Powering Down

A DIFFERENT TACK

GOP Rep. Ed Whitfield of Kentucky, the chairman of the House Energy and Power Subcommittee, has a simple answer when asked what the United States should do to prepare for the post-oil future: nothing, because there won’t be one. “We’ve got a 250-year reserve of coal in this country, and my understanding is that we have about the same length of time in oil—and maybe even more in natural gas,” he says. “I, for one, am not concerned at all about running out of fossil fuels.”

Whitfield represents the GOP mainstream on peak oil (and even human contributions to climate change, which most Republicans dismiss). Partly, that’s because of the party’s increased reliance on fossil-fuel dollars. Since 1999, the oil, coal, and gas industries have shelled out more than $93 million in campaign contributions to members of Congress, according to data tracked by Oil Change International’s Dirty Energy Money Campaign. In 2009 and 2010 alone, members took in more than $25 million, according to public data made available by the Center for Responsive Politics. Even non-carbon sources of campaign money push lawmakers in this direction: Americans for Prosperity, a tea party group that helped flip the House in 2010, was founded by David and Charles Koch, the principal owners of Koch Industries, a major U.S. oil conglomerate.

Republicans also believe that the free market is already overregulated, and they strongly oppose government attempts to jump-start the renewable-energy sector, which they see as “picking winners and losers.” Many Democrats, meanwhile, concede that large untapped domestic oil and gas reserves give the U.S. more time to wean itself off oil and to develop clean technology.  In a recent interview, Deputy Energy Secretary Daniel Poneman said that historically high levels of oil production mean that the United States can adequately meet its oil needs “for the next several decades.”

The fossil-fuel forces have thwarted what Obama had hoped to count among his signature achievements. During the 2008 campaign, he said that his administration would work to spur a domestic renewable-industry market by showering innovators with tens of billions of dollars of subsidies and tax breaks. That capital would allow them to scale up, produce more, and lower prices so that consumers could start using renewable technologies. The goal, Obama said, would be for renewable sources to provide 25 percent of the nation’s energy supply by 2025. “Now is the time to confront this challenge once and for all,” he said after his election. “Delay is no longer an option.”

“The DOE program created financial certainty at a time of uncertainty in the capital markets.”—Thomas Plagemann, First Solar’s VP of project finance

Four years later, these ideas have gotten nowhere, because they require congressional approval. Obama tried to push through a sweeping climate-change bill when Democrats controlled Congress in 2010, but the legislation died, and he never proposed it again. The administration managed to significantly boost automotive fuel-economy standards, a move that will reduce American reliance on oil by about 12 percent. But its only real effort to create a domestic renewable-energy industry was the 2009 economic-stimulus package, which included a one-shot $45 billion injection: The Energy Department received $35.2 billion for clean-energy programs, and the Treasury Department got $13 billion to dispense as grants and tax credits to alternative-energy companies. The stimulus set aside another $2.4 billion to pay for loan guarantees in case a loan recipient defaulted.

The government money was a lifeline for renewable innovation that might have competed with Emirati investments. Banks have been reluctant to lend to renewable-energy businesses because the lack of clear federal standards leaves no guarantee of a market for their products. First Solar, a manufacturer of thin-film solar panels based in Tempe, Ariz., is building three large solar arrays for utilities such as Exelon. Those projects wouldn’t have gotten off the ground without the Energy Department’s loan guarantees, because private financing was scarce. “It would have been difficult to execute all our large projects without the DOE,” said Thomas Plagemann, First Solar’s vice president of project finance. “The DOE program created financial certainty during a time of uncertainty in the capital markets.”

But government backing for clean-energy firms is rapidly disappearing. The failure of Solyndra—whose loan guarantee was $535 million—torpedoed any remaining congressional enthusiasm for that program. Stimulus money had allowed Treasury to subsidize up to 30 percent of alternative-energy firms’ development and construction costs, but that initiative expired last year. Without new government support, clean-energy companies are putting expansion plans on hold, laying off workers, and facing the possibility of bankruptcy.