SFGate063

Energy Independence Now We Need A New Energy Revolution


Hal Plotkin, Special to SF Gate
Thursday, October 4, 2001

URL: http://www.sfgate.com/cgi-bin/article.cgi?file=/gate/archive/2001/10/04/newenergy.DTL

Amid this week’s latest batch of unbearably sad stories about the victims of the Sept. 11 terrorist attacks, one of the most important stories is the one we haven’t read.

It’s the story about how, after the last major crisis in the Middle East 25 years ago, America embarked on a crash program to develop new solar, wind, geothermal and fuel-cell technologies to successfully become energy independent.

You didn’t read it, because it didn’t happen.

The news we’re reading this week might look very different if we had followed that course, which was recommended at the time by scores of environmentalists, ranging from author/activist Barry Commoner to our then-governor, Jerry Brown.

Had we listened to them, the US government might not have earned our well-deserved reputation as a hypocrite nation that prizes oil above everything else, including the very values we purport to uphold.

Of even more immediate concern, our continuing dependence on foreign oil leaves the American economy dangerously vulnerable, particularly if the already unstable situation in the Middle East continues to deteriorate.

That’s why a campaign for energy independence remains one of our best weapons against terrorism. In the long run, one of the most effective steps we can take to preserve freedom here at home and to extend its benefits to others around the world is to loosen oil’s slimy grip on our domestic and foreign policies.

There is an undeniable relationship between America’s alliances with oppressive Middle East regimes and the organized, religiously fueled terror campaign that seeks to punish the US for being the chief enabler of those dictatorships. Put simply, we rely on oil-rich despots at our own peril.

President Bush has been very busy, no doubt.

But more than three weeks after the attacks on the World Trade Center and the Pentagon, we are yet to hear a single word from the president about the importance of new energy technologies. Nor has he told us what he plans to do to wean the US away from the imported sources of fuel that force us into unwise alliances with dictatorships such as Saudi Arabia, where many of the Taliban-protected terrorists and their leaders originated, and where they first learned to hate America.

We should not drop the energy-independence ball again. That doesn’t mean plundering the Alaskan wilderness for a short-term supply of oil. Instead, the federal government should act on promises made recently by Secretary of Energy Spencer Abraham, who last week pledged to increase federal efforts to develop nontraditional supplies of energy.

The president could, for example, issue an emergency declaration that allows investors and entrepreneurs to mine existing patents for potentially useful energy-related technologies that have been buried or not fully exploited by their owners.

In 1979, the Federal Trade Commission, under President Carter, sought to stop Exxon Corporation from taking over the Reliance Electric Motor Company. The company had developed an “alternating-current synthesis” technology that, at the time, was thought to be a major breakthrough. The hope was that the technology could be used to reduce our dependence on oil by making cars and factories more energy efficient.

President Carter’s FTC thought it unwise to allow the Reliance technology to fall into the hands of a company whose primary goal was to sell more oil. After President Reagan was elected, however, his appointees quickly reversed the previous FTC order. Shortly thereafter, Exxon abandoned any plans to commercialize the technology.

There’s no telling how many such underutilized energy patents may exist. I’m no conspiracy theorist, mind you, but it’s just common sense that at least some forces within an industry as powerful and wealthy as the global oil business would have worked over the years to retard the development of technologies that promised to threaten their revenue streams.

We should make it much easier for firms to develop new energy technologies even if that means some existing patent rights must be relaxed. Companies should be permitted — invited, even — to violate energy-technology patents free of charge if those technologies are not fully exploited by the holders of those patents.

Fortunately (and somewhat remarkably), the top 65 US venture-capital firms raised nearly $10 billion in new investments over the last three months, according to the National Venture Capital Association. There are, however, precious few good places to invest that cash right now. Nobody really needs another dot-com or computer-services firm at the moment.

What we do need, though, is for the venture-capital community to back firms that are working to change what happens on the other side of the electrical outlet. Opening up neglected energy patents for exploitation by tech firms is just one way we can give the new energy economy a much-needed shot in the arm.

The president should also get tough with California, which is the largest market for energy in the country.

What happens in our state helps determine what’s possible across the country and around the world. If California fails to lead, or falls behind, the nation’s quest for energy independence will be greatly diminished.

Sadly, our state officials are not rising to meet this challenge. Instead, they’ve proven themselves entirely inept when it comes to formulating intelligent and workable energy policies that would serve not only California’s but also our nation’s interests.

Take, for example, the current multibillion-dollar bond measure California state officials are planning to float to pay for the overpriced electricity recently purchased by state agencies on behalf of California’s consumers and businesses.

Although the Public Utilities Commission rejected the deal this week, based on its costs, Gov. Davis and state Treasurer Phil Angelides are already trying to revive it.

What most people don’t know yet, though, is that the Wall Street bankers selected without full public hearings by our state officials to handle the transaction — if and when it finally is approved — are demanding that California consumers be prevented from purchasing electricity from sources other than the local monopoly for however many years it will take to pay off the bonds. If that happens, it will mean we’ve been put though this whole energy-deregulation mess for nothing.

It also means Californians will be forced to buy energy from existing suppliers regardless of whatever new technologies might emerge. At a time when we need to use the power of California’s enormous market to encourage new tech-driven approaches, nothing could be more backward.

State officials hide behind promises that California will set goals to increase the use of renewable-energy technologies by 10 percent or more over the next few years. But those promises are just as empty as the unmet pledge of future 10 percent energy-price reductions that accompanied the disastrous and misnamed 1996 energy-deregulation bill.

President Bush’s more savvy political advisers might be wise enough to see the opportunity created by California’s continued bungling of its energy policies.

The president could even assume the unlikely role of hero by sticking to his professed free-market position and using the powers of his administration to forbid state officials, including our governor and the state PUC, from preventing free competition in California’s end-user electricity market. That doesn’t mean abandoning federal price caps on electricity supplies, but it does mean making certain all firms and technologies can compete fairly with one another in the country’s biggest market, with no group of suppliers getting a government guarantee of a locked-in customer base.

The truth is, California has many options that would allow it to float revenue bonds that don’t involve preventing consumers from having a free choice about where they want to buy their electricity. The state already has the ability, for example, to build new, more efficient power plants, including renewable-energy-based plants, and to grant a percentage of the revenue generated from those plants to any would-be bondholders. That approach has the benefit of increasing the supply of energy while giving the bondholders title to tangible assets in return for their investments.

There are surely other possibilities in a state as large as California. The overall goal, though, should be to do what should have been done decades ago, which is to more effectively support the development of technologies that can help the US become energy independent.

Given the attitudes of Gov. Davis and the state legislature, few of these ideas appear likely to get a fair hearing. That is, unless federal government authorities step in and let our state officials know they cannot prevent competition in California’s energy markets, no matter how much money they might need for their reelection campaigns.

President Bush is casting the current crisis in simplistic terms, as “a battle between good and evil.” His stated goal is nothing less than the elimination of global terrorism.

As laudable as that sounds, eliminating all terrorism is sure to remain an unobtainable goal in a world where America’s need for oil overwhelms our concerns for human rights.

Our enemies have dealt us a grievous blow. But what troubles me even more are the evils we keep doing to ourselves.

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