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 Taxpayers 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.”

These types of collaborations are rare, and the report marked a unique opportunity for traditionally opposed organizations to take a leadership role and break the gridlock on budget, energy, climate, and environmental policy.  Unfortunately, the report not only fails to realize this opportunity, but makes fundamentally misguided choices that would be counterproductive to reducing the budget deficit and could potentially exacerbate America’s climate and energy challenges.

At the heart of “Green Scissors” is a collection of $380 billion in “wasteful [federal] government subsidies that are damaging to the environment and harming taxpayers,” which the groups believe should be targeted for cuts or elimination.  The proposed cuts include:

• Eliminating $61.275 billion in conventional fossil fuel subsidies and tax incentives.
• Eliminating $49.615 billion in nuclear energy programs for R&D, loan guarantees, environmental cleanup, and nuclear waste liability funds.
• Eliminating $95.817 billion invested in renewable energy loan guarantees, corn ethanol subsidies, R&D, the FutureGen carbon capture demonstration project, and fuel technologies development among others.  The report also targets the elimination of the Advanced Research Projects Agency for Energy (ARPA-E).
• Eliminating $56.655 billion in agriculture subsidies.
• Cutting over $106 billion in selected transportation programs and projects including transfer payments to the Highway Trust Fund.
• Eliminating $15.290 billion in selected land and water subsidies and programs.

At first glance, the proposal correctly identifies some unproductive spending that should indeed be eliminated. For example, corn ethanol subsidies do little more than prop up an uncompetitive alternative fuel that offers little to no carbon emission reductions (its initial intended goal) and doesn’t represent a future, robust economic growth opportunity.  In this way, the proposal appears to open a more nuanced budget debate that the United States desperately needs.  Instead of across the board slash-and-burn budget politics, policymakers should be examining the entire federal budget with a fine-tooth comb and differentiate between vital public investments – such as programs aimed at solving our key economic, energy, climate, and environmental challenges – from government spending on unproductive programs.  Like Time Magazine’s Michael Grunwald lamented, “Here’s a crazy thought: Maybe we should spend more on good things and less on dumb things.”

But this potential is never fully realized, and the report ends up making several factually incorrect statements, misguided recommendations, and errors of omission.  These recommendations are often supported by ideologically-driven economic myths and backed by shallow analysis and evaluative criteria. In particular, the report makes three major errors:

1. The report focuses solely on spending cuts and ignores the role of public investment. Reducing the budget deficit and addressing the nation’s key environmental challenges requires both cuts and targeted investments. This is a key distinction lost in the current budget debate.  The U.S. cannot simply cut its way out of debt (let alone cut its way out of a stagnant economy).  In fact, the chief budget-cutting measure the U.S. can undertake is spurring economic growth.  This means targeting advanced technology-based industries and accelerating innovation to lay the groundwork for long-term, ecologically sustainable economic growth.  And this means sustained public investments.

Unfortunately, the report not only fails to recognize this reality, it aims to cut vital innovation-based programs like ARPA-E, advanced nuclear energy R&D, and loan guarantees. These cuts would be counterproductive to the goal of addressing the budget deficit by eliminating needed support for future growth industries.  Further, by focusing solely on spending cuts, the report misses a key opportunity to shift wasteful spending into productive investment. Instead of simply cutting fossil fuels subsidies, we should reinvest the savings in advanced energy technology innovation and manufacturing, especially through programs like ARPA-E, Energy Innovation Hubs, and the Energy Frontier Research Centers.  The report fails to seize this opportunity.

2. The report is dead wrong about ARPA-E. Not only does the report ignore the role of strategic public investment to address our deficit and environmental challenges, it falsely characterizes and attacks one of the single most important federal programs designed to accelerate the transition to a low-carbon economy: the Advanced Research Projects Agency for Energy (ARPA-E).

First, the authors misleadingly characterize ARPA-E as a “giant government-run research and development agency.” In fact, ARPA-E was originally authorized by the bipartisan America COMPETES Act in 2007 and provided a total of $400 million for two years by the Recovery Act.  The recent FY 2012 House Energy & Water Appropriations bill would appropriate just $180 million for ARPA-E – hardly a “giant” budget.  Furthermore, calling ARPA-E a “government-run research and development agency” inaccurately implies that government employees are performing the research, when in fact ARPA-E effectively acts as a public venture capital firm that largely funds small, innovative private companies that are developing promising technology breakthroughs.

The authors proceed to repeat tired conservative neo-classical economic talking points that reflect entrenched ideology more than economic reality, asserting that “this type of applied civilian energy research has historically been done almost entirely at private firms,” that it provides “taxpayer subsidies to develop things that the private sector was already using on a large scale,” and that it “fails to add real value.”  However, if the authors made any serious attempt to understand ARPA-E, they would find that it targets high-risk, high-value, pre-commercial technologies that the private sector is largely unwilling to support on its own.

Instead of simply funding the most basic, blue-sky research that may never create commercially applicable technology, ARPA-E is funding projects that can yield massive economy-wide returns on investment, support U.S. economic competitiveness and export-oriented  industries, and drive high-skilled job creation. This is similar to what the Department of Defense’s DARPA has practiced for years and what drove the Information Technology Revolution.  Opposing this kind of public investment is misinformed and antithetical to a serious U.S. economic growth and debt reduction strategy.

As a recent ITIF report explained, “In many ways, [ARPA-E] represents public-private innovation at its finest, both for what it does and how it does it: this is not your grandfather’s politicized bureaucracy. It’s a fresh and nimble organization that operates at the intersection of fundamental and applied research, bringing science research and technology development together under one roof. And we’re already beginning to see early returns: ARPA-E projects, worth approximately $360 million in public funding, have to date obtained $285 million in follow-on private investment and led to 17 patent filings, and the program is still very young. But ARPA-E has only just started to spur successful innovation—and we have yet to see what this innovation engine can really do.”

3. The report picks technological winners and losers with an ideologically-driven agenda. The report espouses hard-headed libertarian economic doctrine principles, but in reality, it peddles the same kind of failed strategy of picking which low-carbon energy technologies the government should support and which programs should be eliminated.

For example, the report adamantly opposes any and all forms of carbon capture and storage (CCS) technology and advanced nuclear power (even fusion power, for no explicable reason, as well as small modular reactors). In a follow-up post, Friends of the Earth further laments the idea of leveraging any form of nanotechnology or genetic engineering techniques for low-carbon energy technology.  This is why it opposes ARPA-E, asserting that “much of this program harms the environment.”

Yet it is hardly reasonable logic to oppose the entire agency, paint it as largely harmful to the environment, or suggest that it should be defunded, as the report does.  ARPA-E is investing in a broad suite of clean and low-carbon energy technologies, many with the potential for game-changing impacts to dramatically accelerate the U.S. and global transition to a low-carbon, sustainable energy system.  The agency has only invested in the range of $50 million toward advanced CCS technologies – which could in fact eventually reduce carbon emissions from coal plants – out of its total investments of about $450 million.  Only one of ARPA-E’s six primary programs is focused on, as it describes, “revolutionizing technologies that prevent carbon dioxide produced by coal-fired power plants from entering the atmosphere and contributing to global warming.”  The report paints this kind of modest investment in emerging technology in the same way as billion-dollar demonstration and deployment projects, but they are much different.

Opposing these modest investments in general reflects a fundamental lack of understanding about the nature and scale of the global climate challenge and what it demands (the vast majority of energy and climate experts, including the IEA and IPCC, recognize the need to invest in advanced forms of CCS and nuclear).  But even if Friends of the Earth is ideologically opposed to any form of CCS, this is no reason to oppose the entire ARPA-E agency.  Indeed, the same logic could lead these groups to advocate abolishing the entire Department of Energy because it supports particular technologies they dislike.  Instead of taking a balanced approach that creates a level playing field for all low-carbon energy technologies – enabling potential winners to emerge instead of hand-selecting them – the report would not only eliminate any programs related to CCS and nuclear, it would slash or eliminate entire agencies like ARPA-E that engage in any such activities – an extremist and dogmatic approach.

Conclusion: The 2011 “Green Scissors” report offered a unique opportunity to break through the budget gridlock in a way that cut wasteful programs while reinvesting in vital areas for economic and environmental progress.  Unfortunately, it failed to meet this potential.  Instead of taking a balanced approach, the report jumped on the spending cut bandwagon and focused solely on slashing or eliminating public programs, including vital investments like ARPA-E, which has become one of the federal government’s single most important agencies for advancing a sustainable economic future.  In order to justify these cuts, the report peddled false myths about the nature of public investment and innovation policy, even while pushing an ideologically-driven agenda for picking energy technology winners and losers.  In this way, despite some of its strengths, the report offers a misguided strategy for confronting the nation’s budgetary and environmental challenges.

This is the second article in a series by Alex Trembath detailing opportunities for bipartisan cooperation on energy policy.

In the wake of cap-and-trade’s defeat, and as we begin a new session of Congress, common ground must be found on policy to renovate America’s energy infrastructure. Now may be the time to explore the possible benefits of renewing America’s once vigorous nuclear power production. Notably absent in recent advances in America’s energy portfolio has been nuclear power. Public safety fears stemming from Chernobyl and Three Mile Island have left nuclear policy in stasis for decades, but as our President aims to launch a new industrial policy and our nation trends towards a new national energy policy, it may be time to revive our commitment to this method of zero-emissions baseload power generation.

Nuclear power is unique among clean energy technologies in that Democrats tend to be more hesitant towards its production than Republicans. Indeed, it has a reputation for its appeal to conservatives -Senators Kerry, Graham and Lieberman included provisions for nuclear technology in their ultimately unsuccessful American Power Act (APA) with the ostensible goal of courting Republican support. The urgency with which Democrats feel we must spark an energy revolution may find a perfect partner with Republicans who support nuclear power. But is there anything more than speculative political evidence towards its bipartisan viability?

If there is one field of the energy sector for which certainty of political will and government policy is essential, it is nuclear power. High up front costs for the private industry, extreme regulatory oversight and public wariness necessitate a committed government partner for private firms investing in nuclear technology. In a new report on the potential for a “nuclear renaissance,” Third Way references the failed cap-and-trade bill, delaying tactics in the House vis-a-vis EPA regulations on CO₂, and the recent election results to emphasize the difficult current political environment for advancing new nuclear policy. The report, “The Future of Nuclear Energy,” makes the case for political certainty:

“It is difficult for energy producers and users to estimate the relative price for nuclear-generated energy compared to fossil fuel alternatives (e.g. natural gas)–an essential consideration in making the major capital investment decision necessary for new energy production that will be in place for decades.”

Are our politicians willing to match the level of certainty that the nuclear industry demands? Lacking a suitable price on carbon that may have been achieved by a cap-and-trade bill removes one primary policy instrument for making nuclear power more cost-competitive with fossil fuels. The impetus on Congress, therefore, will be to shift from demand-side “pull” energy policies (that increase demand for clean tech by raising the price of dirty energy) to supply-side “push” policies, or industrial and innovation policies. Fortunately, there are signals from political and thought leaders that a package of policies may emerge to incentivize alternative energy sources that include nuclear power.

One place to start is the recently deceased American Power Act, addressed above, authored originally by Senators Kerry, Graham and Lieberman. Before its final and disappointing incarnation, the bill included provisions to increase loan guarantees for nuclear power plant construction in addition to other tax incentives. Loan guarantees are probably the most important method of government involvement in new plant construction, given the high capital costs of development. One wonders what the fate of the bill, or a less ambitious set of its provisions, would have been had Republican Senator Graham not abdicated and removed any hope of Republican co-sponsorship.

But that was last year. The changing of the guard in Congress makes this a whole different game, and the once feasible support for nuclear technology on either side of the aisle must be reevaluated. A New York Times piece in the aftermath of the elections forecast a difficult road ahead for nuclear energy policy, but did note Republican support for programs like a waste disposal site and loan guarantees.

Republican support for nuclear energy has roots in the most significant recent energy legislation, the Energy Policy Act of 2005, which passed provisions for nuclear power with wide bipartisan support. Reaching out to Republicans on policies they have supported in the past should be a goal of Democrats who wish to form a foundational debate on moving the policy forward. There are also signals that key Republicans, notably Lindsey Graham and Richard Lugar, would throw their support behind a clean energy standard that includes nuclear and CCS.

Republicans in Congress will find intellectual support from a group that AEL’s Teryn Norris coined “innovation hawks,” among them Steven Hayward, David Brooks and George Will. Will has been particularly outspoken in support of nuclear energy, writing in 2010 that “it is a travesty that the nation that first harnessed nuclear energy has neglected it so long because fads about supposed ‘green energy’ and superstitions about nuclear power’s dangers.”

The extreme reluctance of Republicans to cooperate with Democrats over the last two years is only the first step, as any legislation will have to overcome Democrats’ traditional opposition to nuclear energy. However, here again there is reason for optimism. Barbara Boxer and John Kerry bucked their party’s long-time aversion to nuclear in a precursor bill to APA, and Kerry continued working on the issue during 2010. Jeff Bingaman, in a speech earlier this week, reversed his position on the issue by calling for the inclusion of nuclear energy provisions in a clean energy standard. The Huffington Post reports that “the White House reached out to his committee [Senate Energy] to help develop the clean energy plan through legislation.” This development in itself potentially mitigates two of the largest obstacle standing in the way of progress on comprehensive energy legislation: lack of a bill, and lack of high profile sponsors. Democrats can also direct Section 48C of the American Recovery and Reinvestment Act of 2009 towards nuclear technology, which provides a tax credit for companies that engage in clean tech manufacturing.

Democrats should not give up on their policy goals simply because they no longer enjoy broad majorities in both Houses, and Republicans should not spend all their time holding symbolic repeal votes on the Obama Administration’s accomplishments. The lame-duck votes in December on “Don’t Ask, Don’t Tell,” the tax cut deal and START indicate that at least a few Republicans are willing to work together with Democrats in a divided Congress, and that is precisely what nuclear energy needs moving forward. It will require an agressive push from the White House, and a concerted effort from both parties’ leadership, but the road for forging bipartisan legislation is not an impassable one.

The politician with perhaps the single greatest leverage over the future of nuclear energy is President Obama, and his rhetoric matches the challenge posed by our aging and poisonous energy infrastructure. “This is our generation’s Sputnik moment,” announced Obama recently. Echoing the calls of presidents past, the President used his State of the Union podium to signal a newly invigorated industrialism in the United States. He advocated broadly for renewed investment in infrastructure, education, and technological innovation. And he did so in a room with many more members of the opposition party than at any point during the first half of his term. The eagerness of the President to combine left and right agendas can hopefully match the hyper-partisan bitterness that dominates our political culture, and nuclear power maybe one sector of our economy to benefit from his political leadership.

See also: How Nuclear Fits into Obama’s Energy Goal by Dan O’Connor

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Alex Trembath is a Policy Fellow in AEL’s New Energy Leaders Project and will be a regular contributor to the website.   The views expressed are those of the author and do not necessarily reflect the position of AEL.

The term ‘energy efficiency’ usually brings to mind better-insulated homes and smart power meters. But emerging thermoelectric technology could give energy efficiency a whole new meaning by tackling the huge energy waste that happens before the watts even reach our homes.  Yet, to reach market, thermoelectics will have to overcome a number of technological and policy related barriers.

The Promise

Thermoelectric devices, which enable the conversion of heat into electricity, are still at an early stage in the energy innovation chain, but the principle behind how they work can help to highlight a crucial aspect of energy waste across the world that is often ignored in the policy realm.

You may have heard that homes in developed countries waste 25-35 percent of their energy due to insulation problems and inefficient devices. But the lion’s share of energy waste actually comes at the early stages when the electric power is generated in power plants and carried across transmission lines.

Traditional fossil fuel plants create extremely high temperatures by burning or reacting their fuel, which they use in turn to run a steam engine that generates electric power while also rejecting heat at a lower temperature. The low-temperature output typically goes to waste, often tapping precious stream water resources in the process. So not only is the output heat a waste of energy, it also causes more environmental harm by consuming large quantities of water and disturbing neighboring ecosystems. Even cleaner solar panels waste precious energy by releasing heat. Experts estimate that for every 100 kWh of primary energy that are consumed in the United States, as much as 60 kWh goes to waste before ever reaching our factories, our offices or our homes.

Thermoelectrics could become a game-changer in energy efficiency by drastically reducing this energy waste at power plants – but only if we manage to address important scientific and policy barriers first. By tapping the waste heat from power plants, thermoelectric devices could generate additional electricity for the grid while helping to reduce the environmental footprint of water-hogging thermal plants.

The Technical Barriers

Unlike high-performance glass windows and insulation materials for homes, thermoelectrics is not a market-ready technology and is still at an early stage in the laboratory. Because the science behind the devices is so complex, specialists are even debating whether or not thermoelectrics can ever become a viable technology.

Basically, a thermoelectric device works just like an engine: it converts a certain temperature difference (say, a waste heat source at 500 degrees Fahrenheit compared with room temperature at 70 degrees) into an electric potential to generate power (you can find a great review here). For a given temperature output, a very efficient system will generate a high voltage, while a low-efficiency device will only create a modest voltage. In order to achieve real energy savings, the world would need thermoelectric devices with very high efficiency.

At present, this efficiency remains discouragingly low: even state-of-the-art thermoelectric devices can only convert 10 percent of the energy from a waste heat source at 500 degrees. This is why thermoelectrics have only met success for limited ‘niche’ applications, like powering telescopes in space for NASA and marginally increasing the mileage of BMW vehicles – hardly the energy efficiency revolution we have all been awaiting.

Fortunately, this efficiency is only limited by the basic laws of thermodynamics, and there is considerable room for progress. New advances in nanostructured materials, resonant modes, insulating materials and other state-of-the-art physics could help boost thermoelectrics’ contribution to energy efficiency throughout the world.

But technology is only the first step. Suppose now that R&D efforts manage to produce a new thermoelectric technology in a few years that is scalable, economically attractive and that can efficiently tap the waste energy from power plants, what’s next?

The Policy Barriers

In the realm of clean energy, it’s been shown that energy efficiency is the most attractive investment with the shortest payback time. But even with the most proven, market-ready technologies, individuals are still slow to adapt, often at the expense of higher energy bills. How would we get power plants to use thermoelectrics, if such a technology were available?

If past experience is any judge, the wide-scale implementation of a (hypothetical) high-efficiency thermoelectric technology would be a considerable challenge. Unlike private homeowners, electric power utilities are extremely risk-averse and their learning curve is slow. And in contrast with programs such as DOE’s Home Star, there are currently no subsidies or government incentives for utilities to take advantage of their waste heat. Not to mention the fact that even residential energy efficiency has a long way to go, with 20-30 percent energy savings still untapped in the United States. In short, there is a huge energy waste in the power sector and no policy mechanisms to tackle it.

Although it’s difficult to speculate the policy implications of an unproven technology, a few policy themes deserve serious attention. First, industrial plants would think twice about releasing waste heat into the atmosphere and rivers if they could put a price on it. In particular, putting a price on water usage for power plants and factories across the United States would make an enormous difference for the economics of waste heat, as well as for the environment. Second, one could envision a series of requirements for new and existing plants, similar to the Best Available Control Technology (BACT) requirements in the Clean Air Act of 1990, that would be aimed at widening the use of energy-efficiency technology in the power and industrial sectors.

In Conclusion…

At present, the technology behind thermoelectrics isn’t mature enough to play a significant role in economy-wide energy efficiency. Some even argue that this day will never come, and that it would be a waste (no pun intended) of resources to bet on thermoelectrics as a climate change mitigation technology.

It is too early to tell whether thermoelectrics can live up to their full potential, but the basic purpose of thermoelectrics also points to other promising options, such as combined heat and power (also known as a cogeneration plant). As water becomes an increasingly scarce resource, some emerging desalination technologies might also succeed in tapping waste heat from power plants to convert seawater into clean water.

The magnitude of the energy waste problem in colossal: the example of thermoelectrics illustrates how energy efficiency extends far beyond the reaches of our homes. A more mature debate on innovative policy ideas, combined with ambitious technological research, will play a crucial role in bringing about a paradigm shift in the world’s energy landscape.

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David Cohen-Tanugi is a Policy Fellow in AEL’s New Energy Leaders Project. He writes a column on some of the most promising and game-changing clean technologies that are coming out of laboratories in Cambridge and across the United States, providing an in-depth look at the role that innovation policy for clean technologies will play in our energy future.

David is a Ph.D. student at MIT in materials science & engineering.  His research there will focus on computational approaches to clean energy technology. Prior to joining MIT, David served as the China-US climate and energy policy liaison for NRDC.

Disclosure: Several members of the author’s research group at MIT are working on advanced thermoelectric technology. The views expressed are those of the author and do not necessarily reflect the position of AEL.

Published by National Journal

By Teryn Norris
November 16, 2010

In the aftermath of the mid-term elections, it’s unlikely that Washington can overcome the crippling gridlock in Congress. Yet one critical opportunity for bipartisan compromise stands out among the rest: energy policy.

Addressing the country the day after elections, President Obama signaled a clear opening by pressing the reset button on cap and trade and calling for a new agenda. “I don’t think there’s anybody in America who thinks that we’ve got an energy policy that works the way it needs to, that thinks that we shouldn’t be working on energy independence,” he declared. “And that gives opportunities for Democrats and Republicans to come together and think about… how do we move forward on that agenda.”

Senator Minority Leader Mitch McConnell (R-KY) quickly agreed. “I think energy is an area where there is potential for a bipartisan accomplishment of some consequence,” Senator McConnell told the Wall Street Journal. “There are a variety of other things there could be pretty broad agreement on… Nobody thinks it is a bad idea to reduce carbon emissions, the question is how do you do it.”

President Obama and Senator McConnell both cited electric vehicles and nuclear power as areas for compromise, and indeed these are both important areas to support. But electric vehicles and nuclear power are only two pieces of a much larger puzzle, and without a larger framework, Congress risks taking a small-bore approach and missing a larger opportunity to achieve energy independence.

So what’s the fresh idea that Democrats and Republicans alike can embrace? A growing number of experts have endorsed one approach, summed up on Sunday in a prominent piece by the Washington Post editorial board:

“Where can President Obama and ascendant House Republicans find compromise? … The American Energy Innovation Council, a group of business leaders that includes Bill Gates, hopes that the parties might yet be able to agree on a more ambitious and cohesive policy. It recommends a $16 billion annual investment in clean energy innovation, including research and support for getting new technologies to market. An ideologically diverse group of think tankers from the Breakthrough Institute, the American Enterprise Institute and the Brookings Institution agrees and argues that Congress should supplement that investment with subsidies that lower the price of new energy sources.”

The Brookings/AEI/Breakthrough report, “Post-Partisan Power,” was released just before the election and has since received a wide variety of endorsements. The heart of the plan is to overhaul the U.S. energy innovation system with strategic federal investments in clean energy, on the scale of $25 billion annually, to drive down the cost of low-carbon energy technologies for deployment in the U.S. and abroad. It would also support energy science and engineering education, similar to the National Energy Education Act my colleague and I proposed with Breakthrough Institute back in 2008.

Of course, even with such fertile ground for compromise on a critical national issue, the current anti-investment and deficit-centric mentality in Washington doesn’t add up to hopeful prospects for the next Congress, as the Post editorial recognized.  Not that there’s any shortage of smart revenue streams for such strategic federal investments, which eventually would easily pay for themselves.  But as Andrew Revkin noted at New York Times Dot Earth, “This election almost guarantees an end to the brief stimulus-driven period of increased investment in advancing energy technologies that could supplant finite fossil fuels.”

In the near-term, then, the measure of success for this new energy innovation agenda should not be whether it can immediately advance in lame-duck session or the next Congress — although advancing specific pieces is an urgent cause. Rather, the measure of near-term success should be whether this approach can continue building support among thought leaders, advocates, reporters, and a group of committed policymakers.  As one prominent economist once wrote, “That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes the politically inevitable.”

But in the absence of growing momentum behind this approach, it is hard to see how any large and cohesive clean energy agenda can develop in the aftermath of cap and trade for the foreseeable future.  There is simply no clear or viable alternative. In the meantime, the United States will continue falling behind in a major strategic growth sector, shipping hundreds of billions of dollars overseas annually to pay for foreign oil, and damaging the conditions for a livable global climate system. Given the enormous stakes, the leaders capable of breaking the energy stalemate will no doubt be counted among the great legislators of the early 21st century – if only they will step up and seize this opportunity.

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Most of us are familiar with the basic economic principle of supply-and-demand. Economists tend to envision the intersection of the supply and demand of goods and services as the “equilibrium point,” where consumer need for a product meets the ability of producers to provide it. That point is what governs fundamental economic indicators and attributes, especially price and market quantity.

Recently, however, a new supply-versus-demand debate has begun to take shape in the minds of activists and policy-makers alike. Put simply, this new paradigm concerns the supply and demand of clean energy technology.

Conventional wisdom, as it has evolved among global warming activists, tells us that society already has the requisite technology supply to decarbonize the economy. Al Gore has said that “we have all the tools we need to solve three or four climate crises,” and influential climate blogger Joe Romm maintains that “we have all the technologies we need and just lack the political will.” This would suggest that the current supply of clean energy technological is sufficient, and that “political will” should come in the form of demand-side, deployment policies.

But this notion has been increasingly challenged. Energy Secretary Steven Chu, a Nobel laureate, has called for a “second industrial revolution” in clean energy technology, contradicting the perception that political will is the only missing factor on the path to a clean energy future. Chu’s message has become a siren call for many clean energy advocates, but it has not completely dulled the chorus of climate activists who still believe that the technology will materialize once we have fostered adequate demand.

Many of these climate activists have promoted a cap on carbon emissions as their policy-of-choice, ostensibly a mandate that energy companies considerably scale down the burning of carbon sources for energy in favor of cleaner alternatives like solar or nuclear power. However, most governments lack the political will to impose a serious, or “hard”, cap, ending up with a “soft” cap at best, one that allows energy companies to pass on the modestly higher cost of producing carbon energy onto consumers. The theoretical effect of this cap would be to shift consumer energy demand towards cleaner alternatives.

Climate activists point to a similar cap program on chlorofluorocarbons in the early 1990s. But the technological innovations that were required to fix the CFC problem were child’s play next to the mind-boggling challenges of redesigning and deploying entirely new systems for generating, converting, transporting, storing and using energy. In addition, a politically palatable carbon price, like one that would be established by a U.S. cap-and-trade program, would have the approximate effect of increasing the per-gallon price of gas by approximately 10-30 cents—hardly the economic impetus to create a new world.

Subsequently, advocates are now beginning to question the political feasibility of even a soft cap on carbon emissions, following the failure of such a policy to pass the U.S. Senate earlier this summer (the fourth such failure in a decade). A European carbon cap, now in its fifth year of operation, has yet to abate emissions to any considerable degree. Carbon trading schemes are also in the works regionally in the U.S, with the Western Climate Initiative and the Regional Greenhouse Gas Initiative, but these are a far cry from the once yearned-after global cap on carbon emissions. Effort after effort has revealed that nations are unwilling to increase the price of dirty energy, despite IEA projections of a 40% increase in global emissions by 2030. Thus, we see that the chief demand-side effort to reform consumer behavior has met with little success. What, then, is the best path to a clean energy future?

For a more effective and comprehensive solution to our energy problems, we must turn to “supply-side” policies with technological innovation at the forefront. Perhaps the primary obstacle between the status quo and a global clean energy economy is the price gap between clean and dirty energy technology, and a politically palatable price on carbon emissions will do little to bridge that divide. The workable solutions stem from making clean energy cheap, in unsubsidized terms, and available to consumers worldwide.

We can achieve these goals through various supply-side “technology push” policies, such as major public financing of energy RD&D; making the R&D tax credit permanent; and the creation of new public-private partnerships and institutions whose explicit goals are to develop clean technology. These measures must be significant and sustained, and they must complement demand-side industrial policy of which cap-and-trade may be only a small part.

Supply-side innovation policy can be traced to the origins of the Internet, the jet engine, biotechnology, the Manhattan and Apollo projects, and the personal computer. In these and other game-changing technologies, governments played a central role in the initial RD&D processes, to the point where the private sector was able to take full advantage of a technologically transformed economy. We cannot trust the creation of a brand new global energy infrastructure to demand-side policies alone, nor to the assumption that we have all the technologies we need. Partial solutions like cap-and-trade will keep failing until we effectively combine supply and demand approaches towards an innovative mission to build a clean, safe, and sustainable energy future.

By Teryn Norris

When future scholars document the history of global warming, one of the watershed years will almost surely be 2010. For over a decade, the primary goal of U.S. climate policy advocates has been to establish a strong carbon pollution cap and a binding global emissions treaty. Armed with large war chests and major electoral victories, climate advocates had one of the best opportunities to achieve these goals.

This agenda has collapsed. In the aftermath of the Copenhagen climate negotiations and recent developments in the Senate, it is clear that carbon caps in the U.S. and globally will not happen for the foreseeable future. Meanwhile, the IEA projects global CO2 emissions will skyrocket 40% above 2007 levels by 2030, and the EIA predicts China’s emissions will more than double over the next 25 years – which would make its emissions greater than the rest of the world combined.

What happens next? The upcoming lame-duck session in Congress could be one of the last opportunities for national reform before 2013. There are a number of incremental proposals worth pushing, from the American Clean Energy Leadership Act, to Senator Alexander and Senator Dorgan’s Electric Vehicle Deployment Act, to Senator Kerry’s latest Clean Energy Technology Leadership Act. Some still hope for a Hail Mary lame-duck pass on cap and trade, but when asked whether it could be revived, Senator Reid recently said, “It doesn’t appear so at this stage. It doesn’t have the traction that a lot of us wish it had.”

But none of these alternative proposals contain one of the most critical elements for reform: a dedicated revenue stream to fund major federal investment in clean energy research, development, demonstration, deployment, and manufacturing, as well as infrastructure and workforce development. The American Energy Innovation Council, including business titans like Bill Gates and John Doerr, has called for an increase of $11 billion per year in federal clean energy RD&D alone – an idea that could attract serious bipartisan support after mid-term elections. This proposal enjoys broad support from groups like Breakthrough Institute, Brookings Institution, Third Way, ITIF, and many others.

These investments are critical for ensuring the clean energy accomplishments of ARRA aren’t imperiled as public investment falls off a cliff. They’re also critical for establishing U.S. competitiveness and driving down the price of clean energy technologies through innovation. If the price gap between dirty and clean energy technology isn’t bridged quickly, the world has little chance of avoiding climate destabilization as countries like China and India develop at break-neck speed.

Cap and trade could have originally provided this revenue stream, but now that it’s off the table, we must find an alternative. Potential sources include reduced fossil fuel subsidies, offshore drilling royalties, an oil import fee, a small fee on fossil fuel electricity, or even a low carbon tax beginning at $5 per ton. Another source outside the energy sector could be a small fee on financial transactions. This idea has been proposed as a way to fund the $100 billion international climate assistance package, and could be applied domestically to reduce speculative trading and support a new growth industry.

Meanwhile, the possibility of achieving a binding global emissions treaty at the upcoming UN climate negotiations in Cancun is all but gone. The new chairwoman of the United Nations climate treaty body recently put it this way: “I do not believe we will ever have a final agreement on climate change, certainly not in my lifetime.” We must therefore put more emphasis on alternative forums like the Clean Energy Ministerial and Major Economies Forum on Energy & Climate. Instead of endlessly debating emissions targets and timetables, the world’s technology policy leaders can break the logjam by identifying specific technical hurdles, creating coordinated technology roadmaps, and mobilizing the resources for rapid implementation.

Beyond the immediate future, climate and clean energy advocates should take the opportunity to fundamentally rethink our strategy. Will we abandon the prospect of major federal reform, or develop a stronger approach for the next Congress? And will we continue focusing on carbon caps, or will we adopt a new approach focused on technological innovation to make clean energy cheaper? These are just some of the questions that will define the next agenda – and our energy and climate future.

–
Teryn Norris is president and founder of Americans for Energy Leadership.

Subsidies to fossil fuels—a mature, developed industry that has enjoyed government support for many years—totaled approximately $72 billion over the study period, representing a direct cost to taxpayers. Subsidies for renewable fuels, a relatively young and developing industry, totaled $29 billion over the same period… Most of the largest subsidies to fossil fuels were written into the U.S. Tax Code as permanent provisions. By comparison, many subsidies for renewables are time-limited initiatives implemented through energy bills, with expiration dates that limit their usefulness to the renewables industry.

The fact is we are long past the time when the nation’s burgeoning gas, coal, and oil industries needed government help. BP, for example, took in $14 billion in profit in 2009, which was actually down 45 percent from 2008. The oil industry is beyond a doubt the poster child for the inefficiency of fossil fuel subsidies. “I will tell you with $55 oil,” President George W. Bush, an oilman himself, said in 2005, “we don’t need incentives to the oil and gas companies to explore. There are plenty of incentives. What we need is to put a strategy in place that will help this country over time become less dependent.” Since then, U.S. oil prices hit a record $147.27 per barrel in July 2008 and settled at roughly $75 per barrel as of this writing. Of course, the billions of taxpayer dollars spent on oil subsidies over the years have had little effect, regardless of the price of oil: domestic production remains relatively unchanged since the 1950s, as can be seen here.

Pledges to reduce fossil fuel subsidies have been oft-repeated by world leaders – including President Obama – with the G20 committing to doing so at the 2009 Pittsburgh summit, only to reaffirm the commitment at the 2010 Toronto summit after little progress in the intervening year. But governments are finally putting their money where their mouths are. The European Commission, the ruling body of the European Union, recently voted to phase out coal subsidies:

On [July 20], in a preliminary victory for environmental groups and for green-minded regulators, the commission said that cash handouts for loss-making coal mines should end within four years — by Oct. 15, 2014 — rather than being allowed to continue for more than a decade as originally planned. The decision, if approved by the European Union’s 27 governments, would mainly affect mines in Germany, Spain and Romania.

Coal subsidies for German and Spanish mines this year were estimated at 2 billion euros and 1 billion euros, respectively. India, too, is following through on its promise:

The Indian government on [June 25, 2010] reduced popular fuel subsidies, a long-delayed change that will help policy makers reduce a big budget deficit…Policy makers said the government would stop subsidizing gasoline. Diesel, kerosene and natural gas would continue to receive support at a slightly lower level. India spent about $5.6 billion to subsidize fuel in the last fiscal year, which ended in March. State-owned energy companies added the equivalent of an additional $4.4 billion by selling fuel below its cost.

Here at home, President Obama deserves credit for previously proposing to end subsidies for oil and gas companies, as does Senator Bernie Sanders (I-VT), who introduced an amendment to repeal $35 billion in such subsidies and invest the savings in deficit reduction and an energy efficiency program. To be sure, the idea of ceasing fossil fuel subsides has been and always will be met with strident opposition from the recipients of taxpayer largesse – the initiatives of President Obama and Senator Sanders both petered out due to industry pressure. But with Europe and India now leading the way in ending the economic relics of the 20^th century that are fossil fuel subsidies, doing so must also continue to be part of the national debate in America.

Daniel Goldfarb contributed research.

Undersecretary of Energy Kristina Johnson is emphasizing the importance of women in energy fields

On Tuesday, U.S. Department of Energy Under Secretary Kristina M. Johnson announced a new initiative at the Clean Energy Ministerial to promote the participation of women in clean energy science and engineering fields called the “Clean Energy Education and Empowerment (C3-E) Initiative.”  The C-3E Initiative will encourage young women to pursue careers in STEM (Science, Technology, Engineering and Mathematics) fields by supporting workshops and speeches from clean energy leaders to inspire students, and officials in participating countries will lead outreach events and make scholarship funds available for women pursuing advanced degrees in clean energy.

Today, women make up only 20 percent of the professional energy workforce. Many capable and talented women are not joining the effort to promote clean energy technologies due to a variety of factors.  As Under Secretary Johnson stated:

“The clean energy revolution will progress farther and faster if it draws on the brightest minds everywhere. Every young woman who is discouraged from studying science and engineering represents potential innovation lost. The world will be better off — men and women alike — if those who have succeeded in these fields share their own stories, and inspire young women to follow in their footsteps.”

As early as the undergraduate level, top engineering schools suffer from chronic gender imbalances while women form 57 percent of the total US university enrollment.  Cultural factors pressure women out of the science career pipeline at every stage from pre-school to graduate school. Even as children, gendered toys and marketing push more boys and fewer girls towards science.  Once in college, women tend to be in more liberal arts fields such as literature and psychology instead of the STEM fields, especially the physical science and engineering fields. As a result, women make up nearly 77 percent of psychology majors and only 12.9 percent of electrical engineering majors and 21 percent of physics majors.  Johnson’s C-3E Initiative is an important step toward addressing this problem in an area of critical need.

In the world of technology innovation, 86 days is the blink of an eye.  Most companies are looking months or years down the road when they invest in research and development.  But when barrels of oil began pouring into the Gulf from BP’s Deepwater Horizon, the equation changed.  Suddenly, research and development wasn’t optional, it was essential.

BP is the perfect model of what the United States should not do. The American citizen has paid the price for fossil fuel dependence for decades now and we can’t wait for another disaster to strike the US.  Eighty-six days is almost nothing when you talk about technology innovation, but when you are trying to plug an oil spill, rescue workers from a collapsed coal mine, or end an OPEC embargo, 86 days is an eternity.  We need to jump-start the clean energy R&D process now.  We need to invest like we mean it.

It must be the goal of the United States to invest in a broad range of clean energy technologies.  This is necessary not only to replace aging fossil fuel plants and the inefficient vehicle fleet, but also to allow American companies to export clean technologies, systems, and products overseas to the growing international energy market.  In a few years, instead of importing Japanese hybrids, we could be exporting American plug-ins or fuel cell vehicles.

When threatened with safety and environmental regulations, the energy industry usually claims economic hardship, and that regulation will make them uncompetitive.  It is clear now that bad press and lawsuits will kill BP, not regulation.  We see this as a result because BP was unprepared for such a disaster and because it had failed to invest in drilling safety technologies used around the world.

And yet it only took 86 days for BP to design, construct, and put in place a cap that is, as of now, capturing all of the oil spilling from the Deepwater Horizon drill hole.  This serves as proof that despite the grumbling, all it took was the proper resources and the proper motivation to force a stubborn energy giant like BP into innovating the solution to the oil spill.

Today we’re facing a hidden but much more menacing problem. Our continued reliance on foreign oil drives up global oil prices and props up countries like Saudi Arabia, Iran, and Venezuela.  Their collusion with the Organization of the Petroleum Exporting Countries (OPEC) gives them enormous political and economic power over the United States, the 1973 oil embargo proved that, and since then our oil imports have tripled.  Meanwhile, the US energy industry is only investing 0.3% of revenues in R&D of new technologies.  Most industries invest ten times that percentage!

For years, our energy industry has been asleep at the wheel.  There has been no motivation and resources have not been well spent.  We need give our physicists, chemists, engineers, and biologists the resources that they need to develop and deploy clean energy innovations such as fuel cells, advanced nuclear, wind power, next generation batteries, energy-efficient products, carbon capture and storage, among many others.

Global energy demand is going to skyrocket in the coming decades, but the US is not prepared to compete in the global market or achieve energy independence in the world of tomorrow. Our reliance on fossil fuels not only gives strength to our enemies but it literally kills American citizens at home and overseas.  In 2007 alone there were 170 casualties in Iraq and Afghanistan from fuel convoy missions carrying diesel between bases.  Improving vehicle efficiency and developing self-sustainable technologies could help reduce the amount of convoys needed in war zones.  In the US, coal plants emit sulfur-dioxide, mercury, nitrous-oxide, and particulate emissions that cause asthma, pulmonary disease, birth defects, and cardiovascular diseases. Meanwhile, coal miners continue to pay the heaviest price.

While we still wait for the results of the oil cap pressure tests deep below the surface of the Gulf of Mexico we must ask ourselves: what if BP had taken 86 days 10 years ago and developed an effective cap back then?  If, instead of waiting for an explosion, BP had anticipated and preempted disaster.  This whole incident would’ve been over before it had hardly started.  Television crews in the Gulf would have packed up and left on day 5, not day 86, as we all hope they are able to do now.

That is why America needs to act now to rid ourselves of the economic dead-weight of Venezuela, Iran and Saudi Arabia.  By pursuing clean technologies we can introduce competition into a market dominated by energy giants. We can stabilize energy prices, promote public health, and we can break free of the reigns of OPEC.  We need to seize this opportunity and take our economic and energy future into our own hands.  Right now, America has the same mentality as BP: wait for the worst, then act.  If we give our researchers and universities the tools now, then we can prevent the worst and establish a powerful American industry in clean energy technology.

“Yingli Solar at the World Cup“ by Clifton Yin

“China did not participate in this year’s World Cup and has actually qualified for the tournament only once, in 2002. Nevertheless, 2010 saw a solar energy company – Yingli Green Energy Holding Company – become the first firm from that country to secure global marketing rights to the sporting event.”

“Leading the Clean Energy Industry Requires Public Investment” by Yan Zhu

“While carbon pricing has polarized the U.S. energy and climate policy debate, the governments of some Asian nations are investing heavily to develop clean technology manufacturing and form innovation clusters. As a result the United States lags far behind its economic competitors in clean technology manufacturing.”

“Understanding the Energy Innovation Lifecycle“ by Jeremy Cohn

“Understanding the process of energy innovation and investment is an important next step towards taking the necessary actions to ensure energy independence and security.  By recognizing the innovation gap between what is best for a firm versus what is best for all firms we can ensure that American-made products and technologies dominate the marketplace in the years to come.”