Czar obsession

 No New Energy Czar  

We've been down this policy dead-end before

Ronald Bailey | November 11, 2008

According to rumor, President-elect Barack Obama is considering the creation of an Energy Security Council inside the White House. The council, modeled after the National Security Council, would be headed by a National Energy Advisor who would manage the country's energy transformation to a low-carbon economy. This idea is reminiscent of the appointment of "energy czars" in past administrations. This concept of a National Energy Advisor plays a big role in a Center for American Progress (CAP) white paper, "Capturing the Energy Opportunity: Creating a Low-Carbon Economy." CAP president and former Clinton White House chief of staff John Podesta, who co-authored the paper, is now a co-chair of the Obama transition team.

During the election campaign, Obama outlined an ambitious plan to cut U.S. greenhouse gas emissions, chiefly carbon dioxide produced by burning fossil fuels, by 80 percent by 2050. This would be accomplished by imposing a cap on carbon dioxide emissions and then auctioning permits to businesses for each ton of carbon dioxide emitted. Over time the cap drops until emissions are 80 percent lower than they were in 1990. The initial auction might raise as much $100 billion, of which Obama plans to spend $15 billion annually on low-carbon energy research and development. The remaining auction revenues will be used for relief and rebates to help families and communities to cope with higher energy costs.

Obama also promised to put one million plug-in hybrid cars—cars that can get up to 150 miles per gallon—on the road by 2015, by offering a $7,000 tax credit to purchasers. Obama also wants to provide $4 billion in retooling tax credits and loan guarantees to domestic automakers to help build the new fuel efficient cars in the U.S. In addition, Obama promised to ensure that 10 percent of our electricity comes from renewable sources by 2012, and 25 percent by 2025. These elements of Obama's energy and climate plans mirror proposals in the CAP's energy white paper. For example, the CAP suggested a $8,000 tax credit to the purchasers of the first one million plug-in hybrid cars and wants to require that 25 percent of electricity comes from renewable sources by 2025.

A National Energy Advisor heading up an Energy Security Council is supposed to coordinate all Federal efforts at transforming our energy economy. But we've been down this path before. During the "energy crisis" of the 1970s, President Richard Nixon appointed William Simon "energy czar." As Simon tells it, "President Nixon announced to the cabinet that I was to have ‘absolute authority' and compared the job he was giving me with the role that Albert Speer played in the Third Reich when he was put in charge of German armaments." Simon confessed to being a bit uncomfortable about being likened to the Nazi Minister of Armaments and War Production.

Nevertheless, Simon became the director of the Federal Energy Office and overseer of the Emergency Petroleum Allocation Act of 1973 which imposed price controls on oil. Thirty-five years ago this month Nixon launched Project Independence with the goal of achieving energy self-sufficiency by 1980. In 1974, Time magazine reported that experts estimated that cutting U.S. dependence on foreign oil in half by 1985 would cost $500 billion to $1 trillion over the next ten years ($2 to $4 trillion in today's dollars).

In April 1977, President Jimmy Carter declared the energy crisis "the moral equivalent of war." To prosecute this "war," Carter designated former Defense Secretary James Schlesinger as his "Energy Czar" and eventually persuaded Congress to authorize a new cabinet-level Department of Energy to centralize energy policy and research in August 1977. Carter too promised to cut our dependence on foreign oil, declaring in a nationally televised speech in 1979: "Beginning this moment, this nation will never use more foreign oil than we did in 1977—never." Despite Nixon's, Carter's, and subsequent presidential energy independence projects, we import two-thirds of our oil today.

So looking back, did the drive to elevate and centralize energy policy and research actually help? Not a lot, as Robert Fri, a former deputy administrator of both the Environmental Protection Agency and the Energy Research and Development Administration points out. Fri noted in the Fall 2006 Issues in Science and Technology that a National Research Council study of DOE research and development expenditures between 1978 and 2000 uncovered less than stellar results. It is true that the NRC report estimated that DOE generated some $40 billion in economic benefits for the roughly $13 billion it spent on energy conservation and fossil fuel R&D programs. However, as Fri notes, "A mere 0.1 percent of the expenditure accounted for three-quarters of the benefit." That amounts to $13 million spent on unsexy R&D programs that resulted in electronic ballasts for fluorescent lighting, energy-efficient windows, and better refrigerators. These three programs yielded $30 billion in benefits. Fri further observes, "Three-quarters of the expenditure—a little over $9 billion—produced no quantifiable economic benefit. Half of this money was applied to synthetic fuel projects that turned out to be at least a couple of decades premature."

As Fri told Chemical & Engineering News this week: "The government is very good at starting energy projects that it believes will solve energy problems, but it is not very good at generating the intended results." For example, had the Feds somehow managed to continue the synfuels program, the U.S. would now be turning coal into the equivalent of 2 million barrels of oil a day with the unintended consequence of producing huge amounts of greenhouse gases. So how sure can an Obama administration's National Energy Advisor be that plug-in hybrids, or photovoltaics, or carbon capture and sequestration of coal plant emissions are the answers to our energy security and climate change problems? Perhaps biofuels produced using microbes is how we should power our cars. Or maybe concentrated solar thermal is a better idea for renewable base load electric power and coal-fired plants should be phased out in favor of nuclear ones.

Given that President-elect Obama is going to try to address what he sees as the Janus-faced problems of climate change and energy security, adding another layer of bureaucracy is not the way to go. The incoming Obama administration needs only to deploy one tool—its plan to cap and auction carbon dioxide emission permits. The rest of the complicated energy plan, with its plethora of top-down mandates, amounts to counterproductive meddling.

Once a sufficiently high price is set on carbon dioxide emissions, tens of thousands of energy researchers and entrepreneurs will develop and test various new low-carbon technologies in the market. This means that no energy czar or council will have the opportunity to waste more billions by picking technology clunkers. Renewable energy production mandates won't be necessary. A high carbon dioxide price will stimulate the production of 25 percent of the country's energy using renewable sources. Tax credits for low-carbon automobiles aren't needed either. Higher gas prices will encourage drivers to switch to plug-in hybrid, hydrogen fuel cell, or bioethanol vehicles, whichever turns out to be cheapest. Imposing energy efficiency standards on household appliances or providing tax credits to weatherize houses will be superfluous as consumers seek to lower their electricity bills. And instead of rebates, the Obama administration could use the revenues raised by auctioning emission permits to cut federal taxes on individuals.

Instead of "change we can believe in," appointing a new energy czar would be a failed history repeating itself.

Ronald Bailey is reason's science correspondent. His book Liberation Biology: The Scientific and Moral Case for the Biotech Revolution is now available from Prometheus Books.

Obama Considers Appointing Energy "Czar"

Read More: Barack Obama, Environmental Protection Agency, Obama Administration, Obama Cabinet, Obama Energy, Obama Energy Czar, Politics News

By STEPHEN POWER and NEIL KING JR.

WASHINGTON -- President-elect Barack Obama and his aides are close to naming a slate of appointees to run the departments of Interior and Energy and the Environmental Protection Agency amid debate on whether to establish a White House-level post to coordinate policies on climate change and dependence on Middle East oil.

The wrangle over the creation of a high-level energy council or climate "czar" could determine which appointees will run the three agencies, which have the biggest impact on energy and climate policy.

It also reflects the bureaucratic challenge some of Mr. Obama's advisers see in managing the many federal agencies that have a hand in energy policy, including the Transportation Department, which sets vehicle fuel-economy standards; the Interior Department; which controls access to oil and natural gas on federal land; and the EPA, which regulates air quality.

Mr. Obama managed to please multiple factions within the Democratic Party on energy matters during the campaign by promising to invest billions in green-energy efforts and support climate-change legislation. But as he fills out his administration, some fault lines on energy policy are beginning to show.

His pick of retired Marine Gen. James Jones as national security adviser has prompted worry among some environmentalists. Gen. Jones leads an energy initiative within the U.S. Chamber of Commerce, an organization that has long clashed with the group.

Various policy centers -- including one led by John Podesta, who heads the Obama transition effort -- have advocated the creation of an energy council led by a high-level adviser within the White House. Some on the transition team have expressed reservations about the idea, people familiar with the matter said.

People familiar with the selection process said Mr. Obama's top aides plan to meet in Chicago this weekend to help the president-elect choose nominees for the top energy and environmental posts, and that an announcement could come as early Tuesday. A spokesman for the Obama transition team declined to comment Friday.

Among the leading candidates to run the EPA are Lisa Jackson, a former commissioner of the New Jersey Department of Environmental Protection who is now chief of staff to New Jersey Gov. Jon Corzine; and Mary Nichols, chairman of the California Air Resources Board, people close to the selection process said.

The EPA administrator's influence on energy policy is expected to grow both as a result of Mr. Obama's support for regulating greenhouse-gas emissions and a 2007 Supreme Court decision that found the Clean Air Act authorizes the agency to regulate such emissions if it determines they cause or contribute to air pollution that endangers public health or welfare.

Many business groups are already lobbying the EPA against taking such a step, fearing it will lead to an avalanche of costly mandates. Both Ms. Jackson and Ms. Nichols have helped lead their states' efforts to regulate greenhouse-gas emissions from autos and other sources.

Other names in the mix, possibly for chairman of the White House Council on Environmental Quality, are Howard Learner, executive director of the Illinois-based Environmental Law and Policy Center; and Jason Grumet, executive director of the Washington-based National Commission on Energy Policy. Both have a history of working closely with Mr. Obama on environmental matters.

A leading candidate for the post of Interior secretary, according to people familiar with the Obama transition team's deliberations, is Rep. Raul M. Grijalva, an Arizona Democrat who has accused the Bush administration of pandering to energy companies by speeding up the permitting of oil and gas leases on federal land.

Some of Mr. Obama's advisers are pushing for former Oregon Gov. John Kitzhaber, on the grounds that the Interior Department needs a leader with extensive experience running a large organization. The agency has been roiled recently by allegations that it employees mismanaged oil and gas royalties, and became too close to energy industry representatives.

Mr. Kitzhaber couldn't be reached for comment. He told the Associated Press this week it was "extremely doubtful" he would be chosen for the post.

People familiar with the selection process said Kansas Gov. Kathleen Sebelius and Michigan Gov. Jennifer Granholm are among the leading candidates to run the Energy Department.

A spokeswoman for Gov. Sebelius said she is "focused on her job as governor" but "has not shut the door on" serving in the administration. A spokeswoman for Gov. Granholm said she is "looking forward to serving as governor with a partner in the White House."

Write to Stephen Power at stephen.power@wsj.com and Neil King Jr. at neil.king@wsj.com

Unlike Carol Browner, Czar Alexander III of Russia never served as administrator of the EPA. (NEWSCOM/File)

What’s an ‘energy czar,’ anyway?

By Eoin O'Carroll | 12.11.08

It’s not official yet, but news reports say that President Clinton’s former Environmental Protection Agency chief Carol Browner has been chosen by Barack Obama to serve as his administration’s “energy czar.” What exactly does an energy czar do?

As The Wall Street Journal noted last week, the Obama administration sees a challenge in coordinating all the federal agencies that have a hand in energy policy, including the Department of Transportation, which sets fuel economy standards; the Department of the Interior, which grants permits for oil and gas drilling on federal land; the EPA, which regulates air and water quality; the Department of Commerce, which develops infrastructure to promote economic growth and sustainable development; and of course the Department of Energy.

In February 2008, the Center for American Progress, which is headed by John Podesta, who also leads Mr. Obama’s transition team, proposed appointing a National Energy Adviser, who reports directly to the president. This adviser would chair a National Energy Council made up of the heads of the relevant cabinet-level departments. In addition to coordinating energy policy among those departments, the council would be responsible for “outreach with states, localities, and the private sector, and US leadership and partnership in international efforts to reduce global emissions.”

There’s little evidence that the Founding Fathers were inspired by Slavic autocracies when they drafted the framework of our republic, but the term has a fairly long tradition in US politics. President Johnson appointed a “poverty czar” in 1964, President Reagan appointed a “drug czar” in 1982, President Clinton appointed an “terrorism czar” in 1998, and President Bush appointed a “war czar” in 2007. And as lawmakers wrangle over how much the government should intervene in the failing auto industry, there’s been talk of appointing a “car czar” to authorize loans and set benchmarks for progress.

Ms. Browner would not be the first energy czar ever. In 1973, President Nixon appointed John A. Love as the nation’s first Director of the Office of Energy Policy, a title that was quickly dubbed “energy czar” by the press. That  office morphed into the Federal Energy Administration, which eventually became the cabinet-level Department of Energy in 1977.

The online Washington mag Politico notes that Obama himself is not fond of the term “czar.”  (It’s only a matter of time before this will prompt commentators to draw parallels between him and Vladimir Lenin.)

For her part, Browner has mocked The New York Times for calling her a potential “climate czarina.” Displaying more historical acumen than the Times, she noted to Grist that the term actually means “wife of the czar.”

“I’m pretty sure my husband isn’t going to be czar of anything,” she told Grist.

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