Saturday, April 15, 2006

States Taking The Lead on Alternative Energy Ideas

Since we recently discussed these topics in class, alternative energy and sources of economic efficiencies, I thought it was an appropriate blog.

This article was written by the managing editor of the Rocky Mountain Institute (RMI), Joel Swisher. RMI is "an entrepreneurial nonprofit organization that fosters the efficient and restorative use of resources to make the world secure, just, prosperous, and life-sustaining".

Swisher opens the article describing how DC keeps talking about alternative energy sources, but that states are ahead of the national government. He then debates as to whether or not these alternatives are economically efficient. He describes how some states are starting to use portfolio standards that require alternative energy sources to be used by utility companies within a certain period of time (5-15 years). Portfolio Standards are a "flexible, market-driven policy that can ensure that the public benefits of wind, solar, biomass, and geothermal energy continue to be recognized as electricity markets become more competitive. The policy ensures that a minimum amount of renewable energy is included in the portfolio of electricity resources serving a state or country, and -- by increasing the required amount over time -- can put the electricity industry on a path toward increasing sustainability. Because it is a market standard, pollution standard relies almost entirely on the private market for its implementation. Market implementation will result in competition, efficiency and innovation that will deliver renewable energy at the lowest possible cost." (Renewables Portfolio Standard)

Other alternative energy considerations Swisher outlined were for states to use "feebates". A feebate is a fee or a rebate that is assigned to each individual vehicle type based on a fuel economy benchmark set annually for each vehicle size class. Buyers of more efficient vehicles receive a rebate; buyers of less efficient vehicles pay a fee. This would shift the costs to the right people, not taxing everyone, but taxing the right people.

Swisher refers to a document that the RMI wrote in conjunction with the Pentagon entitled The Oil Endgame. In the document they consider how auto manufacturers should be developing lines of lighter, safer and more fuel efficient domestic vehicles to reduce our overseas oil consumption. Additionally, that we should look closer at hybrids and They believe that this change of technology will shift the supply and demand balance of oil. The issue they did not discuss was the costs of production using these new lighter materials, such as carbon composites, advanced steels. And, will the production costs outweigh the competitive price of other similar vehicles? Or, will they produce the lighter cars at the right time while gas prices are at an all time high and let the market dictate.

If anyone wishes to read the "The Oil Endgame", I have downloaded a copy that can be emailed.

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