National Journal: On Energy, Candidates Straddle The Center

Friday, August 8, 2008

(Ronald Brownstein - National Journal)OUTSIDE FORCES ARE DRIVING MCCAIN AND OBAMA TOGETHER ON ENERGY POLICY -- BUT PARTY DIFFERENCES DIE HARD

John McCain has the right idea when he urges an "all of the above" strategy to reduce our dependence on foreign oil. So does Barack Obama when he talks about an "all hands on deck" approach. Neither man has produced an agenda that actually meets that standard, but both are moving in the right direction.

The overriding truth of the energy debate is that the U.S. cannot confront the intertwined problems of foreign oil dependence and climate change if we limit our responses to the solutions acceptable to just Democrats or just Republicans. Only by combining the two parties' priorities -- production and conservation, the development of more fossil fuels and more renewable resources -- can we make progress commensurate with the scale of the challenge.

In their rhetoric, McCain and Obama reflect that awareness. Yet in shaping their agendas, neither has entirely broken from their parties' prejudices. McCain still tilts his emphasis far more toward increased production (particularly of oil and nuclear energy) than conservation or encouraging renewable sources. Obama still stresses alternative sources and conservation.

Yet these differences are narrowing -- though it's difficult to tell amid the rhetorical salvos each side is firing at the other. Unlike many environmentalists, Obama hasn't ruled out increased use of nuclear power. And last week he praised a proposal from a bipartisan "gang of 10" senators that could open to offshore drilling as much as 200 million additional acres in the Gulf of Mexico and off the Atlantic coast. McCain, meanwhile, has edged somewhat closer to Democrats on alternatives. In the Senate, McCain often opposed tax subsidies for renewable sources like wind and solar. But he's proposed some in his energy plan.

Important differences of degree still separate the two men on these issues. McCain, for instance, would go further than the bipartisan plan to permit offshore drilling: He would allow any state to permit drilling off its coastline, while the bipartisan proposal still bars drilling off the Atlantic coast of Florida and from California to Washington state. Obama, in turn, would invest $15 billion in federal funds annually toward researching and subsidizing new energy technology -- far more than McCain envisions.

But the two are not as far apart on these threshold questions as their ferocious campaign conflict would suggest. (It was telling, for instance, that after a few days of Republican ridicule this week, McCain acknowledged that more diligent inflating of tires would, in fact, help reduce gasoline consumption, as Obama has noted.) Obama and McCain have converged in two other important respects. Each wants to use federal procurement to stimulate the market for cutting-edge energy technologies (such as electric cars), the way Washington did for semiconductors through massive purchases by the space and nuclear missile programs. Each also wants to establish a cap-and-trade system that would effectively place a cost on emissions of carbon dioxide and other gases linked to global warming and thus encourage a shift from fossil fuels to alternative energy sources, particularly for generating electricity.

The most immediate of the forces that have narrowed the space between McCain and Obama is growing concern about our dependence on foreign oil (which now provides almost 60 percent of our supply, double the share in 1985). That anxiety is increasing support for exploiting every source of domestic energy production, including oil and gas. But the debate is also being reshaped by a solidifying consensus about the need to reduce the carbon emissions associated with climate change. That concern is prompting more political leaders -- starting with McCain and Obama -- to agree that whatever is done to increase short-term fossil fuel production, Washington's long-term goal must be to speed the transition to a post-carbon energy economy.

"While increases in domestic oil production are possible, they are not where the long-term debate is headed," says Paul Bledsoe, communications director for the nonpartisan National Commission on Energy Policy. "Innovation, low-carbon, clean-energy technologies... are the vision that is ultimately going to win out."

It's at this point that McCain and Obama diverge most clearly. Obama says that in addition to procurement and setting a price for carbon, Washington should deploy a broad assortment of additional carrots and sticks to nurture those new technologies and speed the transition away from fossil fuels. The biggest carrot is Obama's call for vastly greater federal spending on new technologies. His sticks are an aggressive array of federal mandates on industry -- requirements for automakers to indefinitely achieve 4 percent annual increases in fuel efficiency and to make all vehicles capable of running on alternative fuels; for utilities to reduce demand and generate more electricity from renewable sources; and for oil companies to lower the carbon content of gasoline. He's also talked, more fleetingly, about increasing federal support for mass transit and promoting more compact development, which would reduce the number of miles Americans drive annually.

Democrats like Obama believe that without such federal nudges, the energy industry won't abandon billions of dollars in investment in the fossil fuel status quo. But McCain uniformly opposes those ideas. He envisions much smaller subsidies for alternative energy (except nuclear power) and rejects all of Obama's industry mandates. Once a cap-and-trade system places a price on carbon emissions, McCain would mostly rely on the market to cultivate alternative energy sources. "There are better ways to establish markets for many of these things than government mandates," argues Taylor Griffin, a McCain campaign spokesman.

Converging and diverging at different points, McCain and Obama present a complex picture on energy. Each has moved enough toward the other party's priorities that either can be envisioned striking what Bledsoe calls "a very big energy deal that involves climate change and oil security together" in 2009. But the election result still will tilt the needle on any eventual agreement. McCain would accept more government involvement than many Republicans (particularly President Bush) in shaping a post-carbon economy, but not nearly as much as Obama. Obama would rely more on markets than many Democrats, but not nearly as much as McCain. Both parties may be moving toward on an "all hands on deck" energy strategy -- but they still differ on who should be steering the boat.