What a New Energy Economy Might Look Like

Except for the soft hydraulic whir of expectations being raised, the first week of the Obama transition was a quiet one. Indeed, the big news came from neither Chicago nor Washington but from Detroit and Beijing. In Detroit, General Motors — the stupendously clueless automaker — begged for a bailout lest it go bankrupt, thereby raising the question: If our resources are limited, why should we invest in the failed corporate past rather than in the technologies of the future? The obvious answer was to protect jobs. But how long would those jobs last without a significant overhaul of the company's management and priorities? Was it even possible that the Federal Government could demand or supervise such a radical makeover?

There was even bigger news from China, where the government announced a $586 billion stimulus package in an attempt to soften the blow of the coming recession. The China package was big and bold — and a tacit challenge to the Obama Administration. It represented 18% of the Chinese gross domestic product, the equivalent of a $2.4 trillion program in the U.S. Of course, China has bigger problems to solve than we do. Its social safety net is made of tissue; vast sums will be needed to establish a proper health-care and pension system. But much of the $586 billion will also be spent on investments to jump-start China's next economic expansion — investments in transportation, education, communications and energy. (See TIME's special report on the environment.)

And that's where the challenge is: if we don't want to be left behind, we will have to do something similar. Obama has said building an alternative-energy economy will be his top priority. The question is, How bold is he willing to be about that? Actually, there are a lot of questions: How much of the stimulus plan he proposes in January will be devoted to immediate middle-class tax relief, and how much to investing in the future? What would a plausible alternative-energy plan look like?

For answers, I decided to check in with the Center for American Progress (CAP) — the think tank run by Obama's transition chief, John Podesta — which has drafted a green-energy stimulus plan of its own. "We identified $50 billion in programs that are ready to go immediately," says Bracken Hendricks of CAP. "The package would create 2 million jobs across the skill spectrum, from blue collar to high tech, and in almost every area of the country. There was huge congressional appetite for this even before the economic crisis hit."

The package — which could easily be doubled to $100 billion — would have five components:
• A green bailout for the automakers, with a quid pro quo: they would have to increase fuel-efficiency standards in their cars at least 4% per year and make major investments in new battery technology for plug-in hybrids.

• A green-infrastructure fund to make existing public buildings more energy-efficient and provide homeowners with tax breaks to do the same. "This could help revive the construction industry," Hendricks says.

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