Consider the recent case of Xcel Energy, a Minnesota utility that wanted to build a new coal plant. When the state utility commission asked Xcel to recalculate the cost of running the plant with an $8-per-ton cost for carbon emissions, the company did so — and then abandoned its plan for the coal plant. Instead, it will rely on wind generation and hydropower. A spokesperson said that the prospect of a carbon fee helped prompt the decision, and the company now advocates mandatory standards for reducing greenhouse gases.
In this case, just the anticipation of a rule change created a market incentive for Xcel to make its next investment in a way that favored new technology.
They propose five rule changes:
- Put a price on carbon.
- Set “carbon efficiency” standards for vehicles.
- Make energy efficiency the business of utilities.
- Modernize the electric power grid to be more efficient and better deliver clean energy.
- Increase government support for clean energy.
What could this accomplish?
Climate change and oil dependence are pushing us toward a clean, renewable, efficient energy future. The profits to be made in making and selling these technologies are pulling us in the same direction. With one strategic leap, we can wipe out two of the biggest threats to our children’s well-being while creating the high-tech industries that will employ them in the future.
If we just change the rules.