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Lots of ideas for a government stimulus revolve around new technologies, infrastructure and renewable energy. However, most don't seem to be recognizing the opportunity for real change. What are the shortcomings of some of those proposals and what direction should we be thinking in?

My series of articles has so far shown that we are facing an economic downsizing of at least 27% and more from unemployment, caused by the $1000/month income/cost gap of the average American. Market mechanisms are failing and widespread risks stemming from derivative speculation need to be contained. Governments need to sweep up the unemployed through infrastructure, education, and military programs in order to tighten the labour market. State and local governments have to keep their cost up and rely on the Federal government for massive deficit funding. In my last article, I raised the issue of food and energy supply that needs protecting in order to avoid disastrous consequences.

I treat "energy independence" and "investing into the future" as one topic. When we think about those promises that have been made for over 3 decades, we must think not of ourselves but of our children, and I assume that we all agree that energy investment is the number one priority for the future. We probably want to create the new Energy Tech Advance.

Drill baby, drill.

I like that first line of defence to create energy independence from foreign oil.

Hmm. My regular readers sense what's coming: burn it all! The faster we burn it, the quicker we're going to be forced to substitute the Black Curse with something smarter. As a means to create energy independence from the Axis of Evil, I don't think that increasing domestic production of oil is an appropriate measure. We will drill, and we will simply burn more, only to humbly return into the Middle Eastern oil shops where oil will be cheaper anyway. By the time the domestic oil is hitting the markets, the new President will be out of his second term.

What is critical to our children is that burning fossil fuels has and will keep on destroying the quality of air, water, and soil. Never mind that we have come a long way in the last 150 years. Just check the smog on 100 year old photographs. Count the smoking chimneys, and you'll know.

I don't think that drilling for more oil is a wise approach. It's another investment not only into the wrong direction but also into the wrong hands. A few more years of paying the Saudis while America figures out the way into the future won't make a difference.

Build nuclear power plants.

Societies the world over have been pressing against nuclear energy for decades. Is it supposed to turn out as a silver bullet? I acknowledge the technology being "clean" should we be able to solve the waste disposal. However, there are a couple of issues with building more nuclear power plants. Firstly, it takes more than 10 years from planning through the approval processes until having them online. Thus, there will be two two-term Presidents out of office before anything happens. That's not an argument against it, is it? However, nuclear energy sounds like the human supergau to me. I envision an epidemic and nobody will be there to shut the darn things off. We don't have to guess. We know that one after the other would blow up and wipe out human and animal life or bring forward mutants beyond recognition. I am not willing to take that risk. Instead, our investment plan for the future should include to taking them all offline.

Clean coal

Coal has been identified as one of the dirtiest sources to produce energy. Clean coal is a scam term for "cleaner" coal, which of course, is better than dirty coal. For a change, I am with Greenpeace here. They call it "greenwash" the public's mind. The plug for FutureGen had been pulled this year for cost. FutureGen aimed at near zero-emission production of energy from coal. Bush talks about energy independence but pulls the plug. That is interesting, to say the least.

Wind energy

The only reason why wind energy is popular in many countries is because they are subsidized by governments. However, isn't that technology kind of unreliable and very expensive if paired up with batteries to provide for more consistent power supply?

Natural gas

While it sounds grand, it does a little less harm to the environment than oil. However, expanding natural gas usage would not resolve environmental issues. It might actually aggravate them. After all, it is a fossil fuel. Using more natural gas for energy independence could be a possible avenue, though.

Bio-fuel

2008 has shown us that producing bio-fuel can come at a cost in the food chain. If we would want to expand that concept greatly, we better think twice how to replace the sinking food resources.

Geothermal

If you want to get rid of fuel consumption, geothermal energy is one of the few sources that is environmentally much "friendlier", reliable, and cheap. They are perfect for base load requirements, e.g. running at full capacity. MIT thinks that a research investment of $1 billion (ONE billion, I repeat ONLY one billion, we spend $10 billion a month in Iraq) would be sufficient to turn Enhanced Geothermal Systems into reality. Further, MIT believes that EGS systems would provide enough energy 10 km under American soil to supply the rest of the world for 30,000 years (thirty thousand, that's not a typo). What the heck are we waiting for? Dish out the billion and get going! Meanwhile, America can start to drill and build the plants while the technology is perfected. Drill, baby, drill - but differently. Never mind that the first geothermal power plant has been built in Italy 100 years ago. The technology is proven and reliable.

Energy production

About 40% of America's energy production is from petroleum, 25% from coal, and 25% from natural gas and the remaining 10% is from nuclear power, hydroelectric dams, and tiny fraction is from renewable energy sources.

Coal provides about 50% of electricity consumption in America, nuclear and natural gas about 20% each, and hydro about 7%. Unlike production of petroleum based energy, electricity production has one major problem: Because electricity can't be stored cheaply, capacity is oriented at peak demand. Consumption however, fluctuates greatly, from very low night demand to very high day demand. If those power plants could somehow be boosted to produce at capacity 24/7, there would be excess energy to achieve independence from foreign oil.

Energy consumption

Following are the numbers of where energy is used

33% Industry: producing and processing goods

28 % Transportation: ground, air, or water.

21% Residential: homes

17% Commercial: businesses, government, other institutions

It is kind of obvious, but I need to guide you through this. Petroleum is mainly used for all sorts of engines for transportation and in some industries. Think of it: if we could replace all that petroleum for buses, airplanes, taxis, trucks, cars, motorcycles, and the highly fuel inefficient military, with something that is produced from power plants that run below capacity, we could address environmental concerns and energy dependence from foreign oil all at once. If we could then substitute nuclear, natural gas, coal, and hydro with geothermal energy, America could make a REAL difference to its children, and its children's children, and their children. I would call that REAL CHANGE.

As a petroleum substitute needs to be produced for transportation, something is needed that can be transported and distributed to the point of usage. That kind of energy, and I haven't seen another one that comes close to it, is hydrogen, produced from water, and returning to water with little emission (don't be fooled by me, there are emissions).

For those that still believe that we need to tinker around with wind, solar, hybrid, batteries, and what not, go ahead, have fun and loose your money in technology that is either already outdated, or proven inefficient, unreliable, or too expensive. We need a BIG solution and we need it as quickly as humanly possible.

A visionary approach to a "hydrogen" economy is not that difficult and not that expensive either. With government stimulus, the hydrogen production problem can be solved with stimulating hydrogen production with the help of the current electricity producers and with building geothermal power plants. The infrastructure and distribution problem can be solved with the help of the oil companies relatively quickly. The transition to usage can be stimulated by subsidized financing of retooling investments at car manufacturing plants and by mandating all public transportation, including buses, taxis and trains to switch to hydrogen within very few years. The industry has been ready for a wile and the West Coast is already planning on a hydrogen corridor. Hydrogen can be stored and safely used as needed.

Initial stimulus investments of a few hundred billion dollars could boost companies across the board of the economy.

Investing into a hydrogen economy is probably a wise move, which will also find widespread support amongst the people.

What about infrastructure like roads, high speed rails, and more? I do believe that local governments, cities, and states should accelerate their infrastructure investments and repairs. Our roads partly resemble third world Jeep trails. That's not what a developed society deserves. I think that the main focus should be on energy with a united America. I have a problem with the ideas of high speed rails and the like. In other countries, they only survive because they are heavily subsidized. In terms of long distance transport, we need new ideas and old-style infrastructure projects are hindering those to materialize. For example, I think of a long-distance high-speed ground network that lets travellers take along their cars for local mobility. That would change the way we travel inefficiently and dangerously. With high speed, I mean 300 miles/hr or more, without the airport hassles.

This article is part of a series of articles focussing on what local, state and federal governments need to do now in order to address the upcoming economic Depression.

economic stimulus (1): the disabled consumer

at http://www.ireport.com/docs/DOC-132064

economic stimulus (2): focus on income and equity

at http://www.ireport.com/docs/DOC-132067

economic stimulus (3): quarantine risk

at http://www.ireport.com/docs/DOC-132200

economic stimulus (4): sweep up the unemployed

at http://www.ireport.com/docs/DOC-132202

economic stimulus (5): bailout state governments

at http://www.ireport.com/docs/DOC-132205

economic stimulus (6): protect food and energy supply

at http://www.ireport.com/docs/DOC-132795

economic stimulus (7): invest into the future

at http://www.ireport.com/docs/DOC-132856

economic stimulus (8): be globally the most competitive

at http://www.ireport.com/docs/DOC-133022 

economic stimulus (9): change politics

at http://www.ireport.com/docs/DOC-133026

economic stimulus (10): prepare for budget cuts

at http://www.ireport.com/docs/DOC-133113

Please comment. I will try to address questions, if I can.

H.R. Tschudi, economist and entrepreneur, Vancouver