By Alex Trembath and Jesse Jenkins

Updated: This post was originally published on January 1, 2012. It was updated on January 27, 2012 to reflect the announced closure of six coal-fired power plants in Ohio, Pennsylvania, and Maryland.

Two new federal air pollution regulations are expected to spur the closure of up to 69 aging, inefficient, coal-fired power plants, reducing both harmful air pollutants and emissions of the climate destabilizing greenhouse gas, carbon dioxide (CO2), according to an AP survey of US power plant operators and a preliminary Breakthrough Institute analysis of the likely impacts on CO2 emissions.

According to the AP survey, 31 coal-fired electricity generating units at power plants in a dozen states are expected to close rather than face costly upgrades to comply with a pair of new EPA regulations designed to curb emissions of smog-forming pollutants and toxic smoke stack emissions. These plants are joined by four plants in Ohio that were formerly classified by the AP survey as "at risk for closure" and two plants in Pennsylvania and Maryland that were not on AP's list. These units have a combined nameplate capacity of 15,532 megawatts.*

Up to 32 additional coal-fired units with a combined 9,714 megawatts of capacity may also decide to close, as the costs of compliance with the EPA's recently enacted Cross-State Air Pollution Rule, designed to curb air pollution in states downwind from coal-fired power stations, and the new Mercury and Air Toxics Rule announced this week both take effect.

While the purpose of these regulations is to reduce harmful pollutants and improve public health, closure of these aging plants will also lead to a 1.4 to 4.4 percent reduction in US electric power sector emissions of carbon dioxide (CO2), according to an analysis completed by the Breakthrough Institute. These air pollution regulations are thus a prime example of the ongoing success of pragmatic, "oblique" strategies to reduce greenhouse gas emissions.

Continue reading "Breakthrough Analysis: New Air Pollution Rules Could Reduce US Electric-Sector CO2 Emissions By More Than 4 Percent" »

Visit almost any city in the US or elsewhere today, and you are likely to find restaurants from all corners of the world: Indian, Thai, Italian, American, you name it. Clearly, gastronomical diversity within cities has increased hugely over the past couple of centuries. Now go to a city in another country -- and the range of cuisines on offer is likely to be nearly identical. This is a hallmark of globalization: increased diversity locally, decreased diversity globally. As Breakthrough Institute Senior Fellow Erle Ellis and colleagues show in a recent paper, the same phenomenon also applies to plants.

Continue reading "The Other Side of the Biodiversity Crisis" »

By Michael Shellenberger and Ted Nordhaus

In his 2011 State of the Union address, President Obama tacitly acknowledged how politically toxic climate change had become by not mentioning it once. His move angered many environmentalists who insisted there could be no significant action without a full-throated defense of the climate science against skeptics.

But one year later, President Obama's shift can be understood as part of a new climate centrism, one focused less on climate science and carbon pricing and more on energy innovation and the regulation of conventional pollutants like mercury. In his 2012 address, Obama briefly mentioned the divisiveness of climate change as a segue to touting his energy policies.

Polls show that Obama's call for continued energy innovation funding was one of the most popular elements of his speech. Meanwhile, the EPA's new mercury regulations—which will result in the shuttering of some of America's dirtiest coal plants—have long been more popular with Independents and Republicans than carbon regulations.

These policies have a growing number of supporters on the right. Last week, John Tierney of the New York Times pointed to a new study in Science that touted the climate benefits of dealing with non-carbon pollutants:

After looking at hundreds of ways to control these pollutants, the researchers determined the 14 most effective measures for reducing climate change, like encouraging a switch to cleaner diesel engines and cookstoves, building more efficient kilns and coke ovens, capturing methane at landfills and oil wells, and reducing methane emissions from rice paddies by draining them more often.

Continue reading "Obama and the New Climate Centrism" »

By Matthew Stepp, Clean Energy Policy Analyst at the Information Technology and Innovation Foundation and Jesse Jenkins, Director of Climate and Energy Policy at the Breakthrough Institute

It is time to take stock of our current climate trajectory, and consider what it means for climate policy. In Part 1 of this week long series, we argued that our current climate trajectory means we must 1) redouble efforts to reduce CO₂ emissions as quickly as possible, and 2) we must proactively build resilience to the uncertain impacts of a changing climate. Part 2 examined why voluntary economic contraction is a not a viable strategy for reducing emissions “as quickly as possible.” Part 3 explained why implementing a robust clean energy innovation strategy is the key way to making clean energy cheaper than fossil fuels, thus enabling the rapid adoption of low-carbon energy sources and drastically reducing CO₂ as quickly as possible. Part 4 discussed why adaptation through innovation is central to preparing for the impacts of a warmer world. Finally, Part 5 discusses how reducing a set of non-CO₂ pollutants and greenhouse gases can make a significant, near-term dent in warming and buy time to decarbonize the energy system.

As we have argued previously in this series, averting as much dangerous climate change impacts as possible hinges on our efforts to drive innovation and make clean energy cost competitive with fossil fuels. The cost of decarbonization is the key moderating force affecting the pace of carbon dioxide (CO₂) reductions, and innovation is the key to lowering these costs and accelerating climate progress. However, CO₂ isn’t the only powerful contributor to global warming, and scientists have identified opportunities to make a significant, near-term dent in warming by tackling other greenhouse gases and pollutants.

While we cannot effectively manage human impact on the climate over the long-run without decarbonizing the global energy system — a task that hinges on the energy innovation efforts described in Part 3 of this series — in the short term, we would do well to seize opportunities to reduce non-CO₂ emissions, particularly those with immediate co-benefits (e.g. profitable byproducts, improved public health, or better agricultural yields) that align incentives for rapid action.

Continue reading "The Future of Global Climate Policy: Slowing Warming by Cutting Methane and Pollutants (Part 5)" »

In his State of the Union address, President Obama laid out his election-year vision for restoring America's global competitiveness. U.S. manufacturing figured prominently:

Think about the America within our reach...an America that attracts a new generation of high-tech manufacturing and high-paying jobs...we have a huge opportunity, at this moment, to bring manufacturing back.

Last weekend, the New York Times ran a long and important piece on why one particular high-tech product, Apple's iPhone, is manufactured in Asia and not the United States. The article is part of a renewed debate about how the United States can reinvigorate its manufacturing sector, or whether it even should.

A key part of the article is that there is a dearth of middle-income jobs in U.S. manufacturing. A combination of labor-saving technological improvements and the off shoring of more labor-intensive manufacturing has led to a sharp reduction in factory jobs that were once a pathway to the middle class for many Americans. Manufacturing employment on the factory floor may simply never reach levels of previous decades.

Nevertheless, as we have written previously, advanced manufacturing remains critical to U.S. prosperity in the 21st century for three key reasons:

• Advanced manufacturing drives productivity and innovation. Two-thirds of R&D investment occurs in industry and manufacturing is a core component of the nation's innovation ecosystem that is key to creating new technological industries.
• Advanced manufacturing generates output and employment throughout the economy. It has the largest economic multipliers of any industry and large manufacturing facilities sustain entire communities. Even if manufacturing never supports as many direct jobs on the factory floor as it has in the past, restoring advanced manufacturing is thus essential to America's long-term employment challenges.
• Manufacturing is critical to improve the nation's trade balance and tackling our $500 billion cumulative trade deficit. Manufactured goods still comprise 57% of U.S. exports and closing the trade deficit will be difficult, if not impossible, without manufacturing playing a key role.

Continue reading "Global Supply Chains and American Economic Competitiveness" »

Mark Muro and Kenan Fikri. This post was originally published at The New Republic. Muro and Fikri are Policy Director and Senior Research Assistant, respectively, at the Brookings Institution Metropolitan Policy Program. Mark Muro was a collaborator the 2010 report "Post-Partisan Power" with the Breakthrough Institute and the American Enterprise Institute.

It was good to hear strong shout-outs for clean and renewable energy sourcing as part of the balanced energy stance promoted in President Obama's State of the Union speech this week.

We've long agreed that the "all of the above" energy approach Obama championed last night could be desirable so long as it is just that--oriented to the balanced development of all sources including American renewable and clean energy as well as fossil fuel resources.

In that nexus lies a politically defensible sweet-spot notwithstanding the tough politics of the energy debate.

And yet, the President left out a crucial link in his renewed commitments to both clean energy and increased conventional energy: He missed the opportunity to tie the revenues from fossil fuel drilling permits and licenses to investment in energy innovation.

Continue reading "The Missing Link in the SOTU Energy Agenda" »

By Matthew Stepp, Clean Energy Policy Analyst at the Information Technology and Innovation Foundation and Jesse Jenkins, Director of Climate and Energy Policy at the Breakthrough Institute

It is time to take stock of our current climate trajectory, and consider what it means for climate policy. In Part 1 of this week long series, we argued that our current climate trajectory means we must 1) redouble efforts to reduce CO₂ emissions as quickly as possible, and 2) we must proactively build resilience to the uncertain impacts of a changing climate. Part 2 examined why voluntary economic contraction is a not a viable strategy for reducing emissions “as quickly as possible.” Part 3 explained why implementing a robust clean energy innovation strategy is the key way to making clean energy cheaper than fossil fuels, thus enabling the rapid adoption of low-carbon energy sources and drastically reducing CO₂ as quickly as possible. Part 4 discusses why adaptation through innovation is central to preparing for the impacts of a warmer world and buying us time to drastically cut emissions.

The door is closed to mitigating away all of the potentially dangerous impacts of climate change.  We’ve simply waited too long to take sweeping action and provide a cheap and viable clean energy substitute to fossil fuels.  In Part 1 of this series, we discussed that even so, the key objective of climate mitigation efforts is still the same – we must drastically cut emissions as quickly as possible (and Part 2 and Part 3 discussed how). 

Yet the warmer world we have locked ourselves into does inform other policy choices. In particular, building our resilience to extreme weather and increasing our adaptive capacity is now equally as important as mitigation and should be treated as such. Advocating for adaptation and mitigation is nothing new – in fact it’s common place. The argument here is that adaptation must now be a cornerstone of all climate policy choices – domestic or otherwise.

When it comes to climate adaptation policymaking, a lot of work needs to be done, as it’s still a topic that has been largely ignored by U.S. decision makers. In fact, the most immediate hurdle is for decision makers to stop paying lip-service to the need for an adaptation policy and begin aggressively implementing real resilience efforts.

Continue reading "The Future of Global Climate Policy: Building Resilience Through Climate Adaptation Innovation Policy (Part 4)" »

By Matthew Stepp, Clean Energy Policy Analyst at the Information Technology and Innovation Foundation and Jesse Jenkins, Director of Climate and Energy Policy at the Breakthrough Institute 

It is time to take stock of our current climate trajectory, and consider what it means for climate policy. In Part 1 of this week long series, we argued that our current climate trajectory means we must 1) redouble efforts to reduce CO₂ emissions as quickly as possible, and 2) we must proactively build resilience to the uncertain impacts of a changing climate. Part 2 examined why voluntary economic contraction is a not a viable strategy for reducing emissions “as quickly as possible.” Part 3 explains why implementing a robust clean energy innovation strategy is the key way to making clean energy cheaper than fossil fuels, thus enable rapid adoption of low-carbon energy sources and drastically reducing CO₂ as quickly as possible.

As we wrote in Part 1 and Part 2 of this series, our current climate trajectory and global political economy dictates that the only way we can limit potentially dangerous climate change impacts, above the dangerous impacts we’re already locked into, is to redouble efforts to reduce global CO2 emissions as quickly as possible. To rapidly decarbonize the economy requires greatly accelerating the replacement of fossil fuels with low or zero-carbon clean energy substitutes. Implementing the right strategies to do so raises numerous stark policy choices and issues.

The most fundamental issue is that energy is largely a fungible commodity – the electricity coming out of your wall socket doesn’t have any immediately tangible differences whether it comes from a coal plant or a wind farm. The only immediate difference is cost. This key reality means that the rate of adoption for new clean energy technologies is largely moderated by two principal levers:

(1) The level of public tolerance for paying for the cost of cleaner energy in the form of higher energy costs, subsidies, or reduced economic welfare; and

(2) The cost competitiveness of clean energy compared to fossil fuels.

Continue reading "The Future of Global Climate Policy: Clean Energy Innovation Imperative (Part 3)" »

"They did a hell of a lot of work, and I can't give them enough credit for that. DOE started it, and other people took the ball and ran with it. You cannot diminish DOE's involvement." So said Dan Steward, former geologist and Vice President for Texas-based gas company Mitchell Energy, in an interview with the Breakthrough Institute.

In a recent edition of their political fact-checking series, CNN makes glaring historical omissions in their claim that the private sector, not the government, was the leading developer of the technologies that led to the modern shale gas boom.

In a reaction to President Obama's statement in this week's State of the Union address that "it was public research dollars, over the course of 30 years, that helped develop the technologies to extract all this natural gas out of shale rock," CNN reporter Matt Smith claims that the President's analysis was "true, but incomplete." In reality, CNN's fact-check is light on the facts and could use a check of its own.

CNN claims that hydraulic fracturing has been around since initial private application in the 1940s, and therefore government investment was inconsequential to the modern gas boom. This is like saying government investment in jet engines was inconsequential because the Wright Brothers pioneered air travel. CNN gets its facts and its history wrong. Here's what really happened:

• All the component technologies and techniques that made the shale revolution possible - massive hydraulic fracturing (MHF), microseismic imaging, and directional drilling among others - are direct products of federal R&D and demonstration.


• At the request of the gas industry, a diverse set of federal labs and agencies spearheaded R&D and demonstration of early shale extraction technologies, including the Morgantown Energy Research Center, the Energy Research and Development Administration, the Bureau of Mines, the Department of Energy, and the national laboratories.


• The Department of Energy first demonstrated MHF in 1977. Slickwater fracturing, Mitchell Energy's technique for Barnett drilling in the late 1990s, was an incremental improvement on this foundational innovation in hydraulic fracturing.


• In a joint DOE-industry venture, the first successful multi-fracture horizontal well was drilled in 1986. The Gas Research Institute (GRI), which was funded partially by a government-imposed surcharge on retail gas bills, subsidized Mitchell's first horizontal well in 1991.


• Sandia National Labs developed microseismic imaging technology and mapping for use in coalbed methane recovery. Data and techniques developed by Sandia were cited as critical contributions to Mitchell Energy's R&D in the 1990s.


• The federal Section 29 tax credit for unconventional gas resources benefitted the gas industry from 1980-2002.


• Using an innovative technique called slickwater fracturing and capitalizing on federal contributions like MHF, directional drilling, and microseismic imaging, Mitchell Energy engineers drilled the first economical well in the Barnett Shale in 1998. This was the first profitable commercial shale drill in history.

Continue reading "CNN Blows Obama SOTU Shale Gas Fact-Check" »

In his State of the Union address, President Barack Obama referred to the findings of a Breakthrough Institute investigation, which found that 30 years of federal funding led to the shale gas revolution.

"It was public research dollars, over the course of thirty years," said the president, "that helped develop the technologies to extract all this natural gas out of shale rock -- reminding us that Government support is critical in helping businesses get new energy ideas off the ground."

Obama is referring directly to a Breakthrough Institute investigation, which found that all the major technologies -- massive hydraulic fracking, horizontal drilling, 3-D mapping -- came from federal funding. Breakthrough's research was published in the Washington Post, with a longer history of shale gas and key interviews published at the Breakthrough.

Continue reading "Obama's Energy Revolution" »

In his third State of the Union address to the nation this week, President Obama highlighted the critical role of deployment of clean technologies on public lands and military procurement of clean tech in his vision for a clean energy future. His emphasis amounts to a full-throated endorsement of the key policies outlined in Breakthrough's 2010 report "Post-Partisan Power," which presented a groundbreaking framework for action on climate and energy goals in the wake of cap-and-trade's demise. The President cited procurement of clean energy by the United States Navy, coming to the same conclusion as did Breakthrough's analysis: that the US military, as the largest energy user in the world, can exercise substantial leverage in the national effort to drive innovation and deployment of low-carbon technologies. Obama's agenda to utilize federal lands for renewable energy is similarly in line with our proposal in a recent policy brief calling for a National Clean Energy Testbeds Program (NCET), which promotes the use of public lands to drive demonstration of novel energy technologies.

In his State of the Union Address, President Obama stressed the need to continue vital public investments in the building blocks of economic growth and competitiveness: research and innovation, education, and infrastructure. "Don't gut these investments in our budget," Obama declared. "Don't let other countries win the race for the future. Support the same kind of research and innovation that led to the computer chip and the Internet; to new American jobs and new American industries." In a November 2011 report, "Taking on the Three Deficits," the Breakthrough Institute and ITIF argue that to close the budget, trade, and investment deficits, the government must strengthen productive public investments, even as it reduces consumptive spending elsewhere. Distinguishing between investment and spending is vital to America's future economic prosperity.

President Obama's only mention of climate change in this year's State of the Union Address was to note that Congress remains too deeply divided on climate policy to pass "comprehensive" climate legislation. Progress is still possible, the president noted, by shifting to a focus on clean energy and innovation. He's right: as we outlined in our "Post-Partisan Power" report after the demise of cap and trade in 2010, and in this year's "Climate Pragmatism" paper, many on both Left and Right can agree on the need to advance clean energy innovation, resilience to extreme weather, and no regrets pollution reductions that also slow warming.

President Obama swiped one of the GOP's biggest applause lines last night, calling for America to take up an "All of the Above" energy plan, including more production of oil and gas on public lands. But if Obama is going to adopt the GOP's pro-oil and gas policies, he should adopt another GOP idea that's long overdue: direct revenues from oil and gas leasing on public lands to a long-term, clean energy trust fund to invest in advanced energy innovation. Its an idea we called for in April 2010, and was a key suggestion in our October 2010 "Post-Partisan Power" report written with scholars at the Brookings Institution and the American Enterprise Institute. And it's an idea that was firmly embraced by ranking Senate Energy Committee member Lisa Murkowski as recently as September. When will Obama embrace this plan?

In his State of the Union address, President Obama noted that "American manufacturers are hiring again." While we applaud the administration's affirmation of the importance of manufacturing, a reality check is necessary. Yes, manufacturing has rebounded slightly from the depths of the recession, but much more work needs to be done to ensure U.S. manufacturing competitiveness in the 21st century. To create a new era of advanced manufacturing in America, the government must go beyond tax incentives to "bring manufacturing back," and increase its investments in next-generation manufacturing technology and the advanced technology industries that will lead the 21st century global economy. Read more about the importance of advanced manufacturing in this Breakthrough Institute report.

By Matthew Stepp, Clean Energy Policy Analyst at the Information Technology and Innovation Foundation and Jesse Jenkins, Director of Climate and Energy Policy at the Breakthrough Institute

It is time to take stock of our current climate trajectory, and consider what it means for climate policy. In Part 1 of this week long series, we argued that our current climate trajectory means we must 1) redouble efforts to reduce CO₂ emissions as quickly as possible, and 2) we must proactively build resilience to the uncertain impacts of a changing climate. Part 2 in this series examines whether voluntary economic contraction is a key strategy in reducing emissions “as quickly as possible.”

In a recent commentary, Grist’s David Roberts notes that our current climate trajectory puts us on a path to dangerous climate impacts, demanding that we must reduce emissions dramatically over the near-term. His proposed strategy to reduce emissions as quickly as possible constitutes an “all-hands-on-deck mobilization” (including a carbon tax, efficiency standards, subsidies, tech development). He also argues that the time has come to consider “shared sacrifice” in the world’s wealthiest nations: a course of voluntary economic contraction in developed economies (thus reducing fossil energy consumption), while allowing developing nations time to shift from dirty to clean energy.

As we wrote in Part 1 of this series, we firmly agree that our climate trajectory demands that we redouble efforts to reduce global CO₂ emissions as quickly as possible. They key question remains: what levers or strategies are central to determining how quickly we can reduce emissions. Is voluntary economic contraction a key climate strategy?

Continue reading "The Future of Global Climate Policy: Is Economic Contraction a Climate Solution (Part 2)" »

By Dr. Harry Saunders, Breakthrough Institute Senior Fellow

Recent posts by the CO2 Scorecard group claim to have discredited the analysis on rebound effects in industrial sectors of the US economy presented in one of my recent papers--let me here call it "Saunders." The authors offer an analysis of their own said to "devastate" the results I have reported there. Herewith is my response.

The Stakes

It is worth reminding readers of the stakes here. The energy consumption forecasts relied on by the IPCC, the IEA and McKinsey ignore rebound effects, or--to be maximally generous--treat them very inadequately. To the extent ignoring rebound effects results in underestimates of future energy use, it means we have less time than is generally believed to devise climate change solutions. This is surely problematic, but no serious individual would dispute the contention that uncomfortable reality must always trump wishful thinking. I believe rebound effects are significant and quite large, and I believe the peer-reviewed literature, including my own extensive contributions to that literature, supports this view. Unfortunately.

And to be absolutely clear: energy efficiency is a good thing (for one thing increasing economic welfare) and must be aggressively pursued; this has always been my position. It's just that it may not deliver the large reductions in energy use many (including myself) would hope for.

Editors note: for more background and reading on rebound effects see...

• An introductory FAQ on rebound effects, (Breakthrough Institute).
  
• "Does energy efficiency lead to increased energy consumption?," by Jesse Jenkins and Harry Saunders, Making It (UN Industrial Development Organization).
  
• "Energy Emergence: Rebound and Backfire as Emergent Phenomena," a comprehensive literature review on rebound effects (Breakthrough Institute)

Problems with the CO2 Scorecard Analysis

In light of the above, the CO2 Scorecard posts on this subject (1 and 2) are disappointing and disheartening. But they require a response, even if only to defend the honor of my fellow scholars in this field. A complete dissection of the CO2 Scorecard analysis would make this post too long. Rebound analysis, done properly, is a highly technical undertaking. The approach here is to show a handful of the serious problems with the authors' analysis by way of listing five points, with links to an appendix containing the technical foundation for these points. Those interested in further evaluating this foundation can link to the technical discussion; those interested only in the claims made here can skip the full technicalities. Either way, as you will see, it is difficult to escape the conclusion that the authors of the CO2 Scorecard analysis are guessing at what they hope are problems with the Saunders analysis but then have not bothered to check if their guesses are actually right...

Continue reading "CO2 Scorecard Misrepresents and Misunderstands Efficiency Rebound Research" »

By Matthew Stepp, Clean Energy Policy Analyst at the Information Technology and Innovation Foundation and Jesse Jenkins, Director of Climate and Energy Policy at the Breakthrough Institute

Significantly limiting humanity’s impact on the global climate is quite simply an enormous task. Unfortunately, thanks to budget austerity and federal gridlock, any hope of implementing sweeping U.S. climate/energy policy has been optimistically pushed back to 2013 or beyond (though some incremental improvement is possible). And even the most hopeful observers of the recent global climate negotiations in Durban find little real progress towards reducing emissions. Now more than ever, it is time to take a hard look at where we stand and figure out how to match our policies to our climate goals.

Amongst climate scientists and advocates of climate policy, a growing recognition is taking hold that the current trajectory of global emissions will almost certainly lead us to a world of dangerous climate change impacts. For some, this means coming to terms with the fact that holding total global warming to less than 2°C, a commonly adopted “line in the sand” drawn by many climate advocates, has become nigh-impossible.

As a number of scientific articles have shown, most recently by Kevin Anderson and Alice Bows in the Journal of the Royal Society, limiting the world to 2°C warming most likely requires peaking total global carbon emissions in the next 5-10 years followed by immediate reductions to near-zero by 2050 (see Anderson and Bows emission trajectory options here, via David Roberts, and by David Hone here). It is now fairly obvious that the lack of global progress on decarbonization has likely pushed this timetable out of reach, prompting some recent soul searching amongst many climate advocates (the two of us included).

Is this realization a game changer for climate policy? Yes and no. 

Continue reading "The Future of Global Climate Policy: Taking Stock of Our Climate Outlook (Part 1)" »

By Jesse Jenkins and Alex Trembath. This post was originally published as a contribution to the National Journal online discussion "What's Ahead for Natural Gas?"

Just as the history of unconventional natural gas production in America was fundamentally shaped by government support for new technology development, so too will the future of natural gas depend on America's willingness to make long-term public investments in advanced energy technologies.

A convenient narrative has taken hold concerning the development of unconventional gas extraction from shale formations. It goes like this: Once a marginal and shrinking contributor to domestic primary energy, hydraulic fracturing, or "fracking" has unlocked vast reserves of shale gas and ignited a revolution in North American natural gas production, leading to sharp increases in proven reserves and decreases in gas prices. Technical improvements in fracking technology and the diligence of private sector gas companies led by independent wildcatter George Mitchell brought about this renaissance, guaranteeing a future of lower energy prices, cleaner-burning fuel, and a more energy-secure economy.

It's a convenient narrative of independent American ingenuity. But like so many similar stories, this popular tale belies the critical partnership of the federal government in the development of the key technologies that enabled today's shale gas boom.

Continue reading "Avoiding a Natural Gas Bridge to Nowhere" »

The Great Recession has given way to a less-than-great recovery and the pressure is on for Washington to respond. In an upcoming debate, two leading economic thinkers will go toe to toe on whether Keynesian economics offers a credible economic growth agenda.

In the first issue of Breakthrough Journal, ITIF President Rob Atkinson takes traditional Keynesians to task for pushing for additional demand-side public pump priming and for what he sees as their focus on distribution of the economic pie rather than the growth of the pie. In a response, Dean Baker, co-director of the Center for Economic and Policy Research, rejects Atkinson's critique and calls it a "potshot" that dismisses research showing that economic growth is in fact demand-driven.

The two have agreed to hash out their differences in a public debate co-sponsored by ITIF and Breakthrough Journal. Is traditional stimulus spending and assistance to individuals a useful but inadequate response to the Great Recession? Does the slow recovery suggest something more is needed to restore U.S. competitiveness, such as corporate tax reform that encourages innovation and investments in high-end manufacturing, more rigorous trade enforcement, and government support for R&D? Where do today's Keynesians and innovation economists find common ground? Join us for a thought-provoking and candid exploration of progressive economic policies at a historic crossroads.

Debate: Progressive Economics and the Great Recession
Date and Time: Wednesday, February 1, 2012, 9:30-11:00 AM
Location: ITIF, 1101 K Street NW (Suite 610A) Washington, DC 20005

Participants:

Robert D. Atkinson
President, Information Technology and Innovation Foundation (Presenter)

Dean Baker
Co-Director, Center for Economic and Policy Research (Presenter)

John Dimsdale
Washington, D.C. Bureau Chief, American Public Media (Moderator)

Please RSVP for the debate here.

In an article for the new issue of Atlantic Magazine, Planet Money's Adam Davidson leads us through the major changes that have transformed the manufacturing sector in the United States and asks whether manufacturing can ever again be an economic touchstone for middle class Americans.

Davidson notes how advances in productivity and heightened international competition have led manufacturing employment to crater, even as output increases:

Factories have replaced millions of workers with machines. Even if you know the rough outline of this story, looking at the Bureau of Labor Statistics data is still shocking. A historical chart of U.S. manufacturing employment shows steady growth from the end of the Depression until the early 1980s, when the number of jobs drops a little. Then things stay largely flat until about 1999. After that, the numbers simply collapse. In the 10 years ending in 2009, factories shed workers so fast that they erased almost all the gains of the previous 70 years; roughly one out of every three manufacturing jobs--about 6 million in total--disappeared. About as many people work in manufacturing now as did at the end of the Depression, even though the American population is more than twice as large today.

The increasing use information technology, robotics, and high-precision tools means that factory workers must have greater skills than those of previous generations:

Before the rise of computer-run machines, factories needed people at every step of production, from the most routine to the most complex...skilled workers now are required only to do what computers can't do (at least not yet): use their human judgment.

Continue reading "How to Make it in America" »

By Breakthrough Senior Fellow Roger Pielke, Jr. Originally published at his blog.

A group called CO2scorecard.org, whose efforts to compile energy data I have praised in the past, has issued a report which argues that so-called "energy rebound" at the micro-level might be in the range of 30% or less rather than the higher levels that have been argued by my colleagues at The Breakthrough Institute. While longtime readers of this blog and readers of The Climate Fix will know that I think that the debate over the rebound effect is largely inconsequential to the debate over efforts to decarbonize the economy, the report and reaction to it provide a great opportunity to highlight a key intellectual challenge that we all face when overwhelmed with information - beware promoting bad analyses simply because they accord with your tribal convictions.

The CO2scorecard.org report contains a fundamental error that will be instantly obvious to anyone familiar with energy data - they confuse energy intensity and energy efficiency. What is the difference you might wonder? Here is how the US Department of Energy describes the difference:

Energy Intensity is measured by the quantity of energy required per unit output or activity, so that using less energy to produce a product reduces the intensity.

Energy Efficiency improves when a given level of service is provided with reduced amounts of energy inputs or services are enhanced for a given amount of energy input.

When all else is equal, energy intensity - Energy/Output - is simply the inverse of energy efficiency - Output/Energy. But when all else is not equal things get tricky, as the DOE explains:

Declines in energy intensity are a proxy for efficiency improvements, provided a) energy intensity is represented at an appropriate level of disaggregation to provide meaningful interpretation, and b) other explanatory and behavioral factors are isolated and accounted for.

Continue reading "Collateral Damage From Not Knowing What You Are Talking About" »

In a Wall Street Journal column, David Wessel provides a good reality check to reporters and analysts that believe manufacturing is on the up and up in America. In the past two years, Wessel notes, manufacturing has added 334,000 jobs, a positive sign. But that growth pales in comparison to the massive loss of manufacturing jobs over the last decade:

Manufacturing is up lately in part because it was pushed down so far during the recession. That 334,000 increase in factory payrolls follows a decline of 2.3 million in the two years before that. Only two million jobs to go before manufacturing employs as many as it did four years ago.

In the past 10 years, in fact, manufacturing lost 5.5 million jobs. As the Information Technology and Innovation Foundation's Rob Atkinson notes at the Innovation Policy Blog, the loss of manufacturing jobs in this recession, at 15 percent of all manufacturing jobs, was the largest ever, so it makes sense that those jobs would rebound somewhat.

Wessel also makes the important point that in an era of steadily advancing automation and technological sophistication, manufacturing may never generate the same amount of jobs on the factory floor as it did in prior decades, certainly not as a percentage of GDP. But that doesn't mean that manufacturing is less important to the U.S. economy. Indeed, as we wrote in "Manufacturing Growth: Advanced Manufacturing and the Future of the American Economy," even as manufacturing's share of employment and GDP has declined, manufacturing has become even more important to sustaining America prosperity.

This is because manufacturing is the most capital-intensive and productive sector of the economy, and is key to developing and commercializing new technologies. As Wessel writes, "Research and development--the key to maintaining the U.S. edge in innovation--sometimes migrate abroad when production does, a good reason to strive to keep production at home." Manufacturing also has the largest employment and output multipliers of any sector of the economy, creating many indirect jobs and making it a key catalyst of broad economic growth. Lastly, a healthy manufacturing sector is central to the United States' ability to reduce its large and persistent trade deficit. And as Atkinson notes, our massive trade deficit in goods production has increased since the end of the recession.

For these reasons, its imperative that the United States embark on a proactive effort to strengthen the international competitiveness of its manufacturing sector, in particular by helping manufactures adopt new productivity-enhancing process technologies. As ITIF has documented, other nations such as Germany and Japan invest much more in manufacturing technology acceleration programs to boost productivity. For more information on what kinds of policies are needed to improve U.S. advanced manufacturing competitiveness see this "Charter for Revitalizing American Manufacturing," created by leading innovation and manufacturing experts.

State-level clean energy funds (CEFs) are a growing source of investment in nascent clean energy markets, according to a new report from the Brookings Institution Project on State and Metropolitan Innovation. The paper, co-authored by Post-Partisan Power collaborator Mark Muro and the Clean Energy Group's Lew Milford, highlights the leading role key states have taken in America's energy transformation:

State governments led the nation's initial responses to the challenge of energy system transformation a decade ago and since then have developed a broad array of cleantech development tools, ranging from financial support tools and net metering to incubators, cluster supports, and workforce training.

Among the states' initiatives, meanwhile, the nearly two dozen state-side clean energy funds (CEFs) stand as one of the most important clean energy forces at work in the nation--yet they remain little-known.

Using a variety of funding mechanisms -- including tax revenues, electricity surcharges, pollution charges, bonds, and others -- states have committed $2.7 billion to support renewable energy markets over the last decade. That funding, according to the report, has leveraged an additional $9.7 billion in federal and private investment in some 72,000 projects, including solar, hydro, wind, and other clean energy technologies. (Click the above map for state-level information.)

Continue reading "New Brookings Paper Praises State Clean Energy Funds Amidst Washington Paralysis " »

Updated 1/6/12

Automotive engines steadily improved in efficiency by roughly 60 percent from 1980 to 2006, according to a new study by MIT economist Christopher Knittel. That means we could already be driving cars that get an average of 37 miles per gallon (MPG), well above today's average of 27 MPG. The catch, points out Reason's Ronald Bailey: we'd have to be driving cars with the same average weight and power as the average car on the road in 1980.

Instead, consumers took the majority of the improvements in engine efficiency over the last three decades to enjoy larger and more powerful cars (e.g. increasing their use of energy services) rather than reduce energy use, according Knittel's paper, published in American Economic Review.

As Reason's Bailey notes, "This seems an example of the energy rebound effect in which increased energy efficiency encourages people to use even more energy; in this case to fuel bigger and peppier cars."

Indeed it does. (Click here for an introductory FAQ to rebound effects)

If vehicle weight and average power had held constant from 1980 to 2006, Knittel estimates that vehicles today would be roughly 60 percent more efficient than they were in the '80s. Instead, average fuel economy of new vehicles sold in the United States improved just 15 percent over this period.

The reason is clear: consumers chose to take these improvements in engine efficiency as a major increase in average vehicle weight, which rose 26 percent, and a doubling of average horsepower, which rose 106 percent from 1980 to 2006.

"Most of that technological progress has gone into [compensating for increased] weight and horsepower," notes Knittel.

Continue reading "MIT Study: Rebound Effects Erode Auto Efficiency Gains" »

As a part of the Breakthrough Institute's in-depth investigation of shale gas extraction and the role of the federal government in the development of many of the key enabling technologies, we interviewed Terry Engelder, professor at the Penn State and one of Foreign Policy's 100 Global Thinkers. Dr. Engelder has authored highly respected research on shale gas resources and is considered one of the nation's top experts on the geology and history of natural gas mining. As with our exclusive interview with Dan Steward, former Mitchell Energy Vice President, Engelder's testimony relates the long and productive partnership between the gas industry and the federal government that led to today's ongoing shale gas revolution. "The government got it really right," says Engelder. "In terms of a symbol of effective public-private venture, it's shale gas."

Breakthrough: How did you get started in shale gas research?

It was nuclear energy that first got me into gas shales. I worked for the Nuclear Regulatory Commission in the 1970s, which was concerned with mitigating earthquakes that could affect reactors in the Eastern US.

I looked at fractures in gas shales. The connection is straightforward, remains the same to this day: earth stress controls the orientation of hydraulic fracturing for gas shales as well as natural fractures. The physics of the process is identical.

My 1980 Journal of Geophysical Research paper was picked up by industry, in particular Shell and its subsidiary, Shell Western, which was trying to develop the upper Devonian [shale gas region] in Michigan in the 1980s. They phoned up and asked us to help understand the rocks in Michigan in the mid-1980s -- 1986 to 1987 -- to the field.

How would you characterize the government's role?

The government got it really right. In terms of a symbol of effective public-private venture, it's shale gas.

The Eastern Gas Shales projects and experiments in horizontal drilling were important. Those experiments should rise high in the list of things done and supported by the government starting in 1978 or so. The idea was to drill across the fractures and the shales that I'd been documenting for the NRC.

To bear fruit, it took 20 years. It started in 1977. We went beyond Carter and Reagan and were into the Clinton administration before Carter age research paid dividends.

Mitchell hired three of the engineers who were part of the Eastern Gas Shales project. I can't identify them by name.

[Note: Breakthrough Institute could neither confirm nor disconfirm that Mitchell hired three engineers from the Eastern Gas Shales Project.]

Continue reading "Terry Engelder on the Federal Role in the Shale Gas Revolution" »

Before adjourning to watch yule logs and eat holiday hams, Congress actually managed to pass a 2012 budget bill. ITIF's Matthew Stepp provided us with an early analysis of the bill's impact on energy innovation funding. Funding for key Department of Energy (DOE) innovation offices are up by a modest 2.5 percent relative to the 2011 budget, with impacts on specific programs summarized in the table below...

Today, nuclear energy blogger Dan Yurman dives into one of those key offices, with a detailed breakdown of the 2012 budget's funding for DOE's nuclear energy program at ANS Nuclear Cafe.

The Fiscal Year 2012 budget dedicates $768 million to the DOE Office of Nuclear Energy, a nearly 6 percent increase from FY2011 levels. As with overall funding for DOE innovation offices, the 2012 budget thus halts and begins to reverse the declines in federal energy innovation funding initiated in the 2011 budget, which saw nuclear energy funding fall 15 percent (or $132 million) from 2010 budget appropriations.

Continue reading "2012 Budget Increases Nuclear Energy Research Funding" »