April 28, 2008
More Voices Whittle Away at Carbon Price Orthodoxy
Leaders in renewable energy are warning that a carbon price won't be enough to support promising new energy technologies. From a Capitol Hill briefing hosted by the Energy and Environmental Institute earlier this month, Renewable Energy World reported:
Proclaiming "give us a chance, we'll deliver" and "2009 will be a new beginning," leaders of several renewable energy groups this week asserted electricity from wind, solar, geothermal, biomass and hydro can help the U.S. make substantial progress toward mitigating the buildup of carbon dioxide in the earth's atmosphere.
But some, such as Karl Gawell, Executive Director of the Geothermal Energy Association, acknowledged that, "raising the cost of carbon won't do the job alone...we're going to need to be using everything we can."
That's good news, and part of an ongoing trend of questioning the carbon price orthodoxy. Jeffrey Sachs, Monica Prasad, Roger Pielke, Jr., and others are part of a growing movement calling for direct investment in clean energy technology to drive innovation.
The less good news is the leaders at this briefing aren't mentioning investment in innovation in their proposals to complement a carbon price:
Each of the leaders called for "set-asides," tax-credit equity," "offsets," and/or proceeds from any auctions of carbon emission credits as integral, if not critical, to make renewables a major part of any climate change strategy. Feed-in tariffs entered the discussion briefly as efforts by U.S. Rep. Jay Inslee, D-WA, appear to be gaining traction as a vehicle for enabling a cleaner energy future with his proposal for "performance-based incentives" draft legislation.
Ana Cohen, Deputy Staff Director of the House Select Committee on Energy Independence & Global Warming, on which Inslee serves, credited feed-in tariffs in Germany and other countries for positioning companies throughout the European Union to amass significant competitive advantages in U.S. market over the American companies.
"If we don't take real strong action, projects will be managed by European companies," Cohen said. She asserted that few policies will work as well as putting a price on a ton of carbon emitted by electric generators and other industrial sources. But she echoed Karl Gawell in asserting a carbon cap or tax won't be enough. To overcome various market barriers, other measures are needed, including mandates to connect renewables to the grid and stronger state and local building codes.
The focus was largely on things like renewable energy standards or feed-in tariffs. But it's not surprising for a group of renewable energy trade associations, whose job it is to further the immediate commercial interests of their member firms. That helps to explain the focus on short term solutions like the production tax credit.
But this still helps to whittle away at the carbon price orthodoxy, opening the door to policies that propose major federal investment in technology.