A Climate Change Proposal: Changing the Rules
The Center for American Progress has a very good paper by John Podesta (former Clinton white House Chief of Staff), former Senator Tim Wirth, and Vinod Khosla (the founding CEO of Sun Microsystems) who begin to offer thoughts on solutions:
The future of energy is not terribly complicated to envision:
- Clean energy: We'll use new, renewable sources of energy: more biofuels and less oil, more wind and solar, and less coal and natural gas.
- Energy efficiency: Our homes, office buildings, cars, and appliances will require less energy, and we'll have better ways to manage that use.
- Carbon capture: Emissions from coal-fired power plants will be captured and pumped underground.
- A "smarter" grid: Digital technology will finally come to the electric power grid, making it more efficient, more reliable, and better able to draw on renewable resources. It should become a national grid, like our highway system, so any renewable or non-renewable electricity generated in any part of the country can be transmitted to market.
President Bush addressed the first two goals in his State of the Union address in January. His "20 in 10" initiative called for U.S. vehicles to use 35 billion gallons of alternative fuels by 2017, and he also suggested that fuel economy standards could be increased by 4 percent a year over the next decade. On May 14, he directed four federal agencies to take action toward this goal. These are steps in the right direction, but we have a long way to go.
Here are five more rule changes that would reduce emissions, give consumers new choices, launch new businesses, and accelerate the profitable transition to new energy technologies:
Put a price on carbon.
Putting a price on carbon dioxide -- through a cap-and-trade system similar to the one that reduced acid-rain pollution at low cost -- would end the use of the atmosphere as a free garbage dump and create a market for any technology that reduced global-warming emissions.
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Set "carbon efficiency" standards for vehicles.
The debate over fuel efficiency standards has bogged down in finger-pointing between Washington and Detroit. To break the impasse, Congress should pass tough standards for "carbon efficiency." If companies had to reduce the average carbon emissions of their fleet, it would encourage them not only to build lighter, more efficient vehicles, but also to build cars that can run on biofuels and on electricity -- rather than simply updating the internal combustion engine. California has recently taken the first step in this direction. This is the technology of the future, and it is where Detroit should be making its investments.
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Make energy efficiency the business of utilities.
Today, in almost every state, utilities make more money as their customers use more energy. We should flip those incentives. Utility companies in California are compensated for helping their customers reduce their energy use. They make money by helping customers install better insulation and use more energy-efficient products. When a utility can make more money helping people save energy rather than use energy, that's a smart set of rules.
We should go one step further and allow utilities to profit by investing in energy efficiency directly. Today, new windows have three times the insulation value as old ones, and new air conditioners use 30 percent to 40 percent less energy than models that are just 10 years old -- but they are rarely installed in new homes, because home builders don't have to pay the utility bills. Even the new homebuyer may only plan to live there for a few years and may not want to invest in energy efficiency.
For utilities, however, a new building is a 50-year energy obligation, and permanently reducing its energy use should be treated as a 50-year asset. Utilities should be able to earn a return on structural investments in energy efficiency just as they do in a new power plant. Indeed, because home-based renewable-energy systems have the effect of reducing demand, utilities should be compensated for buying solar panels and geothermal heat pumps, which will cut a building's energy consumption for decades.
Modernize the electric power grid to be more efficient and better deliver clean energy.
Nearly every sector of the economy has been made more efficient with the introduction of information technology -- but not the electric power grid, which still operates on 50-year-old technology. A modernized, digitally connected national electricity grid will be more secure, reliable, and resilient, allowing quicker restoration of power after outages and the ability to avert large-scale blackouts. Renewable electric power should be given priority access to such a grid.
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Increase government support for clean energy.
No industry of any consequence to the country has grown and thrived without government support. According to the Government Accountability Office, the oil industry alone received more than $140 billion in subsidies and tax breaks between 1968 and 2000. In the 21st century, the U.S. government has just as much interest, if not more, in the success of clean energy.That's why the government should boost incentives and dramatically increase R&D spending for clean energy -- in line with its importance to the national interest. Last year, the federal government spent less than $2 billion on energy R&D -- just one-third what it spent 25 years ago, adjusted for inflation. During the same 25-year period, government medical research is up nearly 300 percent to $28 billion, and government military research is up 250 percent to $75 billion.