Marshall & Bledsoe for Real Clear Energy, “Colorado Blazes Low-Emissions, High-Employment Energy Pathway”

Donald Trump made political hay in Appalachian and industrial states by running as an ardent booster of coal. Yet what’s really powered America’s remarkable energy boom over the last decade is shale oil and natural gas, renewable solar and wind, clean-tech and energy efficiency.

Energy innovation, in short, is the key to creating more good jobs and lowering U.S. carbon emissions. But given the Trump administration’s animus toward energy technology funding and low-carbon approaches generally, much of the political leadership for America’s next energy revolution will have to come from states where Democrats are in charge.

Take Colorado, which is aggressively pursuing energy innovation across the full spectrum of fuels and technologies. Governor John Hickenlooper has crafted a pro-growth, low-emissions agenda that should be a model to other states and to national policymakers. It emphasizes shale gas, wind, solar, hydropower, efficiency and advanced technology in everything from zero emissions electric cars to home net electricity metering.

Continue read at Real Clear Energy. 

Bledsoe for the Economist, “Whither the world after America’s retreat?”

…The risks posed by a changing climate require action. Last year was the hottest since records began, and 16 of the 17 warmest years have occurred since 2001. Sea level is rising and the polar regions are melting. Extreme storms, droughts and winds already threaten the safety and livelihood of millions. Despite all this, America is now attempting to leave. It will be a complex process that could take years. Renegotiating the Paris accord, or replacing it, could be even harder. Reaching the deal took decades in the first place. Countries which “bent over backwards” to please America—by ensuring the deal was not legally binding among other measures—are hardly likely to start again from scratch points out Paul Bledsoe, a climate policy expert from American University in Washington, DC.

Continue reading at The Economist.

 

Bledsoe for Politico: How Trump can help save coal-with China’s help

Last week, President Donald Trump declared that he would bring back coal jobs, directing the EPA to roll back the Clean Power Plan and other regulations on coal producers. It’s an audacious promise given the recent trajectory of the industry, and most energy experts dismissed it as impossible.

But there is one way for Trump to slow the loss of coal-related jobs and it has nothing to do with undermining climate regulations: Rather, it runs through China.

As Trump meets with Chinese President Xi Jinping today, he has a rare chance to build relations with a global rival and help keep one of his domestic promises. The reason is clean coal technology.

Read more at Politico. 

Gifford for The Hill: Why Trump’s Climate Order Might Backfire

Here’s some friendly advice to U.S. business leaders who may be quietly cheering plans by President Trump and his new administrator of the Environmental Protection Agency (EPA), Scott Pruitt, to “drain the swamp” by gutting environmental regulations: Be careful what you wish for.

Not only will many Americans view such a rollback as radical, but it’s also likely to provoke a torrent of lawsuits, tempting federal and state courts to step into the policy vacuum created by a weakened regulatory regime.

Martha Coakley, the former Democratic attorney general of Massachusetts, predicts that even Republican state attorneys general will consider pairing with private plaintiffs’ attorneys to file tort actions to protect the environment in the absence of viable federal regulation. A new spate of public nuisance litigation — the tort du jour for environmental activists seeking “regulation through litigation” -— would likely result in a far more draconian and unstable set of environmental rules that what’s currently on the books.

Continue reading at The Hill. 

Flashback Friday: PPI in Hindsight

Just over a year ago, PPI unveiled a big ideas blueprint with a prescient subtitle: Unleashing Innovation and Growth: A Progressive Alternative to Populism. We knew that progressives in the United States and Europe needed better answers to the economic and cultural grievances that have fueled the rise of a retrograde populism and nationalism around the world. We did not foresee that Democrats would fail to offer a forward-looking plan for jobs and shared growth, opening the door to Donald Trump’s improbable victory.

Which makes the themes and ideas in PPI’s sweeping policy blueprint more important than ever. Populism today thrives in the political vacuum left by center-left parties that offer no clear vision for reviving economic dynamism and hope. “Winning the economic argument will be essential to victory in the 2016 elections and it starts by getting the diagnosis right,” the blueprint noted. Instead, Democrats ran a campaign that leaned heavily on identity politics, wealth redistribution and centralized, small-bore solutions.

Unleashing argued that America (and Europe) are stuck in a slow-growth trap that holds down wages and living standards. And it offered bold prescriptions for building on America’s competitive advantage in technology and entrepreneurship to spread innovation – now concentrated in a vibrant digital sector — to the nation’s physical economy, which continues to suffer from low productivity. In addition, the document proposed creative ways to modernize the nation’s economic infrastructure, improve the regulatory environment for innovation, build middle class wealth and empower poor Americans to work, save and chart their own course to social mobility and inclusion.

Crucially, the blueprint also urged progressives to reject anger and victimhood and offer voters a confident account for how America can build a new, inclusive prosperity:

What America needs is a forward-looking plan to unleash innovation, stimulate productive investment, groom the world’s most talented workers, and put our economy back on a high-growth path, It’s time to banish fear and pessimism and trust instead in the liberal and individualist values and enterprising culture that have always made America great.

That was the road not taken in 2016. Now it’s the road to political relevance and success for progressives here and elsewhere.

 

Aldy Testimony for the U.S. House Committee on Energy and Commerce

Statement of Joseph E. Aldy
Associate Professor of Public Policy, Harvard Kennedy School
Visiting Fellow, Resources for the Future
Faculty Research Fellow, National Bureau of Economic Research
Senior Adviser, Center for Strategic and International Studies

United States House Committee on Energy and Commerce, Subcommittee on Energy, hearing on “Federal Energy Related Tax Policy and Its Effects on Markets, Prices, and Consumers”

[gview file="https://www.progressivepolicy.org/wp-content/uploads/2017/03/HHRG-115-IF03-Wstate-AldyJ-20170329.pdf" title="the-great-swap"]

Trump’s climate rollback could undermine our promises to the rest of the world

Trump’s executive order eviscerating Obama’s climate plan could leave the U.S. isolated as other countries push forward to curb emissions, observers of international climate negotiations said.

Major climate allies are increasingly concerned that Trump’s efforts to overturn the [Clean Power Plan] and other climate rollbacks will blow a huge hole in the U.S. ability to meet its 2025 climate commitment, let alone reach much deeper emissions cuts needed to stabilize the climate long-term,” said Paul Bledsoe, a senior fellow on energy at the Progressive Policy Institute.

Those concerns about U.S. climate commitments under a Trump presidency could come up in May when diplomats gather for a working group meeting on the Paris climate agreement.

Read more at The Washington Post. 

As carbon emissions rise, so will the “social costs of carbon”

President Trump’s “open mind” on climate change seems to be closing. He’s preparing an executive order to kill Obama administration rules aimed at curbing U.S. greenhouse gas emissions. It is almost as though Trump is determined to increase the amount of carbon and other greenhouse gases America pumps into the atmosphere.
 
As carbon emissions rise, so will the “social costs of carbon.” That’s a fairly new metric energy economists have developed to account for the many ways climate change can harm our economy as well as public health and safety. Harvard’s Joe Aldy, a PPI contributor, helped to develop the measure while serving in the Obama White House. In this piece on The Conversation, he explains how the social cost of carbon came to be and how it’s been used to keep the costs and benefits of regulation in balance.
 
 

Marshall & Aldy for Democracy Journal, “The Great Swap”

Does a deal now gaining momentum across the aisle actually have the potential to break the stalemate on climate change?

Is Donald Trump serious about keeping an “open mind” on climate change? Considering the “drill, baby, drill” cheerleaders he’s put in key Cabinet posts, it’s easy to fear the worst. They appear more than eager to roll back the Obama Administration’s energy and climate policies as soon as possible.

So the safest bet is probably to buckle up for four more years of intractable partisan warfare in Washington over dueling fuels and “alternative” climate science. And yet, there is rising interest, on both sides of the political spectrum, for an idea that has the potential to break this impasse in energy and environmental policy: swapping a carbon tax for many existing environmental regulations and using the revenues to support broader tax reform.

Last week, a group of Republican graybeards led by former secretaries of state James Baker and George Schultz called for a $40 per ton carbon tax, with the proceeds being turned into rebates in the form of dividends to all Americans. Senator Bernie Sanders endorsed a carbon tax during his campaign, and Trump and his daughter Ivanka discussed it with climate change crusader Al Gore after the election.

The Baker-Schultz plan also envisions swapping the carbon tax for an array of less comprehensive regulations—including the proposed Clean Power Plan—that most economists believe are less efficient than an economy-wide carbon tax. All this points to an opportunity for a President who calls himself a world-class dealmaker to craft a grand bargain that gets U.S. energy and climate policy unstuck. It’s a long shot, but the alternative is an endless game of political ping pong in which Republicans ram their energy preferences through Congress unilaterally, only to be reversed when Democrats return to power.

Continue Reading at Democracy Journal.

Bledsoe for LA Times: As Trump ignores record temperatures, taxpayers are footing the (huge) bill for climate change

Global temperatures were the highest on record in 2016 for the third straight year, scientists at NASA and elsewhere reported last week. This is just the latest proof of rapid climate change that has experts and governments around the world deeply alarmed. And yet President Trump and many other Republicans have so far paid no political price for questioning or downplaying the scientific evidence on climate change and undermining environmental policies that reduce risk.

One reason for their apparent immunity is that climate denialists exaggerate the economic costs of laws that aim to cut greenhouse gas emissions. Meanwhile, advocates of effective climate policies have lacked hard numbers on the current and future economic toll of global warming.

But this is starting to change. Over the past several years, a number of peer-reviewed studies have established that climate change is already costing American taxpayers and consumers tens of billions of dollars. As these costs to businesses, states and the federal budget mount, Trump and Congress may finally face pressure to act.

Continue reading at Los Angeles Times.

Press Release: New PPI Report Proposes Grand Political Bargain on Climate & Energy

WASHINGTON—The Progressive Policy Institute (PPI) today released a new policy report, “Long-Term Carbon Pricing: The Great Swap,” at a packed public forum featuring a cross-partisan roundtable discussion with moderator Hannah Hess of E&E News and panelists John Larsen, Director of the Rhodium Group, Jerry Taylor, President of the Niskanen Center, Catrina Rorke, Director of energy policy at R Street and Todd Wooten, Senior Counsel on the U.S. Senate Finance Committee.

The report proposes an economy-wide carbon tax as the most effective and efficient way to reduce U.S. greenhouse gas emissions, while also encouraging investment in clean fuels and technologies. The report also explores the intriguing possibility of a “great swap”—a carbon tax and regulatory streamlining as a part of tax reform—that could create the basis for bipartisan negotiating and compromise to break the current impasse in climate and energy policy.

“The rationale for coupling a carbon tax and tax reform are twofold,” writes Joe Aldy, author of the report and Associate Professor of Public Policy at the Harvard Kennedy School. “First, the climate policy and tax reform benefit from each other in terms of economics. Tax reform lowers the costs to the economy—and potentially eliminates the net costs of a carbon tax—while the carbon tax provides the revenues to finance the tax reform.

“Second, such an approach can neutralize the difficult politics that characterize each issue by broadening the political coalition that would derive a ‘win’ from at least some element of the policy package. Such a broad coalition would ensure the durability of the carbon tax and tax reform, and is consistent with major policy efforts in the past that have coupled policy initiatives to draw broader support, such as under the regular farm bill and transportation bill processes.”

America urgently needs a balanced energy policy that supports both strong economic growth and a healthy climate. Yet many observers fear that with Republicans in charge of both the White House and Congress, our country’s transition toward a low-carbon economy will stall.

Nonetheless, there is bipartisan interest in linking an economy-wide carbon tax to other goals Republicans strongly favor, namely tax and regulatory reform. This could create unexpected opportunities for bargaining and compromise should “normal” politics break out in 2017.

The report comprehensively outlines the political challenge of climate policy, the political support for the great swap (including what both Republicans and progressives would gain, and why both business and labor would support it), the case for an economy-wide carbon tax, carbon price certainty, how to design a carbon tax, and how to use the carbon tax revenues.

Download, “Long-Term Carbon Pricing: The Great Swap“.
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Long-Term Carbon Policy: The Great Swap

In the past two decades, the mounting risks posed by climate change have motivated businesses, cities, states, national governments, and the international community to pledge to take action to reduce their greenhouse gas emissions. Given the scale of the problem, the breadth of action must be effective and must set the foundation for increasing mitigation efforts over time. Thus, delivering on these pledges will require effective policies to drive the deployment of low-carbon technologies today and technological innovation in the future to ramp ambition up on par with the risks of climate change.

Climate change is a problem no country can solve by itself. Since the mid-1990s, the United States has advocated for developed and developing countries to work together in combating climate change and, with the United States’ leadership, the 2015 Paris Agreement delivered unprecedented commitments by virtually every country on the planet to reduce their greenhouse gas emissions. Now, the election of Donald J. Trump, an avowed global warming skeptic, has thrown America’s commitment to global leadership in doubt. If the United States quits the fight against climate change, this risks unraveling the global coalition and could result in other countries following suit. This would be a tragic mistake with incalculable consequences for the entire planet. Moreover, some nations may retaliate against the United States by imposing tariffs on American-manufactured goods based on the greenhouse gas emissions associated with their production.

 

The-Great-Swap-1

 

TVA’s New Reactor Bucks Nuclear Trend

Some good news at last on the nuclear front: The Tennessee Valley Authority (TVA) last week fired up a second reactor at its Watts Bar plant, making it the first new reactor to go live in this century. The advanced 1,150-megawatt reactor will supply carbon-free energy for 650,000 homes and businesses.

This follows a spate of announced closings of existing civilian nuclear reactors, including California’s Diablo Canyon. Since nuclear power is America’s largest source of zero-carbon energy, the shrinking of the nation’s nuclear fleet is both an environmental and an economic problem. It will compound the already difficult task of meeting U.S. commitments at the Paris climate summit to sharply reduce greenhouse gas emissions. It also weakens the U.S. civilian nuclear power industry as other nations race ahead to add more nuclear generation and develop “next-generation” reactor technologies.

The industry arguably was born in Tennessee. The world’s first nuclear fuel enrichment plant was built at Oak Ridge National Laboratory as part of the World War II Manhattan project. Even before Unit 2 was activated, nuclear power accounted for 33% of the state’s energy production from Watts Bar and two reactors located at the Sequoyah facility.

Thanks to TVA, Tennessee also is one of the top 3 largest producers of hydroelectricity east of the Rocky Mountains. But hydro accounts for only 6% of the state’s electricity production, while solar contributes another one percent. Renewable energy may hold great potential, but as these numbers show Tennessee and most other states are a long way from being able to generate most of their electricity from such sources.

While America’s much ballyhooed “nuclear renaissance” has yet to materialize – one reason is the shale boom-enabled influx of relatively cheap natural gas — four other reactors are under construction around the country and are expected to be completed over the next four years. That’s encouraging, but it’s not enough to offset the rate of plant closures, including the five reactors shuttered in 2013 and 2014. Diablo Canyon will be mothballed in 2025, 20 years before its useful life is scheduled to end.

In addition to cheap natural gas, the U.S. nuclear energy industry continues to be hobbled by hostility from “green” activists who want to put all of America’s energy policy eggs in one basket. That’s a huge mistake. Advanced nuclear technologies hold enormous potential for generating clean power in safer and cheaper ways than today’s nuclear reactors. Yet regulatory inertia and lingering prejudices against nuclear power stand in the way.

Fortunately, there is some hope for regulatory improvement. Last month, the House passed the Advanced Nuclear Technology Development Act which would require the Department of Energy (DOE) and Nuclear Regulatory Commission (NRC) to develop a regulatory framework for the testing and licensing of advanced reactors. It would also ensure the two agencies have sufficient technical expertise to regulate advanced designs, and move beyond their current focus on light-water reactors. Regulatory commitments such as this and more will be necessary if the U.S. wants to be a global leader in the clean energy market place.

In the meantime, TVA’s investment in new nuclear generating capacity will ensure that Tennessee remains a clean energy innovation leader.

Investment Heroes 2016: Fighting Short-termism

It’s become conventional wisdom that corporate America has fallen victim to myopia and short-termism. Companies are spending billions buying back stock that could have gone to innovation and investment. Corporate executives have compensation packages tied to stock prices, which focuses their attention on quarterly earnings rather than long-term growth. Investors want immediate results, rather than building for the future. Whatever the merits of the short-termism thesis, America’s weakness in capital spending is all too real. The Progressive Policy Institute first noted the “business investment drought” in 2010 and 2011.

Indeed, we started our “Investment Heroes” annual ranking in 2012 precisely to highlight those companies that were investing heavily in the United States. Jason Furman, head of President Obama’s Council of Economic Advisors, gave the keynote talk at a 2015 PPI conference on “Reviving Private Investment” and highlighted how the private investment drought undercuts U.S. productivity growth and, therefore, income gains.

This report continues the annual Investment Heroes ranking again this year by identifying those U.S. companies resisting short-termism and making long-term domestic investments in buildings, equipment, and software.5 We call these companies “Investment Heroes” because their capital spending is helping raise productivity and wages across the country. Further, we use our “Investment Heroes” analysis to help understand the potential causes of the current short-term mentality and discuss some policy options for reversing it.

Goldberg for The Hill: Are Federal Agencies Putting Science Over Fear-Mongering?

This summer, during one of the least productive sessions in recent history, a rare bipartisan achievement slipped through Congress under the political radar. Democrats and Republicans came together with environmentalists and chemical manufacturers to reform the Toxic Substances Control Act (TSCA).

So, what was the secret to TSCA’s success? All of these groups were unified behind a common regulatory vision: chemical regulation must be based on scientific risk alone. TSCA requires EPA to integrate scientific determinations of a chemical’s hazard, use and exposure potential so that facts, not political or fear-based agendas, are the driving force behind chemical regulations.
To be sure, TSCA is a compromise. No one thinks it is perfect. EPA gained authority over chemical regulations, and industry got a streamlined regulatory process. The Environmental Defense Fund called TSCA “a major improvement.” The Society of the Plastics Industry said consumers can have “confidence in the products they depend upon each day, while giving companies a more predictable regulatory system that is based on science rather than rhetoric.”

Read more at The Hill

Sympathy for Diablo

Nuclear power is by far America’s biggest source of zero-carbon energy, providing 19.5 percent of the nation’s electricity. So why are environmental groups who profess to care about climate change working overtime to get rid of nukes?

The mystery deepens with today’s announcement by Pacific Gas & Electric that it intends to shutter California’s Diablo Canyon facility, the West’s last zero-carbon nuclear plant. The decision reflects a deal PG&E has struck with labor and environmental groups to invest more in energy efficiency, renewables and storage as it phases out Diablo Canyon.

The news comes amid a recent wave of nuclear plant closures in the Midwest, where deregulated markets flush with wind and natural gas simply make the plants uncompetitive. But Diablo’s costs are carried by rates, not competitive markets, so something else was clearly at work. And that something was extreme green politics.

Behind the Faustian bargain were big environmental groups like Friends of the Earth, National Resources Defense Council and Environment California. Together with their allies in state government (Mary Nichols, chair of California’s powerful Air Resources Board, founded the state’s NRDC chapter), the groups have advocated successfully for policies that privilege renewables as the only “clean” route to a low-carbon economy. Governor Brown’s former girlfriend, Linda Ronstadt, recently joined celebrities who have made a second career off opposing Diablo in sending a letter of opposition to relicensing. Not surprisingly the state’s 50 percent renewable standard—enshrined on Governor Brown’s watch–excludes nuclear.

The bargain would let Diablo’s duel reactors run until 2024 and 2025 but retire them 20 years before their useful life is up, in 2044, 2045. The groups claim Diablo’s power would be replaced by renewables and by energy efficiency, but as Rod Adams, blogging for Forbes noted:

“That’s a deceptive fig leaf; it is physically impossible for wind, solar and energy efficiency to replace the steady production of a nuclear power plant. Producing the same total number of kilowatt-hours each year is not the same as producing the same kilowatt-hours on a minute by minute, hour by hour or day by day basis.”

The wind doesn’t always blow and the sun doesn’t shine at night but a nuclear reactor generates zero emission electricity 24/7. In a state where industry continues to flee (Toyota ran to Texas and Tesla opted for Reno) there just isn’t sufficient demand to manage over-generation. And for a company such as PG&E, beleaguered over the current criminal trial for a natural gas explosion, it was politics rather than economics that trumped the West’s last nuclear plant standing.

The timing could not be worse as parts of California are reeling from one of the worst heat waves to hit the Golden State at a time of year when it typically is blanketed by fog or “June Gloom.” In Southern California, grid operators are straining to meet demand in a system that both lost the San Onofre Nuclear Generating Station but also placed a moratorium on natural gas from Aliso Canyon. As a result of the Aliso Canyon moratorium, the state’s grid operator for this summer has forecast at least 14 rolling blackouts.

Renewables need fast-ramp natural gas to back off generation at midday, when solar generates a surplus, and then to ramp back up at night when the sun sets. California’s grid operator throws away or curtails as much as 13,000 megawatts of excess electricity per day. For the green extreme shuttering Diablo is the path to tossing away less solar.

Reliability is an issue but the green extreme’s well-kept dirty secret is that wind and solar have severe environmental downsides. Diablo’s closure will eliminate in 10 years the state’s last, steady reliable, pollution-free electricity source. Replacing Diablo with solar will require vast tracts of land. Siting those facilities pits NRDC against staunch conservationists dead set against displacing the desert tortoise. And wind kills hundreds of thousands of birds and bats annually. But the environmental downside is that renewables need to team with fossil to keep the lights on.

California has for years been banking on an unholy alliance between renewables and load-following natural gas. Moreover, California has already blown its climate change targets because 100,000 tons of potent climate-changing methane leaked unabated into the atmosphere from the Aliso Canyon natural gas field. In a world of unreliable renewables, electricity systems require something to keep the lights on. But unlike nuclear, natural gas is a fossil fuel. California’s apparent model — Germany — has watched climate pollution increase there as decommissioning nuclear plants has led Berlin to rely more on carbon-intensive coal to backup to wind and solar.

But the green extreme is mute on rising emissions. “It makes your skin tingle,” said Damon Moglen, senior advisor with Friends of the Earth, regarding Diablo’s closure. Probably the highly-skilled and decently-paid nuclear plant workers at Diablo are feeling that way too.