Yesterday, New York governor and presidential hopeful George Pataki gave a major energy speech. Here’s the nut:

Let’s replace the equivalent of every drop of OPEC oil — 25% of our current consumption — with greater efficiency, greater domestic production, and greater use of petroleum alternatives, and let’s commit to doing it within the next ten years.

He wants to do this without over-prescribing:

I’m not talking about government picking winners and losers, making investments that favor one technology over another. … I am proposing a positive policy of tax and other incentives that lets the market answer "how, what, and where."

First, five initiatives to increase alternative fuels:

First, let’s dramatically reduce the up-front cost and risk of building bio-refineries and other alternative fuel production facilities by allowing companies to immediately expense their capital investment in these projects.

Second, let’s provide transportation fuel producers with a meaningful federal production tax credit for renewables and clean petroleum alternatives;

Third, let’s further reduce the risk with a vastly expanded federal loan guarantee program to help finance alternative fuel plants.

Fourth, let’s leverage the federal government’s huge purchasing power by moving all federal vehicles and offices to petroleum alternatives within the next ten years. And finally, let’s re-affirm America’s standing as the worldwide leader in innovation and technology.

We did it in computer chips with Sematech, now let’s do it in energy by establishing a national Center of Excellence for Alternative Fuels and Vehicle Technologies.

This public/private partnership will leverage corporate America’s R&D efforts with the best minds of American academia to develop the next generation of petroleum alternatives and energy efficiency breakthroughs.

These are followed by a series of regulatory changes and tax breaks to encourage service stations to actually offer the alternative fuels.

And then the vehicles themselves get this:

I am proposing a new Petroleum Reduction Incentive — a sliding scale of production tax credits for new vehicles — credits that increase as each car’s reliance on petroleum decreases, irrespective of what technology is used to achieve that reduction.

Then there’s this, about public transit, which is suspiciously vague:

Let’s incentivize federal mass transit funding formulas so that states and municipalities have a greater impetus to replace their petroleum powered buses with cleaner, more efficient hybrids and alternative fueled models.

And finally, lest anyone mistake him for a dirty commie, he talks up "increased domestic production," though he and everyone else knows that the amount of oil we can produce domestically is negligible in the big picture.

In practice, most of this amounts to subsidizing ethanol and ethanol infrastructure, but I like the car-mileage credit and the transit funding (if it’s real). All told, it’s surprisingly good to hear from a Republican. I hope once the race starts in earnest we get a real competition for who can do the most on energy.

But if Pataki really wants a market-neutral stimulus, he should hop on the cool-kids bandwagon: a carbon tax. (Feebates would be good too.)