Bush’s energy plan will raise incomes and lower unemployment

US President George W Bush’s much criticised energy plan will raise average incomes and lower unemployment, says a new report by a prominent US policy think-tank.

The report, Econometric and Policy Evaluation of the National Energy Plan, from the Centre for Data Analysis at the Heritage Foundation, says the Bush plan (see related story) will increase energy efficiency and lower energy prices, thus improving the economy. When adjusted to take inflation into account, the Gross Domestic Product (GDP) of the US would increase by an average of 0.1% per year by 2025, a total of $540 billion, with an annual increase in investment in the economy of $65 billion. As a knock-on effect, employment would increase by 1.5 million, and a family of four could expect to have an average rise in income of $1,800.

“The President has proposed a comprehensive and balanced long-term energy plan that corrects the imbalance of supply and demand, ensures that Americans have a reliable and affordable supply of energy for the future, and provides responsible stewardship of the country’s natural resources,” says the report. The strategy will increase supply to keep up with demand – which is expected to increase by 62% between 1990 and 2010 – whilst cutting dependence on external supplies, for which the Arctic National Wildlife Refuge (ANWR) is key, decreasing dependence from 65% to 57%. The plan will also upgrade the energy infrastructure – reducing transmission losses by 50%; promote new technologies to increase efficiency and renewable sources; and protect the environment through multi-pollutant legislation and by ear-marking money for conservation efforts; and will achieve all this without favouring one industry over another. Domestic energy efficiency would also be promoted, through programmes such as the Energy Star scheme (see related story).

Nevertheless, the report admits that Bush’s energy plan is not perfect. “The plan proposes various federal subsidies and tax incentives that interfere with market forces,” say the researchers. “The President should strengthen the plan by omitting these counterproductive mechanisms and allow an unfettered competitive market to achieve the intended outcomes.”

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