positive impacts for states with shared interests can help overcome drawbacks resulting from the lack of a national policy. The nine-state Regional Greenhouse Gas Initiative is a great example of northeastern and mid-Atlantic states banding together to create and support a carbon emission-reducing cap and trade policy that hasn’t gained enough traction to implement at the federal level.

There are instances, however, when strong clear policy is needed at the federal level. The Corporate Average Fuel Economy (CAFÉ) standards drive automakers to produce more fuel efficient cars and trucks. In this case, imagine if automakers were forced to make 50 different cars to comply with every state’s unique fuel economy standard. Rather, the federal level is the appropriate and strongest place for this type of energy policy in the U.S.

A historical example of clear, strong energy policy at the federal level is the Clean Air Act. The landmark legislation was passed in 1970 with bipartisan support in the Democrat-controlled House and Senate and signed by President Richard Nixon. The 1990 Amendments strengthened the bill considerably, passing the Democrat-controlled Senate and House with 89 Yea votes out of 100 and 401 Yea votes, respectively. After that overwhelming passage, conservative President George H.W. Bush signed the bill into law.

We are in a position to dramatically recreate our energy generation, transmission and distribution system in this country. While there is no silver bullet for creating the best system possible, there is silver buckshot comprising of effective national, regional and state level energy policies. For Minnesota, our policymakers need to keep these appropriate levels in mind when advancing our state’s energy interests.

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