June 03, 2008
Tony Blair, Climate Group, and CAP call for public investment and technology-centric climate policy
By William Oman & Teryn Norris
Two new studies published last month -- one by the Office of Tony Blair and the Climate Group, the other by the Global Climate Network and Center for American Progress (CAP) -- strongly advocate a climate policy strategy based on direct government investment in energy technology development and deployment.
The studies independently reach conclusions similar to the Breakthrough Institute's and are yet another indication of "The Emerging Climate Consensus," which recognizes the limits of carbon pricing and advocates major increases in federal funding to deploy low-carbon energy technologies and drive down their costs through direct public investment in RD&D (research, development, and demonstration), deployment, and supporting infrastructure.
The Tony Blair and Climate Group report, titled "Breaking the Climate Deadlock: Technology for a Low Carbon Future (PDF)," provides a comprehensive sector-based analysis and concludes:
"Governments should adopt a strategic top-down approach to ensure that critical technologies arrive on time and provide investment in disruptive options to allow radical transformation in the future... The reality is that carbon pricing does not address many other market failures along the innovation chain."
The study argues that direct public support is crucial to develop and deploy new technologies: "Market failures along the innovation chain require public spending to drive technologies down their cost curve to a point where the carbon price can take over and accelerate their deployment." Echoing the Breakthrough Institute, International Energy Agency, and Energy Secretary Steven Chu (and defying critics like Joseph Romm), the report once again concludes that energy technologies must undergo major developments to meet emission reduction targets:
"Although we have the technologies we need through to 2020, new technologies -- many available but not yet commercially proven -- will be needed to meet the more challenging long-term goals. Therefore, at the same time as we deploy existing solutions, we must invest in future options."
The report suggests that developed nations should double their public investment in RD&D by 2015 and quadruple it by 2020 and identifies key areas to target this investment. The report also cites the Stern Review, which recommends that global public deployment efforts double to $66 billion per year in 2015 and rise to $163 billion by 2025.
The analysis shows that global public and private investment of $48 trillion in RD&D, deployment, and commercialization of low-carbon and efficiency technologies (between 2005-2050) is necessary to sufficiently decarbonize the global economy. This is equivalent to over $1 trillion per year worldwide, and with the U.S. economy representing about 25 percent of the global economy, this could amount to over $250 billion annually in U.S. public and private investment in technology RD&D, deployment, and commercialization.
The Center for American Progress study makes many of the same recommendations. The study's title -- "Breaking Through on Technology: Overcoming the barriers to the development and wide deployment of low-carbon technology" -- repeats our call for a government-led technology development strategy. From the outset the authors place technology front and center and break away from the dominant, regulation- and market-focused policy approach, claiming that "without a firm commitment to develop and transfer new technologies, with industrialised countries taking the lead on financing these endeavours, consensus will be difficult to reach and, in practical terms, emissions will be hard to reduce."
The authors note that public finance is critical, particularly because of the threat of the "valley of death" between research and development and commercialization of new, clean energy technologies. Similar to the Climate Group's conclusions, CAP's main policy recommendations all emphasize the importance of public investment, particularly through direct deployment policy.
One of the study's major policy prescriptions is to place technology at the heart of the Copenhagen negotiations by encouraging more focused incentives and "government-led finance to steer key technologies through the valley of death" at the international level. In addition, according to CAP, "all governments, individually or in collaboration -- preferably the latter -- must dramatically increase the supply of finance to support the new Technologies Initiative." The Blair report also repeats this call for a new international strategy centered on technology:
"The Copenhagen agreement should include a Technology Development Objective to scale up market creation and finance for new technology. In the past debates have focused on either delivering emissions reductions or on developing new technology. It is now clear that we must do both. Therefore, alongside emissions targets the Technology Development Objective should have an equal emphasis on innovation."
Breakthrough and our colleagues have similarly argued for a new international climate policy framework focused on technology development and energy modernization (see here, here, and here). Both the Blair/Climate Group and the Center for American Progress reports have made steps in the right direction by strongly advocating that low-carbon technology innovation be at the heart of national and global efforts to build a clean energy economy. That's a strategy for the energy revolution we need.