It’s pretty clear that drill, baby, drill offers, at best, the relief of a chocolate bar to a mouth full of cavities. While there are many less rotten alternatives to drilling, deciding which alternative(s) to pursue requires a discussion about government’s role in energy policy. Such discussions have no place amid our current election fascination with flag pins, lipstick, elitism, and who has best co-opted the word “change.” So, allow us to offer our top five list.

1.)  Raise the Bar: Why Efficiency Standards Matter
Today, the U.S. ranks last among developed nations for energy productivity (the level of GDP achieved from energy consumed), as noted in a 2007 report from the McKinsey Global Institute. We’re masters at doing less with more.

It took 32 years from the passage of the first corporate average fuel economy (CAFE) standards in 1975 for another increase to be approved. Even that target seems to lack a certain ambition. The U.S. fleet average must reach 35 m.p.g. by 2020. In comparison, Europe has already achieved an average of 44 m.p.g., with the target of of 48 m.p.g. by 2012.

We don’t need a nudge – we need a shove –in the direction of greater fuel efficiency. A report for the International Council on Clean Transportation found that it takes a 15-year cycle for automakers to make and consumers to buy an entirely new auto fleet. Market forces alone do not lead to greater efficiency, nor does regulation with low targets and loopholes. But imagine what our average fuel economy and the Big Three’s stock prices might look like today had America set higher standards and shown the political will to confront SUV loopholes.

2. R&D Support: Show Me the Money
As many pundits have argued, America should invest money into fueling a massive, green energy R&D-olution. Agreed. Yet, two facts must be reconciled:

• Fact 1: Over the last 20 years, federal funding for DOE R&D has fallen across the board. Budgets have been cut for fission, efficiency, fossil, hydrogen, fusion, renewables, as well as electricity transmission & distribution. The 2008 DOE Energy R&D budget is just about equal to the 1984 budget in real terms, while real GDP is 2X higher. It’s an odd way to address our so-called national priority.
• Fact 2: According to the Congressional Budget Office, the expected U.S. budget deficit for 2008 is $407 billion. That figure doesn’t include the Wall Street bailouts, which are estimated to cost hundreds of billions of dollars.

Faced with this staggering debt, how will government fund a green revolution? And if it can, where should money go? See points #3 and #4.

3. Internalize This!
Even with rising gas prices, Americans still do not pay the full environmental price for energy consumed. In an election year, nobody wants to suggest the need for a three-letter word that starts with T and ends with X. The actual experience of numerous European countries that implemented carbon taxes without crippling GDP does not matter. Today, citing the success of Sweden’s 1991 carbon tax in shifting people from oil heating to bioenergy alternatives would likely devolve into accusations of the desire to bring socialism and more IKEA furniture to American homes.

But just suppose that we internalized (via a carbon tax or the cap-and-trade system favored by McCain and Obama) the full cost of our oil addiction. Not only would it provide a financial motivation for people to change their consumption, it would also provide a new source of “dirty” money for Congress. You could credibly develop a spending neutral energy plan, which uses this money to subsidize alternative technologies (plug-in hybrids, fuel cells, and solar car charging stations in parking garages).

4. The Journey to an Oil-Free Existence Begins with Infrastructure Investments
To wean ourselves from our oil dependency, we need to develop super-efficient vehicles for public and private transportation as well as develop fuel alternatives, such as new battery technologies, plug-in hybrids, and second-generation biofuels, (i.e.: NOT CORN ETHANOL).  Government has a role to play in making infrastructure investments and implementing policy to make these options viable. Already, our 100-year old power grid struggles with the current growth in electrical generation – never mind how it would handle the additional strain of electric cars and more solar and wind generation. Absent infrastructure investment, it will be business as usual.

5. Energy Interdependence: Re-Learn How to Play Nice With Others
Diversifying our energy portfolio and reducing our reliance on foreign oil are laudable goals. But the protectionist pandering with “energy independence” is misleading. Even a future with second-generation biofuels and plug-in cars does not mean abstaining from the global marketplace. That is, unless we plan on freezing all energy-related imports and exports.

Energy security must be properly understood as part of larger, global energy interdependence where diplomacy and international cooperation matter. Yes, oil prices have largely risen because the bourgeoning economies of China and India now demand more oil. Still, America uses 70 barrels of oil for every 1,000 people while China uses 5! The prosperity of all nations depends on developing solutions that balance people’s energy needs with environmental concerns. It’s a tremendous opportunity, too, for the U.S. to relearn the game of Follow the Leader.

What Say You?
This top five is by no means a final or exhaustive answer to the question of what role the U.S. government should play in energy policy. Whether you are from a small-town or an urban elite, we welcome your thoughts.

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