Breakthrough

The following is an interview with Breakthrough Senior Fellow Frank Laird, an expert in energy policy, particularly the way that renewable energy policies can affect environmental policy. He is an authority on the history of renewable technology development in the U.S., and a contributor to the Breakthrough blog.
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Last week Breakthrough Senior Fellow Roger Pielke, Jr., climate scientist Tom Wigley, and economist Chris Green published an article in Nature showing that the U.N. IPCC has underestimated the technology challenge in stabilizing greenhouse gas emissions. What's your take on the controversy?

Pielke, Wigley, and Green have found a serious flaw in the IPCC report, especially its Summary for Policy Makers. That report assumes that most of the move to renewable energy (what it calls "decarbonizing" the energy supply) will occur even if governments do nothing, which means that governments need only make a modest push for more renewable energy to get an energy system that will greatly reduce future climate change. Pielke, Wigley, and Green show us persuasively how mistaken that scenario might be.

So what are the implications?

What the world ultimately needs is a powerful drive to innovate new, cheaper, and environmentally benign ways to exploit the huge renewable energy resources that the earth receives. To be sure, lots of good technologies for energy efficiency and renewable energy are already available or will be soon, and we also need policies to get them out into circulation as quickly as possible. But if we want wealthy countries to drastically curb their greenhouse gas emissions and the newly emerging countries to do the same, both groups need a better and cheaper technologies than they can get now.

The IPCC report makes it clear how important it is to start the transition to a sustainable energy system. By understating how challenging that transition will be, the IPCC undercuts the argument for aggressive government policies to make that happen.

The climate policy debate is overwhelmingly focused on emissions caps and a price for carbon. Is there a technology policy framework for scaling up clean energy and driving down their price?

While there are numerous policy proposals out there, they strike me as too ad hoc, small scale, or lacking in detail. Most importantly, they lack a clear statement of what problems they are trying to solve and a coherent strategy for solving them. The problem is that we are not just trying to replace one set of machines with a different, but still interchangeable, set. We are instead trying to change a system, and therein lies the problem.

Why is any government policy needed if renewables are growing so fast on their own?

One can try to counter my claim by pointing out that there are lots of policies out there, in the United States and elsewhere, and that the renewable energy industry is growing at an almost breakneck pace. Between 2005 and 2006, solar grew 6.5%, biofuels by 27.6%, and wind by 45.1% (US DOE 2007a, Table 1). Between 2001 and 2005 the wind energy production grew at an annual rate of 28% (USDOE 2007b, p. 8). But these early successes are just the exploitation of the low-hanging fruit. A more thorough transformation of the energy system will take much more. Before moving onto my own proposals, I'll spell out my criticism of the existing situation in more detail.

There's a lot of hype now about solar. But for it to provide just one of 18 "stabilization wedges," Princeton professors Rob Socolow and Steven Pacala say solar deployment would have to increase 700-fold. How would you assess the state of the industry?

Solar electric technologies come in two forms; one is the solar electric cells (called photovoltaics) that most consumers are familiar with in toys and batteries and watches. They're still pretty expensive. However there's also another type called concentrating solar power (CSP), which takes sunlight and focuses it with a mirror. CSP is getting much cheaper, and in the U.S., coming along faster than PV, but you can only use it where you have a lot of land.

The solar industry is growing by leaps and bounds, but it's still fairly small as energy industries go. But BP, Shell, some of the biggest industrial conglomerates in the world are getting into solar, and that's a huge change. And I think it's a change for the better because those firms are stable -- they're too rich to worry about going belly up.

It's also become incredibly globalized. The largest US manufacturer by PV panels was taken over by a German firm.

Where are we at with wind power technology, compared to solar?

The wind industry is by far the most technologically mature. The electricity from wind is cheaper than any other renewable source of energy except for hydro. Wind is everyone's favorite renewable energy strategy now -- it's the poster child, and a multibillion-dollar industry. But there's only one big American manufacturer of wind turbines; most of the rest are German and Danish.

Solar and wind require batteries and storage. What is the state of the technology for batteries?

There's lots of research and experiments into storage but the technology is not there and it's crucial. It's a real weakness. And there's another weakness -- renewables are going to require a considerable extension of the electric grid. There are a lot of places in the US where there's fantastic wind and wonderful sunshine, but very few power lines. Someone is going to have to pay for that.

Why is the technology so weak?

Really innovative industries have a lot of R&D, and a lot of government funding. We've been under funding R&D in this field for more than 20 years. When you think about the size of the energy challenge, the amount of money that the government puts in is just peanuts -- it's just peanut shells. Part of the reason is that the companies doing fossil fuels are making such fantastic profits, so why should they want to spend money on R&D?

There have always been raging battles over who funds infrastructure in the U.S. In the past the government has always been deeply involved, but now it's going to have to be the rate payers. That's a tough sell. The utility industry is complex; who is required to build what and who pays for it is all very contested, and everyone would love for Uncle Sam to come and bail them out.

What would you say to John Bailey of the New Rules Project, who argued in a recent report that federal subsidies do not have any effect on the development of renewable energy technologies?

I stand by my simple historical observation: all the dramatic technological changes of the last 70 or so years (and going back farther if one includes agriculture) have involved massive federal R&D investments, and not just in basic research. I can't think of any exceptions. Why should energy be different? Businesses will be central to developing clean energy, but relying on the market alone is fruitless.

Bailey also advocates for returning carbon auction revenue to individuals as a way to build political support that otherwise would see carbon auctions as a regressive carbon tax. Is this a wise way of dealing with revenue from cap-and-trade?

I respect the fact that Mr. Bailey and his colleagues are trying to eliminate that regressive problem. And by making the system look a lot like Social Security, he hopes that the carbon auction will have broad political support. Personally, I'm skeptical that one can enact such a system, but who knows?

Also, while Americans do respond to price when consuming energy, they don't respond much unless the price goes way up. And when they do respond, it will be first to energy efficiency, not renewables. Which brings me back to my point about federal R&D and subsidies; we'll need them if we want a revolution in clean energy. Mr. Bailey doesn't need to trash them to make a case for an (in effect) equitable carbon tax and doing so ignores quite a bit of history.

Do you have clean tech favorites?

I'm a real believer in the portfolio idea here. I think we need a very diversified portfolio because no one can predict winners and losers. In the end we're going to have a portfolio of energy sources, and it's going to be complicated, but I think that's good. We need to get away from the idea that there is a silver bullet that's going to solve all our problems.

Will a diverse portfolio of energy technologies mean that the energy system will become less centralized?

In the future we're going to have a mix between distributed generation and centralized generation. There will be big central utilities for electricity, and to distribute liquid fuels, but maybe also a smaller system. Your local restaurant would have solar panels on the roof, or local towns would have their own wind turbines. There's no reason that these kinds of things can't coexist with big centralized power plants.

Are big centralized power plants still going to exist in 20 years? You bet. But there might also be these more distributed things going on.

How should government investments in new technologies be made?

I think they should recognize that when you're talking about clean energy you're not just talking about new technologies; you're talking about a whole technological system. And technological systems have a machine component but they also have economic, political, and social components, and you need to address all of those. Government investments should include lots of R&D but also policies to deal with the political and social components, like developing a skilled workforce. It needs to be a very broad-based approach.