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Surprising (and Welcome) Coalition Says to Invest in Energy Independence Ahead of Coming Crisis

As reported by the Environmental News Service WASHINGTON, DC, March 30, 2005 (ENS)—31 national security leaders—From former Democratic Senator Gary Hart and Clinton Chief of Staff John Podesta on the left to Reagan National Security appointees Robert McFarlane and Frank Gaffney on the right are advising President George W. Bush to reduce U.S. consumption of foreign oil through "improved efficiency and the rapid substitution of advanced biomass, alcohol and other available alternative fuels."

In a letter sent to the President last month, the group urges "a major new initiative" that spends $1 billion for alternative fuel production in the next five years, and uses tax incentives to encourage the use of more efficient vehicles, including hybrids, plug-in hybrids, and flexible fuel vehicles.

The letter states, "We do not know today what form a crisis over oil will take, but we know that a crisis is coming - one that could harm the United States." (For more information about Better World Club’s position on Energy Independence from 2002, click here)

The letter and an accompanying report are issued by the Energy Future Coalition, which describes itself as "an ambitious, visionary effort by business, labor, and environmental groups to bridge their differences and identify broadly supported energy policy options..."

The coalition identifies three challenges related to the production and use of energy - the political and economic threat posed by the world's dependence on oil; the risk to the global environment from climate change; and the lack of access of the world's poor to the modern energy services they need for economic advancement. The Energy Future Coalition says it "seeks to connect those challenges with a vision of the vibrant economic opportunities that will be created by a transition to a new energy economy."

The letter explains that with the U.S. having only two percent of the world's oil reserves but 25 percent of the world's consumption, domestic production alone will not meet America's needs. "To reduce the risk of an oil shock in a global market, we must reduce our use of foreign oil," the letter states.

Signatures on the letter represent a star-studded bipartisan array of high level military and political officials. They include:

Admiral William T. Crowe, Jr., former Chairman Joint Chiefs of Staff
John H. Dalton, former Secretary of the Navy Frank J. Gaffney, Jr., President & CEO, The Center for Security Policy and columnist for the Washington Times
C. Boyden Gray, Partner, Wilmer Cutler Pickering Hale & Dorr, and former White House Counsel to President George H.W. Bush Gary Hart, Co-Chair, U.S. Commission on National Security for the 21st Century, former U.S. Senator from Colorado Robert McFarlane, Chairman & CEO, Energy & Communications Solutions, and former National Security Advisor to President Ronald Reagan Vice Admiral Dennis McGinn, former Deputy Chief of Naval Operations, USN (Ret.) John Podesta, former White House Chief of Staff for President Bill Clinton Vice Admiral Richard Truly, former astronaut, former NASA administrator, former Director of the National Renewable Energy Laboratory Admiral James D. Watkins, Chairman of the Commission on Ocean Policy Timothy Wirth, President of the United Nations Foundation, and former U.S. Senator from Colorado R. James Woolsey, former Director of Central Intelligence.

The signers say they believe that hybrid vehicles and alternative fuels like ethanol can substantially reduce U.S. oil consumption but will require "funding at a level proportionate with other priorities for the defense of the nation."

The Energy Future Coalition emphasizes the three challenges in its letter.
• We must reduce the world’s dependence on oil, helping to free consumers from the economic, political, and environmental risks that it entails.

• We must take steps to control the emissions from the burning of coal, oil, and natural gas that are affecting the global climate.

• And we must recognize that helping developing nations to grow can be both a boost for them and in the best interest of the United States. Extending access to modern energy services to poor people around the world can demonstrate American leadership and create new markets at the same time.

One of the most significant barriers to widespread implementation of clean and proven energy-efficient technologies in international markets is the lack of commercially viable and sustainable project financing for energy efficiency projects (EEPs), the report recognizes.

The problem is that energy efficiency projects are unable to access existing funds due to a “disconnect” between traditional asset-based lending to corporations versus cash-flow based project financing to energy efficiency projects.

"No immediate solution is in sight because energy efficiency markets are not developed enough to motivate local banks to invest in setting up an EEP lending infrastructure," the report says.

The coalition proposes the development of an International Energy Efficiency Financing Protocol that becomes the “blue print” for local and regional financial institutions to finance end-use energy efficiency projects in international markets.

A similar problem plagues financing of clean energy projects in both the developing and developed worlds. Projects such as end-use efficiency, large grid-connected renewables, and small-scale distributed generation have high up-front capital costs and high transaction costs, although they offer environmental benefits and relatively low operations and maintenance costs.

To resolve these problems, the coalition suggests that OECD lending guidelines should be revised to acknowledge the public good associated with low carbon and no carbon technologies and their large capital requirements.

"Bring environmental considerations into mainstream decision-making of public and private financial institutions," the coalition recommends, and "encourage public international financial institutions (IFIs) to use the leverage they exert over private financial flows (through their co-financing, risk mitigation, and policy advice) to support environmentally and socially sustainable development."

The financial and political power wielded by members of the Energy Future Coaliton is substantial. Mohamed El-Ashry, CEO of the Global Environment Facility sits on the Advisory Council alongside Chansoo Joung, managing director of Goldman Sachs, and Jamal Saghir, director for energy and water development with the World Bank.

Michael J. Sullivan, general president of the Sheet Metal Workers’ International also sits on the Advisory Council together with Mark Van Putten, president of the National Wildlife Federation.

The Steering Committee includes Frances Beinecke, executive director of the Natural Resources Defense Council; Thomas Lovejoy, president of The H. John Heinz III Center for Science, Economics and the Environment and former chief scientist and counselor of the Smithsonian Institution; Susan Eisenhower, president of The Eisenhower Institute; and Maggie Fox, deputy executive director of the Sierra Club as well as many signatories of the letter to President Bush.

The Energy Future Coalition is funded by the Turner Foundation, the Better World Fund, the V. K. Rasmussen Foundation, the Homeland Foundation, the United Nations Foundation, the Wallace Global Fund, the J. M. Kaplan Fund, the James M. Cox Foundation, the Surdna Foundation, and the Tides Foundation (Changing Horizons Fund). Tides is also the home of the Better World Club Fund.

Read the Article on ENS-Newswire