These two responses to the State of the Union address are far from predictable! Investor's Business Daily is a new voice on PHEVs from the business community. This editorial abandons the ecumenical "we support all alternative fuels" perspective to say that the planned federal program tilts in the wrong direction and links the relative political power of ethanol vs. electricity to divisions among car-makers. (We'll excuse the editorial's misunderstanding of battery issues.)

Illustrating the breadth of the coalition supporting PHEVs are two blog entries from the The Discovery Institute, the Seattle-based think-tank that is well-known for sponsoring publications and advocates for "Intelligent Design." (See the FAQ: http://www.discovery.org/­csc/­topQuestions.php.

Discovery has become interested in PHEVs. Last June, the Institute's Cascadia Center hosted a transportation conference on the Microsoft campus featuring James Woolsey, Roger Duncan, Andy Frank and Felix Kramer http://www.calcars.org/­news-archive.html. Now Discovery Institute founder and president Bruce Chapman, who is a former director of the United States Census Bureau, a past American ambassador to the United Nations Organizations in Vienna, Austria, past member of the Seattle City Council and was Washington State's Secretary of State, expresses first his optimism, then his disappointment about the President's speech. He goes beyond most advocates in his aggressive call for a federal commitment to "step up the pace" with a commitment to purchase 50,000 PHEVs. He concludes by in effect urging the President to take over and accelerate the work of Plug-In Partners to get production PHEVs a year from now.

EDITORIALS & OPINION
INVESTOR'S BUSINESS DAILY
Just Plain Fuelish
Posted 1/25/2007
http://www.investors.com/­editorial/­editorialcontent.asp?secid=1501&status=article&id=254621504525068&secure=9

Conservation: America already has the technology to cut its guzzling of gasoline. Hint: It's not ethanol. And it's Toyota, not Archer Daniels Midland, that's showing the way.

President Bush's State of the Union pretty much covered energy. Clean coal, nuclear power, fuel economy standards, plug-in-hybrids, biodiesel, solar and wind power, ethanol - all were mentioned as ways to wean us off imported oil.

But some got more emphasis than others, none more than that of "renewable and alternative" fuel. The president proposed that the nation's gasoline be blended with 35 billion gallons of the R&A stuff annually by 2017, or seven times the current amount.

As a practical matter, he's calling for a sevenfold increase in the production of ethanol. At the current subsidy to refiners of 51 cents a gallon, this would cost the taxpayers $17.9 billion a year.

By now, credible economists and scientists have debunked the myth that ethanol can play anything more than a small supporting role in the energy-security mission. Ethanol has less power per gallon than gasoline. It can be produced profitably only with fat subsidies. Making it from corn (the only current source in this country) consumes so much other resources that the net energy savings are, by some accounts, nonexistent. Ethanol from cellulose - plant stems, basically - would be more energy-efficient to produce. But no commercially viable method has yet been found.

So why, with so much going against it, does the ethanol dream refuse to die? And why did an existing technology already in use - gas-electric hybrid vehicles - get mentioned only in passing?

One answer is political. It could be seen in the glee with which Iowa Sen. Charles Grassley greeted the president's pitch for a 35-billion-gallon alternative fuel mandate.

Grassley looked at that point like the happiest human being in the chamber. There is a well-organized and influential ethanol lobby in this country, led by corn farmers, food processors such as Archer Daniels Midland Co. and politicians such as Grassley.

Hybrid technology doesn't have this kind of lobbying clout. Hybrids get some help from the tax code, but subsidies don't come close to those for ethanol. Why? Their support is more diffuse, and the company most responsible for their popularity is Japanese.

Plenty of people are interested in hybrids, and automakers - led by Toyota - are coming out with more hybrid models all the time.

On the horizon are plug-in hybrids, whose batteries can be charged from a wall outlet as well as by power generated from the gasoline engine. This technology could produce huge savings in gas consumption without a drop of ethanol; even today's hybrids produce fuel efficiencies on the order of 20% to 30% over comparably powered conventional models.

What keeps plug-ins from taking off is the lack of a safe, powerful battery that can be fully drawn down and recharged (current hybrid batteries get drawn down only partially). Plug-in batteries need to do the same heavy lifting done by lithium-ion batteries in laptop computers and other portable devices. The trouble is that lithium-ion batteries can overheat and ignite without warning.

But we can see one big difference between the hybrid battery challenge and the push to mainstream ethanol. In the first case, businesses are putting mostly their own money into hybrid technology.

In the second, we're talking about pure subsidies. The ethanol boom is due to tax money - not market demand or good science.

I Probably Will Have my Socks on After the Speech Tonight http://www.discovery.org/­blogs/­discoveryblog/­2007/­01/­i_probably_will_have_my_socks.php Posted by Bruce Chapman on January 23, 2007 11:53 AM

I know a little about what is likely to be in the president's State of the Union (SOTU) address and, for what it is worth, I suspect the speech will be well received as principled, yet responsive to the supposed "bipartisan" atmosphere of a Democratic-controlled Congress. I personally expect to be pleased, but I don't expect that the energy portion of the speech will live up to economic adviser Al Hubbard's prediction that it will "knock your socks off." Not my socks, anyhow.

Energy is a subject we have covered extensively at Discovery Institute's Cascadia Center in recent years. (See today's Seattle Times op-ed http://www.discovery.org/­scripts/­viewDB/­index.php?command=view&id=3875 by Steve Marshall, who is a new senior fellow of the Cascadia Center, as well as retiring president of the Seattle Municipal League, and Bruce Agnew, chairman of the Cascadia Center.) If the president's speech acknowledges the need to reduce dependence on gasoline and recommends a number of options for doing so, we at Discovery will all applaud politely. One of those options is the plug-in hybrid vehicle, using batteries to extend gas mileage several-fold. More polite applause. After all, plug-in electric hybrids (PHEVs) can sharply cut U.S. and world gasoline usage and lower air pollution world wide, and that can start to happen within in as little as a year, and then accelerate. Our national security situation starts to improve the moment we let it be known that we are going to stop subsidizing international opponents such as Iran and Chavez' Venezuela.

But here's our concern. The U.S. Government is really past the time that pointing to the promise of plug-in hybrids is an adequate response to the opportunity available. Research money is fine, but we need action. Unlike other technologies that require several years to implement, plug-in hybrid technology is far enough along that the U.S. Government could jump start it with the expedient of an Executive Order (EO). No Congressional action is needed. The EO would direct the General Services Administration and the Postal Service to provide a purchase promise for some share of the 100,000 or so vehicles the federal government buys each year--providing specs that dictate acceptable plug-in hybrid technology. The purchase order for the federal fleet could be matched manifold by state and local governments that wanted to join in doing something dramatic and immediate to cut hydrocarbon emissions.

Such an order would give Detroit assurance that auto and truck manufacturers could start production of PHEVs very soon, perhaps even by the end of 2007. We believe that they are certainly close enough to needed improvements in lithium ion batteries to move into production before President Bush's term ends. So, if the domestic auto industry indeed is awake to the opportunity--and recent announcements by General Motors and Ford suggest it is--then this represents a huge chance for it to recover its American and world market. If, after a year, Detroit can't meet the U.S. Government specs, let someone else try--say, in Japan. Helping struggling U.S auto manufacturers is a nice byproduct of what we suggest, but the main idea is to get the next generation of cars to use less fuel, and soon.

Unfortunately, I don't expect PHEVs to receive a priority in the President's speech comparable to its importance. (I hope I am pleasantly surprised.) Perhaps the institutionally cautious hand of OMB is holding back the president's staff on this issue. Regardless, unless more imaginative minds can prevail in coming weeks, efforts to gain speed on this issue will depend on Congress. We have seen serious interest so far from-among others--Sen. Sam Brownback (R-KS), Sen. Joe Lieberman Independent D-CT), and Evan Bayh (D-IN), and, in the House, Rep. Jay Inslee (D-WA).

To fellow conservatives who suggest that the government should just let the free market lead in this field, I would point out that reducing gasoline dependence is a national security and economic independence issue. Further, we are not suggesting some new subsidy program, only targeted use of the government's existing purchasing power to make a desirable transportation transition. The whole federal fleet need not be enlisted, either, just enough to goose Detroit into faster action. Once Detroit is fully engaged, the private sector market will respond.

And, to repeat, the president can make this happen himself. He and his aides should consider that PHEVs are likely to be his most propitious energy choice, the one he can most likely bring to fruition during what's left of his term of office. Pursue the others, of course, but step up the pace on PHEVs.

Be bolder, Mr. President.

http://www.discovery.org/­blogs/­discoveryblog/­2007/­01/­my_socks_were_not_knocked_offb.php My Socks Were Not Knocked Off--But... Posted by Bruce Chapman on January 24, 2007 7:44 PM

We had high hopes when Al Hubbard, the President's economic adviser, predicted that the energy section of the State of the Union address would "knock your socks off." Well, it didn't live up to that description, did it? Noting pre-speech leaks yesterday (see below) I predicted that "polite applause" would be the proper reaction, nothing more.

However, this morning the White House followed up with an Executive Order-which was the kind of action we have been suggesting-and the EO does, after all, direct the Federal Government to "Reduce Oil Consumption in Fleet Vehicles. The President...has directed Federal agencies to purchase plug-in hybrid vehicles when commercially available."

There are also directives related to making use of alternative energy and renewable power. But our emphasis in the energy issue has been plug-in hybrid vehicles (PHEVs) because the technology is already close to production quality. Ford has a car, the Edge, that the company had touring around the Capitol yesterday. GM has the Volt, though it's still in the mock-up stage; that is, the thing can't run yet.

The Ford Edge

Ford apparently spent $2 million to build the Edge. That is not surprising. It must have cost a pretty penny to custom-make the first television, after all. To get the Ford or GM product from the custom built stage to assembly line production-and in the process lower prices for consumers-will take many and varied inputs. Among them is the prospect of certain customers. That's where the government comes in.

We note that the Executive Order does not direct the federal agencies to offer the car manufacturers government purchase of a certain number, only "to purchase plug-in hybrid vehicles when commercially available." That leaves a pretty big loophole. How much more impressive it would have been to say, we will buy the first 50,000 plug-in hybrids as soon as they become available. (The federal government purchases about 100,000 non-defense vehicles a year, so this would be a reasonable, but strong promise.) Anyhow, specificity would have been more impressive.

Can the White House start getting specific now with the GSA and the Postal Service? Could it also dispatch representatives to the various state capitals and city halls recommending that they make comparable state and local purchase commitments? Shouldn't the state of Michigan be first in line? Imagine the prospect of various combined levels of government pledging purchases that would fully justify Detroit's going into plug-in hybrid production as early as a year from now.

Despite these reservations, my applause for the energy program-as measured by one of the Frank Luntz applause meters that someone was probably using on test audiences last night-is registering more enthusiasm the more I learn about the President's intentions.