The Great Recession and the Democratic sweep in 2008 returned Keynesian economics to the center of political debate. But Rob Atkinson, founder of the Information Technology and Innovation Foundation, argued in a recent Breakthrough Journalessay that progressive economics, with its focus on economic distribution, had left behind a coherent economic growth agenda. Dean Baker, co-director of the Center for Economic and Policy research, rejected Atkinson's "potshot" in a reply also published in the Journal. The two aired their differences in a debate in Washington, DC. At stake: the future of progressive economics.
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?
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.
A new report by the Breakthrough Institute and Third Way argues that the United States needs to rethink its approach to manufacturing to incentivize and enhance next generation "advanced manufacturing" and worker training.
Stagnant and out-dated policy debates in Washington are the reason that advanced, high-tech products are mostly manufactured outside of the United States, according to a new paper jointly issued by two think tanks. The report, from the Breakthrough Institute and leading moderate think tank Third Way, argues that American manufacturing could experience a resurgence with a focus on complicated and technology-intensive manufacturing products.
"The Kindle has revolutionized how people read, but even though it was born in Silicon Valley, Amazon makes it in Taiwan," said Director of Third Way's Economic Program and the report's co-author, Ryan McConaghy. "When looking for the precision needed to build the e-reader, Amazon had to look abroad for experienced manufacturers because the technology was no longer available here. It's a huge missed opportunity."
In a detailed piece for the Breakthrough Journal, polymath intellectual Vaclav Smil argues that expanding manufactured exports is key to economic revival, and that there is no reason the United States cannot reverse decline of its manufacturing sector.
Monday's dismal manufacturing report and Tuesday's deal to slash spending have spooked the markets, which fear lower growth. While Obama and the Democrats say they will now focus on increasing jobs, the question is what can actually be done to grow the economy?
For Vaclav Smil, the famously pessimistic polymath, the answer is clear: the U.S. must manufacture its way out of decline.
Smil, virtually unknown in the United States, is no armchair pundit. The author of 32 books on risks, catastrophes and much else, Smil is a legend to energy wonks like Bill Gates and was the first non-American to win an AAAS Award for Public Understanding of Science and Technology.
True, we must reduce low-priority discretionary spending, both defense and domestic; slow the projected growth of Medicare and Medicaid; and restore Social Security to fiscal soundness. But we also need to care for an aging population and invest in the skills, research and modern infrastructure that power economic growth.
Alice Rivlin, founding director of the Congressional Budget Office, former director of the White House Office of Management and Budget, former Federal Reserve Vice Chair, and member of the Presidential Debt Commission.
See also: "Losing the Future?" a Breakthrough Institute staff editorial, April 14, 2011
It's not too late for President Obama to return to the clear path to "winning the future" articulated in his State of the Union. But righting the nation's economic trajectory demands a concerted and consistent effort to help Americans understand and embrace the difference between spending and investment, and to recognize that a growing economy fueled by new innovations, new technologies, and new industries is an essential component of any strategy to tame the debt.
"The first step in winning the future is encouraging American innovation. ... We'll invest in biomedical research, information technology, and especially clean energy technology, an investment that will strengthen our security, protect our planet, and create countless new jobs for our people."
With those remarks at the heart of his State of the Union address - and a 2012 Budget proposal to back them up - President Obama drew a line in the sand and articulated a vision of American economic renewal fueled by key investments in the kind of public-private partnership that brought us the railroads and jet aviation, microchips and the Internet, countless biomedical breakthroughs and a portfolio of clean energy alternatives.
As we wrote in January, "Obama's [State of the Union address] was a rejection of proposals to cut federal spending across the board, as he finally made the case before the American people about why public support for innovation is critical for the country's long-term prosperity."
It was a plan to "win the future" and restore American prosperity that embraced the crucial distinction between government spending - consumptive, transitory, and sometimes even wasteful - and public investment - that small portion of our federal budget that catalyzes the enduring innovation, entrepreneurship, and economic growth that makes this nation strong. We hailed the speech as "Obama's breakthrough" moment.
But that was January...
Today, we're veering closer to a very different vision of America's budgetary future, one that seems to embrace the logic of "across-the-board" spending cuts proffered by Republicans, including decreasing budgets for major national research agencies and clean energy innovation programs.
Budget Deal Cuts Investment in Innovation
Late on April 8th, President Obama's negotiators gave his imprimatur to a compromise to fund the government through the remainder of the 2011 fiscal year that would see federal investments in energy innovation fall by nearly 11% (or $325 million) below 2010 levels while stripping over $1 billion from the budgets of the nation's major non-defense research agencies.
These cuts amount to a veritable funding cliff, when one considers the nearly simultaneous expiration of the temporary investments flowing to innovation agencies in 2009 and 2010 under the American Recovery and Reinvestment Act.
If this is the opening battle in the war to win America's future, it is a clear defeat.
Two more influential voices have joined the growing ranks of innovation hawks on both sides of the political spectrum in urging against cuts in federal investment in science and technology. Noted political commentator Mort Kondrake writes that the GOP budget would "torch America's seed corn," while Duke Energy CEO Jim Rogers writes that Congress should increase funding for energy research to make clean energy cheap.
As the Congressional Republicans continue to push cuts to critical federal investments in innovation, two more prominent voices have joined a growing group of innovation hawks on both sides of the aisle seeking to preserve or even increase federal funding for science and technology.
The first is noted political commentator Mort Kondrake, who wrote recently in Roll Call that the GOP is threatening to "torch America's seed corn" by cutting federal technology investment. Kondrake, a long-time contributor to Fox News and Executive Editor of Roll Call, notes that the Republicans' budget bill would cut funding for scientific research agencies by more than 33 percent, at a time when countless science and technology experts argue that we must increase such investments to spur economic growth. As Kondrake notes, the GOP budget proposal would abandon the long, bipartisan history of federal investment in American innovation:
Republican priorities represent not just a repudiation of President Barack Obama's proposed increases for science -- 10 percent for energy, 13 percent for the NSF, 15 percent for NIST -- but of a bipartisan process started in 2005 to secure a doubling of hard science research.
"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.
In a recent column, Innovation Conservative David Brooks calls out both Democrats and Republicans as perpetuating "mirages" for advocating cuts to discretionary spending as deficit reduction measures, and argues that those advocating for increased investments in productive areas need to band together to address entitlements, as growing entitlement spending will impose constraints on those investments in the future.
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)
In tonight's State of the Union Speech, President Obama will call for increased federal investment in education, science, technology and infrastructure. In doing so, he will join a long list of Republican Presidents who recognized that such investments are key to America's economic vitality and a hallmark of true fiscal responsibility. The question now is whether today's Republican leaders will don this mantle, or will continue to recklessly pursue cuts to America's most productive public investments?
Tonight, President Obama is prepared to call for renewed federal investment in infrastructure, research, education, and clean energy technology in his State of the Union Address, according to his advisers. He is likely to argue that new productive investments in education and technology are central to generating jobs and laying a new foundation for economic prosperity. Indeed, the long, bipartisan history of American innovation is one of federal investment in new technologies--even in tough economic times.
But as Republicans in Congress continue their campaign to cut everything in sight (except for what might reduce the growing federal debt -- defense and entitlement spending), with seemingly little regard for the difference between spending and smart investment, it may be difficult for Obama to enact policies that could seriously address the deficit by growing the economy.
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.
Where do good technologies come from? The history of American innovation shows that an active partnership between the public and private sectors has been key to developing breakthrough technologies, which have driven generations of economic prosperity. In an updated report, the Breakthrough Institute explores this partnership through a set of case studies in American innovation.
Driving directions from your iPhone. The cancer treatments that save countless lives. The seed hybrids that have slashed global hunger. A Skype conversation while flying on a Virgin Airlines jet across the continent in just five hours.
Where did these everyday miracles come from?
As soon as the question is asked we know to suspect that the answer is not as simple as Apple, Amgen, or General Electric. 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 American government support for technology and innovation. Our gratitude at being able to video chat with our children from halfway around the world (if we feel gratitude at all) is directed at Apple, not the Defense Department. When our mother's Neupogen works to fight her cancer, we thank Amgen, not NIH or NSF.
Facing renewed international challenges to American technological and economic leadership, the United States "cannot cut back on those investments that have the biggest impact on our economic growth," including science, technology and education, President Obama declared at a speech in Winston-Salem, North Carolina this week.
Echoing his Secretary of Energy and chief science and technology advisers (as well as a pairof familiar op eds from 2008), President Obama told audiences in North Carolina today that the United States faces a new "Sputnik moment" - a challenge to American technology and economic leadership akin to the global race to dominate nascent aerospace, computing, and information technology fields during the Cold War Era.
The United States responded to the 1957 launch of the Soviet Sputnik satellite with a series of major investments in science and education, including the National Defense Education Act and the creation of the Apollo Space Program. Maintaining economic competitiveness in the 21st century similarly demands a renewed national commitment to invest in the building blocks of a dynamic innovation economy, the President said.
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.
In a recent interview with NPR's Robert Siegel, Breakthrough Senior Fellow Roger Pielke Jr. discusses why cap and trade policy collapsed under the weight of its political and practical limitations. He proposes a new path forward focused on making clean energy cheap, instead of continually trying to make fossils fuels more expensive.
Below is an excerpt from the interview transcript. Click here to listen to the full interview and read the entire transcript:
Despite rising national debts, would national governments be wise to borrow today to fund investments in infrastructure, clean energy, and innovation to be enjoyed by -- and paid back by -- a richer, more well-off generation tomorrow?
Here's an interesting argument from our friends across the pond at the UK-focused Political Climate blog, making the case that despite rising deficit concerns and austerity measures in the UK and elsewhere, borrowing from the future may still actually be an appropriate way to pay for clean energy innovation today:
Against this background, it may sound mad to argue for more public borrowing in order to pay for investments in low carbon technologies and infrastructure, but that is what I am going to do in this post.
Let's start with the rationale. ... The starting point is that in advanced economies successive generations tend to get better off over time. For example, at the depths of the 1930s depression Keynes observed that despite the general gloom, he was confident that 100 years in the future, people might be eight times better off in real terms. And indeed average GDP per capita in the UK is now already about 5 times what it was in the 1930s. By extension, we would normally expect future generations to be better off than us in GDP terms.
... [Furthermore, if] we in this generation mitigate climate change, we will allow future generations to have a higher standard of living than they would have if we did nothing. We are very slowly beginning to do this, with policies being introduced to encourage us to invest less in conventional capital (e.g. fossil fuel power stations) and more in investments that effectively maintain natural capital (like renewable energy).
At the moment we are paying for these more expensive investments through reduced consumption, in the form of higher energy bills. If instead we were to borrow a certain amount of money from future generations (who will have to repay through their taxes) and use this money to pay the extra cost of renewables, carbon capture and storage and so on, then the theory says it should be possible to make both our generation and future generations better off. ...
After decades of underinvestment, the United States faces a $2.2 trillion repair bill to modernize the nation's crumbling network of public infrastructure, from railways to airports and roads to sewers, according to the American Society of Civil Engineers.
With budgets at the state and federal level pinched by economic recession, and a surging Tea Party skewing American politics towards a new spendthrift mentality, America may soon face diminished economic competitiveness and more potentially dangerous failures of public infrastructure.
In the Independent, British commentator Rubert Cornwell offers a clear-eyed perspective from across the pond on "the silent crisis that is undermining America: the creeping decay of its public infrastructure."
Throughout American history, federal investments in areas like science and technology have been a long-term driver of national prosperity under presidents both Democrat and Republican.
Throughout American history, strategic government investments in areas like education, technology, infrastructure, and energy catalyzed the entrepreneurship and innovation that has paved the way for so many of the great American technological and economic successes of the 20th century. In the words of conservative New York Times columnist David Brooks, the American story is one of "limited but energetic governments that used aggressive federal power to promote growth."
[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.
At a time of continued economic distress, America should embrace regional innovation clusters as a new paradigm for collaboration, innovation, and economic prosperity.
As new reports confirm a stark decline in long-term U.S. economic competitiveness, the United States needs a new economic paradigm to refocus economic policy and rebuild its damaged economy. That new paradigm should focus on strengthening America's "regional innovation clusters," according to a new report authored by Mark Muro and Bruce Katz of the Brookings Institution Metropolitan Policy Program.
First defined by Harvard Business School professor Michael Porter twenty years ago, clusters--geographic concentrations of interconnected firms, suppliers, educational institutions and other supporting organizations--have staged a comeback in economic policymaking at different levels of government and are now widely viewed as important to accelerate innovation and therefore economic growth. According to the new study, The New Cluster Moment: How Regional Innovation Clusters Can Foster the Next Economy, clusters offer an attractive new economic paradigm for three particular reasons.
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.
A new report by the National Academies paints a grim picture of U.S. economic competitiveness in the 21st century knowledge economy. Major and sustained public investments in education, research, and innovation are key to reversing a long-term decline in global competitiveness.
A new National Academies report released last week confirms what many concerned with U.S. economic competitiveness have warily suspected: America's competitive standing in the 21st century global economy has deteriorated markedly in the last five years.
The outlook has only worsened since the publication of the original report, according to the Gathering Storm committee, which includes leading academics, CEOs, and science and technology experts. For those concerned about America's ability to create lasting, high-paying, high-quality jobs in a time of economic distress, the report's conclusion is disheartening:
"America's competitive position in the world now faces even greater challenges, exacerbated by the economic turmoil of the last few years and by the rapid and persistent worldwide advanced of education, knowledge, innovation, investment, and industrial infrastructure. Indeed the governments of many other countries in Europe and Asia have themselves acknowledged and aggressively pursued many of the key recommendations of Rising Above the Gathering Storm, often more vigorously than has the U.S."
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.
Seemingly inspired by the death of cap and trade, over at the Daily Dish Andrew Sullivan has tied together two interesting threads of conversation -- "Waiting on Innovation" and "Why Not?" -- that deal with the issues of energy innovation and energy taxes.
Highlighted in "Why Not?" the Economist's Ryan Avent is on to something when he suggests a $5 per barrel petroleum tax since it could generate about $40 billion in revenue annually. But to suggest, as Avent does, that the tax should rise by $5 each year with the objective of forcing consumers to drive less or purchase more fuel-efficient cars is a strategy that risks falling into the same political trap that ultimately ensnared cap and trade.
Last week I suggested that Julia Gillard, Australia's Prime Minister, was asking for trouble by promising that carbon pricing would transform society:
When will politicians learn that climate policies are a political loser if they require that people "transform the way we live and the way we work"? The vast majority of people simply do not want their lives transformed. Promising that government will transform your life is one way to ensure a rough political road for any policy -- climate change, health care, economic, whatever.
Basically, cap-and-trade introduces uncertainty at an individual level (though it does the opposite for actual investors); in the current economic climate, that scares people into thinking that they will lose their jobs. . . Anything that the public is unfamiliar with adds to uncertainty - and that is precisely what people don't want. Second, green jobs may poll well across a wide spectrum of voters, but that doesn't mean that selling regulation or taxation with a jobs message will work.
To succeed, policies focused on decarbonizing the global economy must not be seen as adding to personal insecurities, better yet, they should add to personal security. This should be a major lesson taken from the failure of US climate legislation.
Not "everything should be on the table" for budget cuts to reduce the deficit, argues ITIF President Rob Atkinson in a recent essay. Despite what "neo-classical inspired budget hawks" may insist, Atkinson points out, all spending is not created equal and slashing budget line items for investments that spur innovation could actually serve to put the U.S. further in the red.
He writes:
What's behind this widespread unwillingness to prioritize investment? Budget hawks fear that sparing one item from the chopping block will only validate the demands of interest groups to exempt their pet programs. In addition, many adhere to a neo-classical economics perspective, which holds that government plays a negligible role in economic growth and should be neutral with regard to private sector activity... But government should be anything but neutral. Science and infrastructure funding is more valuable than farm subsidies. Government support for research in computer chips is more valuable than support for potato chips...
In contrast, an innovation economics approach to the budget distinguishes between spending on consumption and spending on investment. For innovation economics advocates, all spending (either on the tax or expenditure side) should be on the table, and all investment (on the tax and expenditure side) should be off the table...
We need to expand investments in education and training, science and research, technology (including, but not limited to clean energy) and physical infrastructure. In economic downturns, successful corporations don't cut key investments because they know that these investments are vital to gaining market share and competitive advantage in the moderate term. Governments should think the same way.
Arising out of the debates surrounding clean technology and the economic recession, is the nagging question: can the U.S. continue to lead in high tech innovation without domestic manufacturing? Increasingly, it seems, the answer is "NO" -- a response that carries serious implications for clean tech innovation and economic growth in the U.S.
Political confusion surrounding "green" jobs, clean tech, and outsourced manufacturing (largely to Asia) has caused those looking to clean energy as the next U.S. growth sector and those seeking to raise the U.S. out of a growth-numbing recession to lose sight of what has fueled U.S. technological and economic leadership in the past - public support for innovation and large scale high tech manufacturing. Recently, Alexis Madrigal posed the critical question arising from this confusion to the readers of the Atlantic: "Can the US Innovate Without Manufacturing?"
As Breakthrough and numerous high tech leaders argue, the answer is "NO."
By re-thinking how the federal government can foster innovation and competitiveness in clean energy, from education and research to commercialization and production, the United States can once again become a global leader in clean energy technology.
By Jesse Jenkins, Mark Muro, and Rob Atkinson, originally at the New Republic
Having passed the U.S. House of Representatives on May 28th, the America COMPETES Act, America's flagship competitiveness legislation, will soon be debated in the U.S. Senate. The Act was originally passed in 2007 in response to mounting concern that the United States was failing to effectively compete economically with other nations, imperiling the nation's future prosperity.
Now, a new outbreak of anxiety has engulfed the nation's competitive standing particularly as regards the nation's fledgling clean energy industry. Presently, the United States lacks an effective strategy to compete in this high-growth industry, which is expected to surpass $600 billion globally by 2020. Fortunately, the America COMPETES reauthorization offers a key opportunity for Congress to strengthen U.S. clean energy competitiveness.
In a new policy report, the Breakthrough Institute, Information Technology and Innovation Foundation and Brookings Institution Metropolitan Policy Program call on Congress to strengthen clean energy competitiveness through the America COMPETES reauthorization.
Congress first passed this flagship competitiveness legislation in 2007 in response to concerns that the United States was losing its ability to compete economically with other nations. On May 28, 2010, the U.S. House of Representatives passed the COMPETES reauthorization by a vote of 262-150 and the bill is set to be debated in the Senate. The reauthorization comes at a time when the United States seeks new sources of growth in a fiscally constrained environment. The clean energy market is one such growth industry--expected to surpass $600 billion by 2020--but the U.S. faces unprecedented global competition.
In "Rising Tigers, Sleeping Giant," an authoritative report on international clean energy competitiveness, the Breakthrough Institute and ITIF recently demonstrated how U.S. leadership on a number of clean energy competitiveness metrics has declined in the last decade. The United States' historic lead in energy innovation is slipping as other countries implement national innovation strategies. America now lags economic competitors in Asia and Europe in the manufacture of virtually all clean energy technologies. And the U.S. lags its economic rivals in preparing its future workforce with critical science, technology, engineering and math education (STEM).
The new report argues that to regain leadership in the global clean energy market, the United States must prioritize major investments in clean energy technology and embrace bold new paradigms in clean energy education, innovation, and production and manufacturing policy.
"Meeting the aggressive challenges to U.S. clean energy leadership will require both increased funding for critical education and technology programs as well as new ideas for how the federal government can foster innovation in the clean energy industry, from basic research to full-scale commercialization," said Mark Muro, Director of Policy at the Brookings Institution Metropolitan Policy Project.
The Brookings Institution is out with a new policy brief today building on their prior calls for energy discovery innovation institutes (e-DIIs). These regionally-based, collaborative research centers are designed to "serve as the hubs of a distributed research network linking the nation's best scientists, engineers, and facilities." The newest report assesses the potential for e-DII's in the Great Lakes region.
Through such a network, the nation could at once increase its current inadequate energy R&D effort and complement existing resources with a new research paradigm that would join the unique capabilities of America's research universities to those of corporate R&D and federal laboratories.
Brookings' vision for creating an energy innovation network is consonant with a similar concept put forward by the Breakthrough Institute and Third Way in "Jumpstarting a Clean Energy Revolution with a National Institutes of Energy" which called for a national commitment to energy innovation modeled on the National Institutes of Health.
Politicians talking about clean energy jobs like to claim "they can't be shipped overseas." From President Obama's State of the Union to Rep. Ed Markey stumping for the climate bill he co-authored with Rep. Henry Waxman, the promise of new "green jobs that pay well and can't be outsourced" is an all too common refrain.
The only problem with it is that it's wrong on its face.
America is already exporting clean energy jobs -- or seeing them created abroad in the first place. After pioneering wind and solar power, electric cars, and nuclear plants, America turned its back on the public investments in cutting edge technology that catalyzed these innovations, forfeiting cleantech industries to foreign countries who did not make the same mistakes. The cap and trade program at the heart of the climate bill authored by Rep. Markey may help create more clean energy jobs overseas, but it won't bring those jobs back to America. Conventional responses to today's competitiveness challenge won't cut it. Here's what will...
Until clean and cheap energy sources are available for deployment on a massive scale, developing nations like South Africa will remain stuck in the Development Trap: forced to either sacrifice climate and ecological security in the name of development and poverty alleviation or to condemn countless millions of citizens to energy poverty in the name of climate protection. Breaking out of this untenable position is the urgent challenge of the century. It's time to make clean energy cheap.
[Update, 4/9/10: According to E&E News ($ubcr. required), the 24 member World Bank board voted to approve the $3.75 billion loan to South Africa, including $3.05 billion to construct a new 4.8 GW supercritical coal-fired power station and additional funding to construct 100 MW of utility-scale wind power and 100 MW of concentrating solar power with energy storage capability.
The United States' representative on the World Bank board abstained from the vote, and the explanation is the clearest example of the multi-faceted challenges of global development and the ways in which energy poverty and climate change objectives remain largely opposed in the absence of clean, affordable, and rapidly scalable energy technology options. According to E&E:
In a statement released just as the 24-member World Bank board started to debate the Eskom loan behind closed doors, the U.S. Treasury Department issued a statement saying its abstention "reflects concerns about the climate impact of the project and its incompatibility with the World Bank's commitment to be a leader in climate change mitigation and adaptation."
Still, the United States noted, it "recognizes South Africa's pressing energy needs and the lack of near-term feasible low-carbon alternatives."
Environmental groups, including the Sierra Club, roundly condemned the World Bank decision, and chastised the U.S. for not voting in opposition. However, there is no indication that viable alternative plans to expand energy access in South Africa without exacerbating the nation's greenhouse emissions were proposed. ]
South Africa's finance minister, Pravin Gordhan, has an op ed in the Washington Post that illustrates the multi-faceted challenges facing developing nations as they struggle to provide the affordable access to modern energy needed to pull citizens out of poverty. The piece highlights the current tension between such objectives and simultaneous concerns about the environmental and climate impacts of energy development.
With South Africa's economy growing rapidly - it's expanded by two-thirds since 1994, when Nelson Mandela first took office - the nation's demand for energy has grown apace. As Gordhan notes, "Millions of previously marginalized South Africans are now on the grid." And that's a very good thing.
Consider that not having access to affordable, modern energy sources, particularly electricity, means no access to potable, running water; it means having to burn dung and wood and other primitive biofuels to provide cooking and indoor heating; and it means sputtering kerosene lamps as the only source of light after the sun goes down.
The human toll of such energy poverty is incredible. According to the World Health Organization, solid fuel use causes 1.6 million excess deaths per year globally, especially among women and children, while waterborne disease is one of the leading global killers, ending the lives of over 3 million annually - again, many of them young children - who lack access to clean and safe water supplies.
A largely-symbolic freeze on domestic spending is the wrong route to trim the deficit. Along with real entitlement reform and winding down the wars, smart government investments in broad-based economic growth must be the keystone of a three-part strategy to truly balance the federal budget. Take energy as a case in point, where investments now to catalyze competitive clean energy technologies and industries will pay big economic dividends down the line.
With rising anxiety about mounting federal deficits, President Obama declared a freeze on all non-defense discretionary spending in his latest budget proposal. Heavy on symbolism and light on impact, the Administration's proposal attacks all of the areas of the government least responsible for the inexorable increase in federal deficits, while potentially starving key parts of the discretionary budget critical to America's economic prosperity.
Let's be clear: ballooning deficits do pose a real long-term threat to the United States' economic security. Under current forecasts, the accumulated deficit could total $20 trillion by 2020. That could hobble Uncle Sam with interest payments on the federal debt nearly as large as the projected total for all domestic discretionary spending. Efforts clearly must be taken to avoid such an unsustainable - and risky - financial future.
That said, curbing domestic spending is the wrong route to trim the deficit. The President's spending freeze applies to only a small fraction of the federal budget, while exempting both the mounting costs of two wars and the ever-rising bill for the nation's entitlement programs - Social Security, Medicare and Medicaid.
In the last five years, the U.S trade deficit in renewable energy products increased by 1,400% to nearly $5.7 billion, according to a December report issued by the Senate Subcommittee on International Trade, Customs, and Global Competitiveness.
Here's a short (and potent) Friday Factoid to conclude this week:
In the last five years, the U.S trade deficit in renewable energy products increased by 1,400% to nearly $5.7 billion.
That's according to a report on the opportunities and challenges America faces in the production and export of environmental goods, including clean energy technologies, published in December by the Senate Subcommittee on International Trade, Customs, and Global Competitiveness, chaired by Senator Ron Wyden (D-OR).
The graphic below shows the growth in the U.S. trade deficit in environmental goods. Imbalance in the import/export of renewable energy products ("REP" in the key) is the largest contributor to this deficit.
(Click to enlarge)
Product Key:
REP: Renewable Energy Products
CRET: Cleaner or More Resource Efficient Technologies
EMAA: Environmental Monitoring, Equipment
SHW: Management of Solid and Hazardous Waste
HEM: Heat and Energy Management
WWM: Waste Water Management and Treatment
APC: Air Pollution Control
We'll have more on this report and it's implications on Monday. Enjoy your weekend.
Global trade issues continue to put the U.S. in a climate conundrum, presenting perhaps the thorniest negotiating point as world leaders prepare to meet for international climate talks in Copenhagen next week. Indeed, on the eve of the global climate talks, the negotiating positions of the United States and major developing economies, including China and India, appear to remain at loggerheads. Here's why...
The United States may be stuck in the middle of a climate conundrum. A proposal to establish border tariffs to account for the carbon associated with the imported manufactured products, like steel, looks critical to securing the support of key swing Senators interested in protecting the competitive position of American manufacturing. ... Yet ... those same tariff provisions that could win passage of a U.S. climate bill are firmly opposed by China and other developing nations and could both damage Sino-American trade relations and fissure international climate negotiations.
Breakthrough's Yael Borofsky wrote that back in October, and this climate conundrum continues to present perhaps the thorniest negotiating point as world leaders prepare to meet for international climate talks in Copenhagen next week. Indeed, on the eve of the global climate talks, the negotiating positions of the United States and major developing economies, including China and India, appear to remain at loggerheads.
In a letter to President Obama today, nine moderate Democratic Senators, all key swings for climate legislation or ratification of any international climate treaty, reiterated their demands that any international climate framework U.S. negotiators sign in Copenhagen must include comparable action from all major economies and allow tariffs to adjust prices on imports from any nation that does not agree to bindings agreements to reduce emissions "in specific trade- and energy-intensive economic sectors."
"Climate change is a serious and growing threat to the United States and the world," the Senators wrote. "Smart climate change policies would guard against these risks while also spurring clean energy investments that promote economic growth and create good domestic jobs."
"Importantly, however, poorly designed climate policies could also jeopardize U.S. national interest," the Senators warned, "by imposing burdens on U.S. consumers, companies and workers without solving the climate challenge."
To address these challenges, the U.S. should seek to negotiate a new international climate agreement under which, "All major economies should adopt ambitious, quantifiable, measurable, reportable and verifiable national actions" to reduce emissions of greenhouse gases.
Furthermore, U.S. climate policy, the Senators wrote, should include provisions to implement border adjustment tariffs if necessary to help shield domestic industries facing international competition from countries that have not implemented carbon reduction requirements for their industrial sectors.
Here's the key excerpt from the letter, signed by Arlen Specter of Pennsylvania, Sherrod Brown of Ohio, Carl Levin and Debbie Stabenow of Michigan, Tim Johnson of South Dakota, Kay Hagan of North Carolina, Claire McCaskill of Missouri, Amy Klobuchar of Minnesota and Mark Begich of Alaska:
European and Asian high-speed rail manufacturers are courting U.S. government officials in hopes of securing contracts for some of the $8 billion dollars of federal stimulus funds ear-marked for domestic high-speed rail (HSR) projects. Notably absent from the list of companies vying for the cash are American companies. Without the development of a domestic high-speed rail manufacturing base, much of the HSR technology and expertise will continue to come from overseas, with many of the new jobs being created overseas as well.
European and Asian high-speed rail manufacturers are courting U.S. government officials in hopes of securing contracts for some of the $8 billion dollars of federal stimulus funds ear-marked for domestic high-speed rail (HSR) projects.
According to Greenwire, foreign manufacturers are hosting country visits for federal and state government officials to see their high-speed train technologies, as well as dropping not-so-subtle hints that they will build new domestic manufacturing facilities, or expand existing ones, if they are awarded contracts.
States are also feverishly competing for federal funds. According to NPR, forty states and the District of Columbia have already filed applications requesting more than $100 billion for high-speed rail projects. The most ambitious project is a proposed $40 billion, 800-mile HSR network in California spanning from Sacramento to San Diego. Although the Federal Railroad Administration has yet to award any of the $8 billion in government funds to any state or project, companies from Germany, France, Canada, Japan, and China are hoping that early efforts to charm government officials will pay off down the road.
Notably absent from those promoting their HSR technologies are American companies. That's because the United States ceded international leadership in the transportation technology in the 1960s, when Japan became the first nation to construct a national high-speed rail network.
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.
A Politico poll shows that despite years of environmental campaigns and the debate over pending climate and energy legislation, the public still ranks climate change last among issues that affect the way it votes
Despite years of campaigning, documentaries, increasingly apocalyptic narratives and supposedly landmark climate and energy legislation awaiting Senate consideration, a recent Public Strategies Inc./POLITICO poll shows the majority of the public still ranks climate change last among important issues that affect the way it votes and ranks the economy before all else, even government spending.
According to Politico:
As the nation struggles to climb out of a recession, 45 percent rated the economy as the most important issue in deciding their vote if the congressional election were held today, followed by 21 percent who said government spending, 20 percent who chose health care reform and 9 percent who said the wars in Iraq and Afghanistan. Just 4 percent ranked climate change as the top issue.
This finding isn't new by any stretch. But it is significant news, given the heated debate on climate and energy policy that has passed through the House and is ongoing in the Senate.
Robert Stavins explains why capturing energy efficiency opportunities are actually costly to the economy despite numerous studies that have touted them as a "free lunch" in the effort to reduce carbon emissions
Robert Stavins, Director of the Harvard Environmental Economics Program and a leading proponent of cap and trade, acknowledged in an op-ed for the Huffington Post last week that capturing energy efficiency opportunities is more challenging and costly than many have predicted.
In his recent report entitled, "Too Good To Be True? An Examination of Three Economic Assessments of California Climate Change Policy," Stavins found that three separate studies of the California Global Warming Solutions Act of 2006 - all reporting that emissions reductions targets were achievable at no, or negative, cost to the economy - grossly underestimated the economic burden through errors of omission.
An older but similar study, often referred to as the Five Labs Study (executive summary), conducted by the DOE's Interlaboratory Work Group, also reported that efficiencies to reduce emissions could be captured at no economic cost. These findings, published in the late 1990s, were used to bolster support for the Kyoto Protocol despite the fact that the authors readily acknowledged that the study had not "analyzed specific policies to achieve the cases, identified the political feasibility of policies, or described a pathway to achieve the cases." According to Stavins' critique:
"Those studies were terribly flawed, which was what led to their faulty conclusions. I had thought that such arguments about massive "free lunches" in the energy efficiency and climate domain had long since been laid to rest. The debates in California (and some of the rhetoric in Washington) prove otherwise."
Specific policies, the feasibility of policies, and the effectiveness of policies, asserts Stavins, all have cost implications that are egregious to ignore. By omitting them in the early Five Labs Study and the later California studies that Stavins analyzes in his report, only the cost of specific actions to reduce emissions are accounted for, not the often considerable costs associated with policy implementation.
The UN's World Economic and Social Survey reveals the need for a massive global investment, financed by rich developed nations, to fund a green new deal - one that is focused on mitigating and adapting to climate change by helping developing nations create high-growth economies sustainably powered by clean energy
The 1947 Marshall Plan seems to be referenced whenever it becomes clear that an overwhelming social problem can only be solved through large scale government spending. The results of the UN's World Economic and Social Survey 2009 (WESS) revealed the need for just that type of federal investment in order to manage the global climate and energy crisis. And, according to Reuters, the head of Development Policy and Analysis division at the UN department of Economic and Social Affairs (UNDESA), Richard Kozul-Wright, believes it may be time to call on the Marshall Plan framework, yet again, this time to fund a green new deal.
Regardless of past global policy, the UN's WESS enhances the climate debate leading up to the negotiations set to take place in Copenhagen this December, by pointing out the need for a global investment push in clean energy technology, energy efficiency, transportation, and forest-management. Thus far, much of the debate has centered on coercing developing nations to agree to carbon emissions targets - even as rich nations' carbon "commitments" skew towards symbolism over substance. But as WESS explains:
"[M]itigation and adaptation efforts can move forward effectively only if they are part of a consistent development strategy built around a massive investment-led transformation along low-carbon, high-growth paths."
That means giving up on Kyoto's tired call for empty promises to cut emissions. While reducing global carbon intensity was, and is, a primary goal of climate negotiations, targets are not only too narrow a focus to be a viable solution to the climate crisis, they have been shown to be ineffective. As has been explained by the Breakthrough Institute and most recently by Michael Levi, in Foreign Affairs, the Kyoto Protocol is failing because the too weak carbon emissions targets it set are not even being met by the participating countries.
Wall Street and the wind industry are overjoyed by the uplifting impact of ARRA-backed cash grants, but the boom caused by this short-term stimulus program could be setting the wind sector up for yet another bust without a long-term deployment strategy focused on making clean energy cheap
That's what Ethan Zindler, head of New Energy Finance Ltd, proclaimed to the Wall Street Journal in response to emerging evidence that the government's $3 billion dollar cash grant renewable energy stimulus program is successfully incentivizing private investment in the wind sector.
After falling into the doldrums for the past six-months, the wind industry is roaring back to life thanks to direct public investments enacted in the American Recovery and Reinvestment Act (ARRA), also known as the stimulus bill. A DOE and Treasury-funded cash grant incentive program is helping to grease the pipeline for private investors looking to finance renewable projects, particularly wind farms, slated to begin construction in 2009 or 2010. According to the WSJ, just four weeks into the program $800 million in grants have already been submitted and Wall Street bankers predict that figure to reach $10 billion by the end of 2010.
The cash grant program was created to rescue the clean energy industry, a critical American growth sector, from the malaise of the credit crisis. The tax credits (PTC and ITC) that usually incite clean energy development are worthless in an economic climate where the big financial firms that typically absorb them, on behalf of project developers, are in crisis.
The solution: Congress tucked a two-year cash grant into ARRA worth 30% of qualifying wind, solar, and geothermal project costs, replacing the normal production and investment tax credits. With the money from the program officially flowing since August, the grants are breathing new vigor into clean energy investment, speeding America's economic recovery.
With big players like Morgan Stanley and Citigroup investing $120 million each to finance new wind farms, the wind sector is generating more than clean energy - it's producing clear evidence that public investment really does drive private investment. By covering 30% of a new project's cost, the cash grant program will spur more than two dollars in private investment for every public dollar, successfully leveraging taxpayer money to drive significant private investment in cleaner energy, greater energy security, and accelerated economic recovery.
The projected success of the cash grants, which bankers calculate will lead to 9-15% annual returns per deal, suggests that perhaps, public investment is even more effective at driving private investment than setting an economy-wide carbon price, an oft-suggested strategy to motivate private financing in renewable RD&D.
Thanks to US stimulus funding to nurture strong domestic clean energy markets, European wind giant Vestas is bringing money and jobs into the US as it opens more factories within American borders. But the US must follow the stimulus with sustained, substantial investments in clean tech development and deployment in order to avoid losing future foreign investments--and manufacturing jobs--to China.
It's strange to hear of "insourcing"--the transfer of manufacturing jobs into the United States instead of out--but that's exactly what's happening with Denmark's wind giant Vestas, according to a New York Times article yesterday.
According to the report, a combination of global recession and domestic stimulus spending on clean energy is adding up to a boon for the American clean energy manufacturing industry.
In Europe, Vestas has seen several nations slow down their rates of added wind capacity, and flagging government support combined with financial difficulties has impeded the construction of new projects. By contrast, the United States built 8,500 megawatts of wind capacity in 2008 to Britain's 500, and demand for turbine technology is high. So for opportunities in a more robust wind market, Vestas has begun to look across the Atlantic.
In a continued look at the role of nationalism in the clean energy race, Mother Jones' Kevin Drum applauds the rhetoric behind the clean energy race narrative but raises concerns about over-zealous nationalism and xenophobia towards Asia
A second piece on nationalism in the context of the clean energy race was published on Mother Jones' blog MoJo, and is evidence that the growing body of discourse around this issue has struck a very resonant chord. In the post, entitled "Harnessing Nationalism," Kevin Drum offers poignant, if somewhat veiled, criticism of the rhetoric behind the "clean energy race" narrative.
Inspired by The New Republic's Bradford Plumer, the post starts with a lengthy quote whose primary point is this: the clean energy race is not a zero-sum competition because everyone stands to benefit if China makes a significant effort to reduce emissions by investing in clean technology.
First, as Drum puts it, Plumer's commentary may be an attempt at "intellectual honesty," but honesty doesn't make it completely accurate. True, the whole world will benefit from advancements in clean energy no matter where it comes from, but China is not motivated to compete in the clean tech industry by emissions reductions - it is driven by the potential for economic gain.
As a (rapidly) developing nation, economic development, not emissions targets, is the highest priority. Thus, the race is not about emissions, it is about whose economy stands to benefit from leadership in clean technology.
Drum views the clean energy race through "green" tinted glasses, as well, preferring the "race" rhetoric to the alternative: the apocalyptic narrative that has clearly failed to motivate effective climate change action. Rhetorically speaking, framing the need to reduce carbon emissions as a clean energy race is both more engaging and more productive. As he aptly declares:
If this kind of thing got us to the moon, maybe it can save the planet as well. I say we go along.
The clean energy race, however, is more than just a new and improved framing mechanism or encouragement of America's honed nationalistic tendencies - it is an economic truth. What Drum misses when he writes off the recent proliferation of clean energy articles as hype, is that this issue could both be an effective rhetorical tool as well as a humbling reality.
In a Washington Post op-ed, Nobelist Henry Kissinger calls for the United States and China to avoid nationalism and embrace a new political framework based on cooperation, but would this new paradigm spur clean energy innovation?
When the Breakthrough Institute's Michael Shellenberger and Ted Nordhaus began advocating for a paradigm shift in the global approach to climate change in the early 2000's, they could not have predicted that a paradigm shift of another variety might occur simultaneously. That is: a shift in the balance of global power.
In an op-ed entitled, "Rebalancing Relations with China," published in the Washington Post this week, Henry Kissinger assessed the power shift occurring between the U.S. and China, calling for Sino-American cooperation in lieu of boisterous assertions of nationalistic superiority and hegemonic power.
A Nobel Peace Prize winner, former National Security Advisor and Secretary of State during the Nixon Administration, Kissinger is a known proponent of realpolitik. Although that term typically has a negative connotation in the U.S. and is often associated with power abuse, the word actually refers to a theory of politics grounded in the realistic assessment of power, rather than ideology.
In accordance with this theory, Kissinger's puts forth an ideology-free assessment of the current relationship between the United States and China. China's position as America's largest creditor and the economic crisis, in combination, have served to level the playing field between the two nations. Faced with increasing economic interdependence and China's conflicting interest in reducing that dependence, "ambivalence," Kissinger asserts, "is the inevitable consequence."
In Kissinger's estimation, a new political framework that recognizes China as a global economic power will be crucial to revitalizing the world economy. From this standpoint, there are three ways a Sino-American relationship could play out on the global stage.
Under the economic stimulus, DOE announces $2.3 billion in tax credits for advanced energy manufacturing projects in order to stimulate economic growth, create jobs, and secure American leadership in clean energy
Last Thursday, the Department of Energy announced a boost for the advanced energy manufacturing industry in the form of a $2.3 billion Advanced Energy Manufacturing Tax Credit (MTC). The MTC is authorized under the American Reinvestment and Recovery Act of 2009 (ARRA), otherwise known as the $787 billion economic stimulus package.
Intended to expand the clean energy domestic manufacturing industry, the MTC provides a 30% credit for investments in advanced energy manufacturing facilities that either are new, expanded, or re-equipped. The $2.3 billion in MTCs will stimulate 7.7 billion in total capital investments in new renewable and advanced energy manufacturing projects. By fostering growth of the clean energy manufacturing industry, this investment will enforce and enhance ARRA's larger purpose - boosting economic growth, creating jobs, and securing "American leadership in the clean energy sector" - all while helping reduce greenhouse gas (GHG) emissions.
According to Energy Secretary Steven Chu:
These tax credits will help create thousands of high quality manufacturing jobs in some of the highest growth segments of the economy. This is an opportunity to develop our global leadership in clean energy manufacturing and build a secure, sustained base of jobs for America's workers.
The application process to receive the tax credits began last Friday and the preliminary deadline is September 16, 2009. Applicants will be offered tax credits based on expected commercial viability, and rankings of expected job creation, reduction of pollutants and GHGs, technological innovation, and speed of project implementation.
A recent article in the Christian Science Monitor outlines China's strategy to surpass the U.S in the clean energy race and become the world's next economic powerhouse
Imagining China as a giant green frog seems a little ridiculous, but, as Peter Ford of the Christian Science Monitor reported last week in a piece entitled "China's Green Leap Forward," China's intent to "leapfrog" the United States in the clean energy race is far from ridiculous - it may soon be a reality.
While the U.S. languidly inches forward in clean energy RD&D, China's burgeoning clean and renewable energy industries are growing at an unprecedented pace for a developing nation. Much more than a response to the suffocating pollution clogging the airways of its major cities, the explosion of clean energy technology is part of a national strategy to dominate the industry. As Ford succinctly puts it:
"China price" and "China speed" are poised to snatch the lion's share of the next multitrillion-dollar global industry - energy technology... Indeed, China is pushing ahead on renewable technologies with the fervor of a new space race.
Indeed, China is approaching clean energy with a "space race" mind-set, however, the U.S. has yet to adopt the same sense of urgency. As Americans wait for a Senate decision on the significantly weakened American Clean Energy and Security Act (H.R. 2454), which will invest just $1 billion per year in clean energy R&D and $10 billion for clean energy investments broadly defined, China has already implemented a suite of clean energy policies beginning with the Renewable Energy Law of 2006.
By supporting the growing wind sector with subsidies, tariffs, and an obligatory renewable energy requirement for power companies, China now expects wind manufacturing to grow from 8GW in 2007 to between 12GW and 20GW by 2010. In comparison, the U.S. manufactured just 2.4 GW of wind turbines in 2007 despite having the largest wind market in the world.
Recently, Senator Sherrod Brown refused to accept a climate bill that would simply send both emissions and U.S. manufacturing jobs overseas - inaccurately earning him a label as a "threat" to the passage of federal energy and climate legislation. This week, the Ohio Democrat formally introduced legislation to strengthen America's efforts to both cut emissions and build a prosperous clean energy economy: the Investments for Manufacturing Progress and Clean Technology (IMPACT) Act of 2009.
"We can revive American manufacturing through investments in clean energy," Brown said. "This bill will help our manufacturers retool, put our auto suppliers back to work, and produce clean energy technologies."
The bill would create a two-year, $30 billion revolving loan fund to help small and medium-sized American manufacturers to improve the manufacturing process and increase their production of clean energy parts and systems. The IMPACT Act would also directly invest $1.5 billion over five years to help guide manufacturers into clean energy markets and streamline their implementation of new manufacturing technologies and methods through the Manufacturing Extension Program, a division of the Department of Commerce's National Institute of Standards and Technology.
Thursday, 10 Senate Democrats sent a letter to the President Obama outlining their position on upcoming climate policy. Senators Sherrod Brown (D-OH), Debbie Stabenow (D-MI), Russell D. Feingold (D-WI), Carl Levin (D-MI), Evan Bayh (D-IN), Robert P. Casey (D-PA), Robert C. Byrd (D-WV), Arlen Specter (D-PA), John D. Rockefeller IV (D-WV), and Al Franken (D-MN) voiced their position to make sure that effective climate policy both reduces emissions and strengthens American manufacturing. The letter's signatories want U.S. climate policy to:
Include transition assistance as factories become more efficient and as they retool to make clean energy products in a more efficient way;
Set negotiating objectives around manufacturing that the U.S. can take to the Copenhagen climate negotiations in December;
Establish mechanisms to verify emissions reductions and hold countries accountable for meeting their goals; and
Establish a border adjustment (fee) on goods from countries with less rigorous climate provisions.
The New York Times headline editors were quick to ominously label the letter a "threat" to the passage of a climate bill, but that is hardly the case. This letter was not an ultimatum stating opposition to climate legislation, or even to the Waxman-Markey bill in particular. The letter states the Senator's support for climate action and provides a forum for addressing their clearly stated concerns that if anything, should enable the design of an effective and passable bill. If these critical swing Senators remain "a threat" to climate legislation, it is more due to failure of creative policy design than the evil machinations of industry-funded hacks from coal states. So before we vilify these ten Senators - every one of whom is likely necessary to secure passage of any climate or energy legislation - let's take a close look at what they are actually saying...
"short-term transition assistance in the form of rebates provided to energy-intensive and trade-exposed industries"
While it's unclear whether this is calling for additional emissions allowances for energy intensive industries, the simple fact is that energy is a primary input to our entire economy, making energy costs a major political and economic sensitivity. This is most pronounced in states reliant on coal for their electricity mix and/or reliant on energy-intensive industries for their economy (e.g. the states whose senators signed this letter). That's the simple reality of climate politics. It's long past time to internalize that and pursue good policy design that can still succeed in that political environment. Good climate policy should be able to support manufacturing in the clean energy economy. Let's make sure the details of policy design match the "green jobs" messaging.
In a recent speech at Harvard, energy secretary Steven Chu again supported an agenda to make the US a leading clean energy innovator. But Congress continues to reject strategic policies that would make this a reality.
In a speech yesterday at Harvard's John F. Kennedy School of Government, energy secretary Steven Chu again repeated his declaration that nothing less than a technological "revolution" is necessary to meet America's energy challenge and to ensure the US position as a leading global economic power.
Speaking alongside Congressman Ed Markey, Chu told his audience that future US prosperity depends upon widely deploying renewable energy, developing carbon capture and storage capabilities, and increasing energy efficiency--but most importantly, it depends upon becoming a leading innovator in clean energy technologies.
Chu minced no words when he described this critical juncture for the US in the
global clean energy industry:
"We're faced with the following choices: We can become the leader of a new industrial revolution and lay the foundation of our future economic prosperity ... or we can hope the price of oil will go back to $30 a barrel, deny climate change is happening and let other countries take the lead in energy innovation."
Today, the U.S. Department of Energy announced $377 million in funding to establish 46 Energy Frontier Research Centers (EFRCs) pursuing potentially path-breaking basic and translational research at the cutting-edge of clean energy innovation. Of this funding, $277 comes from the American Recovery and Reinvestment Act (ARRA, otherwise known as the stimulus package) and $100 million comes from the DOE's FY2009 budget. The funding will be sustained over the next five years, with the DOE committing $100 million of its budget to the research centers each year.
"Meeting the challenge to reduce our dependence on imported oil and curtail greenhouse gas emissions will require significant scientific advances," said Energy Secretary Steven Chu as he announced the new funding for EFRCs. "These centers will mobilize the enormous talents and skills of our nation's scientific workforce in pursuit of the breakthroughs that are essential to expand the use of clean and renewable energy."
The majority of EFRCs are based in universities, with several harnessing the skills and resources of the national laboratories, and just three awarded to non-profit organizations and private corporations. Over the course of the program, these centers will employ over 1,800 people in research into four primary realms: Renewable and Carbon-Neutral Energy (including Solar Energy Utilization, Advanced Nuclear Energy Systems, Biofuels, and Geological Sequestration of CO2); Energy Efficiency (Clean and Efficient Combustion, Solid State Lighting, Superconductivity); Energy Storage (Hydrogen Research, Electrical Energy Storage); and Crosscutting Science (Catalysis, Materials under Extreme Environments).
Despite President Obama's call for an energy revolution, it is up to Congress to provide funding. The Department of Energy's Advanced Research Projects Agency - Energy (ARPA-e) made a recent call for research proposals into "high-risk, high-payoff transformational energy-related R&D," for projects that "(1) translate scientific discoveries and cutting-edge inventions into technological innovations and (2) accelerate transformational technological advances in areas that industry by itself is not likely to undertake because of high technical or financial risk."
Over 3,500 research teams submitted proposals for a slice of the available $150 million. As a result, over 98% of applicants we "discouraged" from submitting a full application.
Sure, some of the applications were "undoubtedly unrealistic, fundamentally flawed, written in crayon, or the like," as Andrew Revkin aptly noted at Dot Earth. But with 98% of all proposals rejected, there's got to be another explanation for the high rejection rate as well. Surely at least 5%, 10%, maybe even one third of these proposals are worth further consideration. Remember: this round of project proposals was simply to get into the next round of consideration where ARPA-e program managers would being the real project grant selection process. No, the reason so many proposals were rejected has more to do with the fact that there is simply not nearly enough money to fund all the good, potentially game-changing clean energy ideas out there.
This problem is not unique to this ARPA-e or this round of research proposals. It is a chronic symptom of this country's (under)commitment to clean energy.
In yesterday's Washington Post,
prominent U.S. business leaders John Doerr (from Kleiner Perkins) and
Jeff Immelt (CEO of GE) joined the growing chorus calling on
the nation's leaders to prepare America for the clean-energy race. They
warn that the U.S. is quickly falling behind in "the next great global
industry" -- green technology -- with the risk of damaging America's economic
competitiveness.
Doerr and Immelt's observations mirror recent reporting by the Breakthrough Institute and several major news sources -- including Time, Washington Post, and the Wall Street Journal -- that
show the U.S. trailing Asia in terms of clean-energy investment and
deployment. On the question of which nation is leading the U.S. in the
clean-energy race, Doerr and Immelt don't mince their words:
"We are clearly not in the lead today. That position is
held by China, which understands the importance of controlling its
energy future. China's commitment to developing clean energy
technologies and markets is breathtaking.
Consider: Chinese cars are more than one-third more
fuel-efficient than U.S. cars. China is investing 10 times as much on
clean power, as a percentage of gross domestic product, as the United
States is. China is on track to create 150,000 jobs through the
deployment of 120 gigawatts of wind power by 2020 -- an amount
equivalent to today's global total and nearly five times America's."
Yesterday the U.S. Senate passed the Energy and Water Appropriations Bill (H.R. 3183) appropriating $34.3 billion in energy spending for FY2010. The bill supports Barack Obama's campaign promise to shut down Nevada's Yucca Mountain nuclear waste facility and funds numerous water initiatives set-forth by the Army Corps of Engineers.
Notably absent, however, is any funding for RE-ENERGYSE (REgaining our ENERGY Science and Engineering Edge), Obama's proposed initiative to close the energy education gap by preparing young Americans to compete in the race for clean energy. From Obama's initial proposal of $115 million, the House and Senate Appropriations Committees rejected the program by cutting funding to $7 million and $0, respectively. The bill that passed through the Senate, by an 85-9 vote, contained no mention of the forward-thinking and much-needed education program.
Featured in Yale Environment 360 today, Breakthrough Institute Senior Fellow Roger Pielke, Jr. argues that unrealistic emissions targets are just "magical solutions" - not direct, effective climate policy.
If pressed, most policymakers would concur that symbolism is not the foundation of sound and effective policy. Yet, as University of Colorado Professor and Breakthrough Institute Senior Fellow, Roger Pielke, Jr. points out in his piece featured today on Yale Environment 360, climate policies contingent on carbon emissions targets are often just that: symbolic.
The article was prompted by criticism of Japan's commitment to seemingly small reduction targets, with a significant portion of the finger-wagging coming from the U.K.
The appeal of emissions targets lies in their simplicity. By setting a (usually lofty) long-term goal for reducing carbon emissions, governments appear pro-active in their efforts to deal with climate change. But as Pielke, Jr. repeatedly emphasizes, ambitious targets unsubstantiated by strategies for achieving those goals are not only simple and symbolic, they are misleading.
In lieu of a realistic plan of action and pressured by an untenable goal, governments resort to creative accounting tricks so that their carbon "budget" is balanced. Thus, a nation can be a symbolic climate change hero without actually decarbonizing. The article quotes Stanford's David Victor:
[S]etting binding emission targets through treaties is wrongheaded because it 'forces' governments to do things they don't know how to do. And that puts them in a box, from which they escape using accounting tricks (e.g., offsets) rather than real effort.
According to Pielke, Jr. the UK's recent adoption of aggressive targets provides a definitive example of why they are a "magical solution" to climate change mitigation that unfortunately will not deliver results:
To achieve a 34 percent reduction from 1990 emissions by 2022 while maintaining modest economic growth would require that the U.K. decarbonize its economy to the level of France by about 2016. In more concrete terms, Britain would have to achieve the equivalent of deploying about 30 new nuclear power plants in the next six years, just to get part way to its target. One does not need a degree in nuclear physics to conclude that is just not going to happen.
Decarbonization of an economy, however, is not driven by target-setting or accounting. Using the Kaya Identity as a guide, a simple equation that illustrates how a nation's population, GDP, energy mix, and energy use all contribute to its total carbon emissions, the only real, feasible policy recourse for achieving decarbonization is to drive improvements in the carbon intensity of the energy supply and/or energy efficiency as rapidly as possible. Neither targets nor offsets are a factor in the equation.
Breakthrough Institute believes the clean energy race demands a vigorous federal investment of at least $30-50 billion per year in clean energy. In contrast, Romm ardently supports weaker legislation that would invest just $10 billion per year, less than one quarter of China's planned investments. That may be acceptable to Joe Romm -- but it is no way to win the clean energy race.
Romm asserted that our op-ed "attacks" President Obama and Democratic leaders, when in fact it calls on Congress to support Obama's RE-ENERGYSE energy education program
and urges greater public investment in clean energy to compete with
Asian challengers. Yet Romm never mentioned the central focus of the
op-ed -- RE-ENERGYSE and our efforts to rally support behind it,
including a recent sign-on letter with over 100 organizations
-- and instead criticized us for what he called "willfully misleading
nonsense" about Asian countries' planned investments in clean energy.
Romm also criticized us for asserting that Congress must strengthen
the Waxman-Markey bill with greater investments in clean energy to
compete with Asian challengers and accelerate our transition to a clean
energy economy. Why? Because Romm apparently believes the Waxman-Markey
proposal -- which would invest only $10 billion per year in clean
energy and energy efficiency, less than 0.1% of U.S GDP -- is sufficient to win the clean energy
race. It is not.
"Waxman-Markey would complete America's transition to a clean energy economy, which started with the stimulus bill," reads the title of a prominently featured post
on Romm's website, a claim he has repeated multiple times.
"Waxman-Markey would generate more clean energy action than any piece
of legislation passed by any country in the history of the world!" exclaimed Romm in another recent post as part of his consistent and ongoing cheer-leading for the legislation.
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...
A recent study at NYU's Stern School of Business analyzes the returns on government energy R&D investments and comes to the conclusion that geothermal and wind power could, for a relatively low price, become cheaper than fossil fuel electricity in a matter of years.
The study used a well-known method of analyzing technology cycles that predicts learning curves for emerging technologies. This "S-curve" heuristic guesses that the performance of new technologies, plotted against effort (i.e. total money invested) is shaped like an S.
Early in the life of the technology, improvements are gradual as the basic properties are worked out and an effective design is formed. Next comes a period of rapid growth as the now-stable technology captures "process innovations" and economies of scale. Finally, the rate of improvement slows as the technology becomes mature and improvements become hampered by the dominant structure of the technology and its industry - until the potential emergence of a new competing technology with its own S-curve.
Although such an analysis makes some major simplifications, these S-curve cycles are well-documented throughout history in technologies as diverse as disk drives, steam engines, semiconductors, and automobiles (to name a few).
With the S-curve model in hand, the authors of the report sought to determine the curves of some major alternative energy technologies in order to project how much investment is necessary to reduce the their marginal costs.
A group of over 100 universities, professional associations, and student groups joined the Breakthrough Institute yesterday in submitting a letter urging the U.S. Senate to fully support the Obama administration's RE-ENERGYSE initiative.
PRESS CONTACT:
Jesse Jenkins (510-550-8930 x465 or 503-333-1737)
jesse@thebreakthrough.org
Teryn Norris (510-550-8930 x464 or 510-593-3716)
teryn@thebreakthrough.org
A group of over 100 universities, professional associations, and student groups joined the Breakthrough Institute Tuesday in submitting a letter urging the U.S. Senate to fully support the Obama administration's national energy education initiative. The initiative, named "RE-ENERGYSE" (REgaining our ENERGY Science and Engineering Edge), would produce thousands of highly-skilled U.S. energy workers and develop new energy education programs at American universities and K-12 schools.
The Senate is poised to reject the proposal in its FY2010 Energy and Water Development Appropriations bill by cutting the RE-ENERGYSE program's funding to $0 from the $115 million requested in President Obama's FY2010 budget. Mr. Obama announced the initiative in a speech to the National Academy of Sciences in April, stating, "The nation that leads the world in 21st century clean energy will be the nation that leads in the 21st century global economy... [RE-ENERGYSE] will prepare a generation of Americans to meet this generational challenge."
According to the Department of Energy, the program would develop between 5,000 and 8,500 highly educated scientists, engineers, and other professionals to enter the clean energy field by 2015, which would rise to 10,000 -17,000 professionals by 2020. The Technical Training and K-12 Education subprogram would create between 200 to 300 community college and other training programs to prepare thousands of technically skilled workers for clean energy jobs.
The letter, which was distributed to every Senate office on Tuesday, urged lawmakers to fund RE-ENERGYSE at the full $115 million request. "America is in danger of losing its global competitiveness and the [global] clean energy race without substantial new investments in STEM education," wrote the signatories, which included 53 colleges and universities and dozens of student and youth groups. "RE-ENERGYSE... will train America's future energy workforce, accelerate our transition to a prosperous clean energy economy, and ensure that we lead the world's burgeoning clean technology industries."
The 40th anniversary of the US moon landing highlights lessons for the emerging clean energy race. While there are key similarities and differences between the space race of the Cold War era and clean energy race of today, one thing is certain: the need for vigorous and sustained public investment to drive dramatic technological innovation.
This week marks the 40th anniversary of Neil Armstrong's moonwalk, the event which made the US the first and only nation to accomplish one of the greatest technological feats in human history. While space-race aficionados will argue that US-Soviet competition continued beyond the 1969 moon landing, for the layperson, Armstrong's 'small step' marked the end of the space race.
In 2009, the United States faces a new global competition, one that will have far greater implications for the future of our nation and the world: the clean energy race
The dual challenges of climate change and increased economic competitiveness are driving nations to develop new energy technologies that harness earth's abundant renewable resources. This technology is increasingly viewed as central to our economic fortunes with renewable energy and other clean technologies poised to be the next big growth sector. On several occasions President Obama has acknowledged that:
'The nation that leads the world in creating new sources of clean energy will be the nation that leads the 21st century global economy.'
We've heard calls for a New Apollo project for renewable energy before, and I will not discuss the merits of such a scheme here. Instead, on this historic anniversary, I will compare the space race of the Cold War era and the clean energy race of today--both similarities and differences are apparent, and both offer insights into America's current standing in today's clean energy race.
As Congress debates climate and energy legislation, Asia is moving rapidly to win the clean energy race. So warns a new article in the Washington Post that should serve as a wake-up call to America's leadership at the highest level.
Despite Obama's intentions to increase America's international competitiveness, the article reports that the amount and scale of investments in renewable energy programs coupled with ambitious renewable energy use targets are putting these Asian nations on pace to surpass programs set forth by both the U.S. economic stimulus package and the American Clean Energy and Security Act, the massive climate and energy bill recently passed by the U.S. House of Representatives.
Citing Breakthrough's Jesse Jenkins, the article warns:
"If the Waxman-Markey climate bill is the United States' entry into the clean energy race, we'll be left in the dust by Asia's clean-tech tigers," said Jesse Jenkins, director of energy and climate policy at the Breakthrough Institute, an Oakland, Calif.-based think tank that favors massive government spending to address global warming.
Building on the $30b down payment made in their stimulus, South Korea plans to surge ahead in the clean energy race with a $85 billion, five year public investment in clean energy technology and innovation.
This week, South Korea has upped the ante for green public investment as it continues to make swift progress toward becoming a clean-tech economy. Already, a staggering 80% of South Korea's $38 billion stimulus package has been earmarked for green investments.
And today, the South Korean government announced that it will invest $85 billion more over 5 years to encourage the growth of green industries and technologies. That's more than doubling South Korea's recent promise to invest $40 billion over five years in a "Green New Deal," and the equivalent of 2% of the East Asian nation's total GDP. If the United States were to invest a comparable share of it's national wealth in clean energy technology, the sum would total over $275 billion annually.
China's massive public investments in wind and other renewable energy technologies are edging the rapidly developing nation into the lead in the global clean energy race.
By mid-July, China will begin construction of a massive wind farm project in the northwestern Gansu province, at a total cost of US $17.6 billion. It will be China's biggest wind power station yet; according to local Development and Reform Commission official Wu Shengxue, it will reach an installed capacity of 20 GW by 2020. Eventually, the wind power capacity of the area is projected to reach 40 GW.
This development is the latest in what has recently been a major push by the Chinese to expand renewable energy use. Soon, Chinese officials are expected to reveal a new renewable energy stimulus plan of US $44-$66 billion per year over ten years, which will focus much of its resources on wind power. Under the plan, China will be on track to reach 100 GW of wind power capacity by 2020--more than eight times its current level.
By contrast, the American Clean Energy and Security Act invests only $6-12 billion per year in clean energy. As for the US "green stimulus," it includes a one-time clean energy spending boost of $112 billion--just half of China's $221 billion stimulus investment in green initiatives. Here's a sense of scale: If US investments in clean energy were on par with the Chinese in terms of percent GDP, we'd be spending $140-210 billion per year.
"If China is going to put in $440-660 billion [in clean energy development investments this year], how will $190 billion (actually under $130 billion) over 20 years put us in the leadership position?"
In new independent analysis released yesterday, the Southern Alliance for Clean Energy concludes, as Breakthrough earlier analysis has, that the the impact of the now severely-weakened Waxman-Markey renewable electricity standard on U.S. renewable electricity generation will be "effectively zero."
SACE also looks at the likely impact of the efficiency requirements in the now combined efficiency and renewable electricity standard (which the Alliance refers to using yet another new acronym: "CERES") and concludes it falls far short of President Obama's campaign pledge to reduce U.S. electricity consumption 15% by 2020 (below business as usual projections).
Although it may make the Wall Street Journal and Fortune magazine writers uncomfortable, the kinds of market failures that plague energy innovation, combined with a clear public imperative for transformative change, is a recipe demanding more active government engagement with innovation and industry, not less.
Marc Gunther, the excellent Fortune magazine and GreenBiz.com writer and fellow blogger at the Energy Collective, published a piece last week skeptical of the Obama Administration's new push to support the commercialization of advanced batteries in the United States and help accelerate the day when efficient plug-in hybrid electric vehicles are rolling off American assembly lines and parked in a driveway near you. At issue is $2.4 billion in new funding made available by the U.S. Department of Energy to support advanced battery commercialization and manufacturing.
Gunther quotes a Wall Street Journal article that shares his skepticism of this new funding, which will (in their words) "annoint" new technological and corporate "winners" -- something the Journal clearly sees as an unnecessary intrusion of government on free markets. Gunther agrees, writing:
"They've got a point, though, don't they? One unhappy result of all the bank bailouts of the fall is that $2.4 billion doesn't seem like much--hey, Citi alone has collected north of $45 billion, last time I checked--but a billion here, a billion there, and you're starting to talk real money. And if electric cars are going to be as big a business as a lot of people think, then why government investment should be needed at all? Particularly since we have a climate change bill making its way through Congress that will, at long last, if all goes well, put a price on carbon emissions--thereby giving low-carbon energy sources what they desperately need, which is a fighting chance to compete with fossil fuels on something resembling a level playing field. I thought the whole idea behind cap-and-trade (which I strongly favor) is to capture the externalized cost of global warming pollutants, and then let the market figure out how best to reduce greenhouse gas emissions: regulation that would have a light touch but a profound impact.
But no--with Waxman-Markey, CAFE standards, biofuels mandates, subsidies for "green jobs" and the like--the administration is giving us a belt and a couple of pairs of suspenders, too. Much as I admire Steven Chu, the energy secretary, do we really want to entrust him and his staff to decide which battery technologies are likely to succeed and which companies can most wisely spend that $2.4 billion?"
And as much as I respect Marc Gunther, I quickly took issue with this pretty classic set of objections to government involvement in technological development. I wrote this response, which Gunther dubbed "Defending Big Government," and was happy to post at his personal blog and at GreenBiz. It has now been syndicated at The Energy Collective and at Reuters as well. Here it is for Breakthrough readers:
Driven largely by strong economic growth in developing nations, world energy consumption will grow 44% between 2006 and 2030, according to the U.S. Energy Information Administration. Developing nations will demand cheap, abundant energy. The question remains: will it be clean?
World marketed energy consumption is projected to grow by 44 percent between 2006 and 2030, driven by strong long-term economic growth in the developing nations of the world, according to the reference case projection from the International Energy Outlook 2009 (IEO2009) released today by the Energy Information Administration (EIA).
The current global economic downturn will dampen world energy demand in the near term, as manufacturing and consumer demand for goods and services slows. However, with economic recovery anticipated to begin within the next 12 to 24 months, most nations are expected to see energy consumption growth at rates anticipated prior to the recession. Total world energy use rises from 472 quadrillion British thermal units (Btu) in 2006 to 552 quadrillion Btu in 2015 and then to 678 quadrillion Btu in 2030.
The technologies of the Industrial Revolution were invented in Britain because Britain was the only place where it was profitable to adopt them, argues Oxford scholar Robert Allen.
Robert Allen, an Oxford professor, has a new book out with Cambridge University Press titled "The British Industrial Revolution in Global Perspective." Allen has a precis up over at VoxEU which provokes a few thoughts about efforts to spark a new green global economy.
Allen argues that a combination of factors led to the industrial
revolution, among them international trade associated with the British
Empire, an educated and wealthy populace which created a demand for the
fruits of technology as well as the skills necessary to produce them,
and, crucially, cheap energy. Allen provides the following graph,
showing a comparison of energy costs across Europe in the early 1700s.
The following was originally submitted to the National Journal discussion "
