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Transition 2012

A guide to foreign policy and the 2012 U.S. presidential transition.

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Renewing America Watch: U.S. Gas Prices and Solar Tariffs

by Toni Johnson
March 28, 2012

A solar power plant on the outskirts of Dunhuang, Gansu province China June 10, 2011. (Courtesy Reuters)


This week on highlighting interesting stuff related to the campaign from our sister project, Renewing America, which looks at six domestic issues that could harm projection of U.S. power internationally, we will start with a post  from CFR’s Michael Spence.

With gas prices gathering strength as an issue on the campaign trail, Spence sees little sense in recent news coverage blaming the Obama administration for the problem and says the current sentiment has to do with failing to educate voters on the challenge of non-renewable fuel production. He says when oil prices were high in the 1970s, the United States embarked upon a policy to reduce consumption and improve energy security, only to have those policies undermined when prices dropped a decade later, and now “having underinvested in energy efficiency and security when the costs of doing so were lower, America is poorly positioned to face the prospect of rising real prices.” Spence also argues:

Obama is correctly attempting to explain that effective energy policy, by its very nature, requires long-term goals and steady progress toward achieving them.

One frequently hears the assertion that democracies’ electoral cycles are poorly suited to implementing long-term, forward-looking policies. The countervailing force is leadership that explains the benefits and costs of different options, and unites people around common goals and sensible approaches. The Obama administration’s effort to put long-term growth and security above political advantage thus deserves admiration and respect.

If criticism of democratic governance on the grounds of its “inevitable short time horizon” were correct, it would be hard to explain how India, a populous, complex, and still-poor democracy, could sustain long-term investments and policies required to support rapid growth and development. There, too, vision, leadership, and consensus-building have played a critical role.

The good news for US energy security is that in 2011, the country became a new net exporter of petroleum products. The price of fossil fuels, however, is likely to continue to trend upward.

Also on Renewing America, CFR’s Edward Alden looks at new tariffs to be levied on solar panels imported from China, a country that has been a staple on the campaign trail particularly its trade practices. Alden says the tariffs are relatively low and offers this as a possible scenario for why:

The Obama administration has absolutely no desire to impose punitive duties that would actually impede the sale of Chinese solar modules. The power generated by new solar installations in the United States last year was twice the level added in 2010, largely due to falling panel prices, as well as U.S. government production subsidies and consumer tax breaks that have made solar more competitive with conventional sources. Expanding the use of renewable energy is among the administration’s highest priorities. Indeed, when the duties were announced last week by the Commerce Department, President Obama was touring a Nevada solar facility that is the largest PV plant in the United States. Slapping hefty tariffs on Chinese PV imports would undermine that policy.

At the same time, however, the Obama administration does not want to see the few remaining U.S.-based panel  makers driven out of business by cheap imports, and key administration allies like Senator Ron Wyden (D-OR) and House Ways and Means Committee ranking member Sander Levin (D-MI) have been pressing for aid to the industry.

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