Friday, September 5, 2008

Put the Pedal to the Metal for Innovation in Energy

Here's today's blast at the Washington Post, which I invite you to borrow from and write your own missive to the the only newspaper (so far as I know) ever to have a Sousa march written in its honor.

Dear Sir(s):

The editorial "Stepping Off the Gas" (Washington Post, 09/04/08, A14) accurately analyzes the possible effect of the laws of supply and demand as the price of oil rises and falls. It makes a fatal error, however, in assuming that alternative fuels can only be financially feasible if State-subsidized — which is to say, not financially feasible at all.

On the contrary. There are technologies currently in development that have the potential to provide the United States, even the world with alternative energy sources at a substantially lower cost than fossil fuels. Waste-to-energy conversion, solar power, even hydrogen (the most common element in the universe) are all technically viable at this time. The "trick" right now is not how to do it — they know how — but to bring the cost down by improving the efficiency of the technology.

By engaging in alternative energy development on the scale of the Manhattan Project (but for peaceful purposes), the United States could quickly develop financially feasible energy sources that do not rely on fossil fuels or feed grains. Further, development should not stop at just one viable fuel, but a number, so that neither individuals nor countries are ever dependent on a single source of fuel.

To make certain that every citizen benefits, yes, let the State fund research and development through tax credits and grants repayable if the line of research pays off. Then make the royalty-free patents available only to companies that have significant worker and consumer ownership with the vote, and which pay meaningful dividends and offer rebates in the event of "windfall" profits.

Once a particular technology proves feasible, the necessary upgrading can be financed by discounting loans at the Federal Reserve, but only if the financing so obtained results in increasing the base of worker and consumer ownership, not in increasing the ownership stake of the already-wealthy — or in bailing out failed gamblers such as Bear Sterns. Using the Federal Reserve to finance genuinely productive projects such as energy development is an application of principles developed in a proposal called Capital Homesteading for Every Citizen, from the book with the same title.

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