How T. Boone Pickens' Energy Plan Just Got Killed

The financial bailout bill passed by Congress may have once and for all put an end to T. Boone Pickens' energy plan. Let me explain.

Until the financial meltdown obliterated all other news coverage, T. Boone and his energy plan were everywhere. His book, The First Billion Is the Hardest, is number two on the bestseller list. During the Republican and Democrat Conventions his press conferences were attended by a fawning media, virtually all of who filed stories with the theme "oil man turns wind energy advocate."

Indeed, even the more than casual reader might come away believing the Pickens Energy Plan was all about wind energy. T. Boone's web site does little to contradict that impression. It displays nothing but wind turbines.

But expanding wind energy is not the key element in his plan. The reason is that that the plan's goal is to reduce our dependence on oil and the electric sector uses very little oil. Thus expanding wind-generated electricity does little to move us in that direction. Instead, the heart of Pickens' plan is to purportedly use increased wind energy to back out the natural gas in our electricity system. Pickens wants to eliminate our use of natural gas to generate electricity and instead use it to in our vehicles.

In California, Pickens has been more upfront about his intentions. The Texas oil and gas billionaire has single handedly financed a ballot initiative that would raise $3 billion for incentives for vehicles using cleaner fuels. The initiative heavily favors natural gas vehicles. The biggest rebates would go toward the purchase of heavy-duty trucks and transit buses fueled by natural gas. Only natural gas vehicles would quality for the largest rebate for passenger vehicles -- $10,000.

The primary beneficiary of this ballot initiative would be Clean Energy, the nation's biggest supplier of natural gas for transportation needs. Mr. Pickens is majority shareholder of Clean Energy.

The Pickens energy proposal has a fatal flaw. Transforming our transportation fleet to natural gas will require massive investments in new engines and new fueling systems. Although largely buried in the fine print, Pickens isn't proposing to use natural gas to entirely replace transportation fuels derived from oil. His goal is a 20 percent replacement. So after 15-20 years and the expenditure of tens, if not hundreds of billions of dollars we would then have a transportation system still 80 percent dependent on oil and 20 percent dependent on a fossil fuel whose life expectancy is not much longer than oil's.

A far better plan, and one proposed by a growing number of groups and individuals (including my own, the Institute for Local Self-Reliance, in a recent report titled Driving Our Way to Energy Independence)is to electrify our transportation system. Instead of converting part of our transportation system to natural gas, only to have to then convert it again to renewable fuels, we should convert the transportation system to electricity, and make that electricity increasingly renewable as solar and wind power expand.

Electric vehicles have important advantages over natural gas (or gasoline) powered cars. They are more efficient. They are quiet. They generate no tailpipe emissions.

Moreover, their combined battery storage capacity could usher in a more democratic energy system where households generate transportation fuel from their rooftop solar array and store it in the vehicles' batteries, and, if needed, use their electric vehicles as backup power plants for their homes.

Unlike natural gas cars, electrified cars also lend themselves to being introduced incrementally. There is no partial natural gas car. On the other hand, there is a plug-in hybrid electric vehicle, the first generation of which will be introduced commercially in 2010. The initial PHEVs might have a limited driving range. As a result, initially electricity might power only 25 to 50 percent of the total miles driven. But as battery performance increases and costs drop, electricity will provide a majority and perhaps even 100 percent of the fuel used. Even at lower percentages, if the backup engine for the PHEV were a flexible fuel engine, then biofuels could replace oil, bringing the total oil displacement above 85 percent.