Politicians will always have an influence on the stock market, through regulation, tax policy, incentives, and more. This truism is only more certain in energy policy, where electricity markets and transport are highly regulated and the next administration is widely expected to enact some sort of carbon regulation, if not a tax.

This weekend, I heard the head of the Colorado Governor’s Energy Office speak on what the state administration is doing on energy policy (PDF). Our current governor, Bill Ritter, ran on a three-part platform: working to fix Colorado’s healthcare, transportation, and energy policies. Last year, the administration mostly focused on energy, and although healthcare and transportation will get more attention this year, there are already several energy bills on the legislative slate. This is because “Nobody is certain what to do about transportation or health care, but we do know what to do about Energy.” This scenario may also be familiar to residents of California.

Since we do know what to do about energy, do the remaining U.S. presidential candidates? From the news coverage, I have to admit I’m far from certain. My impression has been that most of the Democrats and John McCain among the Republicans have been talking a good game, but repeated mentions of potentially problematic technologies and policies such as “clean coal,” biofuels, carbon cap-and-trade, nuclear power, and even coal to liquids, leave me wondering if even the best of intentions might lead to bungled energy policy.

If I were president …

There is no doubt that energy policy is complex. Nevertheless, energy policy much more tractable than solving our nation’s healthcare crisis, the looming unfunded costs of entitlements such as Medicare and Social Security, or even what to do about the mess in Iraq. In short, I feel I know why Al Gore isn’t running for President again.

It is true that many of the candidates have health care plans as well as energy plans. but until some other unsuccessful presidential candidate reinvents himself (or herself) by trudging around the nation with a slideshow about healthcare, I doubt our next President will be able to do more than apply a band-aid to any of these problems. (I sincerely hope to be wrong on this.)

In contrast, energy policy, while complex, provides clear opportunities for improvement:

  1. Improved energy efficiency provides winners all around.
  2. Strengthening our national grid is essential to large-scale renewable energy development.
  3. If a carbon cap is chosen over a carbon tax, it needs to be carefully designed to avoid rewarding polluters without significantly reducing pollution.
  4. The entire life-cycle of transport fuels needs to be considered to ensure they don’t do more harm than good.
  5. All externalities of transport solutions need to be considered to avoid unintended consequences, such as higher fuel economy encouraging driving and hence contributing to congestion and accidents. We need better transportation systems and smart growth more than we need better cars.
  6. Clean coal” and nuclear are likely to be much more expensive when true costs are taken into account than cleaner options with less active lobbyists.

Admittedly, several of my points are controversial, but they’re less controversial than turning off life support on a brain-dead Florida woman. And they’re orders of magnitude more important.

Grading the candidates

I’m doing this exercise partly for my own benefit; I don’t know how the candidates are stack up against each other, and I still have a caucus to participate in. What follows are my grades of the remaining candidates on each of the seven above criteria. Keep in mind that I give candidates low grades on “clean coal” and nuclear if they support subsidies for these technologies. I assume that the candidates who are not currently talking about energy policy will not attempt to do anything about energy policy.

Democrats:

All of the democrats have put real effort into their proposed energy policies, but only Obama considers it one of his highest priorities. Links are to sources other than the candidates policy statements.

  Hillary Clinton John Edwards Barack Obama
Energy Efficiency B A B
Transmission/Grid C C B
Carbon Regulation B B B
Transport fuels C F B
Smart Growth C D B
“Clean coal” D F C
Nuclear C B C

Republicans:

Rudy Giuliani and Mike Huckabee seem to consider energy independence (a chimera) more important than reducing carbon emissions. Ron Paul shifts the subject to property rights, while Mitt Romney waffles about whether climate change is caused by human action. Given this backdrop, I cannot take any of their energy policies seriously.

While John McCain also emphasizes energy security important, he puts priority on combating climate change. If you are a Republican who cares about this issue, he is the only one likely to take any meaningful action.

Energy Efficiency C Smart Growth F
Transmission and Smart Grid B “Clean coal” D
Carbon Regulation C Nuclear D
Transport Fuels C    

Conclusions:

I’m surprised to find that Barack Obama is the best candidate for the clean energy voter. I started this project remembering the furor he aroused with his support of coal-to-liquids technology, but his subsequent “clarification” that he was only interested in low-carbon coal to liquids seems to have taught him a lesson about transport fuels, and that early misstep may have led to a more comprehensive look at the tricky issues of transport fuels. This may be why he now takes the lifecycle costs of transport fuels seriously, while they aren’t really on other candidates’ radar.

Obama is also the only candidate who explicitly calls energy one of his highest priorities. I can’t say I’m in love with any of the candidates (note the almost total lack of “A” grades). John Edwards earned the sole “A” because he panders towards interest groups. On energy efficiency, he managed to hit one of my hot-button issues squarely, but then he went and blew it by pandering to the ethanol and “clean coal” lobbies.

A major part of Clinton’s platform involves forcing oil companies to invest in renewable energy, an idea that does not fit into my rating schema. I think this is a bad idea, because reluctant investors are unlikely to make intelligent investments. Even without Clinton’s plan, oil companies that understand peak oil will invest in alternatives, and oil companies that do not will decline along with their reserves.

With my discomfort with Obama’s initial endorsement of coal-to-liquids, and Edwards’ habit of pandering to every interest group at the expense of his own coherence, I used to lean towards Hillary. I’m now convinced that Obama has the best grasp of the issues involved.

Republican clean energy voters have a much easier choice: only John McCain is willing to confront climate change.