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How would you spend $50 billion to stimulate the economy AND energy efficiency, Part 1

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"How would you spend $50 billion to stimulate the economy AND energy efficiency, Part 1"

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We are going to have a huge economic stimulus package soon after Obama becomes President. And a big piece of it is going to be aimed at energy efficiency and renewable energy, as the NYT reported today in “Proposal Ties Economic Stimulus to Energy Plan.”

I have asked a bunch of my wonk ee friends for some energy efficiency ideas, which I’ll be posting in the coming days. I’d love to hear some ideas from you — please try to keep them practical. Focus on spending that creates jobs in the next two years AND that either saves energy (like weatherizing low-income homes) or helps jumpstart the transition to a clean energy economy (like ‘green’ transmission).

I’ll even send one or two the best ideas to the various transition folks I know. Realistically, it would be very hard to actually get into the stimulus package, but a good idea might still find its way into the huge energy bill that is equally inevitable for 2009, but on a somewhat slower track.

Try not to duplicate stuff in the Center for American Progress’s plan, “A Strategy for Green Recovery” (which is a good guide for how to write up an idea). Nor should you duplicate ideas in the NYT piece:

President-elect Barack Obama and leaders in Congress are fashioning a plan to pour billions of dollars into a jobs program to jolt the economy and lay the groundwork for a more energy-efficient one.

The details and cost of the so-called green-jobs program are still unclear, but a senior Obama aide, speaking on the condition of anonymity to discuss a work in progress, said it would probably include the weatherizing of hundreds of thousands of homes, the installation of “smart meters” to monitor and reduce home energy use, and billions of dollars in grants to state and local governments for mass transit and infrastructure projects.

The green component of the much larger stimulus plan would cost at least $15 billion a year, and perhaps considerably more, depending on how the projects were defined, aides working on the package said….

Congressional officials working with the Obama administration said
the stimulus program was also likely to involve tax breaks or direct
government subsidies for a variety of clean energy projects,
including solar arrays, wind farms, advanced biofuels and technology
to capture carbon dioxide emissions from coal-burning power plants.

The programs will be a part of a larger economic stimulus package
whose outlines are faint but which is expected to cost $400 billion
to $500 billion. Mr. Obama has said that his goal is to create or
save 2.5 million jobs in the next two years. He has assigned to his
economic and environmental advisers the task of devising a proposal
that is expected to combine a shot of new federal money into existing
federal and state programs and the possible creation of agencies
modeled on New Deal public works programs.

“We’ll put people back to work rebuilding our crumbling roads and
bridges, modernizing schools that are failing our children, and
building wind farms and solar panels, fuel-efficient cars and the
alternative energy technologies that can free us from our dependence
on foreign oil and keep our economy competitive in the years ahead,”
Mr. Obama said in a radio address last month, echoing a campaign
promise with a new sense of urgency….

“Now they’re talking about some large amount of money — what, $100 billion? — and spending it on windmills, job training, whatever,” said David Kreutzer, who studies energy economics and climate change at the Heritage Foundation, a conservative research group. “But where do you get the $100 billion in the first place? Are you going to take $100 billion from some other part of the economy, are you going to tax some people to pay for it? Are you just going to print it or borrow it? The money has to come from somewhere.”The Obama team and Congressional leaders say they want a plan ready shortly after Congress reconvenes in January.

Mr. Obama has said that, after stabilizing the economy and the markets, putting the nation on the path to a more energy-efficient future is his top priority. The House speaker, Nancy Pelosi of California, said this week that rebuilding infrastructure and creating green jobs was “the first order of business that we will have” when Congress reconvenes in January. Several hearings are planned even before Mr. Obama takes office on Jan. 20.

State officials say a lack of financing has stalled billions of dollars in projects. Gov. Arnold Schwarzenegger of California told Mr. Obama this week that the states were ready to break ground with $136 billion in infrastructure projects that could provide new jobs within two years.

The American Public Transportation Association, which represents local mass transit authorities, said there were $8 billion in “ready-to-go” projects that could preserve or create thousands of jobs and provide more energy-efficient transportation.

Beverly A. Scott, the chief executive of Atlanta’s transit agency and head of the national association, told Congress in October that the projects included diesel-electric hybrid buses for Chicago; a new bus maintenance shop for Eugene, Ore.; and a set of crossover tracks to allow San Francisco’s rapid transit trains to turn around more quickly and carry more riders.

The Obama aide said the residential smart meters were a relatively small project that would not create a large number of jobs, but the aide said they would be an essential building block for the electric grid of the future. The new grid — a multiyear, multibillion-dollar project — would more efficiently move electricity from its source to its destination and would reward those who saved power or used it during off-peak hours.

Senator Jeff Bingaman, Democrat of New Mexico, who heads the Energy and Natural Resources Committee, said he was sympathetic to Mr. Obama’s desire to pump up the economy and reduce energy usage. But Mr. Bingaman said he was wary of big government spending programs without sufficient oversight or expertise.

“Just buying smart meters for everybody doesn’t really move the ball very far,” said Mr. Bingaman, who will hold a hearing next week to gather ideas for energy-related stimulus spending. “Realistically speaking, getting money properly spent in a short period of time requires some degree of competence in the government agency doing it.

The best plan is to start with existing programs that work, like weatherization, and build on those.”

Bingaman doesn’t get the big idea. But I know you do! Change is coming. Ideas welcome.

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30 Responses to How would you spend $50 billion to stimulate the economy AND energy efficiency, Part 1

  1. 1.) I would love to see a high-speed rail system, similar to what Joe Biden has been talking about, set up in the Northeast. There is no reason to go through the whole hassle of air-travel just to travel from New York to DC, or Baltimore to Boston ect.

    I live on the west coast, so I would also like to see a high-speed train from Seattle to San Diego!

    2.) Another great idea, is a comprehensive weatherization of all poor, inner-city homes in cities like Pittsburg or Detroit where coal is the main source of electricity and cold winters require substantial heating costs. This would create jobs, lower electricity costs for the poor, and stop dirty coal pollution.

    3.) Obama’s motto should be, “a solar panel on every roof, and a plug-in hybrid in every garage.”

  2. Andy Bauer says:

    1 )Low Hanging Fruit:
    Require towns that receive Federal (or state $$$ derived from federal $$$) to sign on to the EPA Energy Efficiency Challenge, a move that encourages municipalities to voluntarily reduce energy use and provides tools for doing so. It costs nothing for the town to sign on, and towns with smart folks just might take advantage of these resources.

    Not-So-Low Hanging Fruit
    The above, but also require a town to retrofit one building (energy efficiency-wise) before funds can be received for renewable energy systems.

    2) The CT Clean Energy Fund has an excellent program, the 20% by 2010 Clean Energy Campaign, that calls for commitments from municipalities AND residents to promote clean energy, rewarding towns that meet certain benchmarks with free PV arrays (towns must take EPA challenge before installation). Link: http://ctcleanenergy.com/default.aspx?tabid=82

  3. Kevin Norman says:

    Electric Transportation is important for addressing both peak oil and global warming. Railroads seem to be widely ignored but critical links in the future of transportion.

    1.) Rebuilding some of the rail trackage the was allowed to decay in the last century would reduce petroleum consumption by reducing air travel, automobile travel and long distance trucking.

    2.) All of the mainline railroad traffic could be electrified. This would reduce the dependence of our transportation on petroleum even more. Electrically powered railroads are common in Europe and other parts of the world. Why not here?

  4. JCH says:

    I would start a 60-40 sugarcane-ethanol partnership with Venezuela – Venezuela owning 60%.

  5. Hank Ryan says:

    On Bill Financing – A National Opportunity

    Small Business across the country are straining under both higher energy costs and less access to capital

    Utility 0% Financing, called “On Bill Financing”, can use energy efficiency program funds to clear the “cash flow” hurdle and support comprehensive energy efficiency installations that can return precious capital away from wasted energy use back to help businesses grow. Almost no other investment can equal the return on investment basic energy efficiency delivers through lighting, refrigeration , hvac, motors and other energy use areas for just about any building nationwide.

    Each state has a Public Utility Commission. Utilities function under the rules those regulators mandate that they follow. California and several New England states already offer On Bill Financing (OBF).

    A new administration in Washington may well wish to accelerate efforts at using energy efficiency both for businesses and to help cities, counties, state and federal buildings lower energy use and costs comprehensively as one approach to help stimulate the economy, reduce carbon emissions and diminish security concerns relating to the current overdependence on foreign sources of energy.

    Utilities need to address identifying and managing On Bill Financing within their billing systems in order to develop and operate these programs. IT development can represent a barrier that slows some utility’s willingness to adopt OBF. Another hurdle is the perception of defaults by small businesses and the negative ramifications that entails. This is in spite of several successful OBF programs with proven low default rates. Moreover, many states are just beginning or have yet to begin offering energy efficiency to their customers. Several state Public Utility Commissions are just learning how to manage balancing ratepayer and utility interests.

    The fastest way to accelerate the ability for more small businesses across the country to get access to OBF may be to start with a national concentration on developing programs first aimed at cities, counties, and state and federal buildings. Few things are certain but recent economic events seem to guarantee an unprecedented level of fiscal stress within all public budgets.

    One tourniquet applied to help stop the fiscal bleeding to help stabilize our collective tax base should be a rapid move to accelerate investments in energy efficiency. Government buildings are really no different than any
    other commercial structure. Recovering up to 40% in annual energy costs with investments that require no budget hearings or other up front capital and that offer annual returns on investments from 50-150% should be at the front of the line in terms of what to do next.

    Utilities can minimize risk and succeed with well designed energy efficiency programs using On Bill Financing for all taxpayer funded entities first. Once a utility has developed the IT and billing capability to deploy Institutional OBF, expanding to small business OBF programs as the next step becomes much easier.

    Public policy on a national level can offer states with incentives to mandate that utilities develop Institutional OBF perhaps using much that same carrot approach uses access to additional funding in return for compliance.

  6. jorleh says:

    After Greenland and Antarctic ice mass potential energy one of the most practical energy making or saving methods is ships without water resistance.

    Today´s ships are from stone age. Water resistance killing takes 80 % of the energy at low speeds and over 95 % at the speed 30 miles per hour.

    Rolling pontoons make ships go like trains, without resistance. You know the double barrels, shaft between them, casting no litre of water beside as ship is advancing. 100 or 200 miles per hour, all the same: no resistance. Use your brains a minute and you understand the idea.

  7. red says:

    I like the idea of prizes along the lines of the Automotive X PRIZE when applied to goals with an appropriate level of difficulty, usefulness, lack of current market interest, and “contest promotability” (i.e. easy of promoting it, getting sponsors, etc). Prize competitions could apply to technical or market energy/environment innovations, community efficiency deployment rewards, etc. In addition to achieving goals, they also can be good at educating the public about the issues addressed, and getting the public to see the fun side of energy/environment efforts.

    One nice aspect of prizes is that the budget has to be set aside, but doesn’t actually have to be spent until actual winners appear. Economic activity happens as prize organizers do their work, sponsors step up, competitors do whatever economic activities they need to do in their attempts to win, the public follows the events … but the government doesn’t spend anything until the win. (That’s not quite true … for example, the NASA Centennial Challenges suite of prizes actually includes about half of 1 NASA employee’s salary. However, it’s 99.9% true). Thus some of the fiscal objections mentioned in the NYT article are at least partially addressed. The actual tax dollar value spent on such efforts can be trivial compared to the tens of billions of dollars being discussed, so it’s not as if they’d divert significant funding from the mainstream efforts.

    Peter Orszag (CBO, now OMB) blog post on prizes:

    cboblog.cbo.gov/?p=181

  8. Brian M says:

    One of the key elements that does not get sufficient coverage is jobs training. The economy is hemorrhaging millions of jobs. If the plan is to get these people off of the jobless roles and into the workforce, then we will need to retrain them.

    The people who have lost jobs are not just auto workers and manufacturing types. These folks have, at least, a general understanding of the manufacturing processes. Many have hands-on skills that are directly applicable to the needs for building a clean infrastructure and energy industry. However, these folks represent a minority of the unemployed population.

    The vast majority of the jobless people have zero skills in the areas where they will be needed (nada, none, zip, zilch…). These people were mortgage brokers, realtors, appraisers, financial folks, and other cubical dwellers. If you believe, as I do, that most of these kinds of jobs are gone and not coming back any time soon, then these folks need retraining in order to be contributing members of society. Any stimulus plan MUST provide real, meaningful job training. Training that gives people the new skills needed to switch careers into the new clean economy sector.

    Without meaningful retraining, millions of unemployed people will NOT be able to aid in the conversion to a new economy. Instead, they will remain dead weight on the unemployment rolls, an anchor dragging down the clean economy.

  9. alex says:

    Build a giant cannon in China and use it to ship consumer goods to the US, taking advantage of zero air resistance in space.

  10. CARBON REWARDS instead of CARBON TAXES

    http://free-fiber-to-the-home.blogspot.com/

    Governments around the world are wrestling with the challenge of how to reduce carbon dioxide emissions. The current preferred approaches are to impose “carbon” taxes and/or implement various forms of cap and trade systems. However another approach to help reduce carbon emission is to “reward” those who reduce their carbon footprint rather than imposing draconian taxes or dubious cap and trade systems. Consumers will generally respond more positively to voluntary reward mechanisms as opposed to mandatory solutions imposed by government or other authorities.

    These web sites and blogs discuss a number of carbon reward schemes
    http://green-broadband.blogspot.com/

    Bill

  11. hapa says:

    find out what we don’t know. cartography is always helpful. in this case, inventory every building in terms of water, energy, transport, and other resource use. are they well sealed? are they easy or hard to retrofit? fill thw gaps in records. this would give localities a very rich dataset in terms of organizing money and work.

    pay good money to architects, artists, planners, and sustainability experts to assemble multiple visual representations of regional and local low-impact living as a system. set very tight constraints: high costs, low rations. if 2030 i a time of conservation, what do we do to get there?

    declare eminent domain over battery designs. open source them. standardize their shapes and sizes. make battery development an international open project, with design focuses on predictability, upgradability, portability (such as yamaha using the same class of battery in a scooter as in a mule), and life-cycle.

    build up google maps and such into full-fledged mobile transit planners. hook in all regional transport — bus, train, bike (by including routes and street grade info), taxi, even car rental. hook in an intercity reservation gizmo so you can know in seconds when the next bus, train, or even plane is headed for wherever you’re going. show bus stops and time tables live on the map with the press of a button. the investment here would be opening up the development of transit info systems and making their data very easy to aggregate.

    your phone is your map. now make it your ticket: implement the japanese mobile phone transit pass gizmo. put the tech in all phones and convert the station and vehicle equipment. again, this should be an open standard and money for development and installation, not a contract for proprietary equipment.

    related to the first two, build software for building inspectors, urban planners, civil engineers, and all other interested parties to collect, review, visualize, and project regional resource use data at the household level. emphasize data interoperability. make the future easier to see. this is sort of a green linux for logistics and infrastructure.

    more software: centralize local freight dispatch. a cameraphone with GPS has everything it needs to arrange the transport of something to somewhere. make it easy for a person on foot or bike to buy a used piano or a week’s groceries. reduce car trips and SME overhead.

    we’re switching from extraction-based growth to knowledge-based growth, right, so invest in the open knowledge infrastructure to do things smarter.

  12. KT says:

    Green Eggs and Ham:
    Require all funds appropriated for building projects meet a green standard. The energy bill required all new federal buildings to meet a green standard. Currently, Congress willingly subsidizes the creation of inefficient buildings that will collectively emit billions of tons of carbon dioxide in their lifetimes. It is time that all projects receiving federal funding meet the same green requirements as federal construction.

  13. Carol Guest says:

    Two solutions to improve energy use AND the housing market:

    1) Require Energy Performance Certificates to be issued at the sale of any home. Much like an energy efficiency guide on a refridgerator, these certificates provide the purchaser with a clearer picture of their energy budget and incentive for the seller to make long-term energy investments. For more on the UK program, visit http://campaigns.direct.gov.uk/epc/

    2) Subsidize energy efficient mortgages. Allow homebuyers additional funding or lower interest rates on the mortgage of their energy efficient home. Again, this will help educate the buyer on home energy use, make energy efficient homes more desirable in the market, and create jobs through increased energy audits and energy efficiency upgrades. It will also provide a welcome boost to our struggling housing market.

  14. Nancy says:

    Immediately ban the production/sale/use of incandescent bulbs.

    Have ‘bulb squads’ go to every home and change every lightbulb to a low-energy cfl or led.

    No excuses.

  15. jennifer berman says:

    Create a WWII-sized effort to produce an all-electric highway capable automobile. There must be a design out there that could be implemented immediately and made affordable through economies of scale (think EV1 or something newer). Employ hundreds of thousands of people if not more, including all the suppliers. Even with a coal-fired power grid, we save carbon emissions with electric vehicles – and our grid should only get greener. Highway capable vehicles with an 80 mile range could easily serve as a second car for most families. Crush the suv’s and use the materials for the new cars. This will be be added incentive to implement the smart grid technologies.

  16. David B. Benson says:

    Electrify all mainline railroads.

    We used to, before my time, have electric mainlines to go over the mountains.
    Advantages include point-source pollution (generating plants) where the pollution is much easier to clean up.

  17. Paul K says:

    Order 100,000 plug in hybrid cars from Big Three……………..$4 billion
    Install 21st Century technology on 20,000 schools…………..$10 billion
    National battery development project…………………………….$1 billion
    HVDC transmission infrastructure………………………………..$35 billion

  18. red says:

    On the theory that the money should be doing double or triple duty, go after the general economy (eg: jobs), particular economic problem areas (eg: housing), and energy/environment at the same time. Carol Guest has examples for trying to tackle house while also going after the other 2; there are probably other comparable ideas.

    If you want to go after jobs, the automobile manufacturer crisis, the environment, and energy (liquid fuel) independence all at the same time, give *major* tax rebates or other incentives for buying energy efficient vehicles, or exchanging low-efficiency vehicles for (comparatively) higher-efficiency ones (taken out of circulation). The efficient ones wouldn’t necessarily have to be PHEVs, since you want to encourage vehicles that are now in mass production to be bought (while still helping the Teslas out there as much as the GMs). Higher efficiency would earn bigger rewards on a sliding scale, perhaps also accounting for the removal of low efficiency vehicles. Even going from 15mpg to 25mpg would be a huge improvement. Similar deals could be made for big trucks and other industrial/farm vehicles. There might be a bonus for FFVs, since getting these on the road encourages R&D investment in advanced biofuel production.

  19. alex says:

    Electrify the roads so that EV’s would not need batteries. Like trams – but with all the advantages of cars. All that is needed is for electric rails to be embedded in the roads and metering in the cars to bill according to use. Plus some system to stop anyone electrocuting themselves.

  20. red says:

    Paul K: “Order 100,000 plug in hybrid cars from Big Three……………..$4 billion”

    Something like this would be a good compliment to the consumer incentives to replace vehicles with more efficient ones that I mentioned. I don’t know what the numbers would be, but it seems like now would be a good time for the Federal government to mass order efficient vehicles a couple years ahead of normal practice. At the same time, it could give big incentives to state and local governments, as well as major automobile business customers like rental car companies, to do the same, keeping fuel efficiency at the forefront in the incentive structures.

    Current orders would have to focus on clearing out current mildly fuel efficient inventories and what the auto factories are set up to produce now, but orders for future years could raise the bar, perhaps to include lots of PHEVs like Paul suggests.

    With such massive help getting customers in the dealerships (including help that’s already been legislated), CAFE standards might deserve another look.

    Somehow, going on an efficient vehicle buying spree, and encouraging businesses and consumers to do the same, seems a better role for government than politically picking winners (the Big 3) and losers (efficient vehicle entrepreneurs like Tesla that also need loans but that don’t have the political muscle to squeeze them out of Congress). I’d worry that a political bailout would make it even harder to solve some of the problems the Big 3 have (eg: costs, reliability), and simply delay and worsen the eventual reforms.

  21. Peter Wood says:

    No more open door refrigerators or open door freezers in supermarkets.

  22. Danny says:

    Require new construction to incorporate solar water heating systems, at least in the southern states. Gradually extend this to require all apartment buildings to do the same, and from there to all private homes. Solar water heating is ubiquitous in Israel, being required by law on construction since the 1970s. While it will not solve the problem, the large-scale adoption of solar water heating in such populous states as California, Florida, and Texas, with a total of 78 million people (and growing fast), can make a significant dent in energy consumption.

  23. Danny says:

    Require public buildings to incorporate occupancy sensors to determine electric light usage.

  24. David B. Benson says:

    Solar hot water heaters work even in the Seattle area. No need to restrict use of these to the South.

  25. Leni Berliner says:

    There are many good ideas. What we lack is a way to make those ideas a reality. I propose the establishment of a mixed-ownership National Infrastructure Bank that will underwrite debt and equity investment in all kinds of renewable and “smart” energy generation and transmission projects. Stay tuned.

  26. Ken Hughes says:

    I suggest a liquid fuel free set of mobility options: new trolleys connecting with commuter trains; docking stations at train stations and other high density spots for shared bikes, electric bikes, and electric mini cars; parking lots decked with solar PV panels that feed solar electrons into electric cars and back into the grid as needed; transit villages featuring the best of what we prize in communities, with a 21st century set of technologies making them carbon negative; and employer-issued cards to either open up the gate of the typical free parking lot or to pay for transit or to pay for shared bike/electric car or to invest in community supported solar.

  27. Estetik says:

    Will you support imposition of a fair and gradually rising price on carbon emissions, so as to encourage a reduction in greenhouse gas emissions, with the price determined by apolitical authority based on combined economic and environmental considerations?

  28. endependence says:

    Pass federal legislation that eliminates the concept of pass through leases to remove the Principal/Agent problem in commercial buildings.

    Require the installation of energy efficient water heating systems, either solar hot water or tankless hot water or a combination of both on all commercial buildings.

    Require states with no energy efficiency/GHG reduction legislation to pass such legislation in order to be eligible for green stimulus funds.

    Here is a view of the states that do not have a program.

    http://www.pewclimate.org/what_s_being_done/in_the_states/action_plan_map.cfm

  29. Tom Walker says:

    Lot’s of techno-fix ideas here. Apparently no one has heard of Jevons or his paradox. Greater efficiency leads to higher total consumption (because of lower cost stimulating demand).

    The hard core is that energy efficiency, by itself, won’t cut it. You’ve got to address the fetish of economic growth. Yes, it’s a fetish. It started out as an “idea” but it became a fetish when economists decided that questioning the idea of economic growth was taboo. Furthermore, stopping growth won’t cut it either. There’s got to be a plan for low to no growth that without increasing poverty or unemployment. There is a way. Cut the work week. Cut consumption of industrial goods, thus reducing throughput but increase consumption of “sociability goods” with more free time to organize sharing and caring. Read Peter Victor’s Managing Without Growth to see how it’s possible.

    [JR: Everyone's heard of Jevons -- most people don't believe his theory since it doesn't jibe with the extensive literature on rebound rates, which are probably 10% or less in the real world. In any case, no one on this blog ever said efficiency is the only solution, just the biggest and cheapest.]

  30. Tom Walker says:

    Oh, and as for spending that $50 billion? Easy. Set up leisure income accounts that people in the workforce can draw on for vacation or days off provided they work fewer than, say, 1600 hours per year. The stupid is that we “need” to consume a lot of stuff we don’t really need so that we can “create jobs”. Clue: we can “create jobs” without making more useless and even harmful stuff.