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Posts Tagged ‘energy’

Bipartisan and Pragmatic? What’s not to love?

September 11th, 2013

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Let’s be clear: the time for energy efficiency is now. We’re beyond the days of comprehensive energy legislation; cap and trade is dead and buried, carbon tax a policy for a far-off political future. In this age of incremental improvements, many issues, from fracking to nuclear, are divisive. That’s exactly why Third Way strongly supports advancing energy policies in smaller, yet still important components.  Efficiency is one topic that everyone can agree on – it saves Americans money and makes our economy stronger and more competitive. The Energy Savings and Industrial Competitiveness Act acknowledges the political realities of today and has earned support from both sides of the aisle.

If the time for energy efficiency is now, what could go wrong?

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MLP Bill, With or Without Tax Reform

May 1st, 2013

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Comprehensive tax reform is long overdue, but it’s also going to be difficult and may not happen during this, or even the next, session of Congress. In the meantime, we can’t hold up other tax code fixes, especially in vital areas, such as energy. The MLP Parity Act, a fix to our unequal tax code, shouldn’t be delayed just because it doesn’t fix all of the problems with our current tax code.

As it stands now, the government is implicitly telling investors what to invest their money in. Master limited partnerships are attractive investments, passing profits through to investors without being taxed at a corporate level. This appealing financial structure draws in more capital and lowers the cost of capital for projects owned by an MLP. Unfortunately, under our current tax code, qualifying projects are generally oil and gas related – pipelines, extraction, refining or exploration – excluding many types of energy, from biomass to nuclear to wind. As a result, a project such as a wind farm is less attractive to investors and must offer a higher return than a comparable natural gas project.

This bias in the tax code unfairly picks energy winners and losers, incentivizing the types of energy projects that were common in 1981 when master limited partnerships were first created. Although our fuel supply has changed, the tax code has not, leaving clean energy out of the investment pool. While it may not fix all the inequity in our arcane and complex tax code, the MLP Parity Act is a much needed first step towards an even playing field for our energy future.

This piece was originally featured in National Journal.

Telephones, computers, electric vehicles, and other market failures

February 15th, 2013

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By W. L. Leow

In some circles in Washington, DC, the future of electric vehicles (EV) has become as hot a topic as sequestration or immigration reform. Some skeptical journalists and policymakers are rushing to declare the entire electric vehicle sector a mistake or failure at the first sign of difficulties. Their rhetoric is cogent, writing lucid, and numbers seem compelling. At first glance, the fact that Americans bought just 71,000 plug-in hybrids or all-electric vehicles in the past two years might make the EV look like a failure. The emergence of EVs, however, needs to be viewed from the framework of technology adoption and diffusion, rather than raw numbers or road trips, to tell the true story.

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Tough Choices in the Wake of Hurricane Sandy

November 2nd, 2012

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Everyone from Mayor Bloomberg and Businessweek to Bill Clinton and LA Times are linking Hurricane Sandy to climate change. Do we know for certain that this highly destructive hurricane is the result of climate change?

The short answer is: we don’t. There will always be contrary opinions, but when we look across all the weather events of the past 10, 20, or 50 years, the trend is clear. Climate is the average of weather over a period of time, and we’re seeing 100-year floods occurring every 3-20 years. We’re seeing each year become one of the hottest years on record. And we’re seeing more severe droughts more frequently. This has contributed to a rise in sea level across the East Coast, which makes cities like New York and destinations like the Jersey Shore more prone to flooding when storms do hit.

Why should you care? Read the rest of this entry »

Energy Policy after 2012

October 23rd, 2012

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Summary points

  • Thanks to continued partisan gridlock, major congressional action on energy is unlikely after the 2012 elections. However, this could change if there is a deal to address the budget deficit or if one party makes significant gains in seats.
  • Domestic oil and natural gas production will continue to grow under either Barack Obama or Mitt Romney.
  • A second Obama administration would be likely to seek to accelerate the commercialization and deployment of clean energy through a mix of tax incentives, encouraging private financing, and regulation of conventional and climate pollutants.
  • A Romney administration would be likely to focus on increasing domestic conventional energy production by reducing environmental regulation, particularly on coal-burning power plants, and opening more public land to oil and natural gas development. Excluding basic research, government incentives for clean energy would most likely be eliminated.

Introduction

In 2008, the price of natural gas in the United States was roughly $8 per thousand cubic feet (tcf), coal was used to generate more than 47 per cent of all electricity, and there was a consensus among Democrats and Republicans that climate change was real, caused by humans, and needed to be addressed immediately. It seemed only a matter of time before the country adopted a cap-and-trade system similar to one backed by both parties’ presidential nominees.

Four years later, the energy landscape has changed dramatically. Cap-and-trade is on the ash heap of history, and climate change and clean energy have become enormously politicized. The price of natural gas has dropped as low as $2.25 per tcf thanks to the hydraulic fracturing drilling process (fracking) that has given the United States access to more than 500 trillion cubic feet of natural gas and sent domestic coal use into a precipitous decline. That same fracking technology has led to a domestic oil boom, with imports dropping to 42 per cent of use, the lowest level in two decades. Clean energy, particularly wind and solar, also saw a boom in the early years of the Obama administration thanks to the American Recovery and Reinvestment Act of 2009 (ARRA).

The growth in domestic shale oil and gas production seems inevitable. But the broader future of US energy faces much more uncertainty. There are enormous differences in how the two candidates would approach regulation of energy production and generation, climate change and America’s competition in the global clean energy race. Polling shows that these issues will have little impact on the decisions voters make. But they will have enormous implications for the price and source of the energy Americans consume, the success of America’s energy industries and the fate of international efforts to stem climate change.

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Iran Sanctions Could Be a Diplomatic and Political Slam Dunk for Obama

July 3rd, 2012

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By: Robert Walther and Aki Peritz

This piece was originally posted on National Journal.

This past March, the 24-hour news cycle was filled by pundits deriding the Obama administration for its handling of gasoline prices. With gas prices down 15% to $3.42 a gallon, those critics have gone silent. Yet, the EU and US sanctions on Iran that were recently put into full effect are leading some to predict a new rise in prices–just as we head into the primetime of the election year. It might make for interesting headlines, but the facts suggest the sanctions are unlikely to have a significant impact on American gas prices.

Global oil production has been rising at a time that the European economy is contracting and the market has weakened remarkably. Prices dropped to under $80 dollars a barrel last week. While news out of Europe of a bailout deal strengthened the oil sector on Friday, the current low prices will serve to cushion any impacts of Iranian oil curtailment. Also, let’s not forget that Iranian crude exports are already down nearly 40% from last year’s levels—yet this reduced output has not reversed the downward trend of world oil prices. What’s more, the six month waivers granted to China and nineteen other nations will provide an outlet for Iranian crude over the short-term, easing any strains on market. Read the rest of this entry »