Innovation as energy policy for the world [Policy Perspectives]

Obama's energy policies need to start domestically but aspire to global influence. The basic philosophy should be to rely on markets whenever they work well, but to step in aggressively when market failures appear. This means making the costs of global warming, air pollution, and energy security visible to energy consumers. It means seeking ways to recirculate more dollars domestically in order to reduce trade deficits. It means encouraging a greater diversity of institutional arrangements in energy industries, perhaps encouraging more community energy cooperatives alongside the investor-owned utilities. It means encouraging regional diversity that takes advantage of local resources, thus producing bioenergy from solid waste in urbanized New Jersey and from switchgrass in rural Kansas. Obama's policies should privilege consumer interests over producer interests when those interests conflict, because everyone is a consumer. Obama should aggressively pursue innovations in the energy sector because they can help sidestep painful tradeoffs among objectives.