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Offshore Drilling: Room for Compromise in Pursuit of Clean Energy?

It goes without saying that the nation should legislate no new commitments to offshore oil drilling without first getting to the bottom of the colossal BP disaster in the Gulf of Mexico.

That means investigators, lawmakers, and the public at large need to really grapple with the Deepwater Horizon mess.  

In this respect, lawmakers need to understand what technical things went wrong and get a grip on what regulatory failures played a role. But beyond that--and hardest--all of us need to take from this debacle a little more serious appreciation of the unavoidable costs of our oil addiction. Along these lines, it remains quite mystifying that President Obama only last weekend began to tie what Brad Plumer over at The Vine calls “the nasty side effects of our fossil fuel addiction”--from massive spills to the risks of catastrophic climate change--to a broader case for energy reform and moving the country away from oil. This is a teachable moment after all.

Which brings us to the drifting Kerry-Lieberman climate and energy bill, now stuck in limbo in the Senate, as reports Darren Samuelsohn of ClimateWire. 

Strange to say, the much-debated offshore drilling provisions in Kerry-Lieberman represent a critical opportunity to act on the current teachable moment and tie further fossil fuel use once and for all to energy system transformation. 

How’s that? Well, providing appropriate safety and regulatory provisions can be fashioned, the Senate bill’s drilling title represents an important opportunity to make a necessary point as well as generate substantial revenue to drive the energy system innovation needed to help the nation decarbonize its economy and wean itself from fossil fuels.

To be sure, it’s unclear appropriate safeguards for further drilling can be designed and equally unclear whether the Kerry-Lieberman bill will actually move. But if the legislation does proceed, any concessions on drilling in the bill should be strongly tied to a hard requirement that any lease revenue associated with offshore drilling along the nation’s coasts be invested directly in energy efficiency and clean energy innovation. 

Such a link, as it happens, was first proposed by a 2009 GOP plan to put hundreds of billions of new oil and gas royalties into a trust fund to accelerate clean energy innovation that would help make clean energy cheap and truly help wean America from its carbon dependency.  

But at any rate, such a stipulation makes powerful practical as well as symbolic sense. Data from the U.S. Energy Information Administration show that, in terms of their oil and gas yield, "access to the Pacific, Atlantic, and eastern Gulf [offshore] regions would not have a significant impact on domestic crude oil and natural gas production or prices before 2030." However, as Jesse Jenkins and Yael Borofsky of the Breakthrough Institute have noted, what could make a difference would be to invest the tens of billions in potential federal revenue from oil and gas royalties in efforts to accelerate clean tech innovation and deployment and so help America develop the affordable clean energy sources needed to truly diversify its energy mix and secure our freedom from oil. In short, it’s not so much the oil and gas itself that would make a difference in addressing the nation’s energy needs but the potential associated revenue, which would help to address the nation’s serious need to find the wherewithal to apply from $15 billion to $25 billion a year, each and every year, to clean energy innovation activities.

And if such a trade of drilling for cleantech revenue sounds mercenary, I plead guilty out of desperation. After all, as I noted during a panel session at last week’s compelling Brookings forum “Energy and Climate Change 2010: Back to the Future,” the nation has not done so well with providing for sufficient energy innovation, either through the regular appropriations process or through the allotment of cap-and-trade emission permit revenue within its “comprehensive” climate bills. In the former case, Congress simply comes up short on the dollar levels; in the latter case it keeps “giving away the store” with massive allowance giveaways that severely depress the stream of revenue available for public needs like clean energy innovation. Even now, the Kerry-Lieberman outline will hand some 37 percent of its offshore drilling lease revenue over to coastal states as a disastrous brand of ill-founded “revenue sharing.”

In sum, we desperately need a set of major, dedicated revenue sources for clean energy R&D and deployment and offshore drilling revenue looks like one top candidate. Post-Deepwater Horizon, linking any sort of expanded drilling to clean energy transformation looks is a no-brainer that should be insisted upon.