In an all-to-predictable swipe at new fuel economy standards currently being negotiated by the White House and the auto industry, the arch-conservative Heritage Foundation invokes rebound effects as the latest reason to oppose increased auto efficiency:

When it comes to greenhouse gas emissions, The Atlantic's Megan McArdle notes that fuel efficiency standards will reduce carbon dioxide emissions, "but not by as much as advertised, because more fuel efficient cars make driving cheaper, so people will do more of it. This 'rebound' effect robs about 25% of gains, and also means more congestion, and more wear-and-tear on roads." The rebound effect also takes away some of the estimated cost savings and oil reduction.

Let's ignore for a moment the rich irony inherent in the Heritage Foundation expressing any concern about the efficacy of auto efficiency standards in cutting carbon emissions...

Rather, let's focus on the economic implications of rebound effects, which Heritage gets exactly backwards here. If improved vehicle efficiency triggers a rebound in demand for the energy services derived from personal transportation, that rebound represents an unequivocal improvement in economic welfare at the individual level and a sign of improved productivity and growth at the economy-wide level. Last we checked, Heritage was all for economic growth and improved individual welfare.

Continue reading "Heritage Foundation Gets Rebound Effect Backwards in Fuel Economy Attack" »

The following was written by Matthew Stepp, Clean Energy Policy Analyst at the Information Technology and Innovation Foundation, and is cross-posted from the Innovation Policy Blog.

There's no telling what the future of new U.S. clean energy policy holds. Congress and the White House are stalled in legislative gridlock over the debt ceiling. And clean energy programs are taking a beating in 2012 budget negotiations. But even so, some legislators are taking it upon themselves to offer cohesive clean energy innovation initiatives that are an excellent framework for future energy policy debates. Case in point, Senator Debbie Stabenow (D - MI) proposed the Battery Innovation Act of 2011(BIA) - a comprehensive advanced electric vehicle battery initiative.

As it stands, affordable, energy dense batteries that can travel long distances on a single charge are a key barrier to widespread electric vehicle adoption. And as I've discussed in an earlier post, the current advanced battery technology strategy at DOE is more disparate than coordinated. So BIA is a welcomed and excellent first step in addressing this weakness in U.S. energy policy.

BIA addresses the full range of advanced vehicle battery technology development. The most significant standout in the proposal is its focus on addressing the numerous stages of technology development. BIA supports battery innovation from basic research through manufacturing as well as attends to the growing need for rare, but critical materials in battery production. For instance it orders the Department of Interior to conduct a much needed analysis of the raw materials used in vehicle batteries with special attention on U.S. supply and reliance on those materials. The reliance on rare materials, such as cerium and yttrium, in current electric vehicle battery designs puts the United States at a significant disadvantage. China currently produces 97 percent of the these materials, meaning that without significant domestic supply or the innovation of viable substitute materials we could be trading in our reliance for foreign oil in exchange for a reliance on foreign rare materials. This study would be in line and complementary to DOE's critical materials strategy released late last year.

Continue reading "Clean Energy Innovation Policy in Congress: The Battery Innovation Act of 2011" »

Full Report Overview

The best way to move forward on climate policy is to not focus on climate at all.

That's the conclusion of new report by authors from Oxford, London School of Economics, Third Way, the American Enterprise Institute, the Breakthrough Institute and others. Climate Pragmatism argues that we can move past the climate wars by focusing on what we already agree on: energy innovation, pollution reduction, and resilience to extreme weather.

While there is no evidence -- and indeed, great counter-evidence -- that nations can reduce their carbon emissions through caps, there is more than 200 years of evidence of nations moving to cleaner energy, reducing toxic air pollution, and adapting to the climate. These three pillars of climate pragmatism swim with, rather than against, the process of human development and modernization.

In a story for Time Magazine, environment writer Bryan Walsh writes:

The "Climate Pragmatism" paper explodes a myth that's held by many greens: that energy is too cheap. For most of the world, the opposite is true, which is why more than 1.4 billion people lack virtually any access to electricity. That's an astounding figure, but one that rarely gets the attention it deserves. Lack of electricity impacts public health -- try running a modern hospital without any power -- and retards economic growth. If we want developing nations to be better prepared to deal with the effects of climate change -- or just about any other threat -- we need to get them wired.

Where the old climate regime spent 20 years developing a bureaucracy waiting on the two largest emitters -- China and the U.S. -- Climate Pragmatism says that we can get started right away doing more of the things we already agree on and have great experience doing.

Such an approach disappoints climate warriors and partisans. Al Gore, for one, is organizing another day of PowerPoint lectures. But public support for the environment is at more than 30 year-low, cap and trade is dead, perhaps for good, and global warming has become as partisan and polarizing an issue as abortion and gun control.

Climate Pragmatism also comes at a time when national political leaders are moving toward a more pragmatic approach to climate. In the Guardian/Yale360, we argue that Obama's greatest contribution to the environment was moving the Democratic discourse away from global warming apocalypse and toward economic aspiration. Last week, when New York Mayor Bloomberg donated $50 million to anti-coal activism, he pointedly framed his remarks around public health, not climate change.

Climate warriors and skeptics will, to be sure, keep their 20-year feud alive. But they may no longer impede climate progress.

Full Report Overview

Climate Pragmatism, a new policy report released July 26th by the Hartwell group, details an innovative strategy to restart global climate efforts after the collapse of the United Nations Framework Convention on Climate Change (UNFCCC) process. This pragmatic strategy centers on efforts to accelerate energy innovation, build resilience to extreme weather, and pursue no regrets pollution reduction measures -- three efforts that each have their own diverse justifications independent of their benefits for climate mitigation and adaptation. As such, Climate Pragmatism offers a framework for renewed American leadership on climate change that's effectiveness, paradoxically, does not depend on any agreement about climate science or the risks posed by uncontrolled greenhouse gases.

The new report brings the Hartwell framework into an American perspective, and it is authored by a broad group of 14 international scholars and analysts representing a diverse range of political and ideological positions -- from the conservative American Enterprise Institute to moderate Democratic think tank Third Way and the liberal Breakthrough Institute.

Click here to read a statement on the report from Breakthrough Founders Michael Shellenberger and Ted Nordhaus

Climate Pragmatism is the third paper released by the Hartwell group, an informal international network of scholars and analysts dedicated to innovative strategies that uplift human dignity through mitigation of climate risk, enhancement of disaster resilience, improvement of public health, and the provision of universal energy access. Previous publications include The Hartwell Paper (May 2010) and How to Get Climate Policy Back on Course (July 2009).

Climate Pragmatism also builds on the limited and direct energy technology innovation strategy outlined by the Breakthrough Institute along with scholars at the American Enterprise Institute and Brookings Institution in the October 2010 policy report, Post-Partisan Power.

As the report's authors explain:

The old climate framework failed because it would have imposed substantial costs associated with climate mitigation policies on developed nations today in exchange for climate benefits far off in the future -- benefits whose attributes, magnitude, timing, and distribution are not knowable with certainty. Since they risked slowing economic growth in many emerging economies, efforts to extend the Kyoto-style UNFCCC framework to developing nations predictably deadlocked as well.

The new framework now emerging will succeed to the degree to which it prioritizes agreements that promise near-term economic, geopolitical, and environmental benefits to political economies around the world, while simultaneously reducing climate forcings, developing clean and affordable energy technologies, and improving societal resilience to climate impacts. This new approach recognizes that continually deadlocked international negotiations and failed domestic policy proposals bring no climate benefit at all. It accepts that only sustained effort to build momentum through politically feasible forms of action will lead to accelerated decarbonization.

Continue reading "Climate Pragmatism: Innovation, Resilience and No Regrets" »

Twenty-three years ago, Ronald Reagan addressed the nation to defend federal investments in research and development, even amidst dire budgetary constraints, prefacing the innovation hawks of today. The following is excerpted from Reagan's 1988 national address:

Federal funding for science is in jeopardy because of budget constraints. That's why it's my duty as President to draw its importance to your attention and that of Congress.

...The remarkable thing is that although basic research does not begin with a particular practical goal, when you look at the results over the years, it ends up being one of the most practical things government does... Major industries, including television, communications, and computer industries, couldn't be where they are today without developments that began with this basic research.

...one thing is certain: If we don't explore, others will, and we'll fall behind. This is why I've urged Congress to devote more money to research. After taking out inflation, today's government research expenditures are 58 percent greater than the expenditures of a decade ago. It is an indispensable investment in America's future.

...Some say that we can't afford it, that we're too strapped for cash. Well, leadership means making hard choices, even in an election year. We've put our research budget under a microscope and looked for quality and cost effectiveness. We've put together the best program for the taxpayers' dollars. After all, the American tradition of hope is one we can't afford to forget.

It's not often that we agree with Ronal Reagan's policy prescriptions. But even Reagan recognized the difference between productive government investment and government spending, and called for increased investments in science and innovation even at a time of tight fiscal concerns. Reagan's speech stands in stark contrast to the ideology of modern-day Congressional Republicans, who continue to push cuts to critical federal investments in energy innovation, wholly disregarding the critical role that federal investments in innovation have played in driving the nation's economic growth.

Breakthrough's Michael Shellenberger and Ted Nordhaus are part of a panel of experts convened by Yale Environment 360 to assess President Obama's record on the environment. Shellenberger and Nordhaus write that Obama erred in promoting a failed cap and trade agenda that was destined for defeat, rather than fight for a long-term sustained investment in advanced energy technologies that could make clean energy cheaper and foster economic renewal. Yet Obama has smartly reversed course, embracing a new energy innovation agenda:

During his State of the Union, the president famously asked, "Shall we surrender to our surroundings, or shall we make our peace with nature and begin to make reparations for the damage we have done to our air, to our land, and to our water?"

President Obama in 2010? No, President Nixon in 1970. Where the Republican president would go on to sign landmark environmental legislation into law, the Democratic one would watch cap-and-trade -- and the prospects of a global climate treaty -- go down in ignominious defeat. Some insist that had Obama's rhetoric been equally soaring, cap-and-trade would have passed. But Nixon was symptomatic of an era when Americans overwhelmingly favored environmental protection, even if it curbed economic growth. Obama's problem was with his policy agenda, not his rhetoric. The president's own agencies predicted cap-and-trade would increase unemployment. Had Obama instead sought a big, long-term investment in advanced energy technology -- like the kind candidate Obama promised in 2008 -- he might have succeeded.

Where Obama has succeeded is in rejecting the apocalyptic for the aspirational. While some of his signature stimulus program was wasted on low-wage efficiency jobs, other parts were invested in advanced energy technology and manufacturing. His 2011 State of the Union stressed the critical role innovation plays in driving growth. And he has remained steadfast in his support for nuclear power.

Where the environment was once a bipartisan issue, climate change has made it quintessentially partisan. While Obama's focus on cap-and-trade no doubt polarized the national energy debate, he has since self-corrected to focus on energy technology innovation. Whether or not anti-government Tea Partiers or apocalyptic greens can ever get behind that agenda, Obama has charted a course that holds the potential for Americans to embrace technology and innovation as the key to having both economic growth and environmental protection.

Continue reading "Assessing Obama's Environmental Record" »

Cross-posted from Roger Pielke Jr.'s Blog

I have been following closely, but not writing much on, the debate in Australia over Julia Gillard's proposed carbon tax.  How it plays out will be fascinating to watch and will provide as much a lesson in Australian politics as anything to do with climate policy.

This report from The Australian provides a great example of how politicians can make life extremely difficult for those experts who share their goals:

The Prime Minister took her carbon tax pitch to the heart of Australia's $40 billion coal sector today, telling NSW miners her plan wouldn't place their jobs at risk.

 Ms Gillard told workers at Mandalong's Centennial Coal, in the Hunter Valley, that the mine would stay open for as long as there was coal in the ground.

"This mine will continue to work for those 20, 25 years," she said. "It will continue to be here until the end of its productive life."

She goes further even,

The federal government has committed $1.3 billion to protect coal jobs, while Treasury modelling says the industry's output will more than double between 2010 and 2050 under the carbon tax.

But it also says the proportion of Australia's energy supply derived from coal will fall from 80 per cent now to 20 per cent within 40 years. . .

Earlier, Ms Gillard was tackled on ABC radio over the impact of her carbon tax on Australia's biggest coal port.

"How can (the tax) not have a negative impact on economic growth in this region?" an ABC Newcastle presenter asked.

The Prime Minister said Australia would continue to export coal under her carbon tax, dismissing suggestions Chinese demand would tail off as a result.

"There's a strong future for coal mining in this country, it will continue to grow. Employment will continue to grow," she said.

Tony Abbott, the opposition leader, is plenty happy to hear this line of argument from Gillard:

But the Opposition Leader, speaking in Victoria, said the government plan clearly stated that coal would produce just 20 per cent of the nation's power by 2050.

"The Prime Minister should stop trying to pull the wool over the eyes of people in coal mining regions," Mr Abbott said.

"The whole point of a carbon tax is to get us using less coal. That means less production, less investment and less employment in the coal industry." . . .

Mr Abbott said: "How can it be that it is wrong to burn Australian coal in Australia but it is somehow right to burn Australian coal in China?"

Gillard may or may not believe what she is saying about the future of coal production in Australia -- politicians say all sorts of things in the heat of political battle.  What would be interesting would be to see how policy experts who know better who support the proposed tax respond to a question such as the following:

Is Julia Gillard's commitment to increasing coal production in Australia in the coming decades consistent with efforts to accelerate the decarbonization of the global economy?

From a policy or mathematical perspective there is an obviously correct answer to this question -- No.  It may be the case in the context of Australia's current debate that from a political perspective (as a matter of crass expediency) there is a different answer.  How experts deal with this conflict between policy and politics makes for an interesting case study in the politics of expertise.

One the one hand, if an expert answers the question posed above accurately, then s/he will be seen as giving support to the criticisms levied by Tony Abbott against the proposed tax.  On the other hand, if the expert supports the claims made by Julia Gillard, then s/he will be saying something that is incorrect, giving further ammunition to the opposition.  What would you do? 

I'll be looking for how experts address this issue, and I'd welcome your pointers as well.

By Alex Trembath and Devon Swezey

Yesterday, New York Times columnist Paul Krugman published a blog post repeating his insistence that a carbon price is the key (if not the only) incentive needed to unleash "the magic of the marketplace" and drive innovation in clean energy technology. It was reminiscent of the conventional wisdom of the climate community over the past decade, and reflective of Mr. Krugman's own typically neoclassical views on the economics of climate change. Unfortunately, Mr. Krugman (and most climate policy advocates) continues to get the story wrong on clean energy innovation.

In the spring of 2010, Krugman wrote a widely-read piece in the New York Times Magazine called "Building a Green Economy," which pondered why, if anti-environmentalists are so adamant in their free-market faith, do they not support a price on carbon dioxide emissions. A carbon price, in Krugman's estimation, would serve as a signal to the market, driving innovation in cleaner technologies to the point where they achieved price parity with fossil fuels.

Continue reading "Krugman Still Doesn't Get It" »

Post Updated 7/20/2011

The 2012 Energy and Water Appropriations bill, passed on Friday by the House of Representatives, would cut federal energy innovation funding by 12 percent of the levels put in place by the FY11 Continuing Resolution, 37 percent below the White House's FY12 budget request. The bill would cut the Department of Energy (DOE)'s budget by $2.5 billion over FY2010 funding levels.

Overall, the House's plan would cut about $644 million from the combined budgets of the five major DOE offices engaged in energy innovation activities (see Figure 1 and Table 1 below). However, these new cuts are relative to FY11 budget levels, already diminished by spending reductions included in a Continuing Resolution passed by Congress in April to fund the government through the end of the year. All told, the 2012 Appropriations bill would see funding levels for the five core DOE energy innovation agencies tumble $1.4 billion below FY10 levels and a precipitous $3 billion below President Obama's budget request for FY12.

Figure 1, below, and accompanying Table 1, present the House budget in comparison to the funding levels for these offices in FY10, FY11, and previous Administration budget requests.

For exact figures, see Table 1 at the end of this post.

Continue reading "House Budget Aims to Gut Energy Innovation Investments" »

By Leigh Ewbank, Breakthrough Fellow

This week, the Australian government unveiled the details of its long-anticipated carbon-pricing scheme, which include a fixed-carbon price of $23 per tonne as well as several measures to encourage the research, development, and deployment of renewable energy technologies. In contrast to the death of cap-and-trade in the United States last year, the passage of Australia's national carbon price legislation is virtually guaranteed. Unfortunately, much of the legislation rests with the magical thinking that international offsets will drive the country's decarbonisation, rather than full-scale efforts to drive the development and deployment of clean energy technologies.

Under the proposal, Australia will have a fixed-carbon price of $23 per tonne from July 1 2012, before moving to a cap-and-trade scheme in three years' time. A Climate Change Authority will be established to advise the government on emission reduction targets and a minimum target of 5 percent below 2000 levels by 2020 has been agreed on. Starting in July of next year, the nation's 500 largest emitters (excluding the agricultural sector) will be charged for each tonne of carbon they emit. To assuage voters, petrol is excluded from the scheme and compensation will be available for nine out ten households. Industry will receive $9.2 billion to manage the introduction of the carbon price.

Carbon pricing was not an issue the centre-left Labor government chose to champion. It is well known that as Deputy PM, Julia Gillard advised her predecessor Kevin Rudd to drop Labor's first attempt to price carbon--the Carbon Pollution Reduction Scheme. Under Julia Gillard's leadership, the party contested the 2010 election with an explicit pledge not to pursue a carbon tax, but after an inconclusive election result the measure was reluctantly accepted as the price of forming a minority government and hanging on to power.

Throughout the carbon price debate Labor politicians have propagated the myth that a carbon price alone will decarbonise the economy. Addressing the Committee for Economic Development of Australia earlier in the year, the Prime Minister claimed "a carbon price will drive another sweeping technological revolution like Information Technology did in the 1980s and 90s." As I have argued previously, when it comes to clean technology innovation and deployment, carbon price is no silver bullet. Now, with The Greens holding the balance of power in the Senate, the government was forced to concede the limits of carbon pricing and adopt additional renewable energy support measures.

Continue reading "Australia Unveils Carbon Price Policy" »

Efforts to reach a sweeping, 10 year budget deal collapsed recently after Tea Party Republicans forced Party leadership to oppose any compromise that included tax hikes -- even after President Obama had put treasured Democratic entitlements like Social Security on the chopping block.

Anti-tax activists dress up their opposition to tax hikes as a sign of fiscal responsibility. But in a new essay for the Breakthrough Journal, the sociologist Fred Block argues that the Tea Party is simply the most extreme manifestation of a hedonistic consumer culture.

Continue reading "The Hedonistic Roots of the Tea Party" »

The following is cross-posted from the Information Technology and Innovation Foundation (ITIF)'s Innovation Policy Blog, and was written by Matthew Stepp, Research Analyst at ITIF.

ARPA-E - and clean energy innovation in general - took a body blow this week during the 2012 budget debate. The House of Representatives debated their Energy and Water appropriations bill (which includes funding for DOE), attempting to strike a balance between the nation's energy needs and budget austerity. So far, budget austerity is winning at the expense of future economic growth and reduced carbon emissions. The Advanced Research Projects Agency - Energy (ARPA-E) is being given an anemic $100 million budget for 2012. This is in contrast to the original National Academies report recommendation of $1 billion, the President's 2012 budget proposal of $550 million, and Congress's 2011 authorization of $300 million. This amount wasn't unexpected - all energy innovation investments are slated to be cut - but the lack of support in boosting its funding ahead of a full budget vote remains disheartening.

There were two attempts at boosting ARPA-E's budget (a list of amendments can be found here). One amendment audaciously aimed to boost ARPA-E to $550 million and pay for it by eliminating fossil fuel R&D. A more politically realistic amendment sought to boost the program to $180 million, at the expense of some DOE administration costs. Unfortunately, both amendments failed, and ARPA-E is left with 10 percent of the budget many energy policy leaders believe it needs.

The failure to fully support ARPA-E means policymakers are dropping the ball and potentially losing the game - except the game in this case is economic growth and reduced emissions - as ARPA-E is the central public-private program aimed at doing both. In fact, as we argue in a recent report A Model for Innovation: ARPA-E Merits Full Funding , ARPA-E represents public-private innovation at its finest, for the following reasons:

Continue reading "Dropping the Ball on Energy Innovation: ARPA-E and the 2012 Budget" »

This morning the Brookings Institution's Metropolitan Policy Program released a comprehensive new report, "Sizing the Clean Economy," which takes a detailed look at the United States' ongoing transformation toward a low-carbon future. The report, co-produced with Battelle Technology Partnership, presents the most detailed data available on jobs and establishments in the clean economy, and finds that the clean economy accounts for 2.7 million jobs, more than both the biosciences and fossil fuel sectors, and a little over half the size of the IT sector. (Also check out the new interactive map that accompanies the report)

However, "clean energy" jobs account for only a fraction of the 2.7 million clean economy jobs calculated by Brookings/Battelle. Indeed, the majority of jobs are in more traditional "environmental" sectors like waste management and treatment, mass transit, and conservation. The jobs we usually think of as clean energy jobs--those in renewables, nuclear, smart grid, fuel cells, batteries, energy efficiency and electric vehicle technology--account for just 20 percent of this 2.7 million. While the rest of the clean economy has generally lagged the overall economy in terms of job growth, these newer clean energy industries have experienced explosive job growth, albeit from small bases.

Continue reading "New Report Sizes the Clean Economy" »

The global clean energy industry is set for a major crash. The reason is simple. Clean energy is still much more expensive and less reliable than coal or gas, and in an era of heightened budget austerity the subsidies required to make clean energy artificially cheaper are becoming unsustainable.

Clean tech crashes are nothing new. The U.S. wind energy industry has collapsed three times before, first in the mid 1990s and most recently in 2002 and 2004 when Congress failed to extend the tax credit that made it profitable. But the impact and magnitude of the coming clean tech crash will far outstrip those of past years.

Continue reading "The Coming Clean Tech Crash" »