On Monday night, President George W. Bush gave his seventh and final State of the Union address (eighth if you count the inauguration speech back in 2001). But before I continue, I would like to issue the disclaimer that this weblog is not designed to be an in-depth critique of our president's speech. There are plenty of other bloggers out there that are providing that. Instead, I wanted to comment on one particular section of the speech — the alternative energy section. Especially given that this subject has been receiving increasingly more air time in recent State of the Union addresses. Two years ago, the phrase "addiction to oil" was quickly adopted into the American vernacular as GWB acknowledged spiking oil prices and the urgency of reducing our dependence on it. In last year's speech, with a simple acknowledgement of the risks associated with releasing greenhouse gases into the air, the words "climate change" prompted the buzz for 2007. And for the grand finale of his presidency, on Monday night, new concepts such as "carbon sequestration" and "advanced battery technologies" entered the mix. If history is an indicator those concepts will become mainstream soon enough. I was largely disappointed with the 2007 Energy Bill, as in my opinion, it will only help accomplish a mere fraction of what it should. I am hopeful that the next energy bill will be more all-encompassing.
Carbon sequestration is the basis of our next-generation power plant. Indeed, with this technology, all CO2 emissions from the burning of fossil fuels will be captured and buried beneath the ground, and thus less likely to contribute to the greenhouse blanket in our atmosphere. A prototype of such a plant is currently in the works, and we can only hope to see government funding continue to pour into such projects. For a closer look at this prototype, dubbed "FutureGen," click here.
Energy storage technologies will also need to be advanced as the clean energy revolution progresses. With the continued opining of the hybrid vehicle from our government, it only makes sense that players in the energy storage sector are clamoring to come up with improved batteries for hybrids. Additionally, the 150 year-old lead-acid technology that has long dominated the battery market by companies like Exide Technologies (XIDE) and EnerSys (ENS) are now facing competition by means of lithium ion technology, which is lighter, longer lasting, and more environmentally friendly.
So while many of our politicians are championing themselves as being "eco-friendly" and want to be the ones known for advancing the alternative energy sector, the reality is that we are still far behind. All one needs to do to corroborate that is to look overseas, as much more business in the sector is being done in the European Union and China. By means of feed-in tariffs and generous production tax credits, proven technologies like solar and wind, respectively, are gaining much more traction there than in the United States. Indeed, the solar sector enjoyed a banner year in 2007 almost exclusively because of what solar companies accomplished outside of U.S. borders. We have already discussed this topic ad nauseum at The Panelist, so I must issue another disclaimer here to say that this article is also not exclusively about how America needs a more progressive government, and we will be running in place until that happens, yada yada yada.
Unless you have been living underneath a rock in recent times (or are reading The Panelist for the first time), you have noticed that the American dollar is in free fall. When I was in college in the mid-90's, I occasionally took the one hour drive east from Ann Arbor, MI to Windsor, Ontario to visit the Canadian casinos that apparently had no qualms about taking money from people as young as age 19. My money was usually (okay, always) gone after traversing back and forth between the roulette and blackjack tables, but it was reassuring to know at the end of the night that I actually only lost approximately 65% of what I had originally set out to spend. Today, there would be no difference. Additionally, not too long ago (although it seems like forever), the greenback was stronger than the euro. The dollar's rapid decline has given foreign dictators like Iran's Mahmoud Ahmadinejad and Venezuala's Hugo Chavez more leverage in lobbying to detach their crude oil exports from "that worthless dollar."
So, amidst a declining currency, massive budget deficits, entanglement in a war that is going nowhere, and now on the brink of recession, is America slipping in its place as the premiere global superpower? I never supported us going into Iraq and turning that country upside down, which is a large reason why we are in our current predicament, but contrary to what a lot of people believe, I would argue that no, we are not "slipping." We have been in crisis times like this before. I say that we are simply allowing the rest of the world to catch up.
I wouldn't say that that is necessarily a bad thing either. America has long been advocating the benefits of globalization, and in a truly global world, there is no hegemony from one country. We cannot expect to maintain the best of both worlds forever. In this new "global planet" that we have established, the European Union and China are earning their rights to be labeled "superpowers" too.
Okay, so back to alternative energy. The progress that the sector has made in two short years is stunning. And the potential that is still yet to be tapped is 20x greater. In a global world the superpowers have a chance to lead the charge against a global cause that is far more threatening than any war, budget deficit, or declining currency. That global cause is global warming. By creating a business climate that is favorable for the advancement of the sector, the European Union has so far done its part to lead the charge. China has a plan in place to do so. So why can't we?
Disclosure: I do not own shares of XIDE or ENS.
Photo:Fabio Gava, Creative Commons, Flickr