While it is becoming obvious to many economists that the massive bailouts and stimulus programs of 2008 and 2009 helped us avoid another Great Depression, economic growth is slipping and our unemployment crisis remains. One of the root causes of America's economic slump is our inability to compete in the global economy. America has many competitive advantages: immigrants, financial resources, freedom, creativity and our university-based research institutions, to name only a few. In the long run, we must translate our brainpower into the most sustainable economy on the planet -- one that uses labor, energy, materials, capital and natural resources as efficiently as humanly possible. The Obama Administration seemed to get this idea and integrated it into their economic stimulus package. Now, here in New York, gubernatorial candidate Andrew Cuomo has demonstrated the same deep understanding of the centrality of energy to New York State's economic revival.
In the past several weeks, I have been asked to review the Cuomo campaign's energy analysis. The very clear and concise "Power New York" was recently released by Attorney General Cuomo. I suppose I am as easily flattered as the next guy, and so I was delighted when they accepted some of my suggestions. I think it's to the credit of the Cuomo team that they consulted with a number of people outside their campaign and crafted a thorough and persuasive analysis.
The report begins by observing that:
"New York's energy policy must meet the interrelated goals of providing affordable and reliable energy, improving our environment and creating jobs and economic growth through energy policy as we transition to a more efficient, lower carbon and cleaner greener energy economy"
"Power New York" details a careful and balanced agenda for energy that focuses on the scope of the state government's authority to improve energy efficiency and the use of renewable energy. While a great deal of energy policy is controlled by national governments and global corporations, there is still an important role to play for state and city governments, local communities and individual citizens.
Andrew Cuomo's energy policy reads like a user's manual on how to accomplish a state-level energy transformation. It focuses on energy efficiency, more efficient transmission of energy through smart grid infrastructure and renewable energy. In addition, he takes on the confused and wasteful New York state energy bureaucracy. The inefficient regulatory and administrative processes at work in New York's energy supply are part of the massive, systemic dysfunction within New York's authority laden bureaucracy. Cuomo seems determined to fix this problem.
Energy efficiency is the low hanging fruit of the state's energy problem. The Cuomo plan identifies several areas that are well within the state's authority to change:
This report does a superb job of detailing and explaining how New York gets its energy and how our energy system could be improved. Of course, nothing is perfect, and even this policy statement has some flaws. The most significant problem is that it continues the discussion of drilling for natural gas near New York City's water supply. To be sure, the policy is that "any drilling in the Marcellus Shale must be environmentally sensitive and safe." The problem is that under current technology no drilling can guarantee that our water supply would not be threatened. This entire discussion should be taken off the table. New York's water system is a rare and an essential natural and engineering wonder. If the Gulf oil disaster has taught us anything it should be that no technology is fool proof and the potential for catastrophe should be a primary consideration in drilling for energy, not a secondary one.
Politics, of course, is the art of the possible, and this small flaw should not be allowed to distract attention from this exemplary piece of policy and management analysis. While well-research and carefully considered policy analysis is no guarantee of real-time, on the ground public programs, it is a necessary and important first step.
The goal for New York and for the United States is to reduce the proportion of our GDP devoted to the cost of energy. According to the U.S. Energy Information Agency, energy expenditures as a percentage of GDP stood at 8% in 1970 and peaked at nearly 14% in 1980. As the economy expanded under Bill Clinton it declined to about 6% at the turn of the 21st century but has grown steadily since then to around 9% today. Reducing this number is a key element our nation's and our state's ability to compete in the global economy. Both President Barack Obama and Attorney General and gubernatorial candidate Andrew Cuomo understand and are prepared to act on this fundamental fact. How about the rest of the political establishment?
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