Friday, July 30, 2010

A GOP Energy Alternative


Out of the most tedious congressional debate sometimes comes a little ray of policy sunshine. The GOP got a glimmer this week.

As congressional Democrats plotted how to make their "oil-spill" legislation a political liability for Republicans, and as Republicans flapped over how to avoid that fate, one GOP member excused himself from the circus. California Rep. Devin Nunes instead unveiled his "Energy Roadmap," a companion bill to Wisconsin Rep. Paul Ryan's plan for tax and spending reform. Mr. Nunes wants to get his party thinking about a modern, principled energy policy. Lord knows the GOP could use the help.

Republicans have spent the past decade staying largely true to their belief in cheap fossil fuels, but the rise of the climate debate and "green energy" flummoxed them. Unwilling to be seen as against "clean" energy, they embraced green subsidies. Some excused it as the political price of continued drilling; others just liked the pork.

Calif. Rep. Devin Nunes's nuclear proposal would do more to reduce carbon emissions than any Democratic plan on the table.

Whatever the reason, it's been a boon for ethanol, solar panels, switch grass and General Electric. The Republicans' 2005 energy bill was an ode to Jimmy Carter, putting the government back in charge of picking energy winners and losers via handouts and loan guarantees. President Bush praised "wood chips." Even as gas prices soared to chants of "drill, baby, drill," Republicans carefully adopted the motto: "All of the above." Heaven forbid anyone think Republicans were not for solar water heaters.

And yet this defensive crouch has not, in fact, earned Republicans more oil drilling or nuclear power. All it has done is distort energy markets and embolden Democrats to ratchet back fossil fuels, crank up subsidies, and go for cap and tax. Republicans dissemble, having long ago ceded the right to talk about free energy markets.

On nearly any policy issue—Social Security, taxes, health care, education—Republicans are at least aware of a savvy conservative reform position. Not so energy policy, where they remain confused.

Purists will advocate getting government out of the regulatory way while axing all subsidies—and that would indeed be bliss. But it doesn't help Republicans with today's political realities. The carbon debate will continue to rage; renewables aren't going away; and many Americans worry about both foreign oil and the environment.

Mr. Nunes' interest is how to answer these concerns in a more free-market way. The Californian's road map is the product of years of work, most recently with Mr. Ryan and a handful of Republicans with energy expertise—Illinois's John Shimkus, Utah's Rob Bishop, and Idaho's Mike Simpson. It's a bill designed to produce energy, not restrict it. It returns government to the role of energy facilitator, not energy boss. It costs nothing and contains no freebies. It instead offers a competitive twist to government support of renewable energy.

The bill is unabashedly focused on allowing America to responsibly access more of its own low-cost resources. It opens up more of the Outer Continental Shelf, and takes another run at opening the Arctic National Wildlife Refuge. It restores the leasing for Western oil shale that the Obama administration has squelched.

Rather than throw federal loan guarantees at uncertain nuclear plants, the legislation attacks the true problem: bureaucratic roadblocks. It streamlines a creaky regulatory process, requires the timely up-or-down approval of 200 plants over 30 years, and offers new flexibility for dealing with nuclear waste. Mr. Nunes likes to point out that his nuclear provision alone would do more to reduce carbon emissions than any Democratic proposal in existence. And it would in fact create, ahem, green jobs. Imagine that.

The bill accepts the argument that renewables serve a purpose but can't yet compete against traditional energy. It would divert all the federal resource royalties into a fund. Companies or individuals with proven renewable technology would take part in a reverse auction. They'd bid for government bucks; those that can produce the most megawatts for the least money win. Auction winners forego other federal handouts. And consider this: The more fossil fuel extraction, the more royalties (potentially hundreds of billions of dollars) available to boost alternative energy.

In a better world, renewables would sink or swim. But Mr. Nunes notes that if there is a public will for supporting these technologies, this is at least a "more free-market and transparent way to deploy them immediately." Today, bureaucrats choose unproven technologies on which to bestow taxpayer grants. Blanket tax credits flow to industries—regardless of individual companies' merit. Auction participants, in contrast, would compete, and the market would first have a say in their success. If the GOP is determined to go green, this is megawatts more principled than the status quo.

Mr. Nunes doesn't suggest his bill is the end-all-be-all; his primary goal is to get his party engaged. Watch for the GOP response. The Republican leadership has shown little inclination to adopt bold proposals for the midterms. And the oil spill has spooked it on energy. Yet Senate Majority Leader Harry Reid's recent decision to shelve cap-and-tax has shown that even Democrats now acknowledge the public isn't buying their high-cost, government mandate, subsidy approach. If not some new GOP energy principles now, when?