issue: Energy & Environment

The Electric Car Ecosystem

Posted on by The Progressive Policy Institute

The second coming of the electric car — particularly in the guise of the highly anticipated Chevy Volt — has certainly received a fair amount of publicity in recent months. No wonder: the electric car represents America’s best bet to rejuvenate its auto manufacturing industry.

But while it’s exciting enough to dream of factories humming again and assembly lines pumping out the next generation of autos, the promise of the electric car goes beyond its immediate boost to the American car industry. A fascinating article by Bernard Avishai in Inc. details what exactly the rise of the electric car could mean to our economy:

Actually, here is where the dots connect and the news turns good. For the technical challenge of greening electric cars means entering a commercial landscape that mirrors the transformative industries of the 1980s and ’90s: computers and software, switching and networking, consumer electronics converging with cellular technology. This landscape is full of start-ups and medium-size supplier businesses that play to American strengths: entrepreneurship, originality, comfort with the virtual. We ought to stop thinking about the auto industry as a handful of great manufacturing companies superintending large, dependent suppliers — or, for that matter, cars as standalone objects. Rather, the electric car will be a kind of ultimate mobile device, produced in expanding networks for expanding networks; a piece of hardware manufactured by a burgeoning supplier grid and nested in an information grid interlacing the electrical grid. Building out these three networks will be more profitable, and a greater engine of economic growth, than building the cars themselves.

A word that pops up frequently in Avishai’s piece is “ecosystem.” Not in the environmental-ecological sense — though that obviously matters, too — but rather in the sense that a new complex of entrepreneurs, innovators, and manufacturers will likely spring up in response to the mainstreaming of the electric car. Reforming the grid, constructing a new electric-car-recharging infrastructure, making the next generation of batteries, building hardware and software for the smart cars: these and other ancillary industries have already been jump-started by the promise of the carbon-free car.

Where does government fit in? The Obama administration has already shown its commitment. The American Recovery and Reinvestment Act included $500 million for producers of electric drive components, $400 million for grants promoting plug-in hybrids and electric vehicles, and $4 billion toward the development of the smart grid. Avishai points out that when Obama signed the stimulus package, he was introduced by the head of Namaste Solar, a company of 60 employees — a subtle nod toward the idea that the green economy will be driven by thousands of new, smart companies that spring up to compete in the clean tech ecosystem. The players in the nascent industry also believe that the government has a role in establishing standards early on to bring stability to a free-for-all environment and remove some uncertainty for start-ups to jump into the fray.

And this doesn’t even get to the other obvious benefit of our car transformation: the reduction of carbon emissions as millions of gasoline-powered cars are replaced by the new breed of automobile. It all seems like a vision out of science fiction. What’s thrilling is, as Avishai reports, it’s already happening.

Cap-and-Trade: Neither a Job Killer Nor a Free Ride

Posted on by The Progressive Policy Institute

Cap-and-trade legislation in Congress has come under fire from both left and right. Some on the left claim that the distribution of free emissions allowances to industry amounts to a “free ride.” Meanwhile, many on the right slam the bill as a job and economy killer.

But a new study (PDF) by PointCarbon Research, a carbon market research firm, rebuts both sides’ claims. The study focuses on the impact that climate change legislation would have on the largest emitters in the power and oil industries, which represent about 40 percent of the covered emissions in the U.S.

Contrary to right-wing forecasts of widespread economic collapse, PointCarbon found that a cap-and-trade market would, in fact, yield winners and losers among industry players. “Some companies will actually be considerably better off with a U.S. cap-and-trade program than without,” the study found, noting that companies like Exelon (the largest American utility), FirstEnergy, NRG, and PG&E stand to gain the most. Firms with a diversified fleet of non-emitting (hydro, nuclear, and renewables) and low-emitting plants are more competitively positioned and will likely see benefits.

Meanwhile, firms that rely heavily on high-emissions plants (Southern Co., AEP, Duke) would see the biggest exposure. That finding debunks the idea that industry receiving free allowances would be getting a “free ride” under cap-and-trade. As the study points out, “in reality the bulk of free allowances destined for [the power] sector will not help large power companies exposed on the generation side.”

But even as some firms do see more of a negative impact on the bottom line, the study notes that as the carbon market matures, “companies will be able to mitigate their exposure through internal reductions and offset investments” – meaning that the incentive to innovate and modernize that a carbon price brings will eventually help these companies adjust to the new low-emissions economy.

The study raises a fundamental point: “[P]utting a cost on emissions means giving a value to reductions.” In other words, a price on carbon will mean a cost burden to some – but a revenue opportunity for others. Letting actors compete in this new market is the most efficient and effective way to address the looming climate crisis.  That is precisely what the Senate cap-and-trade legislation hopes to achieve.

Could Nuclear Be the Key to Passing a Climate Bill?

Posted on by The Progressive Policy Institute

The Washington Post reports today that prospects for passing climate change legislation in the Senate — coming up for committee debate on Tuesday — look increasingly dicey as Democrats remain deeply divided on the issue. Democratic senators from the South, Midwest, and Rocky Mountains are balking at the bill’s impact on industry and consumers, while few Republicans are willing to stick out their necks for a bipartisan vote on climate change. But slim hopes for an across-the-aisle deal still exist:

So Democratic leaders, with the support of the Obama administration, are trying to sway at least half a dozen Republicans by offering amendments to speed along their top priority: building nuclear power plants.

Many people have long viewed nuclear energy with suspicion, with cost, safety, and nuclear waste at the top of the list of objections. But the fact is that it will take a long time to scale up the production of renewable energy sources like solar and wind power. It will take just as long to rebuild our transmission grid to deliver that power to all parts of the country. And efficiency alone is not enough to address the climate issue — we need a source of clean power even as we try to develop our renewable energy industry and modernize our grid.

Nuclear is, of course, not the sole answer to our energy needs. But it’s looking like it might be the answer to our political deadlock on climate change legislation. Progressives might not like it, but they should keep in mind that the key is the cap. Getting that cap is the hardest part. Embracing nuclear energy to get one seems not just good policy but smart politics as well.

At the White House, Clean Tech Gets a Push

Posted on by The Progressive Policy Institute

A room full of clean tech entrepreneurs likely would not have been found in the Bush White House. But on Wednesday, October 28, that’s just what you would have seen in a brand-new auditorium (so new that there was no sign for the entrance, and it felt sort of like walking into a warehouse) on the ground floor of the Eisenhower Executive Office Building. On the heels of its announcement of a $3.4 billion investment in building a smart grid — leveraged to achieve $4.7 billion in private investments, totaling over $8 billion — the Obama administration hosted an “Energy and Climate Stakeholders Meeting.” The presenters included White House Senior Advisor Valerie Jarrett, Secretary of Energy Steven Chu, and White House Climate Change Policy Director Carol Browner.

The meeting included an extraordinary, hour-long give-and-take with Chu, who admitted that he would rather be riding herd on DOE bureaucrats to try and get more money for programs to spur clean tech when “they have me doing meetings like this.” But it was said with a smile. He also told stories about crawling around in his attics — first in California, when he was a professor, and now in Chevy Chase — to find the weak spots in his insulation. The lesson? We need far stricter standards in retrofitting homes.

The level of enthusiasm among these administration A-listers was palpable. “We’re off and running!” Jarrett announced. Describing the attitude in Congress and the potential passage of carbon reduction legislation in the Senate, Browner said, “I’ve been in and out of D.C. for twenty years, and there’s sort of that tipping point that happens, where everyone who talks starts saying not ‘if’ but ‘when.'”

In describing $151 million in new grants at DOE’s elite ARPA-E unit for transformative energy research, Chu said, “We’re going to try and hit home runs, not just base hits,” citing, with geeky but endearing enthusiasm, a new program for all liquid metal batteries that can provide large-scale energy storage at 1/20th of the prior cost.

The room was rapt — which is perhaps what you’d expect from a hundred clean tech folks crowded into a spanking-new auditorium with a spanking-new administration. Change, indeed!

This item is cross-posted at The Huffington Post.

Build This: A Real Infrastructure Policy for America

Posted on by The Progressive Policy Institute

Imagine boarding a sleek new bullet train and rocketing from Washington, D.C. to Richmond, VA in under an hour. Imagine creating thousands of durable new blue-collar jobs to build and maintain railways, construct and fine-tune railcars, and help design the electrical grid that would support high-speed rail. Imagine a new architecture for concentrating development around sophisticated new urban centers — and a hungry new customer for clean energy.

Imagining high-speed rail in the U.S. has often just been the province of dreams. The idea has been bedeviled by various lobbying groups hostile to sustainable transportation, beset by internecine warfare between different states and federal agencies, and bereft of a long-term infrastructure policy. As one grizzled and skeptical railway executive told me at a conference held last week by the new U.S. High Speed Rail Association at the H.W. Marriott Hotel in Washington, D.C., “I attended my first high-speed rail conference thirty years ago.”

But these dreams are about to leave the ether and descend to earth, in the form of concrete, steel, and electrical lines, as the U.S., thanks to the Obama administration, prepares to invest $8 billion in actually building high-speed rail. On the heels of the administration’s announcement of $3.4 billion in grants to drive the creation of a “smart grid” in the country, the time is right to think about an infrastructure policy not just for next year but the next generation.

The U.S. High Speed Rail Association is a broad coalition of domestic and international partners working to drive American investment in high-speed rail. There’s good reason to think it’s an idea whose time has finally come, after eight years of the George W. Bush administration, during which federal funding for rail was essentially scaled to zero. The challenge will be to ensure that the initial $8 billion is not frittered away in a series of pork-barrel pilot projects, but instead becomes the first investment in the long-term infrastructure strategy the U.S. has been sorely lacking.

The organization estimates that a fully functioning, 17,000-mile, national high-speed rail system would cost at least $600 billion over 30 years. In his panel presentation, Gov. Ed Rendell (D) of Pennsylvania, a long-time advocate of high-speed rail, urged participants to take the long view on such an infrastructure investment. “We need a capital budget run through an infrastructure bank,” Rendell urged. “It’s the only way to do this.” Rendell emphasized that thousands of “tough, blue-collar work” would be created by high-speed rail, citing an estimate by a Pennsylvania steel plant that makes rail ties that its work force would triple if high-speed rail were to become reality.

John Krueger, a staff attorney with the U.S. Public Interest Group who advocates for new federal budget priorities on transportation, argued that grassroots public opinion will ultimately change our infrastructure policies. “Why high-speed rail?” he asked the conference. “It’s what the people want….The opposite of NIMBY (Not In My Backyard) is PIMBY—Please In My Backyard.” Over 220 states and localities have submitted applications for the $8 billion the Obama administration has allocated to high-speed rail. And in the budget request for 2010, the House of Representatives approved an additional $4 billion of high-speed rail funding, surpassing an initial administration request of only $1 billion.

Presenting on the second day of the conference, Norm Anderson, who heads the consulting group CG/LA Infrastructure, emphasized a series of gaps in the nation’s long-term infrastructure strategy. He highlighted the urgent need for a clear focus on the competitiveness and job creation dimensions of high-speed rail. With competitive nations such as China aggressively investing in high-speed rail, we risk losing our edge in technology, concentrated urban development, low-carbon transportation, and a stable employment base for thousands. Anderson also emphasized the need for a strong funding mechanism — the national infrastructure bank also advocated by Gov. Rendell — and a federal entity that would “own and understand” infrastructure, opening it to both competition and public-private partnerships.

Inspired by events such as the U.S. High Speed Rail Association conference and the Obama administration’s $8 billion commitment, the Progressive Policy Institute’s new E3 Initiative in the coming months will be developing and driving policy proposals on infrastructure and other areas central to rebuilding the nation’s economy around clean technology. It’s an exciting time — and we need to ensure that the excitement does not fade into a passing fancy, but rather leads to real steps that revitalize the U.S.’s economic dynamism.

This item is cross-posted at The Huffington Post.

Reframing Climate Change

Posted on by The Progressive Policy Institute

A recently released Pew poll on Americans’ views on climate change should worry progressives. According to the survey, there has been a significant drop in the percentage of Americans who believe that there is proof that manmade global warming is happening. Also worrisome is the decline in the percentage of people who think that climate change is a “very serious” problem.

The poll of 1,500 Americans found that 57 percent of respondents think there is “solid evidence” that the Earth is warming, down from 71 percent in April 2008. It also found a startling drop in the number of people who think that global warming is “very serious,” from 44 percent in April 2008 to 35 percent today. Particularly striking is the fact that the declines have occurred across the partisan spectrum, with fewer Democrats, Republicans, and Independents all saying they see evidence for warming.

There are several reasons for the growing doubts about climate change. A major factor is media coverage of the issue. Even though climate change is settled science, the media continue to give a platform to skeptics, falsely giving the public the impression that there is no consensus on the issue. (Exhibit A: George Will, not only a marquee name at the Washington Post, but the most widely read syndicated columnist in America.)

Another is that the science itself is so complex that Americans are especially prone to misapprehensions. For instance, a study by academics Patrick J. Egan and Megan Mullin (PDF) found that, at least for less educated Americans, there is a significant relationship between local weather conditions and people’s views on global warming. In other words, during a cooler stretch of days in the summer, some respondents are more likely to think that global warming is not a serious problem. As scientists have pointed out, short-term shifts in weather patterns are irrelevant to the broader debate about climate change.

But a likelier explanation for public cooling on global warming is the state of the economy. Simply put, it’s harder to think about saving the planet when you’re scrambling to save your job. Progressives need to do a better job of framing climate change as less a crisis to be addressed than an opportunity to be exploited. While the Obama administration has sought to make the connection between environmental stewardship and economic recovery via its “green jobs” initiative, progressives have clearly not done enough to hammer home the message.

The shift from a fossil-fuel based economy to a greener, cleaner one is obviously necessary for us to avoid the massive consequences of climate change. But by forcing the economy to innovate – always America’s strongest suit – the transformation into a clean economy just might be the spark America needs to regain its dynamism. Too few Americans know or understand this – and, consequently, their commitment to addressing climate change is proving tenuous.

“Green Shoots” on Climate Change?

Posted on by The Progressive Policy Institute

With the entire U.S. political world engaged in handicapping the likely outcome of the health care reform debate, while others focus on the Obama administration’s impending decision on strategy and troop levels for Afghanistan, there hasn’t been much attention paid outside advocacy groups to prospects for action on climate change legislation (passed, as you might recall, by the House during the summer).

The general prognosis has been pretty negative, in part because of the extreme difficulty encountered in getting the revised Waxman-Markey legislation through the House (requiring compromises that left a lot of advocates cold or lukewarm), and in part because the Senate was so absorbed with health reform.

But last weekend the leading Senate climate change legislation advocate, John Kerry, threw a change-up that will at the very least require a recalibration of expectations, by signing onto a New York Times op-edwith Republican Sen. Lindsay Graham offering a new “deal”: combining a cap-and-trade system for carbon emissions with provisions liberalizing offshore oil drilling and relaxing regulations on nuclear power development.

The op-ed is worth reading in its entirety, but aside from offering conservatives the carrot of more U.S. oil and nuclear power, it also bluntly threatens the stick of unileratal action on climate change by the Obama administration:

Failure to act comes with another cost. If Congress does not pass legislation dealing with climate change, the administration will use the Environmental Protection Agency to impose new regulations. Imposed regulations are likely to be tougher and they certainly will not include the job protections and investment incentives we are proposing.

The message to those who have stalled for years is clear: killing a Senate bill is not success; indeed, given the threat of agency regulation, those who have been content to make the legislative process grind to a halt would later come running to Congress in a panic to secure the kinds of incentives and investments we can pass today. Industry needs the certainty that comes with Congressional action.

This threat may actually be welcomed by hard-core Republican pols who would lick their chops at the idea of “bureaucrats” end-running Congress to set up a cap-and-trade system, but not by those industries that would actually be affected, particularly since the business community is already divided on the issue.

The op-ed also discusses the national security case for action on climate change, and as Brad Plumer at The Vine notes, this argument polls well, has some appeal to conservatives, and also explains why Foreign Relations Committee chairman Kerry has for the moment displaced Barbara Boxer of CA as the “face” of the climate change initiative in the Senate.

Meanwhile, Nate Silver goes through the Senate membership and tries to assess which specific senators might be moved by a new bipartisan “deal” on climate change:

So what does this get the Democrats? It gets them Linsday Graham’s vote, and possibly Lisa Murkowski’s. It takes Mark Begich from a leaner to a likely yes. It might encourage Mary Landrieu, and possibly George LeMieux of Florida, to look more sympathetically at the bill. Then there are a whole host of more remote possibilities: Isakson of Georgia, and perhaps Cochran and Wicker of Mississippi or Burr of North Carolina; none of those votes are likely, but they become more plausible with offshore drilling in place. Overall, it seems to be worth something like 2-4 votes at the margin.

That would give the Kerry-Graham bill a fighting chance, especially if an additional vote or two — possibly John McCain’s — can also be picked up as a result of the nuclear energy compromise. Of course, that’s assuming that no liberals would rebel against the new provisions, but the opposition to both offshore drilling and nuclear energy seems to be fairly soft in the liberal caucus.

On this last point, it’s worth noting that Dave Roberts of Grist, a highly credible warrior for action on climate change, adjudges the concessionson oil and nuclear energy “an affordable price [to pay] for the benefits of passing a bill.”

If nothing else, Kerry’s gambit has shuffled the deck, complicated Republican claims that Democrats are uninterested in genuine bipartisanship, and offered a sign of potential progress in advance of international climate change negotiations in December. All in all, it’s a good example of strategic audacity on an extraordinarily wonky issue, and well worth watching.

This item is cross-posted at The Democratic Strategist.

Energy Efficiency Spurs Economic Growth

Posted on by The Progressive Policy Institute

A new study from Environment Northeast (ENE), an environmental research organization, offers a rebuke to the notion that energy efficiency can only be achieved at the expense of economic growth. Studying the macroeconomic impact of efficiency policies in the Northeast, ENE finds that efficiency provides not just savings for consumers and a decrease in emissions — the usual benefits of energy efficiency — but a significant economic boost as well.

The study used a forecasting model to project the effect of efficiency programs on the economies of six New England states: Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont. It found that efficiency programs led to gains of more than $180 billion in gross state products over 15 years, more than justifying the efficiency investments made by the states.

How exactly does energy efficiency get translated into economic growth? Saving on energy bills, consumers could then redirect that money to the wider economy. Moreover, lower energy costs give regional businesses a boost by strengthening global competitiveness and promoting further growth. So much for the false choice between the environment and the economy that skeptics would have us make.

To read the ENE report, click here.

Building a Clean Economy on an Old Tobacco Plant

Posted on by The Progressive Policy Institute

It’s hard to imagine many new uses for a shuttered tobacco factory. Thirty-foot tall cranes designed for moving bales, a paper factory, heavy equipment including backhoes, fork-lifts and tractors, and old cement floors stained by tobacco juice made sense for tobacco. But the odds that this plant, situated on 140 acres of land and given up by tobacco company Brown and Williamson in 2006 after its merger with R.J. Reynolds, would find a second life seemed pretty low.

Welcome to the world of sustainability and green entrepreneurs. An enormous tobacco factory in Chester, Virginia, about 20 minutes southeast of Richmond, has become the unlikely but inspiring location for an interdisciplinary group of green companies to work together and create a sustainable—and profitable—economy.

The Sustainability Park was launched in 2006 by Brenda Robinson, a Richmond-area biomass entrepreneur. She founded the Sustainability Park to create a community of businesses sharing a common vision of sustainability and renewable energy advancement.

“The Park is still creating jobs and did throughout the economic downturn,” said Robinson, the Park’s founder. “We are continuing to expand with new manufacturing facilities and equipment.”

The Sustainability Park currently has thirteen tenants, whose services include biomass production; industrial composting for landscapers and gardeners; recycling of massive amounts of debris that would otherwise go to landfills; and even a baseball training facility for Richmond-area youth that uses all-recycled equipment. Tenants in the Park also provide the important new business of LEED¬—Leadership in Environmental Energy and Design—Certification. This important program, created and monitored by the U.S. Green Building Council, provides strict standards for certifying construction as sustainable according to a variety of criteria, including the percentage of post-consumer material used and the impact on the local environment.

The Park and other projects like it across the country, belie the notion that green or sustainable projects are somehow antithetical to the free market or to capitalism; on the contrary. The Park itself is a for-profit company and the tenants are all for-profits. There is a raging market for the services the tenants provide. One company, Ace Recycling, sorts large quantities of construction debris, recovering tons of metal, biomass and other materials, for later post-consumer use, whether as wood pellets or as road surfacing—and at prices often lower than landfills.

Robinson explained that small businesses, like those at the Sustainability Park, are currently constrained by the lack of growth capital and government programs are not structured to aid these types of projects.

“We have been resourceful without government assistance,” said Robinson, “but infusion of government shovel-ready funding would have created many more sustainable jobs and additional tax revenue while helping the environment, promoting creative entrepreneurship and clean energy solutions.”

These businesses do need help from government, whether with improved access to stimulus funds; reducing the red tape often required at the federal or state level to apply for and receive grants; and increased investment in research and development. Recently, the Park considered applying for a federal grant to help increase efficiency of their own energy use, which could have saved $250,000 a year. They stopped the application process when they discovered that the regulations in place—including the requirement to purchase a $30,000 energy audit and a limit of 25% on the company’s savings—would have dramatically reduced their economic impact.

Yet, the profitability and early success of the Park’s tenants reveals the tremendous promise of clean technology as a business model and investment for society. Robinson noted the co-location of such varied “green” businesses has triggered tremendous cooperation, brainstorming, and even business deals within the Park. A recycler, for instance, sold material to another tenant to build a road.

The innovation and entrepreneurial spirit at the Park shows that America can indeed grow its way out of the current economy and into a new clean economy, where we will begin leading the world again. Our policymakers need to open the door and where helpful, provide incentives and ease regulatory burdens. The new generation of green entrepreneurs will do the rest.

For evidence, just see the facts. Less than three years later, $20 million has been invested in the Park, which has created 80 local jobs—including rescuing many employees who lost their jobs when the tobacco factory closed.