April 21, 2008
Breakthroughs Depend on Learning While Doing
Your stated goal is to "bring the real price of clean energy down as quickly as possible." Does "down" mean below the cost of dirty energy?
Yes, that means bring real, installed costs of clean energy down below the cost of dirty energy. We believe this is the only way we can ensure that developing countries will adopt a low-carbon development path. If the alternative is slow or no development, we'll have a hard time convincing China, India, Brazil, Mexico, Indonesia and the rest of the developing world not to turn to coal and other fossil fuels to power their development. The United States and Western Europe may be willing to accept "artificially" high energy prices - i.e. prices raised by internalizing carbon costs through tax/regulatory codes - but I'm not confident China, India or any other developing country will be. Short answer: yes, our ultimate goal, if we want to leave as much coal in the ground as possible, is to make coal irrelevant. The only way to do that is to ultimately develop cheaper, scalable alternatives.
I believe you believe that this policy is necessary, but I would like you to answer whether you believe this policy is sufficient? If it is not sufficient, what other policies are necessary?
Making clean energy cheaper than dirty energy isn't a policy. It's a policy goal. Really, the policy goal is creating and spurring the deployment of scalable, affordable energy sources that can power development across the planet while reducing global greenhouse gas emissions rapidly towards zero. That's the objective. I'm not sure that's an explicit objective of most US cap-and-trade policies.
Global warming is a challenge that will require an international perspective when developing policy solutions. It's not enough for the United States to simply say "if we lead, others will follow," or "we'll do our part, it's up to others to do theirs." We have the resources, we have the ingenuity, and we have the technology base to not just develop policy and technology solutions for the United States, but for the world. If we want to solve this global challenge, it requires us to focus not just on raising dirty energy prices here in the United States so that they are more expensive than clean alternatives. We ultimately need to make those alternatives the FIRST choice in the developing world, and that means bringing down their real, unsubsidized costs, as quickly as possible.
You seem to suggest that R&D investment in cheap energy is sufficient. Is this so?
We advocate a variety of policies designed to achieve a policy objective of driving down the costs and accelerating the deployment of scalable clean energy technologies. No, R&D is not sufficient, and I don't think we've ever said it was. A price for carbon will also be necessary to send the right price signals to private capital, correct market failures, and most importantly, provide a mechanism to raise the tens-to-hundreds of billions of dollars annually that will be necessary to fuel a clean energy revolution. We should use whatever policy works (carbon taxes, cap-and-auction, I'm agnostic) to get the highest price on carbon that is politically possible and sustainable over the long term.
How many years do you think the investment program on your webpage will take to make new clean energy cheaper than new dirty energy?
It will depend on the technology. And on what happens to the costs of dirty energy sources. I'm not sure I can answer that question too precisely without doing a bit more research, but it'd better be by 2050, or we're pretty well hosed as a global society. The point is that without achieving this policy objective, cap and trade will be at best, politically challenging to sustain in the United States, as deeper reduction targets drive up energy costs further, as well as internationally useless, as developing nations forego increased energy prices through carbon pricing in order to sustain economic development and pull billions more out of poverty (a goal we can hardly begrudge them). That argues that we should specifically design our policies to achieve this goal, as quickly as possible. Current policy proposals don't seem to be oriented towards that objective. That worries me, and I think it should worry you.
What do you think the world should do about GHG between now and then? What level of GHG do you think Earth will experience in this timeframe?
The United States and the developing world should do what I outlined above, in short: 1) price carbon and raise revenue (on the order of tens to hundreds of billions), 2) invest (bulk of) revenue in driving down costs and rapidly deploying clean energy solutions. 3) engage the international community with an eye towards rapid technology transfer and diffusion as a base of an international climate agreement (ideally in "exchange" for emissions limits in developing countries).
We're not saying don't do anything until clean energy prices are cheaper than coal; that's President Bush's line! We're saying that making clean energy cheaper than coal must be the explicit policy objective of a successful US climate policy, and it's currently not. We've got to get started today in achieving that objective (yesterday really!) and that will mean deploying everything we've got at our disposal today while striving to bring down the costs of mature and emerging technologies, and invest in a broad R&D strategy to develop as many more tools in our toolbox as we can get.
Is the investment program on your webpage also targeted at reducing the cost of new clean energy to less than cost of old (paid-off) dirty energy? If so, how long is this likely to take? If not, does Breakthrough have a proposal to shut down existing dirty energy plants, since you suggest carbon pricing is unlikely? If we don't shut down existing dirty energy plants, how do we prevent reaching disastrous GHG levels in the atmosphere?
We strongly favor replacing dirty energy in the U.S. and other developed economies with clean energy sources, efficiency, or CCS. But we emphatically don't think that efforts to simply shut down coal plants without a well-thought out alternative will work because there is too high of a risk of energy price spikes that generate public animosity and make the kind of sustained effort to reduce emissions over the course of the next few decades politically challenging, if not impossible. In other words, "shutting down coal plants" is a tactic not a strategy, and we will imperil the long-term strategy if we don't focus centrally on replacing dirty paid off energy plants with clean energy sources that create good jobs, increase America's energy security, advance our economic competitiveness, and bring down the price of clean energy. Of course we need to shut down existing coal plants. The question is how we go about doing it, and what will replace them (both here, and abroad in the developing world).