The ongoing shale gas boom and the advent of low natural gas prices has pushed back the goal posts for clean energy technologies like wind, solar, and nuclear power, according to a new fact sheet released by the Breakthrough Institute. While significant progress has been made in low-carbon technologies in recent years, continued innovation and cost declines will be necessary for clean tech to become broadly competitive with natural gas on an unsubsidized basis.
As documented in a new and widely acclaimed report co-authored by experts at the Breakthrough Institute, the Brookings Institution, and the World Resources Institute, the impending collapse of federal support policies for clean tech present fierce challenges to the sector going forward. The report, "Beyond Boom and Bust," offers a platform for policy reform that would accelerate innovation and cost declines, pushing clean tech to broad competitiveness with conventional fossil energy technologies.
As we show in the new fact sheet, the challenges now posed by low-cost natural gas are particularly daunting for low-carbon power technologies. Efforts to reform federal clean tech subsidies must engage these challenges by supporting clean energy innovation and making unsubsidized cost parity for clean tech the top priority.
From a recent high of over $13 per mmBTU in 2008, natural gas prices have plummeted to under $2.50 per mmBTU. These cost declines have been paralleled by similar drops in prices for wind- and solar-generated electricity, but the improvements for clean tech have not yet achieved full cost-parity with natural gas.
Despite robust growth and recent improvements in price and performance, a boom in US clean energy technology ("clean tech") sectors could now falter as federal clean energy spending declines sharply, according to a new report published today by some of the country's top energy analysts.
To both sustain clean energy growth and put the United States' clean tech sectors on an accelerated path to subsidy independence and global competitiveness, analysts at the Breakthrough Institute, Brookings Institution, and World Resources Institute counsel a thorough revamping of American clean energy policies to prioritize innovation and cost declines.
The rewards for smart policy reform now are enormous: with global energy markets hungry for clean, affordable energy technologies and clean tech markets continuing to mature and improve, this is exactly the time for America to secure its leadership in clean tech.
Leading environmental organizations "re-brand" climate mitigation efforts as key to reducing public health risks, embracing recommendations of a Hartwell Group report.
Leading green groups, including the National Resources Defense Council and Sierra Club, are embracinga pragmatic approach to advance climate mitigation efforts by refocusing public outreach efforts around the near-term health benefits associated with reducing reliance on coal-fired power plants and increasing vehicle fuel efficiency.
"We're going to talk a lot about the health implications of dirty air," Heather Taylor, director of NRDC's political arm told Politico.
That's a smart move, says climate change communication expert and American University professor Matthew Nisbet.
While efforts to tackle climate change will avoid potentially significant long-term damages, to secure broad public support, those efforts must be linked to more salient and immediate public concerns while delivering near-term benefits. As Nisbet explains:
"In a polarized America, if you are going to build support for candidates in the Midwest and other battleground states that will back legislation on climate change during the next Congress, you have to switch focus to emphasize public health and economic resilience, goals realized through incremental actions like eliminating coal plants and boosting fuel efficiency."
Nisbet's observations echo the recommendations outlined in Climate Pragmatism, a July 2011 report authored by an international group of 14 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.
Quick quiz: If you improve the productivity of energy use at a steel plant in China, will that plant save energy, or produce and sell more of its now-cheaper steel? If ultra-efficient lightbulbs spread across rural India, will we see energy consumption there decline or rise?
With about two-thirds of global energy consumed in the refinement and transport of energy and the production of goods and services and over 90 percent of growth in energy demand spurred by the so-called "Rise of the Rest" in the emerging economies, these two examples should be at the front of our minds as debate spreads across the blogosphere about rebound effects -- the economic dynamics by which energy efficiency improvements lead to a rebound in demand for now-more-efficient energy services (see an FAQ on rebound here).
Author and reporter David Owen's new book, The Conundrum has sparked this latest round of rebound debate (see e.g. Bryan Walsh, Matt Yglesias, and David Roberts). Much of this debate has (understandably) centered around some of the most readily understandable examples of rebound drawn from our personal experiences -- efficient cars, appliances, home electronics, etc.
Unfortunately, these examples of personal energy use in wealthy countries are also precisely the cases where rebound effects are the smallest, leading some observers of this debate to conclude rebound is a smaller deal that it truly is.
Witness the focus on the so-called "Prius Fallacy" which Time's Bryan Walsh describes as this:
[A]s we become more efficient at using energy, we can save money -- which then allows us to use more of that energy than we did before. Picture it this way: you trade in your gas-guzzling SUV for a new efficient hybrid, end up paying less per mile for gasoline, and use some of the savings to drive more than you did with the SUV. The efficiency has rebounded.
Economist: I think you are way too optimistic that investments in technological innovation funded by a low carbon tax can lead to accelerated decarbonization of the economy. That is why I favor a high carbon price.
Me: But isn't the point of the high carbon price to stimulate innovation? The question is thus how to stimulate or motivate that innovation. I think a high carbon price is politically impossible, which is why I argue for starting low with investments in innovation as part of the package.
A pair of new federal air pollution regulations could result in the closure of up to 69 aging, inefficient coal-fired power plants, simultaneously reducing both harmful air pollutants and driving a 1.4 to 4.4 percent reduction in total US electric power sector CO2 emissions, according to a Breakthrough Institute analysis.
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.
Obama's focus on energy innovation and the regulation of conventional pollutants, rather than climate science and carbon pricing, is part of a growing climate centrism that could hold bipartisan support on addressing issues related to climate change.
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.
A "no regrets" climate strategy: cutting non-CO2 contributors to climate change may be the fastest way to slow warming, while yielding significant, near-term co-benefits.
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.
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.
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.
David Roberts at Grist.org argues that the "brutal logic" of climate change demands we trade economic growth in the world's developed nations for a little more climate breathing room. Is voluntary economic contraction a viable climate solution?
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?
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...
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...
Recognition is setting in that the current trajectory of global emissions will almosts certainly lead us to a world of dangerous climate impacts. Is this a game changer for our climate policy strategies?
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.
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...
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.
Oblique strategies appear to be working to reduce CO2 emissions. New rules from the EPA to limit emissions of the neurotoxin mercury and other toxic and carcinogenic pollutants from the nation's coal-fired power plants represents a small, but real, step forward toward a cleaner, healthier, and lower-carbon energy system.
The Environmental Protection Agency unveiled new (and long-overdue) regulations today to rein in mercury and other toxic pollutants from coal and oil-fired power plants. The new mercury rules, designed to save lives and protect children from the potent neurotoxin, are likely to trigger the closure of many of America's oldest, dirtiest coal-fired power plants over the next decade.
If and when the new rule takes effect, it will be the first time the federal government has enforced limits on mercury, arsenic, acid gases and other poisonous and carcinogenic chemicals emitted by the burning of fossil fuels.
Lisa P. Jackson, the E.P.A. administrator, said that the regulations, which have taken more than 20 years to formulate, will save thousands of lives and return financial benefits many times their estimated $11 billion annual cost. ...
Mercury is a potent neurotoxin, harming the nervous systems of fetuses and young children and causing lifelong developmental problems. Other pollutants covered by the new rule, including dioxin, can cause cancer, premature death, heart disease, and asthma.
Power plants generally will have up to four years to comply, although waivers can be granted in individual cases to ensure that the lights stay on. The EPA estimates that utilities will be forced to retire plants that currently provide less than one-half of 1 percent of the nation's total generating capacity.
In this sense, the EPA's new pollution rules appear to be another example of the ongoing success of "oblique" strategies to reduce climate-warming greenhouse gas emissions. While the new rules may only force the closure of 0.5 percent of the nation's electricity generating fleet, those plants will be among the least efficient and most carbon-intensive power plants in the nation. The coal-fired power plants most likely to be retired in the face of new pollution regulations emit at least twice as much CO2 per kilowatt-hour of electricity as the national average.
This is a small step forward on climate, but a real one, strongly justified on public health grounds alone, even before any climate benefits are considered. The new rules will eliminate "up to 17,000 premature deaths" per year, along with thousands of heart attacks, asthma attacks and emergency room visits, according to EPA estimates.
By Matthew Stepp, Clean Energy Policy Analyst at the Information Technology and Innovation Foundation and 2010 Breakthrough Generation Fellow." Originally published at the ITIF Blog.
The FY2012 Omnibus Appropriations bill, passed through the House and Senate conference committee last week, provides a small 2.5 percent increase in DOE energy innovation investment-related Offices and programs compared to FY2011. The budget includes key investments for new Energy Innovation Hubs, next-generation small modular nuclear reactor (SMR) RD&D and licensing programs, as well as a boost in funding for ARPA-E. Compared to the roughly $800 million cut to energy innovation investments in FY2011 and the additional cuts sought in the House version of the appropriations bill, the FY2012 budget provides renewed, albeit modest, government support for developing affordable and viable clean energy technologies.
To be clear, the 2012 federal budget still falls short of FY2010's peak in energy innovation investments made through the Stimulus and represents only 72 percent of what the President requested for next year. It's vital that more work is done to increase public investments in clean energy innovation, as the government must play an energetic role in supporting the development of next-generation technologies. However, the FY2012 budget does take steps to stabilize, and in some cases boost, high-impact clean energy investments (Figure 1, below). Below are a few of the highlights:
In a new report from the Breakthrough Institute Energy and Climate Program, we document the challenges facing American energy entrepreneurs seeking to commercialize advanced energy technologies to enhance US energy, economic, and environmental security. Innovative public policy solutions are needed to support private sector innovation and overcome the "valleys of death" that trap too many promising advanced energy ventures.
The United States faces an urgent national imperative to modernize and diversify its energy system by developing and deploying clean, and affordable advanced energy technologies. Domestically, developing new energy supplies and ensuring affordable energy prices will bolster American competitiveness and economic growth. Reducing the cost of advanced energy technologies is the key to finally ending a dependence on volatile global oil markets that holds the American economy hostage, compromises our foreign policy, and bleeds more than a billion dollars a day out of the US economy.
Abroad, the military has already begun deploying innovative clean energy technologies to reduce the high cost, paid in both lives and money, associated with transporting fossil fuels across war zones. Moreover, the impending risks posed by climate change compel the accelerated improvement and widespread deployment of low-carbon energy technologies. Countries around the world are already recognizing the critical need for new advanced energy technologies and are positioning themselves to lead the next wave of energy innovation.
Global energy demand is rising steadily, straining the ability of conventional energy systems to keep pace. For security, economic, and environmental reasons, the global energy system is thus modernizing and diversifying. Developing and developed nations alike are seeking new forms of advanced energy technologies that reduce dependence on foreign nations, insulate economies from volatile energy markets, and are cleaner and thus less costly from a public health perspective. Supplying this $5 trillion global energy market with reliable and affordable clean energy technologies thus represents one of the most significant market opportunities of the 21st century.
Despite this clear energy innovation imperative, the United States and the world remain overly reliant on conventional fuels and exposed to the price volatility and persistent public health impacts that reliance entails. The necessary course of energy modernization remains impeded by the high cost and barriers to scalability of today's clean energy technologies. These are barriers that only innovation can overcome.
However, two obstacles currently block the progress of energy innovation, obstacles which can only be addressed through effective public policy. Due to pervasive market barriers, private sector financing is typically unavailable to bring new energy innovations from early-stage laboratory research to proof-of-concept prototype and on to full commercial scale. This leads to two market gaps that kill off too many promising new energy technologies in the cradle. These gaps are known as the early-stage "Technological Valley of Death" and the later-stage "Commercialization Valley of Death." This pair of barriers is endemic to most innovative technologies yet is particularly acute in the energy sector. As a result, many innovative energy prototypes never make it to the marketplace and never have a chance to compete with established energy technologies. These valleys of death particularly plague capital-starved start-ups and entrepreneurial small and medium-sized firms, the very same innovators that are so often at the heart of American economic vitality.
In effect, the current lack of public policy to address this pair of barriers acts to protect today's well entrenched incumbent technologies from full market competition, while hamstringing American entrepreneurs and innovative ventures seeking to develop and deploy advanced energy technologies. The implementation of creative policies to effectively deal with the Technological and Commercialization Valleys of Death will foster vibrant competition in the energy sector and help drive technological innovation and job creation throughout the economy as a whole.
In the past, the United States has driven immense and far-reaching technological transformations. As the pioneering global innovator of the 20th century, the United States built the world's largest economy because of the ingenuity and creative enterprise of its entrepreneurs and citizens. Each step of the way, proactive public policy has played a crucial role in driving American innovations, from railroads and jet engines to microchips, biotechnology, and the Internet, unleashing long waves of economic growth and shared prosperity. New and advanced clean energy technologies afford the same opportunities to the United States today--if public policy is shaped in a way that allows American innovators to thrive once again.
Energy Secretary Steven Chu will appear today before the House Energy and Commerce Subcommittee on Oversight and Investigation to answer questions on the DOE Loan Program Office. While there are important questions to answer regarding the role of government in technology investment and energy innovation, these questions are unlikely to be the main subject of today's hearing.
What was the original purpose of the Section 1705 loan guarantee program, and what was the expected impact on federal budgets and taxpayers?
In 2009, Section 1705 was added to the DOE Loan Programs Office (LPO), established by the bipartisan Energy Policy Act of 2005. The program was originally appropriated $6 billion in federal funds to provide reserves to cover expected losses on a portion of the loans issued by the agency. This $6 billion would be leveraged to offer a significantly higher loan guarantee volume, unlocking substantial debt finance that would be supplied by private banks. The original $6 billion in funding was raided by Congress to provide funds for the Cash-for-Clunkers program in 2009, however, and ultimately 1705 ended up with a $2.5 billion pool to cover expected loan losses.
Congressional investigators should prioritize clean energy commercialization solutions over political grandstanding and focus on identifying key lessons from the experience of the Loan Programs Office. Congress should put these lessons to immediate use to reform federal involvement in clean energy commercialization and establish a new Clean Energy Deployment Administration.
Step right up to see the latest chapter in the ongoing political circus surrounding the bankruptcy of solar manufacturer and federal loan guarantee recipient Solyndra. Today's main attraction: Secretary of Energy Steven Chu's long-awaited appearance before the eager Republican members of the House Energy and Commerce Committee.
Key questions remain about the ill-fated solar manufacturer's dramatic demise earlier this year. Unfortunately, investigations on the Hill long ago veered into the realm of political point-scoring, rather than a serious inquiry designed to improve federal support for nascent and nationally-critical clean energy technologies.
Taking a step back from the circus on the Hill, let's make two things very clear.
First, the global energy system is modernizing and diversifying. For an array of motivations from public health and climate change to security and economic growth, today's economies demand a 21st century suite of clean and reliable energy technologies to supply the $5 trillion-and-growing global energy market.
Second, the DOE Loan Programs Office was never particularly well equipped to effectively address the "Commercialization Valley of Death"--the persistent lack of risk-tolerant capital that plagues American innovators and entrepreneurs working valiantly to improve the nation's energy, economic, and environmental security.
In the wake of Solyndra's failure, pundits have latched on to a simple, compelling narrative: government can't do energy right.
From synfuels to solar panels to "clean coal" (written, inevitably, with knowing quotation marks), demonstration projects funded by the Department of Energy are described as one failed white elephant after another. Today the DOE is the agency everyone loves to hate (and, at least in Texas Gov. Rick Perry's case, the agency to forget).
What gets left out (and forgotten) is that virtually every one of today's major energy technologies exists thanks to sustained US government investments in research, development, and demonstration. Consider:
Solar panels were pioneered by NASA, and have seen massive price declines thanks to government research, development, and deployment. Industry leader First Solar is a direct descendant of DOE research as are Nanosolar and GE's thin film solar division.
The global market for clean energy products grew to $243 billion in 2010, a year in which China and Germany both captured a greater share of this global investment than the United States. That has led many (myself included) to worry about the erosion of US competitiveness in a set of clean energy technology products--from solar and wind to nuclear and advanced batteries--originally invented in America.
Yet this growing market for clean tech is almost entirely dependent upon public subsidy and policy support. To be blunt: today's clean energy markets are artificial, and without perpetual policy support, conventional clean energy products could not compete in most global energy markets.
Across the globe, cash-strapped governments and recession-hit publics are pulling back clean energy subsidies, revealing the ephemeral nature of today's clean tech markets. In the last year, Spain, Italy, and the United Kingdom have all slashed feed-in tariffs for solar and certain other clean energy technologies. In America, expiring tax credits and fading stimulus investments are set to send federal clean tech expenditures plunging 75 percent from 2009 to 2014, according to our research.
There are a hostof reasons why targeted policies and smart public investments in emerging clean tech sectors are justified. But clean tech business leaders and policymakers alike must be crystal clear: the true economic rewards in clean energy industries will not come from producing technology for subsidy-created markets that vacillate wildly with the public mood and the business cycle.
Without substantial innovation to improve the performance and reduce the cost of clean energy technologies, the promise that the clean energy sector might become economically viable, much less a cornerstone of American economic revival, will never be realized. The real clean energy race is thus to invent, commercialize, progressively improve, and mass-produce cheap and reliable clean energy technologies that can compete on cost not just with international competitors but also with fossil fuels.
In short, the race is to make clean energy cheap and subsidy-independent.
Now, new studies .. are again suggesting that modern efforts to improve energy efficiency could lead to big rebound effects; they're touching a nerve and prompting debate in energy and climate circles. Governments and think tanks have launched studies of the paradox, and stories in the New Yorker and New York Times have even suggested that energy efficiency, far from being a savior, could actually be bad for the environment. "The stakes are actually pretty high," says Roland Geyer, professor of industrial ecology at the University of California, Santa Barbara, and coauthor of a recent review of the rebound literature.
Dr. Geyer is right: the stakes are quite high.
As Breakthrough Institute documents in our comprehensive review of the academic literature on energy efficiency and rebound effects, "Energy Emergence" (February 2011), most climate mitigation strategies and national energy policies assume that significant gains can be made in reducing greenhouse gas emissions and national energy imports at little to no cost or even positive economic gain, chiefly by pursuing "below-cost" energy efficiency measures -- improvements that more than pay for themselves through energy savings over time. The International Energy Agency, for example, counsels global policy makers that energy efficiency can accomplish more than half (58 percent) of all global greenhouse gas emissions reductions needed by 2050 in order to put the world on track to a stable climate (see image at right).
Yet rebound effects mean that for every two steps forward we take towards climate mitigation via below-cost efficiency measures, we take one or more steps backwards through rebound effects. And conventional climate mitigation scenarios, including the IEA's and IPCC's, ignore or incompletely and improperly consider rebound effects in their analysis.
If we follow such a course, and ignore rebound effects, the globe will be dangerously over-reliant on energy efficiency to reduce greenhouse gas emissions. Even if rebound effects erode just one-third to one-half of the initially expected savings, the globe could fall 20 to 30 percent short of needed emissions cuts, if the IEA's mitigation plan is followed. Further, such a shortfall means the time available to devise additional remedies is reduced, increasing the urgency of the clean energy supply-side challenge.
Wednesday's news that California solar manufacturer and DOE loan guarantee recipient Solyndra will be declaring Chapter 11 bankruptcy has government critics grumbling about clean tech boondoggles and failed government programs and has analysts worried about the ability of American clean tech companies to compete with subsidized Chinese solar exporters.
Amidst this week's dismal news that U.S. job growth is at a standstill, KQED's Forum hosts Breakthrough Institute Director of Energy and Climate Policy Jesse Jenkins to discuss Solyndra's failure and the future of U.S. energy and manufacturing policy. Listen to the program below...
A new report co-authored by progressive environmentalists, Friends of the Earth, and consumer advocates, Public Citizen, not only misses the mark, it "makes fundamentally misguided choices would be counterproductive to reducing the budget deficit and could potentially exacerbate America's climate and energy challenges".
This post was co-authored by Matthew Stepp, Clean Energy Policy Analyst at the Information Technology and Innovation Foundation (ITIF), and Teryn Norris, President of Americans for Energy Leadership. Originally published at Americans for Energy Leadership.
In the aftermath of the debt ceiling crisis and as the Joint Committee on Deficit Reduction seeks a second budget deal, many public interest groups are working hard to ensure that even while Congress cuts wasteful spending, it preserves vital public programs and expands smart investments in the nation's future. In the energy and climate policy community, a broad range of groups are fighting to defend clean technology investment programs - such as the Advanced Research Projects Agency for Energy (ARPA-E) - that have taken years to establish and offer a glimmer of hope amidst a largely bleak political and policy landscape.
Other organizations are taking a different approach. This week, two progressive groups - the environmental Friends of the Earth and consumer advocacy group Public Citizen - drew attention when they joined the libertarian Heartland Institute and deficit-hawk Taxpayer for Common Sense in releasing a spending cut plan. In a report called "Green Scissors 2011," the groups call for $380 billion in spending they identify as "wasteful government subsidies" and "environmentally damaging."
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.
A pragmatic strategy to restart stalled global climate efforts through the pursuit of energy innovation, climate resilience, and no regrets pollution reduction (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.
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.
In the pages of UNIDO's Making It magazine, Breakthrough's Jesse Jenkins and Harry Saunders explain the impact and implications of the energy demand "rebound effect" spurred on by energy efficiency.
The article builds upon the Breakthrough Institute's "Energy Emergence: Rebound and Backfire as Emergent Phenomena", a comprehensive literature review pointing to the expert consensus and evidence that below-cost energy efficiency measures drive a rebound in energy consumption that erodes much of expected energy savings.
Truly cost-effective energy efficiency measures lower the effective price of the services derived from fuel consumption - heating, cooling, transportation, industrial processes, etc. - leading consumers and industry alike to demand more of these services. There are other indirect and economy-wide effects as well, as consumers re-spend money saved through efficiency on other energy-consuming goods and services, industrial sectors adjust to changes in the relative prices of final and intermediate goods, and greater energy productivity causes the economy as a whole to grow. Collectively, these economic mechanisms drive a rebound in demand for energy services that can erode much - and in some cases all - of the expected reductions in total energy use, along with much-hoped-for reductions in greenhouse gas emissions.
Furthermore, rebound effects are often most pronounced in the productive sectors of the economy, including industry and agriculture, as well as throughout the world's emerging economies.
...
Conventional climate mitigation strategies count on energy efficiency to do a great deal of work. For example, the IEA in a global climate stabilization scenario published by the agency in December 2009, estimates that efficiency measures could account for roughly half of the emissions reductions needed. Yet, from a climate or global resource conservation perspective, rebound effects mean that for every two steps forward taken through greater efficiency, rebounds take us one (or more) steps backwards. This is particularly true throughout the developing world, and in the productive sectors of the global economy.
A clear understanding of rebound effects therefore demands a fundamental re-assessment of energy efficiency's role in global climate mitigation efforts.
A continued failure to accurately and rigorously account for rebound effects risks an over-reliance on the ability of efficiency to deliver lasting reductions in energy use and greenhouse gas emissions. Without a greater emphasis on the other key climate mitigation lever at our disposal - the de-carbonization of global energy supplies through the deployment and improvement of low-carbon energy sources - the global community will fall dangerously short of climate mitigation goals.
At the same time, however, we can re-affirm the role of energy efficiency efforts in expanding human welfare and fueling global economic development. Unlocking the full potential of efficiency may very well mean the difference between a richer, more efficient world, and a poorer, less efficient world. The former is clearly the desirable case - even if the world uses more or less the same amount of energy in either scenario.
The pursuit of any and all cost-effective efficiency opportunities should thus continue as a key component of an efficient course for global development, even as we reconsider the degree to which these measures can contribute to climate mitigation efforts.
Yesterday, Freakonomics featured the Breakthrough Institute on a panel of experts debating the myriad of questions surrounding the costs of Japan and Germany's recent decisions to turn away from nuclear power. The Freakonomics Quorum posed the following question:
With Japan deciding not to expand its nuclear power base, and Germany and Switzerland vowing to phase out nuclear power altogether, how will those (and other) countries replace that electricity, and what sort of political, economic, and environmental trickle-down effects will we see?
The Breakthrough Institute's response is appended below. The Freakonomics Quorum and full participant responses can be viewed here.
In the months following the tsunami-triggered nuclear crisis at the Fukushima Daiichi power station, both Japan and Germany announced major U-turns on nuclear policy. In separate, politically calculated moves, Chancellor Angela Merkel vowed to end Germany's reliance on nuclear power by 2022, while Prime Minister Naoto Kan scrapped plans to ramp up nuclear generation to 50 percent of Japan's power supply in the coming decades, each while reaffirming already-ambitious climate change goals.
The reality, however, is that turning their backs on nuclear power could push both nations' climate and environmental objectives out of reach. Simultaneously achieving both a nuclear phase-out and deep emissions cuts would necessitate an unprecedented - and unlikely - scale-up of renewable energy generation to fill the void left by the German and Japanese nuclear fleets.
Drum draws our attention to some "eye popping" figures for price elasticity of demand for oil from the IMF. According to Drum, these elasticities mean that, in the short term, a 50 percent increase in price leads to a 1.2 percent decrease in consumption. In the long term, it leads to a 4.7 percent decrease.
Conservative blogger Jim Manzi rightly points out that, with elasticities as low as these, a gas tax at any politically realistic level is not going to reduce our dependence on fossil fuels.
Specifically, to the extent that we continue to progress in making non-fossil-fuels technology cheaper and more effective for an ever wider array of applications, we can accelerate the ongoing de-carbonization of our economy. The idea of economists to use artificial scarcity pricing to do this is aggressively marketed in blogs, magazines and TV shows, but is extremely unlikely to work, because the current price elasticity of oil is so low. The work of engineers and physical scientists, however, is likely to be determinative.
The Heritage Foundation recently proposed a near dismantling of the Department of Energy in the name of budget deficit reduction. But their proposal includes numerous inconsistencies and inaccuracies to justify eliminating programs vital to the United States energy innovation system. In response, the Breakthrough Institute, along with ITIF and Americans for Energy Leadership, detail point-by-point the fundamental inaccuracies of Heritage's proposal.
Last week the Heritage Foundation released a policy "backgrounder" report calling for a near-dismantling of the Department of Energy's research budget, including key energy innovation programs that are investing in scientific breakthroughs needed to make clean energy technologies more reliable and affordable. The report suggests that innovation spending increases at DOE are dangerous contributors to the national deficit and inferior financing mechanisms to private sector investment in energy technologies.
The Heritage proposal calls for (1) fully eliminating the Office of Energy Efficiency and Renewable Energy, slashing the $3.2 billion budget, and eliminating proposed advanced nuclear energy technology programs from the Office of Nuclear Energy; (2) eliminating the Innovative Technology Loan Guarantee Program and reducing other applied programs like the Office of Nuclear Energy; (3) cutting $1.59 billion from the Office of Science, including the elimination of two of the four Energy Innovation Hubs, elimination of the 46 Energy Frontier Research Centers (EFRCs), elimination of the Workforce Development for Teachers and Scientists Program, and a broad range of other cuts to basic energy sciences; (4) eliminating the power marketing administrations; and (5) cutting the administration's FY2012 budget request for ARPA-E from $650 million to $300 million. However, the white paper contains numerous inconsistencies and inaccuracies about federal investment in energy innovation.
The Breakthrough Institute, along with our colleagues at ITIF and Americans for Energy Leadership, have produced a Counterpoint that documents the misleading statements and inconsistencies in the Heritage report. The full Counterpoint is reproduced below, and you can download a PDF copy here.
Phasing out the United States' entire nuclear power supply by 2030 would increase the country's carbon dioxide emissions by at least 5% and as much as 13%, depending on what mix of power plants replace the aging nuclear units. If the United States phased out the twenty-three nuclear power plants with the same design as Japan's troubled Fukushima Daiichi nuclear complex by 2030, carbon dioxide emissions in the United States would increase overall by at least 1 percent.
As the crisis at the Japanese Fukushima Daiichi nuclear complex continues to captivate global media attention, President Obama's domestic energy plans, which have long-included a push for the construction of new nuclear reactors, are beginning to be called into question. Two days ago, Senate Democrats demanded a broad review of the safety of the country's nuclear plants, with nine Democrats even seeking to delay legislation to allow the construction of a new plant in Iowa.
The Energy Information Administration (EIA) predicts that, by 2030, nuclear power will supply about 18% of the nation's electricity, as compared to roughly 20% in 2011.
Below, we illustrate the consequences for overall United States carbon dioxide emissions if the United States phases out its entire nuclear fleet. Three scenarios project the effect of replacing lost generation either entirely by coal generation, entirely by natural gas generation, or by an equal split of both.
If nuclear power were to be completely taken out of the United States' power supply by 2030, United States carbon emissions would rise by at least 300 million tons over baseline scenarios. Carbon emissions would increase by at least 5% and as much as 13% across the entire economy, while power-sector emissions would soar by 12% to 33%, depending on the mix of replacement power.
The lowest value corresponds to a scenario in which the nuclear plants are replaced by new natural gas-fired units, perhaps the most likely scenario given recent discovery of plentiful new natural gas supplies in North America.
In the latest in DC's battle over the federal budget, the Senate Democrats released on Friday their plan to fund the government through FY2011, which would make substantial cuts in federal energy innovation across DOE agencies.
While ultimately keeping energy innovation-related spending at a higher level than would the House's Continuing Resolution (CR) (passed two weeks ago), the Senate's plan decreases budgets for each of the DOE's offices involved in energy-innovation as compared to FY2010 appropriations, in sharp contrast to the proposed increases for energy innovation related spending through President Obama's proposed FY2012 budget.
(click to enlarge)
*ARPA-E received $400 million in ARRA funding, to be spent over FY2009 and FY2010, or $200 million per year on average. No additional funding was provided for the agency in regular FY2010 appropriations.
**The estimates for Fossil Energy R&D used in this post refer solely to the Fossil Energy R&D program, rather than Fossil Energy Program as a whole, as Fossil Energy R&D is where energy innovation investments are concentrated.
***For exact figures, see chart at the end of this post.
Although fossil energy sources receive far more federal subsidy than renewables, when compared based on the share of U.S. energy consumption provided, renewable energy sources receive over seven times more subsidy than fossil fuels.
Here's your latest edition of Friday Factoids, (this one a smidgen early)...
A while back, I posted some quick math reminding readers that while pushing to end subsidies for mature, centuries-old fossil fuel technologies is a pretty smart policy, it on it's own will be far from sufficient to make clean energy cost competitive. The global figures come from the International Energy Agency's latest World Energy Outlook and reveal that worldwide, renewable energy sources receive more than twice the subsidy than fossil fuels, when compared based on how much of global energy demand they supply.
Here's a summary of the global figures:
Fossil energy:
Total subsidies (2009) = $312 billion;
Share of global energy consumption provided (2009) = 83 percent;
Subsidy per percentage of global energy consumption provided: $3.8 billion
Renewable energy:
Total subsidies (2009) = $57 billion;
Share of global energy consumption provided (2009) = 7 percent;
Subsidy per percentage of global energy consumption provided: $8.1 billion (Note: excludes conventional hydropower and biomass)
Compared on a per unit of energy provided basis, renewables therefore receive 2.1x more government subsidies than fossil fuels.
Today, we'll add in the U.S. figures, which advantage renewables even more. That's because globally, much of the subsidies provided for fossil fuels are provided in either developing nations or in oil rich Middle Eastern nations, which make it easier for their citizens to purchase fuels through government-funded subsidies for consumer purchases (rather than subsidies for fossil fuel producers; see IEA for more on that).
For the United States:
Fossil energy:
Total subsidies (2002-2008, cumulative): $72.4 billion;
Share of U.S. energy consumption provided (2008): 84.6 percent;
Subsidy per percentage of U.S. energy consumption provided: $0.9 billion.
Renewable energy:
Total subsidies (2002-2008, cumulative): $28.9 billion;
Share of U.S. energy consumption provided (2008): 4.3 percent;
Subsidy per percentage of U.S. energy consumption provided: $6.7 billion. (Note: excludes conventional hydropower)
Compared on a per unit of energy provided basis, renewables therefore receive 7.4x more U.S. federal subsidies than fossil fuels.
Data source: subsidies for Environmental Law Institute, energy cosumption from U.S. Energy Information Administration, "Annual Energy Outlook 2010." Note that subsidy figures are cumulative for the seven years from 2002 to 2008. The per unit subsidy figures for the U.S. should therefore not be strictly compared to the global figures above.
Clearly, ending all subsidies for fossil and renewables alike would not 'even the playing field' for renewables, as some have argued. These figures indicate that fossil energy would still retain quite a distinct price advantage.
Even if we cut all subsidies for fossil fuels, then, we'll need accelerated innovation to fully close the price gap between new renewables and incumbent fossil energy. (For more on that price gap, see a previous installment of our Friday Factoids series here).
This set of frequently asked questions accompanies a new Breakthrough Institute report, "Energy Emergence: Rebound and Backfire as Emergent Phenomena." That report surveys the relevant academic literature and finds extensive evidence that a large amount of the energy savings from below-cost energy efficiency are eroded by demand 'rebound effects.'
On February 17th, Breakthrough Institute released a new, comprehensive survey of the literature and evidence concerning the rebound effects triggered by many energy efficiency improvements.
"Energy Emergence: Rebound and Backfire as Emergent Phenomena" explains why energy efficiency measures that truly 'pay for themselves' will lower the cost of energy services -- heating, transportation, industrial processes, etc. -- driving a rebound in energy demand that can erode a significant portion of the expected energy savings and climate benefits of these measures.
This new set of Frequently Asked Questions explains rebound effects, how they operate, what kinds of energy efficiency improvements trigger bigger or smaller rebounds, and why coming to terms with the full scale of rebound challenges the heart of many contemporary climate mitigation strategies.
A: Increasing the efficiency of an energy consumptive activity will lower the cost of the services derived from that activity - that is, it will change the price of the "energy services" derived from the fuels, such as lighting, transportation goods or services, heating or cooling, industrial processes, etc.
Economic actors respond to price changes in two general ways:
Increasing the utilization of that energy service to increase outputs or incomes. For example, a low-income resident may now heat his or her home more often or heat more areas of the home after weatherizing their home, because it is now far more affordable to heat. (In economics speak, this involves 'elasticities of demand,' or the responsiveness of demand to changes in the price of goods and services)
Re-arranging the factors of production or goods and services consumed to substitute now-cheaper energy services for other goods or services (maintaining the same level of output or income). For example, a more efficient heat plant may enable a chemicals plant or metals smelter to raise temperatures in industrial processes to extract high quality product from poorer quality inputs (substituting energy for materials) or to reduce process times (substituting energy for labor). (In economic terms, this involves 'substitution elasticities,' or the ability of firms or consumers to take advantage of lower prices to productively re-arrange the production inputs or consumer goods they utilize).
Both of these dynamics are "rebound effects," a term for any economic mechanism that leads to a rebound, or increase, in demand for energy following an improvement in energy efficiency that lowers the effective cost of that energy service.
There are other rebound effects as well (for a quick description of each, see the summary here). Our report, "Energy Emergence" surveys more than half a dozen distinct rebound mechanisms, some of which are fairly direct (like the two above), others that are more indirect (like the impact of money saved through efficiency measures as it is re-spent in the economy on other goods or services that in turn require energy to produce). Still more effects are only visible in the aggregate, at the macro-economic scale, as economies respond in a variety of ways to widespread improvements in energy efficiency.
A: No, not always. Although in some cases, it is possible that efficiency improvements will "backfire," driving a rebound in energy that fully compensate for the initial energy savings, increasing energy demand overall. While backfire is by no means the norm, it is possible in some cases (we'll explore conditions that are likely to lead to backfire in a later question).
As "Energy Emergence" concludes, "Rebound effects are real and significant, and combine to drive total economy-wide rebound in energy demand with the potential to erode much (and in some cases all) of the reductions in energy consumption expected to arise from below-cost efficiency improvements."
Think of it this way: rebound effects mean that for every two steps forward we take in energy savings through efficiency, rebound effects take us one (and sometimes more) steps backwards. We may still move forward, but not as much as we initially expected.
A: Rebound matters because the magnitude of rebound effects determines how effective below-cost efficiency improvements are at contributing to lasting reductions in total energy use and therefore greenhouse gas emissions.
Energy efficiency has frequently been cited as the single greatest contributor to emissions reduction and climate mitigation strategies, by everyone from the International Energy Agency and Intergovernmental Panel on Climate Change to consultants like Amory Lovins' Rocky Mountain Institute and McKinsey to efficiency advocates and environmental NGOs. The IEA counts on efficiency for roughly half of the emissions reductions needed in their "Blue Map" climate stabilization scenario (graphic below), for example, while President Obama told reporters in 2009 that with efficiency, "we can save as much as 30 percent of our current energy usage."
So we're counting on energy efficiency to do quite a bit of "climate mitigation work," so to speak.
The problem is that all of these estimates are based on an assumption: that energy efficiency reduces energy demand in a linear, direct, and one-for-one manner. An X% gain in efficiency leads to an equivalent X% reduction in total energy use.
But the economy is anything but direct, linear, and simple, especially when responding to changes in the relative price of goods and services. When a good or service or input to production gets cheaper, consumers and firms use more of it, find new cost-effective uses for it, re-invest any savings in other productive activities, and the economy overall gets more productive overall, driving economic growth and activity.
That's the rebound effect, and it means that we can't assume that improving energy efficiency by 20%, for example, will reduce energy demand by 20%.
If we don't accurately and rigorously account for rebound effects, we risk over-relying on energy efficiency to deliver lasting reductions in energy use and greenhouse gas emissions, and we will fall dangerously short of climate mitigation goals.
A: Rebound effects differ in scale, depending on the type of energy efficiency improvements we're talking about, and where in the economy we look. In very few cases are rebound effects "very small" or insignificant.
Dozens of academic studies have examined the empirical evidence, conducted modeling inquiries, and otherwise tested the scale of rebound effects. While there is much more work to be done to determine the precise scale and impact of rebound effects in different circumstances, the conclusion is that rebound effects are significant and cannot be ignored in energy and climate analysis and policymaking. See the following three questions for summaries of the scale of rebound in different circumstances...
A: In rich, developed nations, if we improve the efficiency of end-use consumer energy services, like cars, home heating and cooling, or appliances, the literature indicates that direct rebound effects alone are typically on the scale of 10-30% of the initial energy savings. Additional indirect and macroeconomic effects may mean total rebound erodes roughly one quarter to one third of expected energy savings in these situations.
Rebound here is smallest in cases when demand for the energy service in question is already saturated (that is, we use as much of it as we would care to use), and highest in cases where the cost of the energy service is a key constraint on fulfilling demand for that service. For example, if a wealthy homeowner already reliably heats all the rooms in his or her house to 70 degrees, he/she wouldn't increase the thermostat to 77 degrees just because our heating system got 10% more efficient. But if a poorer household can't afford to turn the thermostat up, or only heats one room of the house with a small space heater, because the house is too drafty, then if the house gets weatherized and more efficient, that household is likely to use more energy to heat their home. In general, end-use consumer efficiency improvements in rich, developed economies will still lead to a net savings in energy, although rebound effects shouldn't be ignored even here.
A: No, rebound effects are almost certainly larger in poorer, developing nations.
For efficiency in end-use consumer energy services in developing nations, direct rebound effects alone are likely to be much higher than in richer nations, on the order of 40-80%. Rebound is higher here because demand for energy services is far from saturated, demand is far more elastic (responsive to changes in price), and the cost of energy services is often a key constraint on the enjoyment of energy services. This is important, because growing demand in developing nations is the principal driver of energy demand growth worldwide.
We should be very careful in generalizing our experiences or intuitions about rebound effects in rich, developed nations to the larger bulk of the global population living in developing economies. As Lee Schipper and Michael Grubb wrote in 2000:
"[I]n low-income economies, energy and energy costs are often a constraint on economic activity. ... In short, the shadow of Jevons lurks [in developing nations] for precisely the same reason that more efficient use of coal [in Jevons' Britain] did not save coal: the combined effects of different rebounds are very important when energy availability, energy efficiency, and energy costs are a significant constraint to activity and therefore energy use."
Since expanding the supply of energy services is a key constraint on economic activity in developing nations, the macro-economic impact of efficiency improvements in developing economies is also likely to be more significant, helping developing economies grow faster (and thus consume more energy).
A: While more study of rebound effects for efficiency improvements at producing firms (e.g. industry and commerce) is needed, the literature to date indicates that direct rebound effects may be on the order of 20-70% for these sectors, with additional rebound due to indirect and macroeconomic effects.
Rebound effects in firms depend principally on the ability of firms to rearrange their factors of production (labor, capital, energy, and various materials) to better take advantage of now-cheaper energy services. This is especially true for new productive capacity. If long-term substitution is high, rebound effects can be substantial. In addition, output effects contribute to rebound for energy intensive firms with a high elasticity of demand for their products (that is, where consumers are very responsive to changes in the price of their products and demand more product as the price falls).
Improvements in energy productivity at firms can also contribute to greater economic activity and growth, driving up energy demand overall. In general, rebound effects are higher for efficiency in productive sectors of the economy than for end-use consumer efficiency. This is notable, because two-thirds of the energy consumed in the U.S. is consumed in the productive sectors of the economy and "embedded" in the non-energy goods and services purchased by consumers.
A: Yes. At the economy-wide, macro-economic scale, the aggregate impacts of widespread energy efficiency improvements can lead to substantial rebound effects, as producers and consumers respond in turn to various cascading changes in the price of goods and services, the pace of economic growth quickens, and market prices for fuels may fall, driving a further rebound due to market price effects. Since these economic responses are complex and varied, economic modeling is most often used to estimate the scale of macroeconomic rebound due to aggregate efficiency improvements.
A number of 'Computable General Equilibrium' models (see page 34 of the study) generally show rebound at the scale of a national economy of 30-50% or greater, with a surprising number predicting rebound greater than 100% (aka 'backfire'). These studies look at national economies and thus ignore global, macro-economic impacts beyond national boarders, which can add additional rebound in energy consumption.
'Integrative modeling,' a more detailed approach utilized by energy analysts at Cambridge, found that if the world adopted all of the "no regrets" energy efficiency policies suggested by the International Energy Agency, then rebounds effects would erode more than half of expected savings (52%) in the long-term. There are also several reasons to think this is may be a conservative estimate (see pages 39-40 of the study).
At the macro-economic, global scale most relevant to climate change mitigation efforts, then, rebound effects can be substantial, and erode much (if not all) of the expected energy savings and climate benefits.
A: Rebound is likely to be particularly acute and is most likely to trigger backfire (rebound >100% of initially expected energy savings) in the following cases:
If the supply of energy services is a key constraint on economic activity and growth (as it is in much of the developing world), then improvements in energy efficiency are likely to trigger acute rebound or even backfire. In a world where roughly 1.6 billion people lack access to electricity and 2.5 billion rely primarily on primitive biomass (e.g., wood and dung) for cooking and heating, huge pent-up demand for energy services persists and the availability of energy services will be a major determinant of future rates of economic growth and progress. This in turn indicates potential for very large rebounds for efficiency improvements in developing nations.
When more efficient (and thus lower cost) energy services open up new markets or enable widespread new energy-using applications, products, or even entire new industries to emerge. We dub this dynamic a 'frontier effect' in our report, because in these cases, the 'production-possibility frontier' for an energy-using technology expands significantly, opening up unforeseen opportunities for substitution and potentially significant impacts on economic activity and the composition of the economy. In such cases, backfire is the most likely outcome.
Backfire due to this 'frontier effect' dynamic is most likely to arise for 'general-purpose technologies' that have a wide scope for improvement and elaboration, have potential for use in a wide variety of products and processes, and have strong complementarities with existing or potential new technologies. Examples of 'general-purpose technologies' could include steam engines, electric motors, lighting, gas turbines, semiconductors and computing technologies, lasers, robotics, radio transmitters, and perhaps many others. Backfire is most likely to result after energy efficiency improvements in these general-purpose technologies. (See p. 47-8 of the report.)
These emergent 'frontier effect' dynamics may prove particularly challenging for energy analysts to forecast or account for in modeling efforts, as they necessarily involve unforeseen and unpredictable applications of new and improved technologies. This means that forecasts of rebound can easily underestimate eventual rebound due to frontier effects triggered by sustained efficiency gains.
When energy efficiency improvements not only improve the productivity of energy, but also result in simultaneous improvements in other factors of production, such as labor or capital (a 'multi-factor productivity improvement'), an outsized impact on economic output and significant rebound in energy demand can arise.
Very large rebound or backfire is likely the norm in cases of 'win-win' efficiency opportunities, where energy-saving technical changes simultaneously improve the productivity of other factors of production, multiplying the impacts on output, economic growth and energy demand.
For example, in a 2005 paper, efficiency consultant Amory Lovins writes:
"Improved energy efficiency, especially end-use efficiency, often delivers better services. Efficient houses are more comfortable; efficient lighting systems can look better and help you see better; efficiency motors can be more quiet, reliable, and controllable; efficient refrigerators can keep food fresher for longer; efficient cleanrooms can improve the yield, flexibility, throughput, and setup time of microchip fabrication plants; ... retail sales pressure can rise 40% in well-daylit stores ... Such side- benefits can be one or even two orders of magnitude more valuable than the energy directly saved. ...[I]n efficient buildings, ... labor productivity typically rises by about 6-16%. Since office workers in industrialized countries cost ~100x more than office energy, a 1% increase in labor productivity has the same bottom-line effect as eliminating the energy bill - and the actual gain in labor productivity is ~6-16x bigger than that."
While the multi-factor productivity improvements Lovins describes greatly improve the economic case for energy efficiency upgrades, they simultaneously raise the specter of significantly greater rebound in energy demand than if the improvement in energy productivity were considered alone (as is common in the inquiries discussed in prior sections). If the economic impact of labor productivity improvements from efficient buildings is several orders of magnitude greater than the simultaneous savings in energy consumption, for example, then the rebound due to economic growth/output effects alone should also be several orders of magnitude greater than would be predicted if the energy savings were considered alone.
A: Most certainly not! Truly cost-effective energy efficiency improvements make great economic sense and improved energy efficiency may be a key determinant of future economic welfare. In this sense, it may also contribute indirectly to climate mitigation and decarbonization objectives (see "Discussion and Implications" section of our report).
As Skip Laitner of the American Council for an Energy Efficiency Economy writes, "our lagging efforts on efficiency may actually constrain our larger economic productivity."
As we note in our report, this is often the case, particularly in the developing world. Pursuing cost effective energy efficiency opportunities makes great sense then from an economic development and human welfare perspective. At the same time, however, this is precisely why energy efficiency can trigger significant rebound effects that reduce the ability of efficiency to drive down total greenhouse gas emissions, even as efficiency contributes significantly to greater economic growth.
In short, unlocking the full potential of efficiency may mean the difference between a richer, more efficient world, and a poorer, less efficient world. The former is clearly the desirable case, and the one we should all strive for! But in either case, the world will use more or less the same amount of energy. In some parts of the economy, efficiency may reduce overall energy use, while in others it may increase it. The net effect, after accounting for efficiency's role in unlocking economic growth (among other rebound effects) is far from a linear and direct reduction in energy use.
We therefore argue that we should continue to pursue any cost-effective efficiency opportunities on economic grounds, even as we reconsider the degree to which these measures will contribute to climate mitigation efforts.
"In any case, truly cost-effective energy efficiency measures should be vigorously pursued, as they will lead to an improvement in general welfare (at least narrowly construed in economic terms). However, from a climate mitigation perspective, we must be keenly aware of the precise, macroeconomic impacts of energy efficiency improvements, since only a reduction in total aggregate energy consumption will directly contribute to emissions reduction objectives. This in turn requires an understanding and analysis of the non-linear combination of impacts on economic activity, demand for energy as a factor of production, and other macroeconomic factors that are together summed up in the term 'rebound effect.'"
A: Rebound effects are part of the reason that energy use is still growing, even as the economy gets more and more efficient. True, economic growth drives up energy use, even as we get more efficient. But those two terms - economic growth, and energy efficiency - are not unrelated, and rebound effects describe the relationship between the two.
Part of the reason the economy continues to grow is because below-cost energy efficiency improvements grow the supply of energy services and increase the productivity of the economy - we get more economic activity and income and welfare out of the same amount of energy - and productivity improvements are a key driver of economic growth.
Some economists argue that the supply of energy services is a key enabling force in economic growth: think about the impact of electric motors, industrial lasers, computing, automation, and all of the other ways in which we use energy - often quite efficiently - to greatly improve the productivity of our economy. Think about how important energy services - lighting, efficient cooking stoves, electricity - are to development outcomes in the emerging economies of the world. Efficiently expanding the supply of energy services may thus be one of the principal factors determining the rate of economic growth in rich and poor nations alike (see the previous question for more).
That said, there are definitely other factors driving economic growth, including improvements in the productivity of other inputs to the economy, such as labor, capital, and other materials. Rebound effects and energy productivity improvements aren't the only driver of economy growth by any means.
A: Overall, the global economy has been growing at the rate of roughly 3% per year. Historically, we've only seen a roughly 1-1.5% improvement in energy use per unit of economic output (energy intensity or productivity) each year.
For energy efficiency gains to outstrip the increase in energy demand driven by the growing economy, the economy must improve energy intensity/productivity by at least 3% per year, roughly double or triple the historic rate of improvement.
So economic growth continues to out-pace energy efficiency improvements, and energy use continues to grow overall.
Efficiency advocates argue that if we work harder at capturing energy efficiency opportunities, we can more than double or triple this rate of efficiency improvement and bend global energy use downwards.
That's a big task already, but at least two factors make this challenge even harder:
First, a large portion of changes in energy intensity over time can be attributed to structural changes in the economy (Baksi and Green 2007), as economies shift from agricultural to industrial to services-oriented over time. These aren't the technical improvements in transportation, lighting, buildings, or industrial efficiency that energy efficiency policies are concerned with, and these trends are hard to accelerate or effect through policy. They may not continue indefinitely either, so there are limits to gains here.
If, for example, one-half or two-thirds of the historic rate in energy intensity improvements are due to sectoral transitions and structural changes in the economy, then efforts to increase the rate of technical efficiency improvement must work two or three times harder to succeed. Instead of a more than doubling or tripling of our efforts, we must achieve a more than four to nine-fold increase in technical efficiency improvements.
Second, that estimate does not account for rebound effects. Rebound makes the goal even more challenging, as it means efficiency feeds back into energy consumption and economic growth increasing both and making the horizon we're reaching towards recede even further. For every two steps forward we take with below-cost energy efficiency, rebound effects take us roughly one (or more) steps backwards.
For these reasons, we think it is prudent to revisit the ability of below-cost energy efficiency to decouple the economy from growing energy use and drive lasting reductions in climate-destabilizing greenhouse gases. While we should continue to pursue cost-effective energy efficiency measures improvements wherever they may be found, as we write in the report (p. 52):
"Efforts to reliably reduce greenhouse gas emissions or dependence on depleting fossil fuels would be prudent to avoid the risk of overreliance on energy efficiency measures. Such efforts should therefore focus primarily on shifting the means of energy production (rather than end use), relying on zero-carbon and renewable energy sources to diversify and decarbonize the global energy supply system."
A: While the term 'rebound effect' is generally used by energy economists to talk about rebounds after energy efficiency, the basic economic mechanisms - elasticity of demand and substitution, re-spending effects, and the contribution of productivity to economic growth - are well-understood economic phenomena relevant to improvements in the price or productivity of any factor of production, be it capital, materials, or labor.
Let's consider labor, for example. Economists would never assume that a 20% improvement in labor productivity - aka a "labor efficiency" improvement - would reduce overall demand for labor in the economy by 20%.
Everyone knows that improving labor productivity drives economic growth, creates new profitable ways to utilize labor, and overall generally increases employment at the macroeconomic scope, not decreases it.
Even at the scope of the individual factory or assembly line, improving labor productivity may mean the plant can get by with fewer laborers on the shop floor, but even there, the net effects on demand for labor are far from linear and direct. Higher labor productivity lowers product costs and increase demand for those products and opens up new markets that weren't profitable before. It frees up money to re-invest in other areas of production, and it creates new jobs in other areas of business. Even at the firm level, a 20% improvement in labor productivity won't mean 20% of the company's staff is laid off.
Yet this is precisely the simplified, linear assumption that is routinely made in energy and climate forecasting and scenario planning. A 20% improvement in energy efficiency = a direct, 20% net reduction in energy demand, relative to business as usual.
"Rebound effects" are what energy economists call the same, common sense story we just went over for labor, when we're talking about energy productivity or efficiency rather than labor productivity.
The reality is that energy isn't different from labor, or materials, or capital, and a whole field of academic work has gone on - largely out of notice of mainstream energy analysis and policy making - to explore and illustrate how energy efficiency leads to a series of complex, non-linear response throughout the economy that drive a rebound in demand for energy services and thus a rebound in consumption of energy itself. Our "Energy Emergence" report surveys this evidence and presents key implications for climate mitigation efforts.
A: More or less, yes. This basic but somewhat paradoxical dynamic - that energy efficiency lowers the price of energy services, leading to a rebound in consumption of those services - was first thoroughly discussed by British Economist William Stanley Jevons in an 1865 book, The Coal Question. He famously wrote, "It is a confusion of ideas to suppose that the economical use of fuel is equivalent to diminished consumption. The very contrary is the truth."
Some people define this so-called "Jevons Paradox" more strictly, saying that the Paradox refers only to cases when the rebound effects triggered by efficiency measures drives more demand for energy than was originally saved by the efficiency improvements. That's a scenario known in the rebound literature as "backfire," a special kind of severe rebound effect that is greater than 100% of the initially expected energy savings. Backfire means improving energy efficiency actually increases energy demand overall, relative to what it would have been if the efficiency measures hadn't been pursued at all. This is precisely what Jevons observed when he noted that the much more efficient steam engine developed by James Watt led to a huge increase in coal consumption during the 19th century, rather than the conservation of Britain's dwindling coal resources.
However, the generalized dynamic Jevons observed: that efficiency lowers the cost of energy services, driving a rebound in demand for those services, not a direct linear reduction in demand or conservation of fuels, is equivalent to what energy economists now call "rebound effects."
A: No, not all energy efficiency measures trigger rebound effects. Rebound effects are concerned with the response to below-cost efficiency improvements. That's the "low-hanging fruit" we always hear about, the efficiency measures that pay back more in avoided energy use than they cost to install. These are also the ones "below zero" on the often-cited McKinsey and Co. greenhouse gas abatement cost curve seen below. Below-cost efficiency measures always reduce the implicit price of energy services - the useful work provided by energy consumption, be it heating a home, transporting people or goods some distance, powering a production facility, or lighting a work space - and thus always trigger a rebound in demand for those services (see the first question in this series above). It's not a question of whether efficiency measures that truly "pay for themselves" will trigger rebound - they will - the question is how large that rebound will be?
Not all energy efficiency measures are below cost though (the graphic above has arrows pointing to a couple of 'above-cost' efficiency measures, according to McKinsey: plug-in hybrid electric cars, and efficient building design for new buildings). While they incur an economic cost, these efficiency measures should not trigger rebound effects and may still prove effective at reducing energy demand. As we wrote in the report (p. 52):
There is no shortage of opportunities to improve energy efficiency that are not cost-neutral or below-cost. While these measures come with a price tag, in many cases the costs are reasonable and such efforts may be well justified given the long-term threat, economic and otherwise, that global climate change represents.
A: Technically, yes. Price-induced efficiency improvements, whether in response to exogenous energy price increases (changes not caused by policy that is) or successful policy efforts to price carbon emissions or impose energy taxes, should not be expected to result in significant rebound. However, as we write in the report (p. 53), "to fully avoid rebound effects, energy price increases must be sufficient to keep the final price of energy services constant despite improvements in energy efficiency, eliminating any net productivity gains from the efficiency measures." That is, in rough terms, if energy efficiency drives down the price of energy services by 30% or 50%, then energy prices would have to increase through carbon taxes or fees by an equivalent 30% or 50%.
Achievement of deep reductions in energy demand and associated carbon emissions through price induced efficiency will therefore require substantial and rising energy prices over time and sustained over the multi-decadal periods relevant to climate policy, such that rising energy prices keep pace with the improvements in energy productivity.
Furthermore, if revenues collected through carbon pricing, energy taxes, or other efforts to raise energy prices are reinvested into economically productive ends, macroeconomic rebound effects may result, so the precise use of revenues will determine the efficacy of these policies in curbing rebound.
As we conclude in the report:
"Thus, carbon pricing policies (e.g., carbon taxes or cap and trade systems) and energy taxes offer potential tools to mitigate some or all of the energy demand rebound resulting from efficiency improvement - although implementing such policies faces practical challenges and will invariably encounter the political difficulties inherent to policy efforts that seek to impose energy price increases that will result in loss of economic welfare (ignoring potential benefits of avoided economic externalities).
A: Dr. Koomey has done no such thing, as he clarifies in a post at his own blog here. Koomey writes, "It will take time to review the technical questions in the detail this issue deserves, so I'll hold off on stating any conclusions until that work is done."
Joseph Romm of Climate Progress has misrepresented Koomey's work, claiming that "Some of the nation's top energy experts have debunked" our report, linking to a memo from Koomey as his sole evidence. There has been no "debunking" of the the Breakthrough Institute report surveying that literature nor even a serious attempt to debunk it.
A more up to date and unedited compilation of the key emails in that dialog can be read here, if the reader cares to delve deeply into this discussion and see for themselves. Note that the discussion is ongoing.
No. Far from blaming below-cost efficiency for "evils" we praise it as good for economic growth and welfare. However, we do point out that it can increase energy consumption, and that efforts to reduce greenhouse gas emissions cannot rely, as many leading analysts to, on simplistic claims that energy efficiency results in direct energy consumption declines.
Steven Sorrell of the University of Sussex in England headed up a similarly comprehensive review of the evidence for rebound effects published by the UK Energy Research Center in 2007 and originally commissioned by the UK government. In reply to NRDC's David Goldstein and Ralph Cavanagh, he wrote:
"[T]he claim that the Breakthrough Institute "fails to back up its accusations with facts" is plain wrong. Their report is based upon a large volume of empirical evidence in the academic literature. I reviewed this a few years ago - [link] - and the Breakthrough report brings this up to date."
As Mr. Sorrell cautious, "[T]his topic [rebound effects] needs intelligent and careful research to help us understand it better, to improve the quantitative estimates, to reduce the uncertainties and to figure out what we can do in response. Simply dismissing it out of hand," as Goldstein and Cavanagh have tried to do, "will get us nowhere."
Do you have your own questions that aren't answered here? Please leave your question in the comments and we'll do our best to answer.
Last week Breakthrough co-founders Michael Shellenberger and Ted Nordhaus returned to Yale University for a retrospective on their seminal 2004 essay, "The Death of Environmentalism." In their speech they argued that the critical work of rethinking green politics was cut short by fantasies about green jobs and "An Inconvenient Truth." The latter backfired -- more Americans started to believe news of global warming was being exaggerated after the movie came out -- the former made false promises that could not be realized by cap and trade. What is an earnest green who cares about global warming to do now? In this speech, Nordhaus and Shellenberger reflect on what went so badly awry, and offer 12 Theses for a post-environmental approach to climate change.
It is a great pleasure to be here at the Yale School of Forestry and Environmental Studies for this retrospective on "The Death of Environmentalism." In early 2005 Yale invited us to debate that essay, and since then the School has continued to demonstrate a genuine interest in what our friend and colleague Peter Teague has taken to calling ecological innovation. You train your students to ask hard questions -- we saw this first hand in 2010 Breakthrough Fellow and Yale School Masters candidate David Mitchell -- and your flagship publication, Yale360, is publishing some of the most interesting green thinkers today. We are grateful once again for this opportunity to reflect on the nearly seven years since we wrote our essay, and make some new arguments about what the green movement must do now.
Seven years ago the two of us started interviewing America's environmental leaders with the intention of writing a report on the politics of global warming for the October 2004 meeting of the Environmental Grantmakers Association. We came away from the experience deeply disappointed. Not one of the environmental leaders we interviewed articulated a compelling vision or strategy for dealing with the challenge. None expressed much interest in rethinking their assumptions about the problem or the solutions. What we heard again and again during our interviews were the same old riffs that green leaders had been repeating since the late 1980's. Global warming would be solved through the same kinds of policies that we had used to address past pollution problems such as acid rain. Most were confident that John Kerry was, with their help, about to be elected president, and the biggest funders in the movement told us they were just a few steps away from passing cap and trade legislation.
That October we delivered our paper, "The Death of Environmentalism," at the Environmental Grantmakers Association conference. While leaders at environmental philanthropies and national green groups hoped that the debate the essay started would just go away, "The Death of Environmentalism" struck a cord with many others and sparked a spirited debate. Many took the paper's arguments personally and, without question, the most common reaction to our essay was "I'm not dead." Our friend Adam Werbach gave a speech called "Is Environmentalism Dead," wherein he suggested that environmentalists make common cause with a broader coalition of progressive interests in hopes of building a broader and more diverse movement. And Yale's own Gus Speth questioned whether capitalism itself was compatible with ecological sustainability and suggested a radical shift in values was required to deal with the problem.
Last week, a group of Senate Democrat leaders unveiled their plan to build off of the innovation-centered budget proposal released by the President two weeks ago, including several important investments in energy innovation, advanced manufacturing, and infrastructure.
Senate Majority Leader Harry Reid introduced the proposal as an effort to simultaneously "create jobs, promote growth and help America win the future by making smart investments in education, innovation and infrastructure while cutting spending to live within our means."
The Senate Democrats' plan to judiciously invest in innovation and infrastructure while cutting wasteful spending elsewhere in the budget stands in sharp contrast to the Continuing Resolution bill passed by the House this weekend. The House bill budget would cut more than $60 billion from the federal budget to fund the government through FY2011, slashing several important energy innovation initiatives.
The House Republican's Continuing Resolution proposal to fund the government through the rest of Fiscal Year 2011 (FY11, ending Sept. 30) would slash energy innovation investments across federal agencies. The bill, H.R. 1, was introduced last Friday as the GOP's attempt to reduce the deficit and restore "fiscal responsibility," yet would nevertheless strip highly leveraged dollars from important federal programs, while representing merely a drop in the bucket of the $1.3 trillion federal deficit.
The Continuing Resolution as it stands would slice over two billion dollars from the DOE's budget alone and would have detrimental impacts on the state of American energy innovation. The budget cuts would force the layoffs of scientists and engineers, shrink the capabilities of laboratories and universities to perform the most critical cutting-edge energy research projects, and, by cutting funds for highly-leveraged loan guarantee programs, steer private sector funds away from American entrepreneurs and small businesses looking to demonstrate and deploy their innovative energy technologies on American soil.
The Continuing Resolution proposes cuts of at least 17% as compared to FY10 levels in each of the most innovation-oriented offices in the Department of Energy:
The agency which would be hardest hit would be the Advanced Research Projects Agency-Energy (ARPA-E), which funds both the riskiest and most transformative, early-stage energy innovation projects, and would lose a staggering 75% of its budget under H.R. 1.
The Office of Energy Efficiency and Renewable Energy (EERE), which was responsible for roughly 34% of the DOE's energy innovation investments in 2010, would lose 35% of its FY10 budget.
The Office of Science, which funds critical early-stage energy innovation research, would see a 20% decline in its budget. Office of Science devoted 20% of its 2010 budget to energy innovation funding, while supporting additional fundamental physical science research.
The Office of Nuclear Energy, which devoted 41% of its funds to energy innovation projects in 2010, would lose 23% of its budget.
Meanwhile, the Office of Fossil Energy would see an 11% reduction in its budget. 43% of the office's 2010 budget was devoted to energy innovation efforts.
"Energy Emergence: Rebound and Backfire as Emergent Phenomena" finds extensive evidence and a strong expert consensus that a large amount of the energy savings from below-cost energy efficiency are eroded by demand 'rebound effects,' and that in some cases the rebound exceeds the savings, resulting in increased energy consumption from efficiency, known as backfire. The report contains a comprehensive review of the expert literature.
There is a large expert consensus and strong evidence that below-cost energy efficiency measures drive a rebound in energy consumption that erodes much and in some cases all of the expected energy savings, concludes a new report by the Breakthrough Institute. "Energy Emergence: Rebound and Backfire as Emergent Phenomena" covers over 96 published journal articles and is one of the largest reviews of the peer-reviewed journal literature to date.
In a statement accompanying the report, Breakthrough Institute founders Ted Nordhaus and Michael Shellenberger wrote, "Below-cost energy efficiency is critical for economic growth and should thus be aggressively pursued by governments and firms. However, it should no longer be considered a direct and easy way to reduce energy consumption or greenhouse gas emissions." The lead author of the new report is Jesse Jenkins, Breakthrough's Director of Energy and Climate Policy; Nordhaus and Shellenberger are co-authors.
The findings of the new report are significant because governments have in recent years relied heavily on energy efficiency measures as a means to cut greenhouse gases. "I think we have to have a strong push toward energy efficiency," said President Obama recently. "We know that's the low-hanging fruit, we can save as much as 30 percent of our current energy usage without changing our quality of life." While there is robust evidence for rebound in academic peer-reviewed journals, it has largely been ignored by major analyses, including the widely cited 2009 McKinsey and Co. study on the cost of reducing greenhouse gases.
President Obama released his fiscal year 2012 budget proposal this morning, a solid endorsement of the necessity to increase public investment in energy innovation amidst proposals to indiscriminately cut discretionary spending across all federal programs. The President's budget proposal builds off of the innovation-centered economic growth strategy presented in the State of the Union Address last month and the White House Innovation Report released two weeks ago.
On the energy investment front, the budget proposal aims to increase the DOE's budget by 11.8 percent over FY2010's current appropriation levels, or $3.1 billion dollars, a comparatively small increase in an overall budget proposal of $3.7 trillion that proposes reducing the projected deficit by roughly $110 billion per year for the next ten years.
This budget increase is a vital step towards meeting the scale of the energy innovation challenge long-underlined by the Breakthrough Institute and by a general consensus of leading energy innovation experts, think tanks, and policymakers.
However, not all of these increases lie with funding for energy innovation. Using the Energy Innovation Tracker, a tool that compiles federal energy-innovation funding across nine federal agencies for the years 2009-2011, inclusive of ARRA, we've broken out investments in energy innovation (defined in the tracker as Basic Science, RD&D, and Education investments) from general energy investments in measures such as deployment, facility construction, and program management.
On Monday, I appeared on an hour-long webinar hosted by theEnergyCollective.com on China and Energy, diving into questions of energy innovation, competitiveness, and the challenge of meeting China's soaring demand.
Carolyn Bartholomew, a commissioner on the US-China Economic Security and Review Commission joined myself and moderator Marc Gunther to dive into the issues at stake.
We discussed how China can be both the world leader in clean and dirty energy, simultaneously leading the world in the production of clean energy technologies and global contributions to climate-destabilizing carbon dioxide and coal consumption; the economic stakes of the global clean energy race and China's rising prowess in clean tech innovation and production; and the huge scale of energy demand in the rapidly developing nation.
Listen to the audio - "China and Energy" webinar, 1/31/11: (length 01:01:10)
Last week, President Obama threw down an ambitious national goal in his second State of the Union Address: by 2035, 80% of America's electricity will come from "clean" energy sources, double the share we now derive from clean sources.
But what counts as "clean," how do we get there, and is the goal feasible?
Dr Nathan Lewis, a distinguished professor of chemistry at CalTech and direct of the new, Department of Energy-funded Fuels from Sunlight Energy Innovation Hub (which also got a shout-out in the President's SOTU) appeared on NPR/WBUR's "On Point" radio yesterday, to discuss the President's clean energy objectives, the energy innovation challenges that must be overcome to reach that goal, and the economic and environmental consequences at stake.
I highly recommend you give the segment a listen here.
As Ryan Avent writes: "economics is clearly moving beyond the carbon-tax-alone position on climate change, which is a good thing. If the world is to reduce emissions, it needs technologies that are both green and cheap enough to be attractive to economically-stressed countries and people. And a carbon tax alone may not generate the necessary innovation."
Over at the Economist, Ryan Avent notes that economists are beginning to move beyond a simple reliance on carbon pricing as the sine qua non of climate policy:
The typical baseline economist response to the problem of global warming is a very simple and straightforward one. Climate change is a negative externality, and the carbon emissions that generate it are easily targetable. The clear thing to do, then, is to place a tax on carbon emissions which will lead economic actors to internalise the cost of the warming they create with their decisions. This will discourage carbon-intensive activities and contribute to the development of clean alternative, reducing emissions and climate change.
Easy enough. Unfortunately, this strategy quickly runs into difficulty. One big problem is political. It's very difficult to convince people to accept higher energy costs, and it's very difficult to coordinate policy across countries, which is necessary to ensure that the policy works correctly. But there are also economic challenges. ... Economies are good at finding substitutes for key technologies, but it does take some time. And so because the world has waited so long to act, it now seems that the disaster-avoiding carbon tax path may itself be too economically damaging. So what's an economist to advocate?
Climate science was supposed to unite us, on the left and the right, and result in common, concerted action. Instead, the science of climate change has proved to be ideologically polarizing. In a speech for the National Institute of Standards and Technology, Michael Shellenberger and Ted Nordhaus explain why climate science divides us. By contrast, energy technology may actually be able to transcend politics and unify Republicans and Democrats alike.
[Updated 1/11/2011: Robert Stavins was previously misidentified as the former chief economist of the Environmental Defense Fund. He is a former staff economist. We regret the error.]
By Michael Shellenberger and Ted Nordhaus
Thank you very much. We'd like to start by thanking William Ott for inviting us to give this colloquium, which is an honor. NIST has a long record of advancing innovation by developing new ways of measuring new natural phenomena and creating standards for critical technologies. The Institute, famous for the first atomic clock, played a critical role in creating the technologies behind modern computers, semiconductors, sonar, and blood pressure machines. We are grateful for NIST's work and reminded of the critical role played by America's sustained investments in science and technology in creating our prosperity.
It may be hard to remember now but it wasn't that long ago that much of the American political establishment came to believe that the science of climate would transcend ideological and national boundaries and result in common national and global action. The idea was that climate scientists would tell us what the safe level of atmospheric emissions was, and that nations would take shared steps to reducing their emissions over the next 50 years.
But things didn't work out that way. The United Nations treaty process has devolved into an endless exercise in empty promises and angry recriminations. The growth of global carbon emissions has only accelerated in the 13 years since Kyoto was signed. The United States failed last summer for the fourth time in seven years to cap its emissions while Europe, which supposedly has, has seen its emissions grow faster than the United States since 1997.
Here's an intriguing story to kick off the new year with a little retrospection...
Flash back to 2008, and nearly all of the top GOP contenders for a 2012 presidential run were taking global warming pretty seriously and offering real, if measured, endorsements of Congressional or state action to curb pollution and GHGs.
On the campaign stump, in books, speeches and nationally-televised commercials, aspiring GOP White House candidates such as Tim Pawlenty, Mike Huckabee and Mitt Romney have warned in recent years about the threats from climate change and pledged to limit greenhouse gases. Some have even committed the ultimate sin, endorsing the controversial cap-and-trade concept that was eventually branded "cap and tax."
Back in 2008, Newt Gingrich took to a couch next to the Right's current-day arch-nemesis, Nancy Pelosi, to endorse Congressional climate action in an ad sponsored by Al Gore's Alliance for Climate Protection.
And as Politico notes, even Sarah Palin has flip flopped on the issue:
Just days after McCain picked her as his running mate, Palin told ABC News she believes human activities "certainly can be contributing to the issue of global warming, climate change" and that "we've got to do something about it, and we have to make sure that we're doing all we can to cut down on pollution."
Politico's Darren Samuelsohn calls it the McCain effect, with John McCain's prominent endorsement of cap and trade legislation making it safe for GOPers to talk about climate.
"I think McCain is moving in a responsible direction," then-House Minority Leader John Boehner (R-Ohio) told E&E News in May 2008. "Clearly the issue of climate change is on the minds of a lot of people. Humans clearly contribute to this. It just really depends on what kind of a cap-and-trade system, what kind of safety valves are in there."
Flash forward just a few years and each of these prominent GOPers are likely running for an excuse, a mea culpa, or another way to distance themselves from green records that are now liabilities with a Republican base strongly influenced by the Tea Party movement.
So what happened? Was it simply the polarizing direction of the cap and trade debate? The shift in the economic winds? The rise of the Tea Party? The inherent politics of a proposal centered on making our current base of energy sources more expensive, rather than making the cleaner alternatives cheaper?
Whatever the constellation of causes, the change is quite stark. Looking ahead to 2011 and beyond, can we build a new and enduring consensus around an innovation-centered approach to energy reform, building a clean economy, and responsibly reducing pollution? And can we make it sustained enough to avoid the factors that turned the endorsements of prominent GOP leaders into liabilities just a few years later?
On December 15th 2010, hundreds of leading thinkers, scientists, public officials, and innovators gathered in Washington, DC for the Energy Innovation 2010 Conference to initiate a new conversation on a new energy policy paradigm for the 21st century
For 35 years, government and the market have been trying and failing to get energy policy right. Congress has failed to pass large-scale clean energy and climate legislation, while China and other competitors are moving aggressively to take the lead in new energy technology. And the market has failed to create needed low-carbon technology on its own. Meanwhile, the nation's dependence on oil and coal deepens and global temperatures continue to rise. To address these issues, we need to get past the old energy policy paradigm - and we just may be turning the corner.
On December 15th 2010, hundreds of leading thinkers, scientists, public officials, and innovators gathered in Washington, DC for the Energy Innovation 2010 Conference to initiate a new conversation on a new energy policy paradigm: one that recognizes the central role of innovation in resolving the world's looming energy challenges and boosting American competitiveness. Climate change aside, we can't rely on carbon-based fuels for the next 150 years the way we did for the last 150. And we can't create the transformational energy innovations we need without putting innovation front and center.
"Energy Innovation 2010" merely begins a new national energy dialog that must continue well into the coming years. Breakthrough Institute and our partners will continue to spearhead this conversation as we seek new strategies to address the multifaceted energy challenges facing America and the world.
In case you missed the conference, held before a packed house at the National Press Club, or if you simply want to revisit the top notch presentations delivered throughout the packed day, videos from the full conference can be viewed below.
Starting in the 1970s green groups helped kill new nuclear plants by claiming greater energy efficiency would slash energy consumption. It didn't. Energy demand rose 40 percent more than Amory Lovins predicted. The result? A coal-plant building boom. Time to rethink the role of energy efficiency.
By Michael Shellenberger, Ted Nordhaus, and Jesse Jenkins
If there's one thing everyone knows for certain, it's that energy efficiency reduces energy consumption. President Obama, Steven Chu, Fortune 500 chieftains, Silicon Valley VCs, the U.N. and McKinsey all say it.
Why, then, does ever-greater efficiency go hand-in-hand with ever-greater energy consumption? In this week's New Yorker, journalist David Owen explains this apparent paradox. The essay (excerpted below) is as fascinating as anything written by Malcolm Gladwell. And the implications for energy and climate policy are of great significance.
From hybrid crops to blockbuster drugs, nuclear power to wind power, and microchips to the Internet, government support was critical to the productive public-private partnerships that spawned so many revolutionary American technologies.
This presentation was delivered by Jesse Jenkins (Director of Energy and Climate Policy, Breakthrough Institute) and Daniel Sarewitz (Director, Center for Science, Policy, and Outcomes, ASU; Breakthrough Institute Senior Fellow) at the Energy Innovation 2010 Conference, December 15th, 2010.
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Apple, Amgen and General Electric. Bill Gates, Thomas Edison, and Alexander Graham Bell.
We are all familiar with these genius inventors and titans of industry.
Yet most of us remain unaware of the almost constant presence of a silent partner in American innovation: the federal government.
We might recall something about microchips and the space race, or know that the National Institutes of Health funds research into new drugs and treatments.
But most of us remain unaware of the depth and breadth of government support for technology innovation.
As we gather today to consider how to drive forward the dramatic innovation needed to deliver cheap, clean and massively scalable energy sources to power world, we would do well to pause and take a look back at the United State's long history of limited but energetic public investment in breakthrough technologies.
Breakthrough Institute and other leading think tanks sponsor day-long conference rethinking energy innovation in the United States: getting to scale, making clean energy cheap, securing American leadership.
After
two years of often-tumultuous debate in Congress, the national debate
over energy and climate change policy has now been altered: cap and
trade policy efforts have run aground in Congress, perhaps fatally, and
Republicans are ascendant, reshaping the national political landscape.
Meanwhile, with economic recovery the top priority for the public and
policymakers alike, America's clean tech competitors are surging ahead,
raising the stakes for energy policy.
Against this backdrop,
support is growing on both right and left for new national investments
in energy innovation that can help address some of the most urgent
imperatives of our time - renewing the economy, improving energy
security and public health, and overcoming key environmental challenges.
A growing chorus of voices thus counsels a renewed national commitment to develop breakthrough energy technologies - and to the reform of America's energy innovation system itself.
In
recent months, energy experts have advised policymakers to: take a page
from the nation's long history of successful military research and
procurement; build on the success of agricultural research stations and
the National Institutes of Health by establishing new innovation
institutes and clusters nationwide; promote the right mix of both
competition and collaboration to spur innovation and productive
knowledge spillover; reform energy subsidies to reward innovation; and
restructure business taxes to promote investment in the building blocks
of an innovation economy.
On December 15th, a group of America's leading policy think tanks will host a day-long conference in Washington D.C. to rethink energy innovation.
Energy Innovation 2010,
held at the National Press Club, will bring together leading experts
from government, think tanks, academia, and business to ask hard
questions about how energy innovation efforts can be brought to scale,
how the innovation system must be restructured and reformed, and how to
renew the kind of active partnerships between the public and private
sectors that were responsible for so much of America's prior
technological innovation and economic strength.
Breakthrough Institute is proud to organize and sponsor this free, day-long conference, along with the Information Technology and Innovation Foundation and with sponsoring partners the American Enterprise Institute, Third Way, Clean Air Task
Force, Consortium for Science, Policy and Outcomes, Securing
America's Future Energy, and the Brookings Institution. We are pleased to
welcome TheEnergyCollective.com and Yale Environment 360 as media sponsors for the event.
Forcing countries to agree to emissions caps will never work, argue Ted Nordhaus and Michael Shellenberger. The duo argues in a special Wall Street Journal column that the global community should think past U.N. climate talks in Cancun and focus instead on energy innovation, adaptation, and no regrets policies that do not require agreement about global warming.
The failure of the U.N. climate process is proof that shared economic sacrifice cannot be the basis of global action. Nations will not scale up clean energy as long as it remains so much more expensive than fossil fuels. Thinking past talks in Cancun, nations should focus instead on energy innovation, adaptation, and no regrets policies that do not require agreement about global warming. The first step is recognizing that the global market for clean energy exists only thanks to government subsidies and mandates. Instead of imposing emissions controls and subsidizing existing technologies, nations should use competitive deployment to purchase advanced energy technologies, benchmark the winners, and allow intellectual property to spill-over between firms and nations.
This is the framework we propose for pragmatic global climate action in the cover story for a special energy section in today's Wall Street Journal, pegged to the start of U.N. climate talks in Cancun, Mexico. Today also marks the launch of a new web site, Breakthrough Europe, and its kick-off post, "Cancun Can't: The Twilight of European Climate Leadership," which documents the failure of Europe's cap and trade system to reduce emissions.
Our Wall St. Journal essay, "How to Change the Global Energy Conversation," builds on Breakthrough Institute's thinking about the failure of the UN process ("Scrap Kyoto," Democracy Journal), the clean tech intellectual property illusion ("The Revolution Will Not Be Patented," Slate), the green Keynesianism and neoliberalism behind Obama's green jobs fiasco ("Green Jobs for Janitors," The New Republic), and our proposal to make clean energy cheap through technology innovation ("Fast, Clean & Cheap," Harvard Law and Policy Review, Feb 2008).
Research and innovation on energy storage and transmission technology must proceed in parallel as the nation ramps up use of renewable energy, according to a new report from the American Physical Society.
New innovations in energy storage, transmission, and the integration of variable electricity sources are necessary to enable renewable energy sources to contribute significantly to the U.S. energy supply, according to a new report from the American Physical Society.
Establishing national policies to spur the deployment and adoption of renewable electricity sources, such as wind and solar power, are important, but the scientists warn that research and innovation must also proceed in parallel on better energy storage technologies, new strategies for integrating the varying and intermittent output of these energy sources, and improved technologies for the long-distance transmission of renewable electricity.
A new report by Third Way and an op-ed by three U.S. Senators add to the gathering consensus for a technology and innovation-led strategy for clean energy progress and economic renewal.
America can recapture the lead in the global clean energy race if it commits itself to a major public-private effort to spur clean energy innovation.
That's the message of a new report released today by Democratic think tank Third Way. The report, "Creating a Clean Energy Century," is the first in a series of reports from Third Way's new project on energy innovation, co-chaired by U.S. Senators Mark Udall (D-CO), Kay Hagan (D-N.C.), and Debbie Stabenow (D-MI).
The report begins with clear-cut premises. Clean energy is still too expensive and unreliable relative to fossil fuels. Other countries are moving toward clean energy more quickly than the United States. Countries that are able to make clean energy cheaper than fossil fuels will gain the greatest economic benefits, by capturing more of the rapidly growing domestic and global markets for clean energy.
There will be no cap-and-trade climate bill considered in the next Congress, Majority Leader Harry Reid (D-Nev.) promised a colleague today.
Newly sworn-in Sen. Joe Manchin (D-W.Va.) said today that Reid made a "total commitment" to him that there would be no cap and trade next session.
Reid's office confirmed the promise. "Given the election results, there is no chance we can deal with cap and trade," Reid spokesman Jim Manley told E&ENews PM.
New ideas will clearly be needed to make clean energy progress in the next Congress and beyond.
For more on that, see the "Climate Next" series now underway at the Atlantic, Slate, Mother Jones and the other participating partners in the Climate Desk project. Breakthrough's Michael Shellenberger and Ted Nordhaus kick off the series with their essay, "Innovate First, Regulate Later."
Remaining competitive in the fast-growing, 21st century clean energy sectors will demand the same world-class talent and highly-trained workforce that helped the United States lead the world in the high-tech sectors of the 20th century.
Today, the race for dominance in clean energy technology sectors pits the United States against the greatest international competition for a key emerging technology field than in any era since the Cold War race to lead in aerospace, computing, communications, and IT fields.
Remaining competitive in the fast-growing, 21st century clean energy sectors will demand the same world-class talent and highly-trained workforce that helped the United States lead the world in the high-tech sectors of the 20th century.
As we wrote in "Post-Partisan Power," a road map for a limited and direct national energy innovation strategy recently released by Breakthrough Institute and scholars at the Brookings Institution and American Enterprise Institute:
The United States cannot hope to rise to this global challenge or confront pressing energy innovation imperatives without a new national investment to train and inspire the next generation of intrepid American scientists, engineers, and entrepreneurs. Today, the United States ranks just 29th out of 109 countries in the percentage of 24-year-olds with a math or science degree.47 Only 15 percent of undergraduate degrees in the United States are earned in science, technology, engineering, or mathematics (STEM) fields compared with 64 percent in Japan and 52 percent in China. Even South Korea -- a nation with a population one-sixth the size of the United States -- graduates more engineers annually.
The situation is particularly dire in energy technology, with roughly half of the U.S. energy industry workforce expected to retire over the next decade. Meanwhile, demand for workers in the renewable electricity industry is expected to more than triple from 127,000 in 2006 to more than 400,000 in 2018. The anticipated, large-scale ramp-up of the U.S. nuclear power industry would similarly require the industry to hire tens of thousands of new nuclear engineers and related positions annually. Yet today, from elementary school through post-doctorate programs, students and educators lack the resources to develop new curricula and educational programs, receive key training, or expand research opportunities to meet this national challenge.
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.
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."
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.
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.
[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.
Growing empirical evidence that energy efficient technologies may drive greater energy consumption, not less, demands a new look at the role of energy efficiency in efforts to mitigate climate change.
One of the most curious facts about energy is that economies continue to use more of it even as they use it more efficiently. This strikes us as strange because it has become an article of faith that making cars, buildings, and factories more energy efficient is the key to cheaply and quickly reducing energy consumption, and thus pollution.
But energy experts have never seen this as particularly mysterious. As energy historian Vaclav Smil notes, "Historical evidence shows unequivocally that secular advances in energy efficiency have not led to any declines of aggregate energy consumption." A group of economists beginning in the 1980s went further, suggesting that increasing the productivity of energy would increase economic growth and energy consumption. Efficiency advocates dismiss the evidence of rebound in energy use pointing to direct behavioral changes at the household or business level that are easiest to measure. But the most significant energy rebounds are indirect -- in the production of energy, raw materials, and consumer goods -- not in the "end use" of consumer products.
Below, a leading energy economist, Harry Saunders, explains why energy efficiency does not decrease energy consumption in the way we conventionally understand it. In the process, Saunders clarifies the controversy over his recent co-authored study for the Journal of Physics, which reviews 300 years of lighting history to predict the impact of new solid-state lighting technologies (e.g. LEDs). Against the widespread belief that new lighting technology will reduce energy consumption, Saunders and his colleagues found that they will likely increase it -- greatly expanding the global use of lighting in the process, especially in developing countries. Saunders clarifies some important questions, and explains the basics of "the rebound effect."
With the new study, rebound has firmly moved from the theoretical to the empirical, and the implications of it must now be dealt with by all of us who were counting on efficiency to be an easy way to reduce greenhouse gas emissions.
-Michael Shellenberger, President, Breakthrough Institute
Why Energy Efficiency May Not Decrease Energy Consumption
By Harry Saunders
I recently co-authored an article for the Journal of Physics ("Solid-state lighting: an energy-economics perspective" by Jeff Tsao, Harry Saunders, Randy Creighton, Mike Coltrin, Jerry Simmon, August 19, 2010) analyzing the increase in energy consumption that will likely result from new (and more efficient) solid-state lighting (SSL) technologies. The article triggered a round of commentaries and responses that have confused the debate over energy efficiency. What follows is my attempt to clarify the issue, and does not necessarily represent the views of my co-authors.
Breaking against conventional wisdom, SolveClimate's Elizabeth McGowan takes a fresh look at what a GOP win in November could mean for clean energy progress, noting that new political dynamics in a Washington under divided rule could actually improve chances for bipartisan energy legislation.
According to most electoral prognosticators, Republicans are poised to win major victories in the upcoming November midterm elections, with control of both the House and Senate within their reach. That should spell the end for climate and clean energy legislation, according to many observers, at least for the next Congressional cycle.
But what if it doesn't? Over at SolveClimate, Elizabeth McGowan takes a fresh look at what a GOP win in November could mean for clean energy progress, noting that split control in Washington could actually improve chances for bipartisan energy legislation.
If support for cap and trade is perceived as a key contributor to the political demise of vulnerable moderate Democrats, count it as yet another nail in the coffin for the repeatedly-failed policy.
If you live in states like Delaware, Pennsylvania, West Virginia or Kentucky, you may have already seen them: new political hatchet ads attacking Democrats and even some moderate Republicans for support of Congressional cap and trade bills.
According to E&E News ($usbcription required), the climate policy, which narrowly passed the House of Representatives last year before stalling in the Senate, is the latest weapon wielded by conservative Republican Congressional candidates across the country, who are trying to ride a wave of anger over perceived, out-of-control big government policies into office.
Instead of raising the price of fossil fuels, Gates argues that the time has come to shift our attention to raising the revenues necessary to fuel innovation and make clean energy cheap.
In a new interview with Technology Review, Bill Gates nails the global energy and climate challenge and discusses the need for dramatic increases in energy innovation funding to make clean energy cheap.
In a climate discourse dominated by emissions targets and carbon caps, Gates has provided a refreshing and clear-eyed look at the first-order importance of direct public investment to develop clean, affordable technologies to replace fossil fuels on a global scale.
In this new interview, Gates discusses why dismissing the difficulty of the challenge is counter-productive, and argues that carbon pricing can never drive the dramatic innovation required to transform the global energy system. Instead of raising the price of fossil fuels, Gates argues that the time has come to shift our attention to raising the revenues necessary to fuel innovation and make clean energy cheap.
Below the fold, you can find excerpts from Gates' interview, which can be read in full here.
For more, the NYTimesAndy Revkin and TIME magazine's Bryan Walsh each spotlight the interview here and here, respectively.
The American Recovery and Reinvestment Act has funded breakthrough innovation and new growth industries that are driving down the cost of clean energy and building the foundation for competitive 21st century U.S. industries, according to a new White House reportreleased today on the impacts of the U.S. stimulus bill.
Yet while the White House report highlights the considerable clean energy momentum established by the Recovery Act, it also inadvertently raises the specter of an impending clean tech funding cliff which risks sending U.S. clean energy industries into deep freeze as stimulus funds begin to expire over the coming months.
New legislation introduced by Republican Representative Devin Nunes (CA) and backed by several GOP House members would invest billions into renewable energy deployment, signaling an opportunity for bipartisan support for clean energy technology policies.
Over at CNBC, reporter Trevor Curwin has been one of the first to note the significance of the Republican bill, which Nunes' says could "potentially provide hundreds of billions in financing" for renewable energy over the next several decades.
There's been some change over at WhiteHouse.gov's energy and environment page, but probably not the kind we had in mind when we heard President Obama's oft-repeated campaign slogan, "Change You Can Believe In."
A number of (as yet unfulfilled) energy and environmental policy pledges have been removed from the WhiteHouse.gov page in recent weeks.
Chief among them: President Obama's pledge to "invest $150 billion over ten years in energy research and development to transition to a clean energy economy," once a central plank in Obama's energy and environment platform, and a feature of his first national budget proposal (in FY2009).
Utilities across the country are building dozens of old-style coal plants that will cement the industry's standing as the largest industrial source of climate-changing gases for years to come.
The AP describes the continuing presence of coal power in the United States:
Utilities across the country are building dozens of old-style coal plants that will cement the industry's standing as the largest industrial source of climate-changing gases for years to come.
An Associated Press examination of U.S. Department of Energy records and information provided by utilities and trade groups shows that more than 30 traditional coal plants have been built since 2008 or are under construction.
The construction wave stretches from Arizona to Illinois and South Carolina to Washington, and comes despite growing public wariness over the high environmental and social costs of fossil fuels, demonstrated by tragic mine disasters in West Virginia, the Gulf oil spill and wars in the Middle East.
But like everything related to the energy and climate, it is useful to have a sense of proportion. So have a look at the figure above, which comes from a US DOE presentation earlier this year (PDF). The figure shows the coal power build rate - actual and planned -- for the US and China.
The red parts of the bars for 2008 and 2009 (and perhaps part of the yellow for 2010) are what the AP article is describing. The broader context are the blues and greens.
Cap and trade has died. Last week, Democrats pulled the plug on an ill-fated climate and energy bill. The climate policy paradigm that reigned supreme for over a decade has finally collapsed under its own weight. And - believe it or not - that is a good thing for us all.
Cap and trade was structurally flawed from the outset. From Kyoto to Copenhagen, it left a trail of failed climate conferences, false promises and stillborn bills in its wake. It is time to move on and embrace a bold new approach in our fight against climate change - one revolving around epic government investment aimed at unleashing a clean energy revolution. Rather than trying in vain to make fossil fuels more expensive, we should focus our efforts on making clean energy cheap.
For over a decade, the primary goal of U.S. climate and clean energy advocates has been to establish a strong carbon pollution cap. This agenda is dead for the foreseeable future, and precious time has been wasted. The U.S. must quickly pivot from pollution regulation to an aggressive clean energy competitiveness and innovation agenda, and we can begin with new leadership in the next Congress.
U.S. economic leadership is at a crossroads. Recent outlooks suggest we may experience long-term stagnation and unemployment comparable to Japan's lost decade. Yet while we have suffered an economic crisis produced by our own financial sector - losing millions of jobs, trillions in economic output, and further damaging our industrial base - China has largely shrugged off the global recession with high levels of growth and self-financed stimulus, all while purchasing billions of Treasury bills to finance our own deficit.
Breakthrough's Energy and Climate Director, Jesse Jenkins, appeared today on 88.9 KCRW Santa Monica and Public Radio International's nationally-syndicated show "To the Point" to discuss the recent withdrawal by Sen Harry Reid (D-NV) of a compromised Energy bill based on...
Breakthrough's Energy and Climate Director, Jesse Jenkins, appeared today on 88.9 KCRW Santa Monica and Public Radio International's nationally-syndicated show "To the Point" to discuss the recent withdrawal by Sen Harry Reid (D-NV) of a compromised Energy bill based on largely on a framework of Cap and Trade.
After more than $100 million in lobbying by green groups and allied industry players, and the bill's eventual watering down to a "utility-only" cap, Majority Leader Reid confessed that there was still no way he or the party would be able to muster the sixty votes necessary for the beleaguered legislation to pass.
This is the fourth time in seven years that this cap and trade strategy has been shot down. This time, with the Democrats just one seat shy of a super-majority and with the White House occupied by a president who came to office promising to make climate change a top priority, perhaps the latest episode in the serial failure of cap and trade indicates that it is time to bury the failed policy and develop an entirely new strategy -- one capable of overcoming the political obstacles that doomed cap and trade while successfully making clean energy cheap enough to sustainable power an energy-hungry planet.
The latest death of cap and trade demands a fundamentally new clean energy strategy designed to overcome political obstacles to carbon pricing and simultaneously achieve the primary objective upon which our climate future hinges: making clean energy cheap.
Reports put the time of death at 1 P.M. EST, July 22nd, 2010. That is when Senate Majority Leader Harry Reid emerged from a meeting of the Democratic Caucus without enough support for even a severely weakened and scaled-back emissions cap on the utility sector.
With that, recognition has finallyset ineverywhere: the United States Senate is not going to enact any form of cap and trade. Not this year. And probably not any time in the foreseeable future.
Worse yet, clean energy progress this year has gone down with the long-sinking cap and trade ship.
Breakthrough's Jesse Jenkins offers his recommendations for clean energy policy and strategy in a panel format at online environmental magazine, Grist.org.
Over at online environmental magazine Grist.org, I've been featured among a panel of "seven of Grist's favorite journos and wonks" each offering their two cents on what (if any) changes to climate and clean energy strategy should be made now that cap and trade is on the ropes.
Part 1 focuses on what to do with the remainder if this quickly-waning Congressional year, while Part 2 focuses on longer-term strategy. Here's my response to each question:
Update (Jul 16, 2010): Expanding on a Washington Post op-ed, Vinod Khosla delineates his argument "about the deficiencies of an isolated cap-and-trade or carbon-pricing bill," and joins the climate technology consensus. Khosla writes, "If we want to make a significant difference, we need to get on the path to reducing carbon worldwide by 80 percent now by focusing on what I call "carbon reduction capacity building" -- in other words, we need to develop radical carbon-reduction technologies. A utility cap (or a carbon price) won't build capacity -- it will just increase our utility costs and decrease our manufacturing competitiveness without any increase in our technological competitiveness. On the other hand, although a policy that promotes capacity building will increase research investments in the short term, it will likely decrease overall electricity costs in the medium to long run (through the magic of competition, technology and regulatory certainty), while simultaneously reducing carbon. Disruptive technologies require investment; they don't come from the status quo."
Update (Jul 14, 2010): Other observers have reached similar conclusions about the faltering pollution paradigm. Walter Russell Mead and Clive Crook weigh in on "The Big Green Lie" but can't agree on what it is. Mead argues that it is "that the green movement is a source of coherent or responsible counsel about what to do" while Crook argues that "it's the diminished credibility of the claim that we have a problem in the first place." But both agree that cap and trade and the effort to establish a global carbon pollution regime are dead. Meanwhile, Newsweek's Stefan Theil observes that "the whole concept of radical, top-down global targets is coming under scrutiny" and suggests that the "new climate realism" will "look at other options beyond the current set of targets" and "include a broader mix of policies" including "a shift of subsidies into research and development" and "greater efforts to adapt society to a warmer climate."
Update (Jul 10, 2010): See Andrew Pendleton and Matthew Lockwood of the UK-based IPPR think tank response to Alex Evans' contention that real action on climate will only occur after a major global warming disaster. "There is simply no reason to believe that a climate shock big enough to bring about major changes in thinking will come along before we reach a tipping point (how would we know?)" they write. "Climate change is by its nature long-term and insidious, more like a frog in a warming pot than a sudden Anschluss."
The twenty-year effort to create a single global pollution framework to reduce carbon emissions is in a state of collapse. Meanwhile, a new climate policy consensus is emerging, one which prioritizes direct investment in technology innovation to make clean energy cheap. The new framework begins from the understanding that the root cause of the failure of the pollution paradigm was the technology and price gap between fossil fuels and their alternatives. But hard and important questions are being asked of the new investment-and-innovation paradigm. How is it different from just increasing subsidies for clean energy? How can we be sure it will reduce emissions? What role should carbon pricing play? Here Breakthrough Institute answers frequently asked questions of the climate technology paradigm and responds to challenges raised by Alex Evans on the left and Robert Michaels on the right, among others, who have taken aim at Breakthrough's and Bill Gates' proposals, respectively.
By Ted Nordhaus and Michael Shellenberger
The twenty-year effort to create a single global pollution framework to reduce carbon emissions is in a state of collapse. Europe's Emissions Trading Scheme (ETS) has not reduced emissions and is quickly fading as the central effort to decarbonize European economies. The UN process is becoming a forum for nations to compare and coordinate national policies and measures, not create or enforce a binding global treaty. And it is now clear that, if energy legislation passes the U.S. Senate, it will not create an economy-wide cap-and-trade system, nor will it increase the deployment of clean energy.
Meanwhile, a new climate policy consensus is emerging, one which prioritizes direct investment in technology innovation. This consensus begins with the recognition that the root cause of the failure of the pollution paradigm was the technology and price gap between fossil fuels and their alternatives. No nation -- not even the wealthiest in Europe -- is willing to price carbon enough to cover the difference. Until the technology gap is closed, little will be done to accelerate the transition to a low-carbon economy.
The truth is that we've never been debating a real, binding "cap" on greenhouse gas emissions, just an emissions target and a (pretty modest) carbon price signal. With that as the bar set by "cap" and trade legislation, it is certainly possible to get even better outcomes -- faster transformation of the U.S. energy sector, faster clean energy innovation, and even faster emissions cuts -- with a new clean energy strategy.
Unfortunately, Doniger, NRDC (and EDF) wind up clinging onto a "cap" on carbon they have already given away while at the same time standing opposed to a new clean energy strategy that could still salvage a substantive win despite what little time remains on the Congressional clock.
Environmentalists have long couched their opposition to nuclear power in the argument that tinkering with elementary particles to produce energy is inherently unsafe. But advances in climate and nuclear sciences suggest that the dangers posed by today's nuclear technology are far less serious than the risks of tinkering with global climate systems.
In 1945, J. Robert Oppenheimer gave the go-ahead for the Trinity test, the first human-induced nuclear explosion. As he observed the massive explosion unleashed by his creation, he uttered the now-famous phrase:
The "peak oil" theory may be false or misleading, but it does create a powerful motive for change: governments and businesses should make large-scale investments to reduce their exposure to the oil risk.
Many "peak oil" theorists suggest we will reach peak oil production by the year 2020. I argue that this peak is artificial, occurring only due to economic, technological and political limitations. While I contest the "peak oil" theory, I do believe that we can harness the real power of its assertions: governments and businesses should make large-scale investments to reduce their exposure to the oil risk. We can therefore get to the "End of Oil" without adhering to the "Peak Oil" theory. Today we need a new logic - one of environmental protection, energy security, and national prosperity - for ending our addiction to oil.
In 1956, M. King Hubbert produced his famous symmetrical exhaustion curve, forecasting a peak in global oil production. The curve that he constructed is both simple and logical, and appears to work well for the U.S. Yet this seemingly inescapable curve was wrongly fitted to the total, global oil resource. In reality the geological fact that oil, a finite resource, is depleting has thus far been estimated, as Stouteberg (2008) shows, with a wide range of uncertainty.
With the final seconds ticking down on the Congressional clock, President Obama and Senate Democrats face a choice: waste what time remains convincing supporters they haven't abandoned cap and trade, or call a new play and build upon substantive Republican proposals to score a real clean energy win this year.
With the final seconds ticking down on the Congressional clock, President Obama and Senate Democrats emerged from a White House summit with Republican moderates Tuesday still lacking any plan to score a last minute win for clean energy.
Wasted opportunity
Establishing a price (any price) on carbon pollution through a(n increasingly weak) cap and trade system continues to be the the preferred climate and energy approach of environmental advocacy groups and Democratic leadership. This preference holds despite the fact that for at least three years, that plan has consistently failed to uncover any route to securing the sixty votes necessary for passage in the Senate (a similar bill narrowly passed the House last June).
Heading into the Tuesday morning White House summit, Republicans eyed as key swing votes for any clean energy or climate bill telegraphed clear intentions: cap and trade would be a practical non-starter, but they were ready to act with the President on measures to promote zero-carbon electricity, electric and plug-in hybrid vehicles, and greater energy technology innovation, clean up dirty coal plants, and improve energy efficiency.
The summit offered President Obama a prime opportunity to reset the Senate energy debate by calling a new play: take up the energy provisions Republicans have offered, counter with a more aggressive proposal on similar fronts, and begin earnest negotiations with GOP swing votes to ensure passage of a final bill that could move America towards a clean energy economy before the Congressional clock expires.
Unfortunately, President Obama let this chance to break from the failed and increasingly desperate cap and trade agenda slip by, using the meeting, instead, to reiterate to the assembled Senators - and greens watching from the sidelines - that "he still believes the best way for us to transition to a clean energy economy is ... by putting a price on [carbon] pollution."
Federal investment in clean energy innovation of at least $15 billion per year is a bipartisan strategy for energy leadership, and it deserves the support of Democrats, Republicans, and Independents alike.
When President Obama and key Senate leaders meet today to reach a compromise on energy and climate legislation, they should strongly consider increasing federal investment in clean energy technology to at least $15 billion annually. This is a comprehensive third way strategy to improve U.S. energy independence, economic competitiveness, and climate security, and it deserves bipartisan support.
We are a Democrat and Republican. One of us campaigned for Barack Obama in 2008, the other as a delegate for John McCain. One of us worked on energy and climate policy for the progressive Breakthrough Institute, while the other worked on similar issues for the conservative American Enterprise Institute. We disagree on a wide range of issues, and we hold different economic philosophies.
Despite our differences, we are strongly united behind a serious federal agenda for clean energy innovation. Regardless of the future of cap and trade, robust federal investment in clean energy technology can effectively tackle both energy and climate policy reform. In addition to reducing our oil addiction, it can help build new export-oriented and manufacturing-intensive industries, seize global market share, drive down the price of clean energy technologies, and accelerate the transition to a cleaner, low-carbon economy.
An Energy-Independant Future has been "just beyond" our grasp for nearly thirty years. Jon Stewart nails it again as he chronicles the spin of the last eight presidents, whose successful contributions to the rhetoric of energy independence has been matched only by their failure to manifest its reality.
President Obama's Oval Office address pressed the reset button on energy and climate policy, signaling the need for a new clean energy innovation agenda.
The biggest news from President Obama's Oval Office address is that cap and trade legislation is probably dead for the foreseeable future, and the administration is seeking new ideas.
Instead of using last night's prime-time opportunity to push cap and trade in the form of the Kerry-Lieberman American Power Act -- as many climate advocates saw as their last hope for "comprehensive" climate reform -- President Obama pressed the reset button on energy and climate policy, saying he was "happy to look at other ideas and approaches from either party, as long they seriously tackle our addiction to fossil fuels." He made no mention of setting a price on carbon or establishing an emissions cap and trade system.
As Andrew Revkin observed at New York Times Dot Earth, the president "signaled that he is leaving open a variety of paths on energy and climate policy and no longer hewing tightly to the idea of a cap and trade system for restricting heat-trapping emissions -- which he never wavered from during his campaign." David Roberts of Grist, one of the few remaining hopefuls for cap and trade reform, wrote "Final thought: Obama didn't drive the carbon cap tonight, so there won't be a carbon cap in the energy bill this year."
It comes as no surprise that a broad-based coalition of activists are calling the bluff of 19 companies earning carbon offset credits through the Carbon Development Mechanism created by the Kyoto Protocol. The activists accuse the companies, based largely in China and India, of creating greenhouse gas emissions for the sole purpose of earning credits from destroying them.
According to a review by E&E News (subs. Req'd):
"Sometimes they produce gas just to burn it and get some CDM money, and it's not at all an honest way of behaving," said Chaim Nissim, an engineer with Noe21, a Geneva-based climate change advocacy organization that has researched carbon offsetting projects at industrial gas companies.
"It's fake," Nissim said.
CDM officials say they are investigating the allegations...
With countries still unable to negotiate a second commitment period to the Kyoto Protocol, the future of the entire CDM is in limbo. No one could say what it meant for the carbon market as a whole if it is indeed determined that one third of the whole volume of CERs don't represent any actually abated or avoided greenhouse gas emissions.
At Dot Earth, Andrew Revkin discusses why we should stop waiting for the "fog of misinformation and disinformation on climate" to dissipate from the public mindset and instead focus on the developing "energy consensus" that we need clean, cheap energy to meet the expanding energy needs of quickly growing global population.
Reflecting on lawmakers' struggles over climate bills through most of the last decade, it seems clear that insistence on comprehensive one-step legislation including firm, declining caps on emissions from the get-go -- before building confidence and momentum around the new direction -- is a path to nowhere...
Given the stasis in the Senate, even with the "external" costs of fossil fuels on glaring display in the Gulf of Mexico, it may be time to start listening more to those proposing this more stepwise route forward. Such an approach would better reflect an unbending reality: A quest for new energy choices that advance human lives while limiting conflict and climate risks will require sustained work by a generation or more -- not just one Congress or president.
Christiana Figueres startled delegates when she addressed the United Nations climate conference in Bonn last week: "I do not believe we will ever have a final agreement on climate change, certainly not in my lifetime," the Costa Rican diplomat told them.
"If we ever have a final, conclusive, all-answering agreement, then we will have solved this problem. I don't think that's on the cards." Addressing the issue successfully would "require the sustained effort of those who will be here for the next 20, 30, 40 years".
Her words count, and not only because of her 15-year involvement in tackling global warming. Next month, Ms Figueres takes over from the Netherlands' Yvo de Boer as executive secretary of the UN's climate change secretariat, based in the former west German capital.
As Bonn's low, heavy skies pelted delegates with rain, much of the rest of the talk during the long sessions was of technical matters such as the measurement of greenhouse gases. But in quiet conversations in the corridors, in cafes over hurried coffees or while scurrying between thunderstorms, the deeper question some officials were asking was whether there was indeed any point in continuing with this type of negotiation, which had failed for 20 years. Could the UN climate talks be reformed - or were they just too broken to fix?
A new policy brief by the Breakthrough Institute and Americans for Energy Leadership, "The Power to Compete?", provides the first independent analysis of how the Kerry-Lieberman American Power Act would impact U.S. competitiveness in the global clean energy industry.
A new policy brief released today by the Breakthrough Institute and Americans for Energy Leadership provides the first independent analysis of how the Kerry-Lieberman American Power Act would impact U.S. competitiveness in the global clean energy industry, benchmarking its provisions against key policy components for technological innovation and industrial development in the low-carbon power and transportation sectors.
Federal energy policy has become a primary U.S. national priority in the wake of the Deepwater Horizon oil spill and amidst the ongoing Senate debate over comprehensive climate and energy reform. The May 2010 release of the Kerry-Lieberman American Power Act (APA) currently represents the flagship proposal for comprehensive reform in the Senate, and its future within the context of broader energy legislation will be determined in the weeks ahead.
The renewed urgency for energy reform arrives among growing national concern that the United States is falling behind its competitors in the growing clean energy industry. Thus, in addition to reducing emissions of greenhouse gases, one of the core objectives of the Kerry-Lieberman proposal is to enhance U.S. competitiveness in clean energy technology markets. As Senator Kerry declared in the opening of the APA release press conference, "The bill that we are introducing today and revealing today, the American Power Act, will restore America's economy and reassert our position as a global leader in clean energy technology."
Not only did Lindsey Graham (R-SC) withdraw from talks surrounding a climate and energy bill eventually released by Senators John Kerry (D-MA) and Joe Lieberman (I-CT) in early May, yesterday he announced that he wouldn't vote for the legislation should Kerry and Lieberman successfully bring it to the Senate floor.
Graham cited disagreement over added restrictions on offshore drilling and doubt that the bill could ever get 60 votes on the Senate floor.
"What I have withdrawn from is a bill that basically restricts drilling in a way that is never going to happen in the future," Graham said. "I wanted it to safely occur in the future; I don't want to take it off the table."...
He said he will offer up later this year a "hodgepodge of ideas out there that I think form a potential pathway forward."
This includes introducing as early as this week a "clean energy" production standard that would include a "more aggressive definition of biomass" and give nuclear power the "same standing as other alternative energy sources." The standard needs to be higher to make these sources more deployable and financially attractive, he added.
Graham's announcement is likely the last nail in the coffin for cap and trade this year.
Despite the Deepwater Horizon calamity, if the Kerry-Lieberman climate bill gets passed then concessions on offshore drilling are likely to be part of the deal. But Brookings' Mark Muro points out that this outcome could provide a "teachable moment and tie further fossil fuel use once and for all to energy system transformation," citing a post by Breakthrough's Jesse Jenkins and I, in which we argued that a 2009 GOP plan to dedicate the new oil and gas royalties to a clean energy fund would be an appropriate compromise if drilling is inevitable.
The Breakthrough Institute team works to publish quantitative analysis of Congressional climate and clean energy legislation, often working to publish a series of analyses "in real time" as the Congressional debate unfolds. Here is our collection of analysis of climate bills in the current Congress:
Environmentalists have long sought to use the threat of catastrophic global warming to persuade the public to embrace a low-carbon economy. But recent events, including the tainting of some climate research, have shown the risks of trying to link energy policy to climate science.
Speaking to a packed auditorium at Stanford University, Secretary of Energy Steven Chu called for a Manhattan Project for energy, emphasizing the need for "tens of billions of dollars" annually in public funding for energy technology innovation, but he missed a golden opportunity to inspire and rally our nation's future leaders to tackle the political, economic, and technological hurdles standing in the way of a clean, prosperous U.S. energy economy.
Video: View the Secretary Chu's speech at Stanford in its entirety here and view the "Educating the Energy Generation" panel at Stanford here.
The federal government should be investing "tens of billions of dollars" annually to drive a Manhattan Project-style pace of innovation necessary to address the scale of the energy challenge facing the U.S., said Energy Secretary Steven Chu yesterday.
"If you look at the amount of funding for that [the Manhattan Project], and the amount of funding to put a man on the moon, it was a huge spike in funding. I think we do need that. The recovery act actually was the start of that...you still need I think tens of billions of dollars as a minimum per year invested in these technologies and the associated science. The DOE, our base budget for energy research is on a scale of $3 billion...the primary energy industry budget is about $1 trillion, if it's a high tech industry 10-20% is the usable amount of sale that you invest so that's $200 billion, so what we're investing in federal dollar is less than 1% of that or on a scale of 1% of what should be invested."
The Secretary highlighted the steps the Department of Energy was taking to encourage innovation given the limited funds available, including including the launch of the new Advanced Research Projects Agency for Energy and several Energy Innovation Hubs (nicknamed Bell-lablets) based on the storied Bell Labs innovation model.
A race is on to lead in the burgeoning clean energy sector. While the United States might be behind for now, we are far from the finish line.
America once led the global solar business, but manufacturing scale is shifting to Asia. Strong, targeted government incentives supported markets for solar technology in Japan, a country almost completely dependent upon imported energy.
At the same time, public investment in research and innovation helped build the technical prowess needed to establish solid manufacturing capabilities. The Chinese government, along with numerous entrepreneurs, is developing manufacturing and technical capabilities for solar and other clean energy technologies that will combine economies of scale with a growing market, which many project could be the largest in the world in five years.
One year ago, America's president said he was going to start a green-energy revolution. Here's why the Obama administration failed -- and what needs to come next. (Foreign Policy)
There was good reason to be hopeful in January of 2009 that the election of Barack Obama would bring about America's long-awaited clean energy revolution. As president-elect, Obama had started to talk about energy policy in a way that no leader of either party had before. Promising to save the country from both severe recession and industrial decline, Obama described the transformation of America's energy economy as a defining challenge of his presidency -- an economic and national security imperative that Congress would fail to address at the nation's peril.
But the reality fell far short of expectations. The Obama administration succumbed, like many others, to a sort of magical climate thinking that promised a painless and even prosperous transition to a low-carbon future with the tools already at hand. The only official within his administration to accurately grasp the technology challenges we faced, Energy Secretary Steven Chu, was sidelined at crucial moments.
Benchmarking clean-tech competitiveness: A new report by the Breakthrough Institute and Information Technology & Innovation Foundation provides the first comprehensive analysis of competitive positions among the U.S. and key Asian challengers in the global clean energy race.
The report examines the competitive position of each nation in core clean energy technologies, including solar, wind, and nuclear power, carbon capture and storage, advanced vehicles and batteries, and high-speed rail, as well as the government strategies each nation hopes will strengthen its position in the global clean technology sector. The report also offers recommendations for U.S. federal policymakers for regaining U.S. competitiveness.
You know the world is changing when the president's first trip to Asia is defined by a new U.S. foreign policy dubbed "strategic reassurance" - convincing China that the United States has no intention of containing its growing power or endangering its foreign investments. As the New York Times put it, "When President Obama visits China for the first time on Sunday, he will, in many ways, be assuming the role of profligate spender coming to pay respects to his banker."
You also know times are changing when China, the world's greatest polluter, and other Asian nations are poised to dominate the burgeoning global clean-tech industry by out-investing the United States. That's the conclusion of a large new report we co-authored called "Rising Tigers, Sleeping Giant," released this week by the Breakthrough Institute and Information Technology & Innovation Foundation (see coverage in Financial Times and Wall Street Journal). The report is the first to thoroughly benchmark clean energy competitiveness in four nations - China, Japan, South Korea, and the United States - and finds the following:
"Asia's rising 'clean technology tigers' - China, Japan, and South Korea - have already passed the United States in the production of virtually all clean energy technologies and over the next five years will out-invest the U.S. three-to-one in these sectors... While some U.S. firms will benefit from the establishment of joint ventures overseas, the jobs, tax revenues, and other benefits of clean tech growth will overwhelmingly accrue to Asian nations... Should the investment gap persist, the U.S. will import the overwhelming majority of clean energy technologies it deploys."
What do these two changes have in common? They both reflect the accelerating shift of global power from America to Asia, caused in large part by the serious mismanagement of U.S. economic policy.
In Yale e360.org, Ted and Michael make the case that the recent decline in the public's belief in global warming is partly due to apocalypse fatigue. Mobilizing the public around an abstract, distant and long-term issue like climate change is hard enough. What makes it even harder is when advocates of action engage in an apocalyptic and hyper-partisan discourse demanding changes to the American way of life. "Rather than galvanizing public demand for difficult and far-reaching action," they write, "apocalyptic visions of global warming disaster have led many Americans to question the science."
Update (12/7/2009): Citing Nordhaus and Shellenberger, The Christian Science Monitor has weighed in on "apocalypse fatigue" with a thoughtful piece discussing public attitudes towards climate change and the challenge of engaging the public in such an abstract but urgent problem.
Experts reason that, after years of warnings of future disaster and protracted negotiations to achieve a climate treaty, a sense of fatigue has set in. The worldwide recession also has people focused on keeping their jobs, if they even have one, and on keeping a roof over their heads. That may be one reason President Obama rarely talks about climate change itself but frequently mentions the "green" jobs that fighting it will create.
Some even argue that Gore - his Nobel Prize notwithstanding - is a poor standard-bearer for the cause because he is seen as a partisan politician...
In fact, the louder and more alarmed climate advocates become in these efforts, the more they polarize the issue, driving away a conservative or moderate for every liberal they recruit to the cause," argue Ted Nordhaus and Michael Shellenberger in the article "Apocalypse Fatigue: Losing the Public on Climate Change," written for Yale Environment 360 magazine, a publication of Yale University's School of Forestry & Environmental Studies.
Just up today at Yale e360, Michael Shellenberger and Ted Nordhaus' latest op-ed tackles the issue of "apocalypse fatigue".
Make no mistake, despite the ever growing consensus that global warming is a human induced problem, roughly fifteen percent fewer Americans believe that this is the case when compared with polls from as recent as April 2008 (from 71% in Apr 08, to 56% in Oct 09). Many pollsters blame the polls themselves for being flawed, many blame the recession. To get the whole picture, Shellenberger and Nordhaus argue, one must examine the way the global apocalyptic narrative is being "sold" to us.
The truth is both simpler and more complicated. It is simpler in the sense that most Americans just aren't paying a whole lot of attention. Between being asked about things like whether they would provide CPR to save the life of a pet (most pet owners say yes ) or whether they would allow their child to be given the swine flu vaccine (a third of parents say no), pollsters occasionally get around to asking Americans what they think about global warming. When they do, Americans find a variety of ways to tell us that they don't think about it very much at all.
Three years after it seemed that "An Inconvenient Truth" had changed everything, it turns out that it didn't. The current Pew survey is the latest in a series of studies suggesting that Al Gore probably had a good deal more effect upon elite opinion than public opinion.
Public opinion about global warming, it turns out, has been remarkably stable for the better part of two decades, despite the recent decline in expressed public confidence in climate science.
Further:
What is arguably most remarkable about U.S. public opinion on global warming has been both its stability and its inelasticity in response to new developments, greater scientific understanding of the problem, and greater attention from both the media and politicians. Public opinion about global warming has remained largely unchanged through periods of intensive media attention and periods of neglect, good economic times and bad, the relatively activist Clinton years and the skeptical Bush years. And majorities of Americans have, at least in principle, consistently supported government action to do something about global warming even if they were not entirely sold that the science was settled, suggesting that public understanding and acceptance of climate science may not be a precondition for supporting action to reduce greenhouse gas emissions.
The more complicated questions have to do with why. Why have Americans been so consistently supportive of action to address climate change yet so weakly committed? Why has two decades of education and advocacy about climate change had so little discernible impact on public opinion? And why, at the height of media coverage and publicity about global warming in the years after the release of Gore's movie, did confidence in climate science actually appear to decline?
With China, South Korea and Japan all moving aggressively to corner the burgeoning global clean energy market, Asian competitors may dominate the clean energy sector if Congress doesn't act now to strengthen the Waxman-Markey bill with much larger investments in our own clean energy economy and fully support President Obama's energy education initiative, Norris and Jenkins argue.
Monday's op-ed comes one year after Breakthrough proposed a similar National Energy Education Act, calling for an effort on par with the original National Defense Education Act of 1958, which invested billions each year to train and empower the young generation that won the space race and invented the technologies that catapulted the U.S. and the world into the Information Age.
Breakthrough Institute is planning to release a full report on the USA-Asia clean energy race within the next few weeks, so stay tuned.
As President Obama put it in his Congressional address in February:
"We know the country that harnesses the power of clean, renewable energy will lead the 21st century. And yet it is China that has launched the largest effort in history to make their economy energy efficient... New plug-in hybrids roll off our assembly lines, but they will run on batteries made in Korea. Well I do not accept a future where the jobs and industries of tomorrow take root beyond our borders -- and I know you don't either. It is time for America to lead again."
President Obama is right. However, as Norris and Jenkins warn in today's op ed:
"If America does not take immediate action to bridge its energy education gap - and if we fail to make substantially larger investments in our own clean-energy economy - we will effectively cede the clean-energy race to Asia. A decade from now, we may still find the burgeoning clean-energy economy promised by Obama and Democratic leaders. It will simply be headquartered in China."
You can read the extended version of the op ed below...
The Breakthrough Institute has published twenty separate "real-time" analyses of major provisions in the Waxman-Markey climate and energy bill, entitled the "American Clean Energy and Security Act" (ACES), tracking changes and conducting analysis as the bill has evolved from initial discussion drafts in May into House-passed legislation in June. The following bullets summarize major findings of these analyses, which primarily focus on the potential impact of the legislation on energy innovation, the deployment of emerging clean energy technologies, and the competitive position of American clean energy industries:
The bill's greenhouse gas emissions cap is effectively non-binding for the first decade or more and is unlikely to drive significant near-term changes in the U.S. energy economy. In order to control costs of the cap and trade program created by the bill, firms are permitted to purchase up to 2 billion tons of offsets annually - roughly equal to one third of total emissions in sectors of the economy that fall under the emissions cap - instead of reducing their own emissions. Up to 1.5 billion tons could be offset by overseas emissions reduction projects. Projections of likely offset usage are generally lower than the legal maximum due to expected limits in the supply and availability of low-cost offsets. However, analysis of the legislation published by multiple government agencies projects that regulated firms will utilize enough offsets each year to render the cap effectively non-binding for most of the next decade or two. Firms would be legally permitted to continue business-as-usual emissions and practices through the end of 2017 under the most conservative offset projections (from the CBO) and through 2027 under the most expansive estimate (from the EPA). Emissions could fall for other reasons during this time period but would not be required to by the emissions 'cap.'
The global recession is likely to drive an oversupply of emissions permits under the cap and trade program for several years. Unless the economy rapidly recovers, U.S. emissions in 2012 (when the cap and trade program would be implemented) will likely remain lower than the emissions cap for several years, leading to an over-supply of permits and a collapse in carbon market prices to at or near the floor price on auctioned permits established by the bill ($10 per ton, rising slowly over time). Firms will purchase and bank low-cost permits and emissions offsets during this period, undermining the stringency of the emissions cap in future years, as well. Under likely emissions and economic recovery scenarios, U.S. emissions in capped sectors could rise for much - if not all - of the next two decades by utilizing only a fraction of the offsets permitted by the bill.
The carbon price signal established by the cap and trade program is expected to be modest and insufficient to pull emerging clean energy technologies into the market or spur significant investment in clean energy innovation. Estimates of carbon prices for the first decade under the bill range from $11-$16 per ton of CO2 under EPA forecasts to $15-$26 per ton under CBO projections. If the economic recession results in lower-than-previously-forecasted emissions levels and emissions permits are over-supplied (as discussed above), prices will be even lower, likely remaining at or near the $10 per ton auction floor price established by the bill. For comparison, carbon prices in the European Union's Emissions Trading Scheme (ETS) have regularly traded at more than $30 per ton of CO2 and have been insufficient to drive significant clean energy innovation or deployment of low-carbon energy sources.
The renewable electricity standard (RES) established by the bill will not ensure any increase in U.S. renewable energy deployment beyond already conservative business-as-usual projections. After exemptions are factored in, the bill's combined energy efficiency and renewable electricity standard will require between 8% and 11.5% of U.S. electricity generation from qualifying renewable sources by 2020. Without any RES, the U.S. Energy Information Administration (EIA) already projects 10% of U.S. electricity will come from qualifying renewable energy sources by 2020 under their business-as-usual forecasts. EIA's projections are considered conservative, because they assume tax credits driving wind, solar and other renewable energy deployment expire without renewal (in 2012 for the production tax credit and 2018 for the investment tax credit). Analysts with the Union of Concerned Scientists conclude, "Bottom line: The Waxman-Markey RES does not ensure that any new renewable electricity will be developed beyond the renewables that are already projected to occur under the business as usual forecast by the [EIA]."
The bill invests far less in clean energy technologies and industries than either the American Recovery and Reinvestment Act (ARRA) or the direct investments being made by competing nations, including China, South Korea and Japan. At an average carbon price of $15 per ton of CO2, clean energy technologies would receive just $9 billion out of over $70 billion in annual allowance revenue generated by the bill's cap and trade program. Only about $1 billion annually would be directed to clean energy R&D, just one fifteenth of President Obama's proposed investment in next-generation energy research and development. An additional $1 billion annually would be directed through a separate provision towards the demonstration and early deployment of carbon capture and storage (CCS) technology for coal-fired power plants, bringing the bill's total direct investment in clean energy technology to an estimated $10 billion annually. In contrast, ARRA (the stimulus bill) will invest over three times more - roughly $33 billion annually - in clean energy technology in 2009 and 2010. The Chinese government is planning to invest $44 to $66 billion annually in China's own clean energy technologies and industries over the next ten years and South Korea and Japan are also making aggressive investments to position their clean energy industries at the lead of the burgeoning global clean energy sector.
The Breakthrough Institute joins the Brookings Institution and the Information Technology and Innovation Foundation to discuss the need for a explicit innovation policy to discuss the price gap between fossil fuels and clean energy, and what innovation policies are needed to overcome it.
As the House considers climate legislation, many have come to believe that regulations alone will result in a reduction of emissions. But energy and technology experts say a more explicit federal investment in technology is needed. Please join the Brookings Institution, the Information Technology and Innovation Foundation, and the Breakthrough Institute to discuss the need for a explicit innovation policy to address the challenge of global climate change. At the event, policy experts will discuss the price gap between fossil fuels and clean energy, and what innovation policies are needed to overcome it.
Robert Atkinson
President, The Information and Innovation Foundation
Speakers
The Honorable Jay Inslee (D-WA), United States House of Representatives
The Honorable David Wu (D-OR), United States House of Representatives
"The Technological Barriers to Climate Mitigation"
Nate Lewis
George L. Argyros Professor of Chemistry, Caltech
"Climate Policy Requires Making Clean Energy Cheap"
Michael Shellenberger and Ted Nordhaus
President, The Breakthrough Institute and Chairman, The Breakthrough Institute
"The Case for Energy Discovery Institutes"
Mark Muro
Fellow and Policy Director, Metropolitan Policy Program, Brookings Institution
William B. Bonvillian
Director, Masschussettes Institute of Technology, D.C. Office
Two prominent -- and iconoclastic -- environmentalists argue that current efforts to tax or cap carbon emissions are doomed to failure and that the answer lies not in making dirty energy expensive but in making clean energy cheap. (Yale e360)
In early May, anxiety among climate activists about the fate of cap-and-trade legislation erupted into a full-throated roar with the release of a scathing open letter by Dr. James Hansen. In it, the NASA scientist called a bill by Representatives Henry Waxman and Ed Markey a "temple of doom," savaging it for being complex, corrupt, and "a minor tweak to business-as-usual." Hansen called for a carbon tax in its place, one that would establish a "substantial and rising price on carbon emissions."
Hansen was right about Waxman-Markey. It will do little to reduce U.S. emissions, will transfer billions to incumbent energy interests in the form of free pollution permits, and will send billions more to timber, agriculture, and other interests, here and abroad, in the form of dubious "offsets." But Hansen's analysis of why climate legislation has gone so terribly off the rails is wrong.
Hansen argues that the problem has to do with the mechanism by which Waxman-Markey would establish a carbon price -- a cap-and-trade system. In this, Hansen is joined by many other greens and economists, who argue that cap-and-trade is a cumbersome and economically inefficient means of establishing a carbon price, one that is particularly vulnerable to manipulation by polluters and politicians.
On the other side of this debate stand many business interests, some prominent climate scientists, and green groups like the Environmental Defense Fund and the Natural Resources Defense Council. They argue that cap-and-trade is a superior approach, because it guarantees certainty of actual emissions reductions, and a more pragmatic one, because it does not require politicians to vote for a new tax on pollution. They say taxes are just as prone to manipulation by politicians and polluters and that simple carbon taxes exist only in the ivory tower equations of academic economists, not in the real, rough-and-tumble world of politics and legislating.
The truth is, however, that neither of these approaches will lead to significant reductions in carbon emissions, and for a basic reason: Both Hansen and those he criticizes focus on pollution regulation and pricing to make fossil fuels more expensive, rather than on innovation to make clean energy cheap. This approach ignores the history of technological breakthroughs, which has primarily been driven by public investment. And public investment in clean energy is what is needed today, because no effort to achieve deep reductions in carbon emissions, domestic or international, will succeed as long as low-carbon energy technologies cost vastly more than current fossil fuel-based energy.
In this week's New Republic, Ted and Michael argue that the green bubble has popped -- and that's a good thing. Characterized by both fear of the apocalypse and the desire for transcendence, the green cultural moment that began with "An Inconvenient Truth" in 2006 and ended in the Great Recession of 2009 carried in it a dark, anti-modern impulse that liberals and progressives need to abandon if we are to create a politics grounded in prosperity, freedom, democracy.
Sometime after the release of An Inconvenient Truth in 2006, environmentalism crossed from political movement to cultural moment. Fortune 500 companies pledged to go carbon neutral. Seemingly every magazine in the country, including Sports Illustrated, released a special green issue. Paris dimmed the lights on the Eiffel Tower. Solar investments became hot, even for oil companies. Evangelical ministers preached the gospel of "creation care." Even archconservative Newt Gingrich published a book demanding action on global warming.
Green had moved beyond politics. Gestures that were once mundane--bringing your own grocery bags to the store, shopping for secondhand clothes, taking the subway--were suddenly infused with grand significance. Actions like screwing in light bulbs, inflating tires, and weatherizing windows gained fresh urgency. A new generation of urban hipsters, led by Colin Beavan, a charismatic writer in Manhattan who had branded himself "No Impact Man," proselytized the virtues of downscaling--dumpster-diving, thrift-store shopping, and trading in one's beater car for a beater bike--while suburban matrons proudly clutched copies of Michael Pollan's In Defense of Food and came to see the purchase of each $4 heirloom tomato at the farmer's market as an act of virtue.
For those caught up in the moment, the future seemed to promise both apocalypse and transcendence in roughly equal measure. The New York Times and San Francisco magazine ran long feature stories on the uptick of upper-middle- class professionals who worried to their therapists about polar bears or who dug through the trash cans of co-workers to recycle plastic bottles, as though suffering from a kind of eco-OCD. At the same time, folks like Pollan and Beavan provided a vision of green living that seemed to offer not just a smaller carbon footprint but a better life. Amid the fear was the hope that the ecological crisis would bring us together and make us happier.
And then, almost as quickly as it had inflated, the green bubble burst.
The Brookings Institution and the Breakthrough Institute argue for major federal investments in a new energy innovation system. (Originally published Yale e360)
We have a new article published at Yale Environment 360 with the Brookings Institution today arguing for major federal investments in a new energy innovation system, based on a recent proposal by Brookings' Metropolitan Policy Project, which included contributions from the Breakthrough Institute and cited our previous report, "Fast, Clean, & Cheap." Note: Jesse Jenkins and David Warren also co-authored this article, but due to editorial requirements are mentioned as contributors.
To Make Clean Energy Cheaper, U.S. Needs Bold Research Push
For spurring the transformation to a low-carbon economy, the federal and state governments, universities, and the private sector must join together to create a network of energy research institutes that could speed development of everything from advanced batteries to biofuels.
By Mark Muro and Teryn Norris
Yale Environment 360
April 30, 2009
Energy Secretary Steven Chu recently called for "Nobel-level" breakthroughs and a "second industrial revolution" in energy technology to overcome the world's interlinked energy and climate challenges.
Chu's implication: We currently lack the technologies we need to fully avert catastrophic global warming. His admonition: America must dramatically accelerate the development of clean energy technology.
Chu has it right.
The task is clear: To renew the U.S. economy, respond to global climate change, foster the nation's energy security, and help provide the energy necessary to sustainably power global development, America must transform its outdated energy policy. Innovation and its commercialization must move to the center of energy system reform. The nation must move urgently to develop and harness a portfolio of clean energy sources that are affordable enough to deploy on a mass scale throughout the U.S. and the world. In short, we must make clean energy cheap.
Putting a price on carbon will take us part of the way, but not nearly far enough. To make the revolutionary shift to a low-carbon economy, we propose a bold new research paradigm: the creation, over time, of several dozen renewable energy research hubs around the nation. These centers -- known as energy discovery-innovation institutes, or e-DIIs -- would be established with a combination of federal, state, university, and private funds and would take the lead in accelerating the development of reasonably priced alternative energy technologies and bringing them to the marketplace.
For advocates of immediate and strong climate and clean energy legislation, there's one man we should all be paying close attention to: Senator Sherrod Brown (D-OH).
Senator Brown is one of several Democratic Senators from America's 'Heartland' states that form the critical swing block of legislators that will need to support any climate and clean energy bill that hopes to cross the critical 60-vote threshold in the Senate. Along with a small handful of potential Republican swing votes, these Heartland Democrats have to get behind strong climate policy if we want to see it enacted anytime soon.
The White House says it's serious about climate change. But its plan to regulate carbon emissions is doomed to fail. ... Nordhaus and Shellenberger in Slate.
Last week brought more bad news for supporters of cap and trade climate legislation. It came in the form of an appearance by House Energy and Commerce Chairman Rep. Henry Waxman's appearance on PBS' "The Tavis Smiley Show." When asked how cap and trade would create technology innovation, Waxman said, "When we raise the price of energy -- which will happen if we reduce the amount of carbon emissions -- and industries have to figure out how to live in a carbon-constrained environment, they are going to have to figure it out because it is in their profitable interest to figure it out."
Waxman's blunt statement that the goal of cap and trade is to raise energy prices was deeply off-message for green groups, which have long insisted that energy efficiency and conservation would prevent energy prices from rising. But it was only the latest in a series of setbacks for climate legislation.
If Democrats want to win on climate policy, they must think fast and move quickly to regain control of the debate. ... Teryn Norris in the Huffington Post.
If Democrats want to win on climate policy, they must think fast and move quickly to regain control of the debate. Last week was the opening round of the national climate fight, and the Democratic Congress was nearly knocked out.
It began on Tuesday with the introduction of a major climate bill by Democratic Congressmen Waxman and Markey. The proposal made a fateful choice: it threw out President Obama's "Apollo" plan for investing $150 billion in clean energy and focused instead on meeting the demands of leading environmental organizations, emphasizing cap and trade regulation and a laundry list of electricity and efficiency standards.
A little more than four years after we started a debate about the future of environmentalism, President Obama has largely ended it. ... Nordhaus and Shellenberger in The San Francisco Chronicle.
A little more than four years after we started a debate about the future of environmentalism, President Obama has largely ended it. In his State of the Union address, Obama called for the most far-reaching program ever proposed by an American president to remake America's energy economy - with hardly a mention of the environment.
If Obama aims to successfully achieve a transformational presidency and launch a new progressive age, he must offer a new economic governance model that gives America a fresh start.
On Tuesday, President Obama signed the historic American Recovery and Reinvestment Act to avoid a spiraling economic downturn. But is it enough?
No. The Congressional Budget Office projects the U.S. economy will lose $2.9 trillion in total economic output over the next three years (PDF). To close that gap, Obama would need to sign a bill with approximately $2 trillion in total spending. But the current plan is less than $800 billion, with almost $300 billion for tax cuts. A recent report (PDF) by the chief economist at Moody's Economy shows that while one dollar of public spending can boost GDP as much as $1.70, every dollar of tax cuts can increase GDP by only $0.30 to $1.00. In other words, spending is up to five times more effective than tax cuts at boosting GDP.
So we have a stimulus bill that contains about $500 billion of public spending and $300 billion of dubious tax cuts. Given the CBO's projected $2.9 trillion output gap, calling the bill weak is an understatement. This gap presents a danger not just to the economy. If the economy is still dragging in two years, and the stimulus is publicly perceived as a failure, Democrats could not only lose the mid-terms in 2010, but the role of public investment could be discredited for years to come.
A cautionary note about losing sight of climate objectives amidst all the fervor about green jobs and green stimulus. ... Jesse Jenkins and Teryn Norris in the Huffington Post.
The Huffington Post has featured an op-ed by me and Jesse Jenkins, "The Danger of Green Stimulus," which issues a cautionary note about losing sight of climate objectives amidst all the fervor about green jobs and green stimulus:
Barack Obama's final appointments in December indicate a strong commitment to action on climate change. Steven Chu as Energy Secretary, Carol Browner as Energy & Climate Czar, John Holdren as Assistant for Science and Technology -- just to name a few recent selections -- are all proponents of vigorous action to cut U.S. global warming pollution and take leadership on a new international climate treaty. And Hilda Solis, Obama's new Labor Secretary, is a champion of "green jobs."
All is well on the climate front, it seems. Except that it's not.
Carbon cap and trade regulation remains the top federal policy priority for the majority of environmental groups. But in June, cap and trade legislation failed in the Senate, and sixteen Democratic Senators from coal and manufacturing-heavy states voiced their opposition to high carbon pricing. The policy faces even greater obstacles in today's economic climate, since it would increase the energy bills of the American public.
Al Gore just updated his prescription for fighting climate change. Now other environmentalists have to follow his lead. ... Nordhaus and Shellenberger in The New Republic.
In a New York Times op-ed published on the first Sunday after Barack Obama's presidential election, Nobel prize winner Al Gore shifted from his longstanding focus on regulating carbon pollution to advocating direct government investments in clean energy as the best way to deal with climate change. Gore is the country's most prominent spokesperson on climate change and a shift in his thinking in reaction to new economic and political circumstances is highly significant.
Of Gore's five recommendations to President-elect Obama, the first four are for investment--in solar thermal plants, energy efficiency, a new electrical grid, and in electric cars--and only the final is for regulation, establishing a price for carbon. But even on this last point, Gore was far from aggressive, suggesting merely that the United Nations meeting to replace to Kyoto treaty in Copenhagen next year should result in countries agreeing to "invest together in efficient ways."
Amid the energy crisis, Democrats are losing the high ground on the environment to a GOP that is pushing oil drilling. Nordhaus and Shellenberger in the LA Times.
As the election enters its endgame, Democrats and their environmental allies face a political challenge they could hardly have imagined just a few months ago. America's growing dependence on fossil fuels, once viewed as a Democratic trump card held alongside the Iraq war and the deflating economy, has become a lodestone instead. Republicans stole the energy issue from Democrats by proposing expanded drilling -- particularly lifting bans on offshore oil drilling -- to bring down gasoline prices. Whereas Barack Obama told Americans to properly inflate their tires, Republicans at their convention gleefully chanted "Drill, baby, drill!" Obama's point on conservation and efficiency was lost on an electorate eager for a solution to what they perceive as a supply crisis.
Al Gore's ambitious call for 100 percent domestic clean energy within 10 years strongly evoked President John F. Kennedy's "moon shot" speech. But a better starting point on the road map for today's clean energy transformation may be where the space race began: Sputnik.
Energy is now the No. 1 issue in the 2008 elections, with both candidates touting new plans to deal with soaring energy prices. Meanwhile, Congress is at a standstill, arguing over the renewal of critical clean energy incentives and a push for more offshore drilling. But above the partisan cacophony is a proposal all Americans can get behind: a new national education initiative to meet the energy challenge.
Media elites and environmentalists are howling over Hillary Rodham Clinton's and John McCain's call to suspend the gasoline tax. While the gas tax "holiday" is certainly a crass pander to working-class swing voters who are more concerned about rising energy prices than global warming, it is also a powerful warning to groups that hope to deal with climate change by increasing the cost of electricity.
A path-breaking analysis published in the Harvard Law and Policy Review that documents the radical improvements to low-carbon technologies needed to meet humanity's growing energy needs and the kinds of policies needed to secure them.
A path-breaking analysis published in the Harvard Law and Policy Review that documents the radical improvements to low-carbon technologies needed to meet humanity's growing energy needs and the kinds of policies needed to secure them.
Nordhaus, Shellenberger, Jeff Navin, Teryn Norris and Aden Van Noppen co-authored this 2007 treatise.
Green groups may carp, but the the truth is the book could turn out to be the best thing to happen to environmentalism since Rachel Carson's Silent Spring."
Earlier this year, the Nathan Cummings Foundation commissioned a review of publicly available polling data that demonstrated a substantive problem for initiatives to increase the price of carbon: energy cost anxiety. Voters consistently rated energy costs as a higher concern than global warming, and resisted policies that would increase the cost of electricity and gasoline.
This survey jointly conducted by American Environics and EMC Research confirmed that analysis.
A Proposal to Manage Risk & Invest in Resilient Communities. Created in the Fall of 2006 by The Breakthrough Institute, The Center for American Progress, and American Environics. (PDF)
The fate of the Arctic National Wildlife Refuge has once again grabbed national headlines as supporters of oil development are using an unrelated defense budget bill to authorize drilling in the refuge.
Investing in Oil Savings, Retiree Health Care, and a Revitalized Auto Industry for a Stronger America by Bracken Hendricks, Ted Nordhaus, Roland Hwang and Nick Shipley. (PDF)
The Environmental Protection Agency 
The following was originally submitted to the National Journal discussion "
