Drill, Baby, Drill?

Drilling for oil off the California Coast may sound crazy. But are there better ways to raise money for renewable energy and mass transit?

Even if President Obama inks a historic climate pact in Copenhagen
this week, it won’t solve one of the most vexing problems we face
— the lack of funds required to rapidly expand wind and solar
power and build more mass transit, particularly in California. Neither
the governor’s proposals nor the federal cap-and-trade plan, for
example, will produce enough money. But one energy analyst has been
peddling a novel idea that could provide plenty of cash for the Golden
State.

Gregor MacDonald, who was featured on MSNBC earlier this year,
believes that California should allow energy companies to finally tap
its large coastal oil reserves and then tax the proceeds heavily. The
state can then direct the money to expanding light and commuter rail,
along with a massive buildup of solar and wind power, he said. “You
can’t use the proceeds to do business as usual,” said MacDonald, a
former state resident who now lives in Massachusetts. “Every single
penny must go to build out renewable energy and to pay for a new
transportation system.”

MacDonald realizes that his proposal will be a tough sell for
environmentalists who have fought offshore drilling for decades. And
his proposal probably has little chance of going anywhere. Yet it
raises an important question about how California and the world are
going to pay for the greentech needed to wean ourselves off fossil fuel
and the automobile.

It’s certainly not going to be with traditional taxes. California
can’t raise taxes for education, let alone green energy. Yet the need
is obvious and the costs substantial. Most climate scientists agree
that the US government should invest at least $20 billion to $30
billion annually over the next few decades. However, the weak
cap-and-trade plan passed by the House this summer and now moving
through the Senate likely will invest less than $10 billion each
year.

Oil drilling also may be politically pragmatic. California
Republicans who staunchly oppose raising taxes would surely jump at the
chance to open up the coast. Plus, there is plenty of oil —
twelve billion barrels, of which about 10 percent can be safely
removed, MacDonald said.

MacDonald also argues that oil companies will pay steep taxes to
secure stable oil rights. And giants such as San Ramon-based Chevron
will save money by extracting crude more closely to their customers.
MacDonald also contends that a steady supply of California oil will
stabilize prices, which is essential for the economy and for when the
state builds mass transit and green energy with gasoline-powered
vehicles.

In the end, his idea may have no hope of survival, but California
and the rest of the world still must figure out how to pay to go
green.

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