Breakthrough's Devon Swezey speaks at an event unveiling a new report by the Information Technology and Innovation Foundation about how economic doctrines inform our views on how to address climate change, how conventional doctrines are failing, and what policies are needed for clean energy progress.
Last week, the Information Technology and Innovation Foundation (ITIF) released an important new report that explores the ideological origins of different policy responses to climate change, and helps clarify why there has been a lack of consensus (and lack of progress), on tackling climate change or nearly two decades.
The report, "Economic Doctrines and Approaches to Climate Change Policy," examines three competing economic doctrines--neoclassical economics, neo-Keynesian economics, and innovation economics--and describes how the doctrines shape different policy responses to climate change.
Neoclassical economics emphasizes the need to get prices right, and has provided the intellectual basis for the dominance of carbon pricing as a solution to reducing carbon emissions. Neo-Keynesian economics is most concerned with managing the demand for goods and services, and has led to clean energy policies that seek to boost the demand for low-carbon sources of energy, including regulations and mandates like renewable portfolio standards. Innovation economics recognizes the limitations of both pricing and regulation to drive the adoption of clean energy technologies, and argues that dramatic innovation is needed to reduce the cost and improve the performance of clean energy technologies before they can be adopted around the world at a scale that can significantly impact carbon emissions. Innovation economics therefore concerns itself not only with prices but also with developing and strengthening the institutions and public-private collaborations that drive technological transformation.
The full report is well worth the read, and can be accessed here.
I was also fortunate enough to speak at the event unveiling the report. You can watch a video of the event below or read a shortened version of my opening remarks below.
Breakthrough Institute Chairman Ted Nordhaus gives the keynote address at the World Climate Solutions conference at the Bella Center in Copenhagen, Denmark, the very building where international climate negotiations collapsed less than one year ago.
In late September, Breakthrough Institute Chairman Ted Nordhaus gave the keynote address at the World Climate Solutions conference--northern Europe's biggest annual clean tech event. The conference was held in Copenhagen, Denmark in the Bella Center, the very place where the international climate negotiations collapsed less than one year ago.
Nordhaus was introduced by Anders Eldrup, CEO of DONG energy. What follows is a video of the introduction and speech, as well as each speaker's full remarks.
In an era of concern about federal spending and deficits, a large majority of Americans (even among Republicans) support federal investment in energy research and development, finds a recent Pew survey.
"There is broad public support for a variety of other proposals to address the nation's energy situation. About eight-in-ten (79%) favor requiring better fuel efficiency for cars, trucks and SUVs, and 74% support increasing federal funding for research on wind, solar and hydrogen technology."
Despite rising national debts, would national governments be wise to borrow today to fund investments in infrastructure, clean energy, and innovation to be enjoyed by -- and paid back by -- a richer, more well-off generation tomorrow?
Here's an interesting argument from our friends across the pond at the UK-focused Political Climate blog, making the case that despite rising deficit concerns and austerity measures in the UK and elsewhere, borrowing from the future may still actually be an appropriate way to pay for clean energy innovation today:
Against this background, it may sound mad to argue for more public borrowing in order to pay for investments in low carbon technologies and infrastructure, but that is what I am going to do in this post.
Let's start with the rationale. ... The starting point is that in advanced economies successive generations tend to get better off over time. For example, at the depths of the 1930s depression Keynes observed that despite the general gloom, he was confident that 100 years in the future, people might be eight times better off in real terms. And indeed average GDP per capita in the UK is now already about 5 times what it was in the 1930s. By extension, we would normally expect future generations to be better off than us in GDP terms.
... [Furthermore, if] we in this generation mitigate climate change, we will allow future generations to have a higher standard of living than they would have if we did nothing. We are very slowly beginning to do this, with policies being introduced to encourage us to invest less in conventional capital (e.g. fossil fuel power stations) and more in investments that effectively maintain natural capital (like renewable energy).
At the moment we are paying for these more expensive investments through reduced consumption, in the form of higher energy bills. If instead we were to borrow a certain amount of money from future generations (who will have to repay through their taxes) and use this money to pay the extra cost of renewables, carbon capture and storage and so on, then the theory says it should be possible to make both our generation and future generations better off. ...
With the GOP set to make significant electoral gains on November 2nd, Republican Senator Lindsey Graham is urging the GOP to work together with Democrats and President Obama in the coming Congress to make bipartisan progress on the nation's energy challenges. But the South Carolina Republican pointedly rejected further work on a cap-and-trade proposal he briefly backed during the 110th Congress.
According to E&E news (subscription required) Graham recently told South Carolina's WVOC radio last night:
"My belief is, if we get back in power in the House and get close in the Senate, that we ought to really clamp down on spending and reform the government. ... But we ought to not put ourselves in the position of being the party that said 'no' to hard problems, that we ought to ... come up with an energy policy without cap and trade that will create energy jobs in America, break our dependency on foreign oil and clean up the air. ... There's plenty of things that we could do that would be good for job creation by challenging the president to come to the middle and find ways to move forward as a nation, and put the burden on him to say 'no' to us."
Graham added:
"Energy legislation in the Senate has stalled, and our energy policy in America is nonexistent. The EPA's going to start regulating carbon in January if the Congress doesn't act. So one of the real priorities of the Congress and the nation ought to be energy independence."
Support for a technology-first approach to America's energy and climate needs is rapidly growing in the wake of the October 14 release of the "Post-Partisan Power" proposal by scholars at the Brookings Institution, AEI and Breakthrough Institute. Here is a sampling of the many reactions and widespread discussion generated by the report...
Joshua Green, Atlantic Monthly & Boston Globe: "Unlike most of what gets introduced just before an election, this was not a soon-to-be-forgotten political ploy, but a long-term project to accomplish what Congress and the president could not: put the country on the path to a clean energy future."
David Leonhardt, New York Times: [T]he death of cap and trade doesn't have to mean the death of climate policy. The alternative revolves around much more, and much better organized, financing for clean energy research. It's an idea with a growing list of supporters, a list that even includes conservatives -- most of whom opposed cap and trade."
Tim Mak, Frum Forum (a site started by former Bush speechwriter David Frum): "If Americans want to fight the challenges of climate change and reduce their dependence on foreign oil, this piece sets a good baseline for discussion."
Ezra Klein, Washington Post: "It's not that PPP is a sure thing, nor that it will pass Congress anytime soon. The Tea Party Republicans will need to sow their wild and crazy oats for awhile before they feel any need to tack to the center. But when they do, they aren't going to embrace cap and trade. They might, on the other hand, embrace a limited and direct approach to energy innovation."
Michael Levi, Council on Foreign Relations: [T]his idea may well make a lot of sense... most of the paper is actually a smart and thoughtful discussion of how to do energy innovation policy right".
Kirsten Powers, New York Post: " If America wants to remain the leader of the world economy, Washington has to attack this issue."
Bryan Walsh, TIME Magazine: "A truly bipartisan approach on energy and climate won't be easy--sometimes, especially right before an election, it seems completely impossible--but it's the only approach we can hope for, if we still hope."
Nature: "[G]iven the lack of consensus in other areas, long-term R&D intended to bring the cost of clean energy down might well be one area where lawmakers will be able to agree."
Case Western professor Jonathan Adler writes: "While not without flaws, the proposal represents a serious alternative to politically-moribund cap-and-trade proposals and the regulate-everything mindset that produced the Waxman-Markey bill."
Newsweek: "Cap-and-trade is on life support, but its weakness is giving other ideas room to breathe. Emerging proposals focus on investment in clean energy, pitched to the public with a narrative that omits a doomsday point of view about global warming and instead focuses on more practical considerations like job creation or the need to stop certain types of pollution."
All that convergence around a politically centrist, technology-first approach alarmed some climate warriors on left and right.
Climate skeptic Steven Milloy of Green Hell blog (and Junkscience.com) wrote: "The left isn't oscillating at all. They are focused on establishing a one-world socialist paradise. Whatever path gets the comrades there, they'll follow. Global warming has just been there most successful gambit to date."
Said Grist.org's David Roberts: "The Republican Party don't want to spend government money on clean energy, Hayward notwithstanding."
Joe Romm, ClimateProgress.org: [It] should also be obvious we're not going to get a massive federal clean energy program either."
Not all long-time climate warriors were sour on the proposal.
While EDF chief economist Nathaniel Keohane reiterates that "we need both cap and trade and sustained investment in clean energy R&D," he went on to tell the New York Times' David Leonhardt, "if it turns out that we can't get cap and trade in the near term, we need R&D investment all the more."
Harvard's Robert Stavins still insists "there is no other feasible approach that can provide meaningful emissions reductions" beyond cap and trade, but he acknowledges: "New path-breaking technologies will be needed to address climate change, and public support for private-sector or public-sector R&D will be crucial to meet this need."
MIT's Michael Greenstone, a long-time cap and trade supporter, isn't so sure about the real-world viability of the policy he once advocated. "The first best hope was getting a world price for carbon, and that now looks remote in the coming years," he told Leonhardt. "But there are ways in which the other options may be preferable to a price only in the U.S." Greenstone endorses the need for $25 billion in clean energy R&D investments and rightly explains, "All the action is really going to be occurring in developing countries" who will need clean and affordable energy to power their economic growth.
In a second post, Washington Post's Ezra Klein looks the realpolitik in the face as well and concludes: "The best of all worlds would've been a price on carbon married to a big investment in clean-energy research. But this is not the best of all worlds. This is our world. And this [technology-first proposal] ... might be our last, best chance to protect it."
Update The Washington Post editorial page endorses Post-Partisan Power's call for a bipartisan energy innovation strategy, noting: "Even if cap-and-trade had passed, the logic goes, the government would still have had to invest in scientific research to make green energy affordable; might as well make those investments, anyway ... incremental action is better than none."
Contrary to recent news stories casting controversy over a stimulus-funded clean energy grant program, the program was a successful job creator that in no way wasted taxpayer money.
A slew of critical news articles about a clean energy stimulus program have suggested both that the program is a government boondoggle and that the Obama Administration has inflated the number of jobs supported by the program. Both contentions are misleading.
"The Obama administration is crediting its anti-recession stimulus plan with creating up to 50,000 jobs on dozens of wind farms, even though many of those wind farms were built before the stimulus money began to flow or even before President Barack Obama was inaugurated."
It is true that some of the projects that received funding under the stimulus-funded Section 1603 cash grant program went to projects that had completed construction prior to the stimulus bill. The MSNBC article, written by journalist Russ Choma, notes that 11 of the 70 major wind farms that received grants had erected their wind towers during the Bush Administration.
The problem is that this fact fundamentally misses the point.
A clean energy stimulus program has come under criticism for funding projects that had started construction before the stimulus bill was passed. These criticisms miss the point. The projects would have received an equivalent benefit in a better economy, and the program has been a successful job creator in an industry that was once near collapse.
A stimulus program to boost the deployment of clean energy technology has come under criticism for contributing funds to projects that had started construction before the stimulus bill was passed. A long and in depth Greenwire story notes that 64 percent of the 50 highest dollar grants went to such projects.
While the hastily-constructed stimulus programs for clean energy could have been better optimized, those arguing that the Section 1603 clean energy grant program somehow created a boondoggle are completely off base. Any projects already under construction would have received an equivalent benefit in a better economy, and the stimulus-funded clean energy grant program has been a successful job creator in an industry that was once near collapse.
David Ropeik brings to light a pragmatic point about the psychological challenges to new nuclear power deployment caused by fear of nuclear power:
But, as is often the case with risk perception, emotional filters, more than the facts, determine how afraid we are, or aren't.
Whether this is rational or irrational, right or wrong, is irrelevant. It is, inescapably, how it is. But we must recognize that our response to risk can pose a danger all by itself. Our fear of nuclear power has led to energy economics that favor coal and oil for electricity, at great cost to human and environmental health. Particulate pollution from fossil fuels kills tens of thousands of Europeans every year, and CO2 emissions fuel a potentially calamitous shift in global climate.
No amount of education or good communication can get around this. Subjective risk perception is hard-wired into our architecture and chemistry. What governments can do is to learn what psychological research has established: our perceptions, as real as they are and as much as they must be respected in a democracy, can create their own perils.
With that understanding, government risk assessment can account not only for the facts, but also for how we feel about them and how we behave. That way, we can reduce conflict over nuclear power and other risk issues, and foster wiser and more productive policies for public and environmental health.
After decades of underinvestment, the United States faces a $2.2 trillion repair bill to modernize the nation's crumbling network of public infrastructure, from railways to airports and roads to sewers, according to the American Society of Civil Engineers.
With budgets at the state and federal level pinched by economic recession, and a surging Tea Party skewing American politics towards a new spendthrift mentality, America may soon face diminished economic competitiveness and more potentially dangerous failures of public infrastructure.
In the Independent, British commentator Rubert Cornwell offers a clear-eyed perspective from across the pond on "the silent crisis that is undermining America: the creeping decay of its public infrastructure."
When policies on emissions reductions collide with policies focused on economic growth, economic growth will win out every time. Climate policies should flow with the current of public opinion rather than against it, and efforts to sell the public on policies that will create short-term economic discomfort cannot succeed if that discomfort is perceived to be too great. Calls for asceticism and sacrifice are a nonstarter.
The "iron law" thus presents a boundary condition on policy design that is every bit as limiting as is the second law of thermodynamics, and it holds everywhere around the world, in rich and poor countries alike. It says that even if people are willing to bear some costs to reduce emissions (and experience shows that they are), they are willing to go only so far...
To succeed, any policies focused on decarbonizing economies will necessarily have to offer short-term benefits that are in some manner proportional to the short-term costs. In practice, this means that efforts to make dirty energy appreciably more expensive will face limited success.
...
The unavoidable reality is that policy makers and those they represent are committed to sustaining economic growth, bringing populations out of poverty, and expanding access to energy. Emissions reduction goals will not be achieved by policies that seek to stimulate innovation by constricting, much less by reducing, economic activity.
Yesterday, scholars from the American Enterprise Institute, the Brookings Institution, and the Breakthrough Institute released a joint report proposing a post-partisan way forward on climate and energy policy that moves beyond the framework of cap and trade. The report, "Post-Partisan Power," ignited a firestorm of discussion.
To answer some of major questions about the report, E&E News OnPoint TV host Monica Trauzzi invited Breakthrough Institute Director of Climate and Energy Policy Jesse Jenkins and Brookings' Senior Fellow and Director of Policy for the Metropolitan Policy Program to join her show.
Throughout American history, federal investments in areas like science and technology have been a long-term driver of national prosperity under presidents both Democrat and Republican.
Throughout American history, strategic government investments in areas like education, technology, infrastructure, and energy catalyzed the entrepreneurship and innovation that has paved the way for so many of the great American technological and economic successes of the 20th century. In the words of conservative New York Times columnist David Brooks, the American story is one of "limited but energetic governments that used aggressive federal power to promote growth."
The new report calls for increasing federal innovation investment from roughly $4 today to $25 billion annually, and using military procurement, new, disciplined deployment incentives, and public-private hubs to achieve both incremental improvements and breakthroughs in clean energy technologies. The authors point to America's long-history of bi-partisan support for innovation.
Writes David Leonhardt in today's New York Times, "the death of cap and trade doesn't have to mean the death of climate policy. The alternative revolves around much more, and much better organized, financing for clean energy research. It's an idea with a growing list of supporters, a list that even includes conservatives -- most of whom opposed cap and trade."
Mark Muro of Brookings tells Politico the proposal's four parts "are broadly popular, provide a very broad and appealing American vision of economic transformation and are certainly far more doable than a global pricing system at this point." Added Steve Hayward of American Enterprise Institute, "The entire climate and energy agenda that we've been talking about for several years now has hit a dead end, so it's time to hit the reset button."
The new report calls for increasing federal innovation investment from roughly $4 today to $25 billion annually, and using military procurement, new, disciplined deployment incentives, and public-private hubs to achieve both incremental improvements and breakthroughs in clean energy technologies. The authors point to America's long-history of bi-partisan support for innovation.
Writes David Leonhardt in today's New York Times, "the death of cap and trade doesn't have to mean the death of climate policy. The alternative revolves around much more, and much better organized, financing for clean energy research. It's an idea with a growing list of supporters, a list that even includes conservatives -- most of whom opposed cap and trade."
Mark Muro of Brookings tells Politico the proposal's four parts "are broadly popular, provide a very broad and appealing American vision of economic transformation and are certainly far more doable than a global pricing system at this point." Added Steve Hayward of American Enterprise Institute, "The entire climate and energy agenda that we've been talking about for several years now has hit a dead end, so it's time to hit the reset button."
As the Times's Leonhardt explains the new post-partisan proposal, and the growing energy innovation consensus surrounding it, "reflect[s] the political reality that raising the cost of dirty energy is unpopular, especially when the economy is so weak. Finding the money to make clean energy cheaper, even when government budgets are tight, will probably be an easier sell."
While cap and trade legislation became embattled by partisan wars over climate science and compromised to the point of inefficacy, Leonhardt reminds readers that there is a successor strategy waiting, if one only turns to the long, bipartisan history of American technological leadership.
"[H]istory shows that government-directed research can work," Leohardt writes.
"The Defense Department created the Internet, as part of a project to build a communications system safe from nuclear attack. The military helped make possible radar, microchips and modern aviation, too. The National Institutes of Health spawned the biotechnology industry. All those investments have turned into engines of job creation, even without any new tax on the technologies they replaced.
"We didn't tax typewriters to get the computer. We didn't tax telegraphs to get telephones," Breakthrough Institute's Michael Shellenberger told the Times. "When you look at the history of technological innovation, you find that state investment is everywhere."
And in that history, lies a new path forward to deliver clean cheap energy, economic productivity, and national prosperity.
By Steven F. Hayward, American Enterprise Institute; Mark Muro, Brookings Institution; Ted Nordhaus and Michael Shellenberger, Breakthrough Institute
If ever there were a time to hit the reset button on energy policy, it is today. Congress is set to adjourn without taking substantive, long-term action on either climate or energy. While conservatives may be celebrating the death of cap and trade, the truth is that the right's longstanding hopes for the expansion of nuclear power and oil production have also run aground, foundering on the high cost of constructing new nuclear plants and the impacts of the devastating oil spill in the Gulf of Mexico. As a result, energy policy is at a standstill, despite overwhelming public support for accelerating the move to clean, affordable energy sources and tapping fast-growing clean energy industries to create jobs and wealth in the United States.
The upcoming climate negotiations may be the last under the direction of the United Nations Framework Convention on Climate Change, as negotiators grow increasingly frustrated with empty promises and little progress on emissions reductions.
The upcoming climate negotiations may be the last under the direction of the United Nations Framework Convention on Climate Change (UNFCCC), according to some negotiators. The mood at the run-up to the negotiations, which are set to take place in Cancun, Mexico at the end of November, is largely austere as even negotiators recognize the increasing futility of the U.N. emissions reduction framework.
Last year's climate negotiations in Copenhagen were an outright failure, ending without the "comprehensive or legally binding" emissions treaty that climate advocates had hoped for. As Michael Shellenberger and Ted Nordhaus have argued, the Copenhagen negotiations were contrived from the start, characterized by countries' empty promises of emissions reductions that they did not have the intention, nor the capabilities to fulfill.
And even the Natural Resources Defense Council (NRDC), who once spoke of the Copenhagen Accord as a monumental success and breakthrough for international climate cooperation, now acknowledges the contrivance that characterizes the UN framework. Jake Schmidt, international climate policy director for the NRDC, recently wrote of the run-up to Cancun:
" 'There is such a huge contrast between what countries are doing at home and what they say at these international negotiations,' he wrote. 'It is like living in a parallel universe where one side is talking in a made-up language.' "
Part of the problem, as the New York Times' Andy Revkin notes, is that it's difficult to "find a consensus among 192 variegated countries that doesn't require reams of waffle words and few firm steps."
Just as important, as the Breakthrough Institute has repeatedly argued, the fixation with targets and timetables detracts from the overarching and critical necessity of transforming and modernizing the global energy system in order to curb carbon dioxide emissions. Without a reframing of international climate negotiations, and a concerted and focused effort to drive global investment in clean energy, emissions reductions targets and promises will remain empty and unfulfilled.
This may be the last breath for climate negotiations under the UNFCCC, as negotiators grow increasingly frustrated and the public realizes the emptiness of promises made, but it remains to be seen if a necessary new framework, centered on clean energy investment and innovation, can take its place.
Earlier this month, we posted early reviews of the book, but since then "The Climate Fix" has received more high acclaim. In addition to the reviews below, you'll find an excerpt from Pielke Jr.'s interview with the Houston Chronicle as well as details about upcoming book events and ways to get your hands on a copy.
More and more clean energy businesses are becoming trapped in the clean energy technology "Valley of Death"--the research phase after proof of concept but before commercial production--where companies often need continued funding to survive. Unfortunately, as a result of the bad economy and a lack of venture funding, "that valley is getting even deadlier," according to a new story in the San Francisco Chronicle:
Most [VC Fims] placed their bets with the expectation that they would cash out in five to seven years. In the new normal, that horizon is getting pushed out.
It has long been recognized that promising clean tech firms need more patient capital to navigate the Valley of Death. New federal institutions have been proposed to address this issue, but such proposals are languishing in Congress as the clock runs out on the Congressional calendar. One such proposal, championed by Senator Jeff Bingaman (D-NM), is the Clean Energy Deployment Administration (CEDA). CEDA would utilize a suite of flexible credit enhancement tools, including loan guarantees, securitization, and insurance, that would reduce risk for investors in cutting-edge clean energy technologies.
There is also a greater recognition that the Department of Defense can and should play a critical role in financing the advanced demonstration and early commercialization of promising clean energy technologies, particularly those with dual-use military applications.
Ultimately, a much greater role for federal investment is required, as even private sector financiers and investment bankers have come to recognize:
"Venture capital has been very good at driving technology," says [Goldman Sachs clean energy investment analyst] Bolster. But even VCs don't have pockets deep enough to pay for scaling up these capital-intensive businesses. "When it comes time to write that $500 million to $1 billion check, nobody's home."
With critical stimulus investments soon expiring, the success of the nation's clean energy entrepreneurs will depend on whether Congressional leaders can cut through the anti-government ideology threatening to take root in Washington and provide the investments necessary to build a robust clean energy economy.
The oft-told story of Science as the central driver of environmental progress is wrong. No scientific consensus was required for Congress to take action on either ozone or acid rain. The decisive trigger, writes Roger Pielke, Jr. in his eye-opening new book The Climate Fix, was technology innovation -- cheap alternatives to CFCs and sulfur-heavy coal.
This week sees the publication of Roger Pielke, Jr.'s long-awaited book, The Climate Fix, which comes at a time when other politically centrist voices are calling for a new focus on technology innovation in the wake of the failure of U.N. treaty talks, and the fourth failure of cap and trade in the U.S. Over the last decade, Pielke, a Breakthrough Senior Fellow, has published a string of peer-reviewed studies of climate change mitigation and adaptation that have altered the debate over global warming.
Here's the latest in our irregular Friday Factoids series, provided as usual without comment...
According to the U.S. Energy Information Administration, the statistics and forecasting agency of the U.S. Department of Energy, a substantial price gap remains between the levelized cost of new renewable electricity sources and conventional fossil fuel power plants. Their cost estimates are for new power generation equipment constructed in 2016 and reported in 2008 constant dollars (see graphic below).
Electricity from new onshore wind power, for example, is 49% more expensive than electricity from new conventional coal-fired power plants, and 80% more expensive than electricity from a conventional natural gas-fired combined cycle power plant, according to EIA estimates. Wind power built offshore is 28% more costly than onshore wind, says the EIA.
Electricity from new utility-scale solar photovoltaic (PV) power plants and solar thermal power plants are roughly 5x and 3x more expensive, respectively, than natural-gas fired combined cycle power plants, and roughly 3x and 2x more expensive, respectively, than conventional gas-fired combustion turbines, according to EIA figures.
[Originally published 10.28.10 in The New Republic.] President Obama's strategy for economic renewal through clean energy was flawed from the start, too over-reliant on cap and trade and public works programs to retrofit buildings for energy efficiency. To succeed, a new industrial economy requires large, sustained investments in innovation and manufacturing like the kinds that built America's information technology and biomedical industries.
An abridged version of this article appears in the October 28, 2010 print edition of The New Republic (and online here, subscription required)
In August 2008, then-candidate Barack Obama traveled to Lansing, Michigan, to lay out an ambitious ten-year plan for revitalizing, and fundamentally altering, the American economy. His administration, he vowed, would midwife new clean-energy industries, reduce dependence on foreign oil, and create five million green jobs. "Will America watch as the clean-energy jobs and industries of the future flourish in countries like Spain, Japan, or Germany?" Obama asked. "Or will we create them here, in the greatest country on earth, with the most talented, productive workers in the world?"
Two years later, the answer to that second question appears to be no. Obama's environmental agenda is in tatters. His green jobs plan has done little to make a dent in unemployment, which persists at close to 10 percent. Obama's signature environmental initiative, cap-and-trade, died in the Senate in July. And, during the first year of Obama's tenure, China massively outspent the United States on clean-energy technology.
The story of how Obama's green agenda came up empty is more complicated than the one conventionally told by Democrats and greens, who imagine that cap-and-trade would have been transformational had Republicans and global-warming deniers not gotten in the way. In truth, the president's strategy was flawed from the start. Cap-and-trade would not have birthed a domestic clean-energy economy -- indeed, it wasn't designed to. Meanwhile, the administration's green stimulus spending was split between short-term, if worthy, investments in green technology, to which far too little money was allocated, and over-hyped public-works projects that would never have delivered the new industrial economy Obama promised as a candidate.
This is a guest-post by Daniel Goldfarb and Adam Sieff, originally published at LeadEnergy.org
When does inaction on energy reform go too far? When it risks our nation's economic health? When it leads our planet towards environmental catastrophe? Surely we must draw a line when it puts American soldiers directly in harms way. A recent New York Times article suggests that the military has seen enough, and in the absence of Congressional action, is taking the lead on developing clean energy technologies.
This new role for the military should come as no surprise. The Department of Defense is the largest single consumer of energy in the United States. In 2007, it consumed 1,100 trillion BTU's--more than the entire country of Nigeria and at a higher per-capita rate than all but three countries in the world. The DoD further estimates that for every $10 increase in the per barrel price of oil, it costs the military $1.3 billion. At the same time, energy is the key enabler of US military combat power. American military force is tethered to increasingly vulnerable fuel supplies: "In Iraq and Afghanistan, one Army study found, for every 24 fuel convoys that set out, one soldier or civilian engaged in fuel transport was killed."
The failure of Congress to pass a new budget after the November elections could put a successful energy innovation program at death's door. The Department of Energy's Advanced Research Projects Agency for Energy (ARPA-E), which funds teams of entrepreneurs to develop high-risk, high-reward energy breakthroughs that could deliver game-changing results, is at risk of being zeroed out of next years budget.
The agency was first authorized in 2007 under President Bush, but didn't receive appropriated funding until the passage of the American Recovery and Reinvestment Act (ARRA) stimulus legislation, which allocated $400 million to the program. The program is widely viewed by business leaders as a success, and has successfully committed competitive grants to many of the countries top entrepreneurs and innovators.
Yet, as ARRA funds expire, ARPA-E is in danger of not receiving the federal commitment it needs to survive at the same time as other nations are redoubling their efforts to invest in clean energy innovation.
Here's the deal: Rather than pass a new budget, Congress recently passed a "Continuing Resolution" to temporarily extend fiscal budgets from FY 2010--which ended on September 30--until December. However, ARPA-E only received $15 million in FY2010, just enough to keep the lights on. If Congress comes back after the election and passes another Continuing Resolution into next year rather than passing a new budget, ARPA-E could be inadvertently zeroed out, unable to make new grants and fund innovative research projects that help create a clean energy economy and have the potential to drive economic growth.
In a letter sent last week, the Breakthrough Institute, Third Way, and the Information Technology and Innovation Foundation urged House and Senate leaders to support ARPA-E after November. You can read the letter below, or download PDF copies here (House) and here (Senate).
September 30, 2010
Senator Daniel Inouye
Chairman, Appropriations Committee
S-128 U.S. Capitol, Washington D.C. 20510
Senator Thad Cochran
Ranking Member, Appropriations Committee
S-128 U.S. Capitol, Washington D.C. 20510
Senator Byron Dorgan
Chairman, Subcommittee on Energy and Water Development
322 Hart Senate Office Building, Washington, DC 20510
Senator Robert Bennett
Ranking Member, Subcommittee on Energy and Water Development
431 Dirksen Senate Office Building, Washington, D.C. 20510
Dear Senator Inouye, Senator Cochran, Senator Dorgan, and Senator Bennett:
We are writing to urge you to fully fund the Advanced Research Projects Agency-Energy (ARPA-E) at $300 million for 2011 before the 111th Congress adjourns. This program embodies the kind of smart, targeted use of tax dollars to develop next generation technologies that helped propel American economic growth throughout the 20th century. By providing this funding, we can help ensure that affordable clean energy innovations are developed and commercialized in the United States, leading to the cutting-edge American companies and new jobs that will help drive private sector growth well into the 21st century. A failure to fund ARPA-E this year would essentially zero out a program that is critical to America's ability to compete in the global market and transition to clean energy. Much of the world is moving to clean energy. Countries from China and India to Spain and South Korea are no longer willing to tolerate the costs of pollution, security threat of relying on foreign oil and the dangers of a warming planet. These nations are investing billions of dollars to develop, manufacture, and adopt affordable, new technologies that can produce clean energy as cheaply as fossil fuels. The countries that do this first will reap enormous economic and environmental benefits.
America excels at precisely this kind of challenge. Throughout this country's history, mission-focused government agencies and America's entrepreneurial private sector worked together to develop dozens of new technologies and entire new economic sectors, from commercial aviation and nuclear power, to microchips, the Internet and biotechnology.
Despite America's long history of effective public-private innovation partnership, the U.S. has not followed this successful model with clean energy. Well into the 2000s, neither the private sector nor government dedicated the money or brainpower needed to solve practical, commercially applicable clean energy challenges.
In 2007, the 110th Congress passed, and President Bush signed into law, legislation to create ARPA-E, modeled on the extremely successful Defense Advanced Research Projects Agency (DARPA). Over the last four decades, DARPA's small staff and budget has had a huge impact, giving birth to a number of significant innovations including the Internet, Global Positioning Systems and unmanned aerial vehicles (UAVs).
Today, ARPA-E can do the same for clean energy, leading to new energy storage systems, air-based wind turbines or advanced vehicles as groundbreaking--and with as much potential to spur economic growth--as the DARPA-led innovations of the past. At a time when we are competing against countries like China, which is investing $738 billion over the next ten years to beat us to market with cheap, clean energy technologies, we cannot afford to stand still.
Congress recognized the importance of ARPA-E when it provided $388 million for the program in 2009. Without investments like this, started under President Bush and continued by President Obama, we will be abandoning the kind of targeted innovation that fueled an American century of new ideas and economic growth. That is why Congress should keep ARPA-E's research on track and fully fund it this year, so America's engineers and entrepreneurs can keep doing what they do best: invent cutting-edge technologies that will move us to clean energy and drive economic growth.
Sincerely,
Josh Freed
Director, Clean Energy Program
Third Way
Michael Shellenberger
President
The Breakthrough Institute
Rob Atkinson
President
Information Technology and Innovation Foundation
Just before lawmakers left Washington on Friday to focus full time on the November elections, Senators Jeff Bingaman (D-NM) and Olympia Snowe (R-ME) introduced a package of tax incentives intended to support domestic clean energy manufacturing as investment from temporary stimulus measures expire. (E&E News Subs. Req.)
The bipartisan bill includes $2.5 billion to extend the section 48C Advanced Energy Manufacturing Tax Credit, which would help domestic manufacturers retool or expand their operations to produce clean energy technologies. That tax credit is due to expire with the stimulus. As the Breakthrough Institute has long argued, incentives like these are critical to help U.S. companies compete in global clean energy markets and create jobs at home.
"Without a policy focused on the supply side (e.g., developing a robust clean tech industry in the United States), there is a very real chance that any policies to spur demand for clean energy will simply result in that demand being filled by foreign supply. If that is the case and the United States continues to run trade deficits in clean energy, the United States will be a net loser of jobs in this growth industry."
A short lame-duck session planned for after the November elections is now all that remains between the expiration of critical clean energy manufacturing tax credits and the continuation of America's clean tech momentum.
Despite average cash injections of $2bn annually over recent years and large untapped gas reserves, electricity capacity remains at about 40 watts per capita, roughly enough to run one vacuum cleaner for every 25 inhabitants.
China manages 466 watts per person, Germany 1,468. South Africa, the continent's economic powerhouse, generates 10 times as much electricity as Nigeria for a population one-third the size.
Officials calculate that the potential activity stymied by lack of electricity amounts to $130bn a year.
In the absence of a functioning grid, those who can afford it, spend about $13bn a year running the small generators whose rattle and sputter is the soundtrack of urban life. The poorest 40 per cent have no access to electricity.
Banks estimate that spending on power drives up their costs by 20 per cent, helping push interest rates well beyond what small businesses can afford.
Potential investors are hardly filled with confidence when the lights go out at ministries or - terrifyingly - airports.
The article has two very powerful quotes:
As Babatunde Fashola, Lagos state governor, said of the [Nigerian business conference] audience: "For them, electricity has become as important as oxygen."
And:
As if the audience needed reminding, the organisers added: "The cost of darkness is infinite."
If you want to focus on a single metric that tells you how fast an economy is decarbonizing (that is, reducing its ratio of carbon dioxide emissions to GDP) then you should focus on changes in the proportion of energy consumption from carbon neutral sources. For any nation to hit emissions reductions targets, and the world to hit low stabilization targets the simple mathematics indicate that annual decarbonization rates will have to exceed 5% in most national economies.
The UK has suffered a second fall in renewable energy production this year, raising concern about the more than £1bn support the industry receives each year from taxpayers.
The drop in electricity generated from wind, hydro and other clean sources in the first half of 2010 could also be a setback to the coalition government's promise that the UK could help lead a "third industrial revolution" and create a low-carbon economy.
The DECC today said lower than expected wind speeds and rainfall led to a 12% fall in renewable electricity generated between April and June, compared to the same period in 2009. This setback follows a smaller but still notable decline between January and March, again compared to last year.
With a sharp drop in output from nuclear power stations as well, greenhouse gas emissions from each unit of electricity generated will inevitably have risen, at a time when the UK has pledged to cut such pollution, and is pressing other countries to do the same.
The renewable energy figures are likely to prompt criticism of the government's energy policies from all sides. Supporters want ministers to increase funding for green industry so more wind farms are built, reducing the risk of seasonal set backs; critics will say the government should instead increase support for energy efficiency, nuclear power or cleaner forms of burning fossil fuels.
The changes in the UK energy mix suggest that the economy has become more carbon intensive as gas has increased at the expense of nuclear power:
The latest energy statistics for the second quarter of 2010 show total energy production in the UK was 9.2% lower than the same period last year, while final energy consumption was 1.8% higher. Among the different fuels, output from oil and coal fell, while only gas increased its output, by 7.1%. It was a similar picture for electricity alone: coal power stayed steady at about 23% of electricity supplied, nuclear output fell by 23% to 15.8%, and gas production rose by more than 10% to over half of all electricity.
