The plug-in revolution: a grand plan for America's energy woes.

• Author: Leonard, Jeffrey

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My physician friends often complain that they can never escape the demands of their profession. No matter where they go--whether it's on vacation or to their kid's soccer game--people inevitably come up seeking advice on their bad backs or their parent's Alzheimer's.

These days, I understand their complaint a little better. For the past two decades, I've run a private equity firm in Washington, D.C., that invests in clean energy. My counsel has rarely been sought at local cocktail parties (and that's been fine by me). But that changed when the price of oil skyrocketed. Now it seems as if everyone I meet, from taxi drivers to U.S. senators, wants to discuss energy policy with me.

The funny thing is, most of the senators are no more up to speed than the taxi drivers. And at least the cabbies listen.

So what do I tell people?

Well, the good news is that voters and politicians are finally awake to the energy problem. It's especially encouraging that the debate is focusing on the most dangerous part of the energy supply chain: foreign oil. This is a case where the conventional wisdom is true. Our addiction to imported crude threatens our national security by making us reliant on Middle East oil dictators and assorted autocrats around the world. It is also ruinously expensive to maintain, costing nearly a trillion dollars a year at current prices. This seriously exacerbates our trade deficit, nearly four-fifths of which can be linked to oil imports. Finally, our use of oil is environmentally destructive. The oil we put in our cars is responsible for more than a third of America's greenhouse gas emissions. This prevents us from properly tackling the biggest environmental challenge facing the country and the planet: climate change.

So an important message to politicians is that oil has three huge strikes against it: it's a security threat, an economic threat, and an environmental threat. This is far worse than the cumulative rap on any other major source of energy. For example, Al Gore is right that coal is bad for global warming, but from a national security or balance-of-payments perspective coal stands up well. And while politicians like to pretend that "oil" can be distinguished from "foreign oil," in practice dependence on one kind of oil means dependence on the other. We can drill all we want to here in the United States, but we'll only ever meet a fraction of our demand, since we use a quarter of the world's oil production but possess--at best--only 3 percent of the total reserves.

The bad news is that none of the current energy plans being debated in Washington or presented by the presidential campaigns adds up to sound long-term policy for dealing with the energy challenges facing the U.S. Most of the supposed grand solutions turn out to be half-baked schemes that pander to voters and vested interests. John McCain argues for more drilling in America. Barack Obama favors more subsidies for ethanol. Oilman T. Boone Pickens advocates retooling cars to run on compressed natural gas. These and many other big energy plans have at least one thing in common: they involve a multiyear, massive-spending, government initiative that will set America on the path toward displacing foreign oil with some kind of domestically produced liquid fuel. That may seem like a sensible idea, but in fact it merely postpones, and therefore makes more costly and wrenching, the energy transition that I--and many other industry leaders I talk with--believe will save America.

In the film The Graduate, Walter Brooks famously gives Dustin Hoffman a one-word piece of career advice: "Plastics." At the risk of sounding similarly glib, let me nevertheless suggest a one-word answer to our multifaceted energy problems: electrification. The basic idea is...