John McCain's Lexington Project or Energy Plan differs from Barack Obama's by encouraging more nuclear power plants and drilling for domestic oil and natural gas. It focuses on breaking the stranglehold of oil on our economy by relying on battery power to run our cars and trucks. However, there may be little money to do this given the financial crisis plaguing the credit markets and the government's planned $700 billion rescue package.

But there's no money
So what does the financial crisis mean for the McCain and Obama Energy Plans? Everything-- there is simply no money to do many of the things that these plans envision. In my opinion, we should question anything they say when it comes to investing in energy technology or for that matter energy tax incentives to encourage people to invest in and install renewable energy.

Remember, there is only so much money and with the U.S. waging a war in Iraq, Afghanistan and expanding into Pakistan, it's unrealistic to think that either McCain or Obama are going to be giving us money. Unless they are going to raise some by increasing income or corporate taxes.

McCain's Energy Plan
Despite the above, I'm going to critique John McCain's Energy Plan and emphasize what can be done with very little or no money. After all, life will go on and the federal and State government's will continue to provide services and yes, spend our money.

1) Expanding Domestic Oil And Natural Gas Exploration And Production:
Nice idea, but Congress has shown the same inept actions that I talked about in the Elephants in the Energy Plans. The current bill opening up offshore drilling seems to say "Yes you can drill, but." The "but" here refers to how close to shore (50-100 miles form the coast) companies will be allowed to drill. However, the real deal killer or stupidity of the bill leaves it to the States to decide. Don't you love it? The entire country has to be depend on a few States to approve exploring and drilling oil and natural gas. Talk about the tail wagging the dog." 

Critics of drilling offshore or building large energy infrastructure often complain that it will take years to see offshore oil or natural gas have an effect on supply. They are right. Energy development takes lots of money and a great deal of time. The time element is spent fighting opponents or duplicative environmental reviews at the Federal and State levels.

We have a similar situation with natural gas. Fine idea to drill and build more natural gas pipelines such as the much talked about Alaska Natural Gas Pipeline. However, this project is huge and challenging. It will stretch approximately 1,715 miles (2,760 kms) from Prudhoe Bay, Alaska through the Yukon territory and northeastern British Columbia to the BC/Alberta border near Boundary Lake, and will include new build and certain existing infrastructure within Alberta.

It thas the following characteristics:

-Wlll cost about $30 billion to construct- I think that is low, more like $40 billion
-Will be completed in 2018
-Even if approved by US and Canadian regulators, much depends on whether Exxon Mobil, BP and ConnocoPhillips want to extract that natural gas and send it to southern markets.

Aside from the chalenges of laying a 48-50 inch pipeline, there are regulatory challenges. Governor Palin and the State of Alaska prefer TransCanada to build the Alaska Natural Gas Pipeline. Also Britishe Petroleum and ConocoPhillips announced formation of Denali, a natural gas pipeline project proposal to build and operate an Alaska natural gas pipeline system. Denal's application is being reviewed by federal energy officials and would compete with TransCanada's proposal. Some people may also think that an Alaska Natural Gas pipeline is just a concept project. We disagree. Both TransCanada and Denali are moving forward and there has progress on the proposed Alaskan Natural Gas Project.

Governor Sarah Palin of Alaska announced that the TransCanada Alaska would be the preferred applicant for the pipeline project under Alaska Gas Incentive Act (AIGA. The state Legislature in August 2008 approved legislation to issue the AGIA license to TransCanada Alaska and on Aug. 27, Gov. Palin signed the legislation to issue the license to TransCanada Alaska.

The Alaska Gasline Port Authority is also the sponsor of an Alaskan LNG project that contemplates delivering Prudhoe Bay gas to Valdez by pipeline, has added new partners and the state is assisting AGPA with project development.

Senator McCain, please make sure that the natural gas from the Alaska Natural Gas project finds its way back to the United States and is not liquefied and sent to Japan by some liquefied natural gas terminal project. Also please also resolve the competition to build the Alaska Natural Gas Pipeline project between TransCanada and the Denali Group. This is a very large project and both companies may have to pool their resources to mitigate financial risks. Also and more important, the competing proposals pits the Federal government potentially against the State of Alaska who favors TransCanada. We can't afford extensive litigation and delay.

2) Taking Action Now To Break Our Dependency On Foreign Oil By Reforming Our Transportation Sector
John McCain's Clean Car Challenge. John McCain will issue a Clean Car Challenge to the automakers of America, in the form of a single and substantial tax credit OF $5,000 for the consumer based on the reduction of carbon emissions.

With a $700 billion bailout in the wings, how will you or Senator Obama do this? Forget it. Forget about Drill baby drill when it comes to oil. Instead substitute it wth "Buy baby buy".

Use the federal government's enormous purchasing power to buy cars and trucks (flexible fuel, hybrids, fuel cells, electric) for government use. Focus on fleet vehicles in the Federal government and Department of the Defense. There is no reason why police, utility, the the FedEx's of the world should not be driving hybrid or plug in vehicles.

Take into the consideration the entire system, including how to incent businesses to build alternative energy fueling stations, side by side with gasoline pumps.

 

3) John McCain Will Propose A $300 Million Prize To Improve Battery Technology For Full Commercial Development Of Plug-In Hybrid And Fully Electric Automobiles.
Rethink this. First, I don't think this is enough given the existing loan guarantee program of $38 billion that the Bush Administration is currently making available. Second and more important, is this limited to U.S. companies? I think we have to be thinking about building a U.S. industry. Frankly, I'm not too excited about changing one master (oil producing nations) with another foreign country or company even if it was an Improved Battery Technology provider.

4) John McCain Supports Flex-Fuel Vehicles (FFVs) And Believes They Should Play A Greater Role In Our Transportation Sector.
Put your money where your mouth is. Commit the federal government and Defense Department to purchase up to 50 percent of these vehicles in 10 years. See my comments on item 3.

5) John McCain Believes Alcohol-Based Fuels Hold Great Promise As Both An Alternative To Gasoline And As A Means of Expanding Consumers' Choices.
Agree with you about removing subsidies on corn-based ethanol and getting these folks away from the trough. This is damaging becasue it gives false hope to folks who may think that one technology will save us. Alcohol based fuels may be regional fuels, that is close to the corn belt.

6) Investing In Clean, Alternative Sources Of Energy
John McCain Believes That The U.S. Must Become A Leader In A New International Green Economy.

Forget about investing on more research and development. Create the market that will attract private investment. Use the Federal government's enormous purchasing power to buy these products and subsidize US green technology. How about installing solar panels on the roof of every federally owned and leased government building.

Also, before you put another $2 billion for Advancing Clean Coal Technologies, see what is going on with the current round of energy loan guarantees for fossil energy that the Bush Administration has implemented via the Department of Energy.

7) John McCain Will Put His Administration On Track To Construct 45 New Nuclear Power Plants By 2030
If you build one third the number of nuclear plants, you'll be lucky. The ones you do build will not be close to where the power is needed. You'll have to find a way of building interstate power lines to get that power to where it's needed.

Also, where are you going to find the nuclear engineers, scientists and saftety professionals after 30- 40 years of not building a new nuclear power plant in the United States. You'll have to form close associations with universities to attract and educate nuclear engineers and scientists. This is doable and in fact the Department of Homeland Security and National Science Foundation are proving scholarships to attract students into cyber security.

8) John McCain Will Encourage The Market For Alternative, Low Carbon Fuels Such As Wind, Hydro And Solar Power by implementing permanent energy tax credits
Better late then never but you don't have the money to do this. To really do this you need to establish and Federal Renewable Energy Portfolio. Look to States like Texas and California for leadership. But read the DOE Wind Report closely. It's the lack of adequate interstate power lines that will thwart this goal. You can get around this by building those solar and wind energy projects as close to where the power is needed. Like on the roofs of homes, builidings and all federal government building.

9) Protecting Our Environment And Addressing Climate Change: A Sound Energy Strategy Must Include A Solid Environmental Foundation
John McCain Proposes A Cap-And-Trade System That Would Set Limits On Greenhouse Gas Emissions While Encouraging The Development Of Low-Cost Compliance Options. A climate cap-and-trade mechanism would set a limit on greenhouse gas emissions and allow entities to buy and sell rights to emit, similar to the successful acid rain trading program of the early 1990s. The key feature of this mechanism is that it allows the market to decide and encourage the lowest-cost compliance options.

Just do it.

10) Promoting Energy Efficiency:
John McCain Will Make Greening The Federal Government A Priority Of His Administration. The federal government is the largest electricity consumer on earth and occupies 3.3 billion square feet of space worldwide. It provides an enormous opportunity to lead by example. By applying a higher efficiency standard to new buildings leased or purchased or retrofitting existing buildings, we can save taxpayers substantial money in energy costs, and move the construction market in the direction of green technology.

Like this alot. Make sure to allocate enough money in agency budgets to make this a reality. Also include this in the President's Management Agenda and grade all agencies (Green, Yellow and Red) as is done now in areas such finance and accounting, e-government, IT security, etc.

11) Addressing Speculative Pricing Of Oil
You may be able to reach the traders doing business in US Exchanges, but not those in London, Japan and other overseas markets. This is a complex problem also for natural gas and electricity trading. So you will have to convince those countries and others in the Middle East to regulate speculators in oil, gasoline, natural gas and electricity.

What we would do first?
In our article that examined Barack Obama's Energy Plan, i listed the following actions, but that was before I realized that we were going to be an additional $700 bilion to stabiize credit markets. The first two are new

• Begin negotiations with the Iraqi government to pay the United States for supporting, protecting and training Iraqi security and armed forces since 2003. These payments can be taken in cash or in oil shipments.
• Encourage and build more cogeneration plants that would produce power and use the excess steam to heat and cool buildings.This has been done in many places. The New York City Steam system is a great example. Cogeneration plans would site power plants closer to where they are needed and avoid having to build more interstate power lines.
• We would put smart meters and demand response programs in place to give every electricity consumer direct control over what they are willing to pay for electricity. Then educate them along the lines of the Anti-Smoking ads except make it cool to smart to save electricity.
• Give consumers energy loans and grants to encourage them to install energy efficient technology and solar and wind energy on the roofs of their homes (single and multi-family, businesses). Don't think this is affordable at least in your first term.
• Reduce comflicts when building high voltage power lines to move solar and wind energy in remote areas to areas that use a lot of power.
• Talk to Canada and see if you could somehow expedite the construction of the Alaska Natural Gas Pipeline.
• Reduce the demand for gasoline and oil via public transportation subsidies and establishing a 4 day work week for federal agencies and encouraging work at home programs. Encourage State and City governments to do the same.
• Build an automobile industry that replaces the gasoline driven car with electric vehicles using the federal government purchasing power. Commit that a certain percentage of cars and trucks purchased by the Federal Government and especially the Department of Defense have to be Flexible Fuel, fuel cell, battery or electric cars.

Gaming the Energy Plan
Trying to develop and implement an energy plan ultimately comes down to finding the right mix of energy technologies to achieve the right prices and environmental quality. To see what we mean, you get to play being an Electricity or Environmental Czar (depending on your point of view) using an electricity calculator for the United Kingdom that we found on BBC Online.

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