issue: Energy & Environment

Tom Friedman’s Reading My Stuff on Green Tech and the Military!

Posted on by The Progressive Policy Institute

Look, I realize that Tom Friedman gets a lot of guff from the liberal intelligensia.  Matt Taibbi over at Rolling Stone has practically made a second career out of eviscerating Friedman’s sometimes tortured contortions of the Queen’s Tongue.  Certainly, Taibbi scores the odd point: “It’s OK to throw out your steering wheel,” Friedman once wrote about George Bush’s Middle East policy, “as long as you remember you’re driving without one.”  What?

Fair enough.  But Tom, a long-time friend of PPI no less, is an insightful writer who, more often than not, is on the right side of history.  Take his column this weekend on the “U.S.S. Prius“:

Spearheaded by Ray Mabus, President Obama’s secretary of the Navy and the former U.S. ambassador to Saudi Arabia, the Navy and Marines are building a strategy for “out-greening” Al Qaeda, “out-greening” the Taliban and “out-greening” the world’s petro-dictators. Their efforts are based in part on a recent study from 2007 data that found that the U.S. military loses one person, killed or wounded, for every 24 fuel convoys it runs in Afghanistan. Today, there are hundreds and hundreds of these convoys needed to truck fuel — to run air-conditioners and power diesel generators — to remote bases all over Afghanistan.

Mabus’s argument is that if the U.S. Navy and Marines could replace those generators with renewable power and more energy efficient buildings, and run its ships on nuclear energy, biofuels and hybrid engines, and fly its jets with bio-fuels, then it could out-green the Taliban — the best way to avoid a roadside bomb is to not have vehicles on the roads — and out-green all the petro-dictators now telling the world what to do.

Let’s just say I’m happy Tom’s reading my stuff.  Yep, on October 12, I wrote the following piece in the Los Angeles Times on the same topic to mark the 10th anniversary of the bombing of the U.S.S Cole in Aden harbor:

America forgets Oct. 12 as seamlessly as it remembers Sept. 11. Ten years ago today, 17 U.S. Navy sailors were killed and 39 injured in an Al Qaeda attack against the U.S. destroyer Cole in the harbor of Aden, Yemen. The Cole was relatively defenseless during a 24-hour refueling stop when suicide operatives pulled alongside in a small, explosive-laden boat and detonated a charge, ripping a 40-foot hole in the hull.

Though the lessons from 9/11 will be debated for years, Oct. 12’s message is succinct. It is best summed up by Marine Corps Commandant Gen. James T. Conway: “Energy choices can save lives on the battlefield.” The armed forces are searching for next-generation green energy technologies because they provide power at the point of its consumption, which decreases the military’s need to resupply with carbon-based fuels.
…
Mabus is setting big goals for an energy-independent military. He wants to sail a “Great Green Fleet” by 2016 — a full carrier strike group composed of nuclear and hybrid electric ships, as well as biofueled aircraft. By 2020, Mabus wants half of the Navy’s energy to come from alternative sources.

That’s why the Obama administration should consider a Pentagon innovation fund. A few well-spent dollars would help companies tackle the technological learning curve and reduce costs.

To get to where Mabus wants to go, ideas need cash. The Pentagon may have a truly out-of-control budget, but consider this: Radar, GPS and the Internet all started as military-funded projects. The next green technology could be sitting in a lab somewhere, begging for a few dollars to help produce it on a bigger scale.

With conservatives pushing this climate change denial nonsense, it’s an important point that the military is innovating on green-tech because it can’t wait for the political “debate”.  So much the better as more-and-more mainstream writers pick up on this narrative.

Knowledge Capital Writedown: Wind Turbines

Posted on by The Progressive Policy Institute

On the front page of the NYT this morning, Keith Bradsher gives a perfect example of a knowledge capital writedown, in his story about wind turbine technology being transferred to China by a Spanish company, Gamesa:

Nearly all the components that Gamesa assembles into million-dollar turbines here, for example, are made by local suppliers — companies Gamesa trained to meet onerous local content requirements. And these same suppliers undermine Gamesa by selling parts to its Chinese competitors — wind turbine makers that barely existed in 2005, when Gamesa controlled more than a third of the Chinese market.

But in the five years since, the upstarts have grabbed more than 85 percent of the wind turbine market, aided by low-interest loans and cheap land from the government, as well as preferential contracts from the state-owned power companies that are the main buyers of the equipment. Gamesa’s market share now is only 3 percent.

With their government-bestowed blessings, Chinese companies have flourished and now control almost half of the $45 billion global market for wind turbines. The biggest of those players are now taking aim at foreign markets, particularly the United States, where General Electric has long been the leader.

The story of Gamesa in China follows an industrial arc traced in other businesses, like desktop computers and solar panels. Chinese companies acquire the latest Western technology by various means and then take advantage of government policies to become the world’s dominant, low-cost suppliers.

It is a pattern that many economists say could be repeated in other fields, like high-speed trains and nuclear reactors, unless China changes the way it plays the technology development game — or is forced to by its global trading partners.

Because of Gamesha’s transfer of knowledge capital to China, GE’s knowledge capital has become less valuable, which eventually will affect wages and employment.   Gamesha’s knowledge capital has been less valuable as well, which affects the Spanish standard of living.

The correct policy prescription is for the U.S. to dramatically up our investment in knowledge capital and physical capital.  Dramatically. That may require less support for consumption now so that our children can be better off in the future.

This article is cross-posted at Innovation and Growth

Photo credit: Bonnie Tsang

Tip-Toeing Around The Elephant: US Mitigation And The COP

Posted on by The Progressive Policy Institute

The US was in an awkward position in Cancun. The administration clearly wanted to show leadership, but it was hamstrung by an inability to deliver legislation with any tangible commitments. Since that seemed unlikely to change in the new Congress, US negotiators were left playing defense on the key issue — mitigation.

This makes movement in other areas (such as finance and forests) difficult, though that is in part due to US insistence on parallel, rather than serial, treatment of issues.

The result was sometimes bizarre diplomatic displays by the US, such as Energy Secretary Steven Chu’s address — essentially a remedial crash course in climate science. Secretary Chu did not take questions, one suspects because it would have been difficult to answer the obvious one — how does the US plan to meet the President’s 17%-cuts-by-2020 goal articulated last year?

Difficult, but not impossible. The awkward position in which US officials find themselves and the effects it has on US credibility and capability make the administration’s continued avoidance of serious public discussion of EPA carbon regulations puzzling. Research at RFF and elsewhere indicates that EPA regulations, either on the books already or likely in the near future, could achieve emissions reductions in the range of the President’s goal.

I’ve studied these regulations over the past year or so, and I’ve been repeatedly surprised by their likely impact. Vehicle fuel economy standards, new power plant permitting rules, and whatever the agency decides to do for existing sources can each make a significant emissions impact. Perhaps more interestingly, coming EPA regulations ostensibly aimed at other pollutants could have a big impact on carbon by pushing a substantial portion of coal plants into retirement, and replacing them with cleaner technology.

It’s not clear why the US administration and negotiators didn’t trumpeting these regulations as evidence of a commitment to cut emissions. It’s possible it is felt that a regulatory approach won’t be understood or taken seriously by the international community, but EPA regulations are far from the only complex issue on the table (just ask your local climate finance expert for a quick summary if you suspect otherwise). And other countries are undoubtedly familiar with a regulatory approach — for many it is their preferred domestic environmental policy. One thing is certain, though — the best way to ensure that the international community (and the American public) fails to understand or appreciate the EPA’s capabilities is for the administration and its negotiators to refuse to explain them.

Another possibility is that the administration worries that hyping EPA’s powers is politically dangerous. The agency is more effective, this argument goes, if it can operate quietly and at its own pace. To put it more directly, to speak of regulation is to destroy it — perhaps because Congress would respond by seeking to cripple the agency.

But the President should not forget that his party still controls the Senate, and that he still wields the veto pen. Even if the President resigned himself to giving up EPA powers (or delaying them) as part of a compromise, it would surely be in his interest to say how strong these powers are, thus increasing their value in any bargain.

Moreover, the argument that regulatory emissions cuts are more effective if kept quiet contradicts what is arguably the central dogma of US foreign climate policy — that US action is valuable not for its small contribution to global goals, but as a tool for unlocking negotiations and prompting action elsewhere. If US negotiators can’t or won’t talk about the best policy tool the US currently has, they can’t do their jobs. This makes the long term likelihood of a meaningful international agreement much smaller.

EPA regulation is not the first, best option for US climate policy; it is above all likely to be more costly over the long run than a pricing mechanism. But neither this admission, nor the fact that EPA regulations are legally required, are good reasons not to forcefully and frequently articulate their emissions benefits. Perhaps we as a country should be embarrassed that we cannot adopt a national climate policy that more closely approaches the ideal in terms of both costs and benefits. But the administration should not let any embarrassment about what the country cannot currently do prevent them from talking about what it can.

As my colleague Dallas Burtraw pointed out in his talk here this week, US credibility on climate requires that the administration be a lot bolder — not by making new commitments that it lacks the domestic powers to back up, but simply by publicly, loudly, and clearly saying what it can and will do with the tools it already has.

This article is cross-posted at Weathervane

Making Sense of Connecticut v. AEP

Posted on by The Progressive Policy Institute

The U.S. Supreme Court agreed today to hear an appeal to Connecticut v. AEP, a court of appeals granting eight states the right to sue American Electric Power (AEP) Co. and several other utilities for greenhouse gas emissions.  The states had argued that carbon dioxide emissions were a “public nuisance,” and hoped to force the companies to reduce their emissions through litigation.

In a recent PPI memo, Philip Goldberg argued that such litigation made little sense.

Progressives should … not reflexively support climate change litigation, no matter how passionately one might favor emission reductions. We should adhere to our principles and protect due process rights of defendants, even when those defendants are large corporations. The David and Goliath analogy may score political points, but it only works in litigation when Goliath does something objectively wrong. Otherwise, any group that fails to get its way in the political arena will turn to the courts. Such an act would be an affront to democratic proceduralism that has long defined our progressive philosophy.

You can read the entire memo here.

Why Progressives Should Cool to Global Warming Lawsuits

Posted on by The Progressive Policy Institute

Environmental progressives have been urging the federal government to address climate change for more than 30 years. Many of these efforts have focused on setting limits on the emissions of carbon dioxide, methane, and other gases collectively referred to as “greenhouse gases” or GHGs. Presidents George H.W. Bush, Clinton, and Obama all negotiated international treaties on global emissions, and Congress has considered numerous climate-related bills. None of these efforts, however, has resulted in binding emission caps for U.S. operations, and Senate efforts to pass a “cap and trade” bill have been dropped. As a result, some progressives advocate a new arena for this battle: the courts, with lawsuits against a group of companies to directly force them to reduce emissions.

There are four lawsuits based on the premise that a handful of American companies, all associated with energy use and production, can be held legally responsible for “global warming.” The suits claim that the companies engaged in operations or made products that contributed to the buildup of GHGs in the atmosphere, causing the earth to warm. The cases seek either reductions in emissions or payment for injuries caused by specific weather events, such as hurricanes and flooding, allegedly caused or made worse by climate change. The liability threat for these defendants is massive: billions of dollars in the current suits, injunctions against their operations, and new filings for future weather-related injuries.

For environmental progressives, the real purpose of this litigation is to use the threat of massive liability to force the companies to accept concessions on climate change policy. These lawsuits, first filed in 2004, were born of frustration with the political process, particularly under President Bush, for failing to take steps to combat climate change. Given the seeming demise of climate change legislation in the current Congress, many progressives have found achieving the same – or perhaps more stringent – policies in the courts an increasingly appealing option.

Read the entire memo

Rupert Murdoch v. Justice Scalia

Posted on by The Progressive Policy Institute

Just like their crazy-as-a-FOX cousins, the Wall Street Journal editorial page has indulged yet again in a spectacle of tragicomical self-victimization. An especially shameless recent raving targets the Democrats’ efforts to expose the furtive corporate backing behind their array of political front groups, of the sort that Rupert Murdoch, the brothers Koch and their band of aspiring overloads have nearly perfected. Naturally, the Journal gets it wrong across the board.

Their charge was that Senate Finance Committee Chairman Max Baucus engaged in a “liberal abuse of power” against right-leaning “issue advocacy” groups recently when he asked the IRS to investigate whether “certain tax exempt 501(c) groups had violated the law by engaging in too much political campaign activity.”  But Baucus did not target “certain” groups—his request to the IRS was broad, and intended to give them wide rein to go where the facts led them and report back.

Senator Baucus, as chairman of the Senate committee responsible for the tax code, has the obligation to examine how his committee’s laws work in practice, and whether they ought to be revisited. The examples in his letter, one of which cited a local financier who paid for a pro-development referendum campaign in Washington State, represented the results of investigations by the New York Times and Time, not part of any partisan hit list as the Journal would have us believe.

Even if the IRS investigation ends up disproportionately impacting conservative groups, that is because these groups’ “issues” just so happen to coincide squarely with their backers’ financial interests, calling into question their tax-exempt status.

This is not the case with conservative bogeymen such as George Soros. While Soros and other wealthy progressives also contribute to issue advocacy groups, their personal fortunes do not turn on the agenda they espouse.  Soros would in fact be even better off financially were the Republicans to gain power and, say, extend Bush tax cuts for the wealthiest Americans. Contrast that with the Koch brothers, whose sprawling empire is one of the top ten air polluters in the United States, and who have been called the “kingpins” of climate change denial.  One can just imagine how much they have to lose from stronger environmental regulations or a cap-and-trade bill.

Now, it is all well and good if the Kochs and Co. want to keep pumping dollars into elections and carbon into the air. That is their right under the law.  But they should have to be honest about it so that the American people can judge whether this agenda coincides with their own.   We all know that the Supreme Court in the case Citizens United upheld the right of corporations to spend freely on behalf of issues and candidates they believe in.  Less well known is the court’s decision, in the same term, in Doe v. Reed.  In it, the 8-1 majority held that there is no categorical First Amendment right to anonymous political speech.

In Doe, finding against such a right to privacy was critical, said the Court, to “fostering government transparency and accountability.” Perhaps Justice Scalia explained the rationale best: “Requiring people to stand up in public for their political acts fosters civic courage, without which democracy is doomed…”  That is what the tax code provisions the right is abusing are supposed to reinforce, and which Senator Baucus is charged with overseeing.

Would that the Journal had Scalia’s spine. Instead it complains about businesses being made the “targets of vilification with the goal of intimidating them into silence.”   But why should consumers unwittingly support businesses that advocate interests potentially at odds with their values?   This contrast is especially striking when those same businesses can covertly advance their interests through a tax-exempt organization.  Only in the Journal’s circular world, where what’s good for the golden gooses is good for the gander, could this somehow square.  But such misdirection and obfuscation, as we well know, is the only way the far right can still pretend to have the interests of the American people at heart.

Photo credit:  cafemama

Is the Obama Administration Really Serious About Nuclear Power?

Posted on by The Progressive Policy Institute

Constellation Energy announced last weekend that it is pulling out of negotiations with the Obama administration over its pending application for Department of Energy loan guarantees to build a new reactor unit at its existing Calvert Cliffs nuclear plant in Maryland. This means that for now, Constellation has scrapped all plans to expand the plant, which would have brought 1600 megawatts of low-carbon power to the market and thousands of jobs to the local economy.

What drove Constellation to walk away from further negotiations is the position taken by the White House Office of Management and Budget over the cost of the “credit subsidy fee” Constellation must pay for the guarantee. OMB set the fee at  $880 million, or 11.6 percent of the total guarantee. OMB says this fee accurately reflects the risk to taxpayers of default by Constellation, which may or may not be accurate, even presuming that shielding taxpayers from 100% of the default risk is an appropriate goal.  The problem is that no one ever expected the loan guarantee program to be priced so high, most notably the energy companies that have spent years now tied up in the application process. Constellation had argued for a fee closer to 1-2 percent, and DOE had previously made statements that indicated it was basically in agreement with that fee level, before the Obama White House got involved in the program and indicated it needed greater protections against the risk that the company won’t repay its loans. OMB has demanded a price for those protections that is basically what private lenders would charge (which is high considering the regulatory and cost risks associated with a nuclear power plant–hence the need for the loan guarantee program in the first place).

If you are an opponent of expanding nuclear power, this is great news. It means that after years of hard-fought legislative and regulatory battles in which the nuclear industry made significant headway toward getting the federal government to clear the way for a “nuclear renaissance” in the U.S., yet another battleground has been found to effectively scuttle the entire program for nuclear loan guarantees for the time being. Apparently that new battleground is the arcane world of credit scoring within the federal budget bureaucracy, most notably OMB.

By throwing sand in the gears of this final stage of the bureaucratic approval process, the White House has let the Department of Energy’s loan guarantee program grind to a halt after years of promises of support to the industry for badly needed new projects. By all accounts, this controversy appears to be simply a fight between budget bureaucrats that needs to be hashed out publicly and resolved. But a less benign interpretation might suggest a deliberate bias among those in the administration in favor of spending loan guarantee dollars on renewable energy at the expense of nuclear projects. In either case, it is a problem that President Obama could easily fix with leadership from the White House, by making it clear that nuclear power is a national priority that is too important to lose new projects over bureaucratic delays.

Instead of leadership, the White House has responded with unfortunate lack of credible commitment to addressing this issue. According to Bloomberg news, OMB’s spokesperson said administration officials were surprised that Constellation gave up on negotiations.  It’s hard to believe they could really be that clueless. Everyone following the nuclear loan guarantee process knew this was a potential deal-killing problem for Constellation and other applicants, especially anyone who read Constellation’s executives say so specifically in the New York Times almost a year ago. This issue was raised in Jack Lew’s recent confirmation hearing to take over OMB, and Senate Energy Chairman Jeff Bingaman openly criticized the administration in a hearing on September 23 for holding up these loan guarantees. These complaints have been heard coming from several different corners in Washington and the energy industry for months. If I knew enough not to be shocked by Constellation’s move, how did OMB and the White House did not see this coming?

The administration’s handling of the Constellation loan application raises an important question that needs to be answered: just how committed is President Obama and his administration to expanding nuclear power? The president has said nuclear energy is part of his vision of America’s energy future (most notably in a speech ironically delivered in Maryland announcing a nuclear loan guarantee approval), but we have not seen many tangible results that the members of his administration are fully committed to making that vision a reality. After all, the Constellation announcement comes during the same week when the president was stumping for more infrastructure spending and his own economists released a report arguing that now is an ideal time to build large capital projects, both in terms of economic stimulus and low project costs for financing and labor. In the last week, the administration also cleared the way for two new solar energy projects on federal land and, even more notably, announced a $1.3 billion DOE loan guarantee approval for a massive new wind power project. All of these other initiatives this week are important and deserving of the president’s leadership in making them a national priority. But with the news from Constellation coming amidst all this other administration support for new energy and infrastructure projects, the overall picture is too easily misconstrued as the administration coordinating to put a thumb on the scale in favor of everything but nuclear energy.

Given the energy realities we are facing and the president’s own acknowledgments that nuclear energy needs to be part of a low-carbon response to meeting growing demand, President Obama can not afford to let a bureaucratic bean-counting snafu tie up billions of dollars in new investment and tens of thousands of jobs. Hopefully, this issue is essentially a policy glitch in the administration’s energy agenda, rather than something more problematic. But regardless of the cause, if President Obama is serious about including nuclear in our energy mix, then he needs to use the power of his office to take a hard look at these problems–and fix the glitch.

Photo credit: Let idea Compete

When National Security Means Energy Independence

Posted on by The Progressive Policy Institute

This post is the fourth in a series about the Progressive Military

The smell that will always take me and many other vets back to the old Army days is diesel exhaust fumes.  When you spend many years of your life rolling around the muddy trails of military training areas in 5-ton trucks or the bumpy roads of Iraq and Afghanistan in armored Humvees, the smell brings on instant nostalgia.  It is my hope, and the hope of many senior military leaders, that our next generation of servicemembers won’t know that smell because they won’t be using oil.

There is widespread agreement by institutions on all sides of the political spectrum that energy independence, security, and planning for the repercussions of climate change must be addressed.  Former CIA director James Woolsey has called this “the first war since the Civil War that America has funded both sides.”  However there is still opposition, mostly from the GOP Congressional minority, to taking real comprehensive steps.  Their opposition to a comprehensive energy and climate bill, such as the American Power Act, has stifled momentum on the issue.  Too many in Congress want to ensure nothing get done on the issue for quite a while.

Despite Congressional impasse, the military is looking at the issue from top to bottom and pushing forward.  The Army is investigating using the safflower as a biofuel and began its Fuel Efficiency Demonstrator (FED) program to develop new vehicle technologies in response to battlefield calls for the need to reduce the number of dangerous convoys that use and transport fuel.  The effort doesn’t extend solely to vehicles and equipment; it also extends to the power grids on it installations at home and downrange.

Navy Secretary Ray Mabus, strongly committed to the issue, has promised that the Navy and Marine Corps will get less than half of its power from fossil fuels within ten years.  As far as new energy and combat power are concerned, the electric hybrid ship USS Makin Island and the hybrid-fueled FA-18 “Green Hornet” fighter jet have already made their maiden voyages.  The Navy is also committed to making all of their installations energy self-sufficient by 2020.

Not to be outdone, the Air Force has developed an A-10 “Thunderbolt”, a ground attack aircraft, that also runs on a biofuels mixture and plans to test at least three other aircraft models this year.  This is a significant development as the Air Force is the military’s top energy consumer.  On the ground, Langley Air Force Base has installed a geothermal energy system as part of the Air Force goal to reduce its energy consumption 20% by 2020.

The Pentagon has begun to “wargame” the consequences of climate change that the military may be called upon to address.  As resources become scarce, it may lead to conflicts on several continents.  U.S. bases may be threatened by rising sea levels.  It may also lead to conflict between allies and destabilize stable states and further ruin already shaky ones.  It is also no secret that American dependence on oil from unstable regions leaves us vulnerable every time there is a hiccup in the supply caused by unrest or terror attacks.

There may be continued debate as whether we have already or will reach “peak oil”, whether the alarms raised about “foreign” oil are an overreaction, or, most of all, whether climate change is actually happening at all.  The U.S. military doesn’t seem to be willing to take the chance that these things aren’t or won’t happen.  In the words of energy security advocate and retired Army Chief of Staff General Gordon Sullivan, “We never have 100 percent certainty. If you wait until you have 100 percent certainty, something bad is going to happen on the battlefield.”

If Congress and the American people trust the military to keep them safe, hopefully they will trust the military on energy independence and climate change.  General Anthony C. Zinni, retired U.S. CENTCOM commander, has said, “We will pay for this one way or another.  We will pay to reduce greenhouse gas emissions today . . . or we will pay the price later in military terms and that will involve human lives.”

Photo credit: US Army Africa

Retooling the American Economy for Jobs, Innovation, and Competitiveness

Posted on by The Progressive Policy Institute

America is adrift and needs leadership to modernize and build a foundation for 21st century competitiveness. And while it’s a long hard to travel, there are at least a few signs of optimism.

Such were the key takeaway points from Friday morning’s panel on the question of “Retooling the American Economy,” which was part of the Progressive Policy Institute’s Second Annual North American Strategic Leadership Infrastructure Leadership Forum in Washington, DC.

The panelists were : Tom Friedman, New York Times Columnist, Pulitzer-Prize Winning Author; Jason Furman, Deputy Director, National Economic Council, White House; Roderick Bennett, Advisor to the General President of the Laborers’ International Union of North America; and John Woolard, CEO, Brightsource Energy. David Wessel, economics editor of the Wall Street Journal moderated.

In general, the panelists agreed that we’re in a difficult spot. We’re falling behind China on infrastructure, on energy, on basic research and development –  just about every measure of investing in a 21st century economy. As Friedman put it, “We can only go so long with a philosophy of dumb as we want to be.”

Part of that dumb-as-we-want-to-be philosophy is an unwillingness on the part of many to admit that government has a key role to play in creating an environment where innovation can thrive, both by making big investments and putting the right incentives in place. The solution to this, of course, is leadership.

“We have an epic lack of faith in government with a capital G, but we have an unchanging love for government at the local level when it means bridge projects and energy projects and broadband projects,” said Furman. “And that’s something you see at the bipartisan level. Some of this means we have a messaging problem, and some of that is bottom-up, pointing out what it all tangibly means.”

“But how you get the snake through the python is a big challenge,” Furman added. “You have to pass the thing through Congress, and the debate will be framed in big government terms.”

Friedman, who was openly critical of the administration’s salesmanship efforts, argued that what was needed was big-picture leadership.

“We need to make it aspirational,” said Friedman.  “That’s what the moon shot was all about. People want nation-building at home. You fly from Shanghai to JFK, and you go from the Jetsons to the Flinstones. People sense that. And the President has never made that the lodestar. He’s never leveraged all that energy.”

Woolard, who heads a large solar energy company, offered a dose of optimism. “We have a lot more projects here in the U.S. than abroad,” he said. “There are good projects, and there’s a lot moving forward.”

“But,” he added, “The thing that scares me most is the longer-term issue. Not enough students are going into engineering. We need to encourage people to go into those disciplines.”

Woolard also described the challenge at hand: In order to stabilize carbon emissions at 450 parts per million by 2050 (a commonly-agreed on target to stem global warming), “we’ve gotta build between 12,000 and 20,000 gigawatts of carbon-free power. That’s a power plant per day. We’ve built gigawatts a week before, but we don’t have the rules yet to get to this objective. We need policy.”

The consensus was that there would need to be a price on carbon. “Capital works itself out with the right rules,” Woolard said. But given the politics of energy, would the political will ever exist?

Here Friedman was an optimist: “We’re absolutely going to have a gas tax and a carbon tax,” he told the audience. “Because we’re going to run out of money, and we will need revenue and when we run into that wall, people will look around and say, what’s the best source? The sad thing is there are 535 members of Congress, and not one will propose this when it is so manifestly in the strategic and economic interest of the country.”

Bennett, whose union represents construction workers, also registered support for a gasoline tax, which he called “the elephant in the room.”

Friedman also offered a “killer app” for economic competitiveness: “An ecosystem of a national renewable standard, a price on carbon, a gasoline tax, higher building efficiency standards,” he said. “Put that ecoystem in place and you get 10,000 green garages trying 10,000 different things. Two of those will be the next green Google and Microsoft. The killer app is the enabling system.”

The Eastern European Energy Void: A Case For American Leadership

Posted on by The Progressive Policy Institute

Parts of Hungary may well still conjure drab images of the Cold War: bleak and desolate wheat fields, maybe a blue-gray sky, skeletons of Soviet-era construction.

Stereotypes, of course, often contain a grain of truth. The New York Times’ recent profile of Oroszlany, some fifty miles east of Budapest, harks back to that bygone era.  Some 3,000 of the town’s 20,000 residents work in industries related to coal; with that many directly tied to the industry, it’s not hard to imagine how deep into the economy coal’s tentacles stretch.

But that’s changing — authorities announced that Oroszlany’s coal mine would close within three years.  The mine’s closure is well-intended, as the European Union — of which Hungary became a member in 2004 — seeks to end government subsidies for carbon-producing sources of energy.  Dirty coal is, of course, a chief protagonist.

This noble clean-energy goal has created a painful short-term “bridging” problem: The coal-fired power is disappearing too fast, and Hungary is left with an energy shortfall. It simply doesn’t produce enough domestic power right now to keep up with demand.  Figuring out any role that the U.S. or EU might play as Eastern Europe makes this transition is becoming ever more important.

This energy transition is an issue Gabor Rajnai, Oroszlany’s mayor, understands all too well. He wonders how his town is going to keep warm in the winter.  He frets Russian natural gas will fill the gap.  Rajnai probably remembers New Year’s Day 2006, when Vladimir Putin, then Russia’s president, sent a shockwave across Europe when he directed Gazprom, the state energy company, to shut off the flow of gas to the Continent.  Thanks to a price dispute with Ukraine, Europe froze, as it did again when Russia slowed down gas supply again in March 2008.  To make up for this year’s drop in coal-fueled power, Hungary will again import Russia gas.

This is the latest in a deepening dependency.  In March 2008, Putin and Ferenc Gyurcsany, his then- Hungarian counterpart, signed a contract that deepened cooperation on natural gas projects, including Hungarian financing of a Russian pipeline through the country.  In other words, as NATO-member Hungary transitions to a cleaner fuel sources, it is lashing itself ever tighter to the world’s coldest petro-dictator.

Let’s hope this deal doesn’t end up putting Hungary on par with its Eastern European neighbor, the Czech Republic.  As detailed in a stunning mid-September article in The New Republic, Russia and Gazprom camouflaged a network of Czech shell companies to obfuscate the money trail that leads directly from Prague’s hand to Moscow’s mouth.

The Czech Republic faces the same bridging problem as Hungary, too: As coal plants are phased out, how will the country power itself before domestic, self-sustaining energy sources are brought online?  Nuclear power, as regularly championed by PPI, is an option, but as TNR chronicles, even the Russians are likely to win that bid too.

However, that doesn’t mean Hungary and the Czech Republic are doomed to fall in some sort of Cold War-style Soviet sphere of influence.  According to one industry expert, the region’s long-term prospects of creating secure domestic energy sources are more solid: Alex Cranberg of Aspect Energy thinks Hungary has solid reserves of its own gas yet to come online.

He told me he was first drawn to Hungary because its geological fingerprint reminded him of the southern US, and thinks the country’s natural gas industry — where Aspect has invested — is well-run and could produce a stable supply of clean natural gas over the long-haul.  The trick, he says, is getting to the tough-to-reach underground gas fields, which make up some 90 percent of the domestic supply.  That appears to be happening: in the last four years, Cranberg claims that his joint venture has gone from producing none of Hungary’s natural gas to 20 percent, and that slice of the pie should only grow.

But growing takes time, and ensuring that Hungary — and Eastern Europe — has access to a diverse supply of energy in the interim is an important policy initiative that Brussels, not to mention Washington, seems to have glossed over.  Vice President Biden was in Prague to lobby for Westinghouse’s nuclear bid, but local experts believe it might be too little too late. Helping develop domestic clean power sectors could be a productive initiative for both capitals, from economic, energy, and security perspectives.

Photo credit: Wally Gobets

Did Enviros Overreach in Ecuador?

Posted on by The Progressive Policy Institute

The plot is generic Hollywood, straight out of an airport potboiler:

U.S. oil company drills in Amazon, leaves behind contaminated pools of sludge. Activists sue on behalf of rainforest Indians ravaged by disease. Environmentalists and rock stars rush in to show solidarity with the victims. Not hard to tell how this story ends; we’ve seen this movie before.

Except that in this drama, the actors don’t quite play to type. It turns out that the “good guys” cheat, manipulating an Andean countries’ weak and corrupt judicial system in a bid to extract a king’s ransom — $27.3 billion -– from the U.S. oil company. Meanwhile, that company’s claims to be a victim of a political shakedown is getting a sympathetic hearing in U.S. courts.

So maybe this murky saga is not Hollywood material after all. In any case, here’s the real story, courtesy of Roger Parloff on CNNMoney.com:

Ecuador ended its long-time oil exploration partnership with Texaco in 1990. Texaco worked out an agreement to help clean up sites in the Amazon, and was formally absolved of further liability by Ecuador’s then-government in 1998. Nonetheless, a lawsuit was filed subsequently on behalf of Indians who said they had suffered higher rates of cancer and other diseases as a result of exposure to toxic waste. A new Ecuadoran government led by Rafael Correa, a socialist and fiery champion of impoverished indigenous peoples, strongly backs the suit.

According to Parloff, there’s strong evidence that lawyers for the plaintiffs helped to write the report of an allegedly impartial “expert” appointed by an Ecuadoran court that found Texaco – since acquired by Chevron – liable for further damages. A U.S. magistrate recently issued a scathing ruling that said the plaintiffs’ apparent collusion with Ecuador’s judicial system “would be considered fraud by any court. If such conduct does not amount to fraud in a particular country, then that country has larger problems than an oil spill.”

The plaintiff’s misconduct has overshadowed the important questions: how badly did the Indians suffer from exposure to toxic waste, and who is responsible for cleaning up the sites? It’s alleged that Texaco’s remediation efforts were inadequate, even if a compliant Ecuadoran government approved them. Yet Ecuador’s state-owned oil company has continued to drill in the area since Texaco pulled out 20 years ago.

This episode yields at least three morals. First, oil exploration is hazardous, and its full environmental and health costs must always be accounted for. Second, the end doesn’t justify the means, even if the end is to bring justice to people harmed by the effects of oil drilling. And third, it pays to greet overly familiar plot lines, with stock villains and heroes, with an extra measure of skepticism.

photo credit: Rain Forest Action Network

A Conservative Case for Public Transit

Posted on by The Progressive Policy Institute

Over at the American Conservative Magazine, William S. Lind makes a powerful conservative case for renewed investment in public transit: “For cities, conservatives’ banner should be read, ‘Bring Back the Streetcars!’”

A couple of points are worth highlighting:

1)    The current car-dependent culture we have now is not a free market outcome. Lind notes that: “it is the produce of almost a century of government intervention in the transportation market.” Highways, according to Lind, only “cover 58 percent of their costs from user fees, including the gasoline tax.”

2)    Public transit is a real driver of economic development or redevelopment. (Lind cites Portland, OR and Kenosha, WI as cities that got a real boost from putting in a streetcar line)

3)    Public transit helps advance energy independence.

4)    And if the first conservative political virtue is prudence, as Russell Kirk advised, “there is nothing prudent about leaving most people immobile should events beyond the pale cut off our oil supply, as happened in 1973 and 1979)

Lind’s piece is one of several in a symposium on transit over at the American Conservative. And in fact, “The American Conservative’s nonprofit parent, The American Ideas Institute, will launch a new center on transportation made possible by a grant from the Rockefeller Foundation. The center will work to showcase conservative arguments for a balanced transportation system in which rail and roads complement one another.”

Lind has also written a book with conservative stalwart Paul Weyrich on this subject: Moving Minds: Conservatives and Public Transportation.

This suggests real promise on a left-right consensus on the need for meaningful investments in public transit. Progressives ought to pay attention.

Photo credit: Oran Virincy’s photostream

The McClellan Principle

Posted on by The Progressive Policy Institute

It’s a familiar argument: we know that putting a price on carbon will impose economic costs, but we can’t be absolutely sure that major climate change will happen. Therefore, we shouldn’t impose a carbon price, or at least we should avoid doing so in a recession, and be very reticent to do so at any point. The argument strikes many as logical and wise.

It is neither. And it won’t help make good policy or make progress towards consensus on what good climate policy should be.

At its core, the argument claims that any uncertainty about climate change means we should either give up, or at least wait indefinitely for better evidence. I call it the “McClellan principle.” Like the Civil War general, proponents of the argument counsel doing nothing until absolutely certain of success. The principle is frequently stated or assumed to be true in climate policy debates, often but not always by professed climate skeptics. To give a few recent examples, Stephen Calabresi states the principle explicitly in a Politico debate last week, while Steve Everley of Newt Gingrich’s American Solutions outfit uses the stealth version of the principle by listing costs of a carbon price while failing to mention climate change at all. But perhaps the most common form of the principle is simply as a concluding statement, thrown in as if its implications were obvious and unworthy of debate. The Wall Street Journal does this when criticizing California’s AB32 cap-and-trade policy in an April editorial:

While almost all of AB32’s benefits are speculative and uncertain, its costs are hitting businesses and residents now. This is one more blow to jobs and growth that California doesn’t need.

The appeal of the McClellan principle may come from the fact that it is cloaked in rational language, but it isn’t a rational approach to policy at all. In fact, it’s the inverse of the familiar “precautionary principle” advanced by many Greens (at least in the precautionary principle’s strong form). The strong precautionary principle would require a policy response even if uncertainty is large. The McClellan principle requires inaction even if uncertainty is small. Both principles are simplistic, and neither leads to good policy decisions.

The reason for this is that there are both costs and uncertainty about those costs associated with climate policy and with doing nothing. Both are real choices with consequences, even if we can’t say with complete precision what those consequences are.

The McClellan principle stresses that the economic costs of climate policy—primarily higher energy prices—are certain, while there is at least some chance that all the climate science models are wrong and that there will be no costs associated with doing nothing. Holding out hope that the Earth will not warm (or that we can do nothing about it) strikes me as absurdly Panglossian, but the basic premise that we can be more confident in estimates of the economic costs of policy—particularly that they will not be zero—is probably right.

The McClellan principle’s conclusion does not follow from this premise, however. Making policy based only on which kind of costs we think are more or less likely to be zero doesn’t make sense. We should instead do the best we can in estimating the two costs, both their magnitude and precision, and make the policy we can based on those estimates. That is of course incredibly difficult in practice. It raises questions about discounting of future costs and benefits, the tensions between national policy and global risks, and distributional impacts, among others. But it has to be the basic framework for making a decision. Both the McClellan and (strong) precautionary principles try to offer shortcuts, but in doing so they obfuscate rather than clarify.

I illustrating this is hard because conversations about climate policy are, unfortunately, so loaded with politics and preconceived ideas. Instead, let’s look at another issue loaded with different politics and preconceived ideas: crime. Imagine you are on a parole board considering release of a prisoner. There is a cost to releasing the felon (he might commit another crime) and a cost to keeping him in prison (prisons are crowded and expensive, and he might contribute to society if released). You know the cost of prison is not zero. The cost of release might be zero, or it might be big. But that doesn’t mean you should release the felon— or even that you should be any more likely to. Setting moral/ethical considerations about the prisoner aside, all we should care about is balancing our best guess about the costs of both options.

Of course, the way that parole boards work in practice—or at least the way most people demand that they work—is that any real chance of repeat offense is regarded as a reason for denying parole. So why is there such a dissonance between the way many people view parole decisions and the way so many view the climate policy debate? Why does the mainstream view on releasing felons appear to be a form of the precautionary principle, while the McClellan principle, if not the mainstream view on climate, is at least a major and usually uncriticized one? Surely a big factor is that the risks of crime are viewed as more personal and visceral, even if the chances of actually being a victim of a re-offender are low. It might be as simple as saying that most of us fear criminals more than we fear the more emotionally and temporally, if not probabilistically distant risks of climate change—and that mainstream positions are defined by what we most fear. That’s unavoidable to some extent, but it’s not a rational approach to making good policy.

Others, most notably Richard Posner, have made a similar analogy between major climate change and asteroid impacts—for which uncertainty is similarly paired with catastrophic downside risk. This analogy is useful because asteroid impacts are completely politically irrelevant—there’s no party line, and little fear—and as a result few people seem to have either a precautionary or McClellan principle-style reaction. A rational approach is the most appealing, though the same lack of fear may cause us to ignore the risk entirely and do nothing.

As these analogies hopefully illustrate, precision is important, but lack of it shouldn’t keep us from acting—on climate or on other problems of risk. Precision is just another factor in estimation of risks and costs. And whether the costs of action or inaction might have a chance of being zero doesn’t provide a shortcut out of the difficult task of balancing the two and making policy. Uncertainty matters, but it does not and cannot do the work alone.

I suspect that many people who advance the McClellan principle as their argument against pricing carbon would still oppose a price even if there were much less uncertainty about climate change risks (or would simply disbelieve claims of certainty). In their case, the McClellan principle may provide cover for less politically-acceptable positions, like an economic or political interest in fossil fuels or a very large discount rate. But many people who state the principle are not being disingenuous just to score rhetorical points. You don’t even have to reject climate science to advance the McClellan principle—you just need to point to the uncertainty within it.

But even for the intellectually honest, the wellspring of the principle’s appeal is, again, fear. Especially in a recession, the downside of pricing carbon sparks greater concern than climate change does, at least for many people. To them, the economic costs of a carbon price are very real, immediate, and personal, while the costs of climate change are distant and abstract. This is to some extent true for everyone, though if you are unemployed and live in a coal state, economic costs are certainly more apparent: a recent study suggests that unemployment and some measures of concern about climate change are negatively correlated. In a democracy, these perspectives cannot and should not be dismissed. They are valuable and should be listened to when considering climate policy, and in particular its distributional impacts.

But the fact that costs are tangible—that they are feared—doesn’t mean the McClellan principle is any more logically sound. Lack of certainty about climate change risks doesn’t justify inaction any more in Ohio than it does in California—or places at great risk from warming, like Bangladesh. The McClellan principle is ultimately based on fear, not reason. Stripping the principle of its thin cloak of rationality might therefore make a difference, however small, in the politics of climate policy. As I mentioned above, I’m certainly not the first person to try to do this, but the principle remains a resilient meme. It’s worth having the counterargument in your pocket.  Next time you hear it, ask its proponent what they would do on a parole board.

Public Power Goes Nuclear

Posted on by The Progressive Policy Institute

Opposition to nuclear energy seems to be melting fast, especially in the South. The Tennessee Valley Authority voted last week to complete a nuclear reactor in Alabama it stopped working on in 1988.

Earlier this year, the Obama administration awarded loan guarantees to Southern Company and two partners to build two new nuclear reactors in Georgia – the first new generating plants to be approved since the 1970s. Others are in the works for South Carolina, southern Maryland, and Texas.

TVA’s decision to revive its long-shelved reactor at the Bellefonte site was the latest sign that a “nuclear renaissance” in America isn’t just hype. Work began on the plant in 1974 but was stopped in 1988 because of falling energy demand, as well rising anti-nuclear sentiment following the 1979 Three Mile Island incident.

The $4.3 billion project is part of the venerable public power company’s strategic plan for meeting future energy demand in the seven states it serves: Tennessee, Alabama, Mississippi, Kentucky, George, North Carolina, and Virginia. It envisions reducing carbon and sulfur dioxide emissions, by switching from coal-burning units to natural gas and nuclear energy. “We want to be one of the nation’s leading providers of low-cost and clean energy by 2020,” TVA CEO Tom Kilgore told the Associated Press.

Will other regions emulate the South and learn to love nuclear power again? It’s hard to say. The South is not as well endowed in wind, hydro and even solar energy as other regions, though it could become a major biofuels producer. But other regions, notably the Midwest and Mountain West, are even more dependent on coal than the South. They may also turn to nuclear energy, along with natural gas and, if it pans out, clean coal technology as attractive alternatives for meeting rising energy demand with low-carbon fuels.

And since President Obama isn’t getting much love these days, it’s worth pointing out that his administration has given the nuclear revival a big boost by dramatically increasing nuclear loan guarantees. He’s absolutely right: at a time when America’s ability to generate good jobs is in question, we cannot afford to cede global leadership in the fast-growing market for nuclear energy to France and China.

Photo credit: Scrunchleface’s photostream

Myths and Realities of Regulatory Uncertainty

Posted on by The Progressive Policy Institute

Ezra Klein joined others this week in mocking the “uncertainty” rhetoric that Republicans and some business leaders have been parroting to argue for lower taxes and lighter regulation.  As Stan Collander, Brad DeLong, and Ezra himself have all done an excellent job of arguing, there is plenty of reason for ridicule.  Most of the talk about businesses being paralyzed by uncertainty over taxes and regulations is little more than politically-driven spin.

The problem I have with Ezra’s post this week is that he chose the wrong example to pick on.  He points to Derek Thompson’s  interview with Eric Spiegel, CEO of Siemens USA, who complains about the uncertainty his company faces in the wake of the failure to pass an energy bill in Congress.  Thompson and Klein both equate this position with the less policy-specific confusion and outrage Republicans are attributing to the business community at large.   Thompson sums it up with this broad conclusion:

It’s another piece of evidence that “government should remove uncertainty” is a euphemism for “government should enact the laws that make me profitable.” For some companies, “make me profitable” might mean simply slashing taxes on income and capital gains, cutting public spending and getting out of the way. For other companies like Siemens, it means government getting in the way. It means putting a new tax on carbon, giving tax money to companies building wind blades, and adding new regulations for renewables.

In this case, there is more to it than that.  The kind of uncertainty problems that Spiegel describes are actually legitimate, at least in part.  The energy industry has been holding its breath for years waiting for the EPA and Congress to decide what they are going to do about regulating carbon emissions.  With the energy bill now faded into legislative limbo, it looks like the industry will not get the resolution it needs anytime soon, which means billions of dollars worth of investment will be trapped in limbo as well.  The uncertainty is so real that several people in the industry have privately told me that they almost don’t care what Congress chooses to do with carbon pricing, as long as it does something, so they can stop waiting and start building.   Or as another energy CEO put it recently, “There’s a lot of capital sitting on the sidelines just waiting for more regulatory clarity.”

It’s worth differentiating the energy industry’s need for long-term clarity in climate policy from the standard fear and loathing Republicans are promoting.  Here’s why.  A lot of the decisions energy companies need to make are binary choices that change dramatically depending on the policy assumptions: whether a new plant should be coal or natural gas, whether a new wind farm is viable without tax incentives, whether a new nuclear plant could be approved and running within ten years.  It’s hard to make economically rational decisions when the outcomes are so dependent on unresolved political questions.  This is fundamentally different from arguments that companies are afraid to hire new workers this quarter due to taxes or health care regulations.

There is no shortage of unsupportable statements about uncertainty that belong to the realm of political fiction.  Rep. Boehner’s latest call for a moratorium on new regulations certainly qualifies, blaming the “uncertainty that’s being created by the Democrats’ agenda” for leaving every employer and investor in America “frozen” with fear.   That kind of rhetoric is obviously exaggerated, and it should either be refuted or ignored altogether.

However, we should not allow Republicans crying wolf to drown out the voices that have legitimate gripes about regulatory uncertainties that Congress needs to address.  And we should be careful not to confuse the two for each other when we hear them pleading their case.

How the Military is Leading the Way on Energy Security

Posted on by The Progressive Policy Institute

As a U.S. Army veteran I am used to dealing with the military, an organization that, by necessity, takes swift and decisive action when necessary, despite the fact that many see it as a conservative organization that is resistant and slow to change. In Washington, I am becoming used to dealing with another organization that is much more conservative and even more resistant and slower: the United States Senate. I am proud to say that the U.S. military is once again taking decisive action on energy independence and security, as well as addressing the military repercussions of climate change. The military is taking action where the United States Congress will not.

On July 27 I attended the White House Forum on Energy Security along with a group of veterans from Operation Free, a nationwide coalition of military veterans from all eras and ranging from Privates and Airmen to Generals and Admirals – all of whom support the goal of energy independence, security, and addressing the national security repercussions of climate change.

We have collectively been touring and speaking throughout the country and in Washington, D.C. in support of breaking our dependence on largely foreign oil and pushing Congress to take real steps toward a comprehensive clean energy climate plan. We have come to support the American Power Act developed through a bipartisan effort by Senators John Kerry and Lindsey Graham with Senator Joseph Lieberman and cooperation from the White House.

July 27 was supposed to be the day that the Senate finally took real action on the issue we have all been working hard for over the past year. It didn’t happen. As we all got on airplanes throughout the country in high spirits, something was happening on Capitol Hill: nothing.

By the time we hit ground in Washington, D.C. we learned that everything had changed. The Senate didn’t have the sixty votes needed to proceed to an up-or-down vote on the bill. We went to the Hill again to meet with fence-sitting Senators and their staff. The opinion we encountered there was disappointing, but not surprising: we need to do something about the issues of energy security, energy independence, and climate change, but we’re not going to do anything now.

Some, echoing Republican sentiment, said the issue hadn’t been discussed enough yet, that the Senate process of debate and hearings needs to be completed, that it would force them to choose ‘winners and losers’ and they are not ready to do that.

Hadn’t been discussed enough? We’ve been talking about energy security and independence since the 1970s. Other countries are taking action while we are being left behind. The CIA includes repercussions of climate change and our dependence on foreign fossil energy in its assessments. The State Department does as well.

Now the U.S. military is taking serious steps to address the issue. It devoted an entire section of the 2010 Quadrennial Defense Review Report (p. 84) to responding to climate change issues.  Secretary of the Navy Ray Mabus has expressed a clear vision of a force independent of fossil fuels. The military is taking action by reducing the use of fossil fuels, researching the use of alternative sources, and increasing the efficiency of its energy use, whether on battlefield outposts in Afghanistan or home installations in Texas. Speakers from each branch of the U.S. military have discussed similar opinions, expressing that action on this issue shouldn’t be taken for political reasons, but for security reasons. The money we pay for oil goes to regimes opposed to our interests. The cost of procuring, transporting, and securing that fuel is extreme, in dollars and to the lives of our troops.

This contrasts greatly with the attitude of too many Senators, who continue to choose politics over security. The U.S. Congress trusts the military and veterans on other security issues. Energy independence, energy security, and planning for the possible consequences of climate change are national security issues. The military is taking action, even if Congress won’t. If they’ll listen on other national security issues, let’s hope they’ll trust the military when it comes to a comprehensive clean energy climate plan that makes us energy independent.

Photo Credit: DVIDSHUB’s Photostream