Regulate to Innovate?
Flanked by Energy Secretary Steven Chu and Carol Browner, the administration's Energy and Climate 'Czar,' President Obama discussed his thoughts Monday on the House of Representatives' recent passage of the ACES energy and climate bill.
Secretary Chu stuck, for the most part, to his favorite talking point: comparing US energy policy to the hockey playing of Wayne Gretzsky. We need to play policy like the latter played hockey, Chu is fond of saying, by concentrating on where the puck is going to be rather than where it is at the moment.
Browner (joined at one point by Chu) continually, and almost dogmatically, asserted that prior regulation had successfully spurred rapid innovation and transformed industry. According to Browner:
"That story can be told time and time again about environmental rules, that's probably the clearest -- same thing for CFCs. The Senate decided to ban -- the bill banned CFCs, there wasn't a replacement via the guaranteed market -- the investments were made, the replacements came forward, it was cheaper, much more quickly than we thought." (via NYT)
Browner believes it was the Senate that regulated CFCs and, thereafter, industry that responded. Regulation breeds innovation and successful policy goals, Browner clearly maintains.
The truth of the matter is far subtler. The Clean Air Act Amendments of 1977 only banned non-essential use of CFC's, and it was not until the Dupont Corporation had long acknowledged that it had developed a CFC substitute that the international Montreal Protocol banned their use entirely. The real story here was that innovation bred (or at least enabled) regulation, not the other way around.
Browner's pronouncements Monday were nothing new for this former chief EPA Administrator and long-time champion of regulatory policies. As Breakthrough reported back in December at the time of her appointment, in her own words, this is the truth according to Carol Browner:
"As a former regulator -- and I can cite you any number of stories --when the government steps up and says there's a requirement, that we're going to have to take sulfur out of diesel fuel, you're going to have to get rid of CFCs (chlorofluorocarbons) by a date certain, what the government is doing is creating a market opportunity."
The problem is her facts are simply out of line with the truth -- nor do the examples she cites have much to tell us about tackling the wholly unique and massively complex challenge of global climate change. As we've written many times, the Acid Rain parable is misrepresented and both inapplicable and inappropriate as a precedent for the climate challenge.
While Secretary Chu has been a staunch advocate of expanded public investment in clean energy innovation, in his appearance on Monday, he instead repeated talking points that echoed Browner.
According to Chu:
"If you send this long-term signal that there is a cap on carbon and it's going to ratchet down, then industry has shown remarkable innovation over the years on everything we've done, whether it's sulfur dioxide cleanup, whether it's getting appliances more efficient. As soon as you say this is where we've got to go, we've always gotten there a lot faster, a lot cheaper. And so this bill with the cap and with the slowly ratcheting down will send a signal to industry that says, you know, get your engineers thinking about it, get your scientists thinking about it. And once you unleash that great American research and innovation machine, it's going to be -- it'll take us into this new future."
Unfortunately, while ACES clean energy R&D investments are just a tiny fraction of what both President Obama and Secretary Chu have called for in the past, neither spoke up Monday to indicate where the money is going to come from to fund the "great American research and innovation machine."
As Breakthrough's Jesse Jenkins and Adam Zemel explained back in December:
"What we see time and time again is that regulations - which may work well as "tech pull" policies that pull already existent technologies into the marketplace - will do little to drive the development of new technologies ("tech push" policies). Only public investment and an active partnership between government, academia and business will drive the development of the clean, affordable and massively scalable energy sources we'll need to overcome the global climate challenge."