Climate

Lindsey Graham: “Every day that we delay trying to find a price for carbon is a day that China uses to dominate the green economy.

With 20 million jobs at stake globally, China poured $440 billion into clean energy last year. Our only hope to match them is the bipartisan climate and clean energy jobs bill

It is shaping up to be the Great Game of the 21st century.  To top officials and business executives here at the World Economic Forum, Topic A this year was the race to develop greener, cleaner technology….  it is a battle for potentially millions of jobs and trillions of dollars in export revenues.

“Six months ago my biggest worry was that an emissions deal would make American business less competitive compared to China,” said Senator Lindsay Graham, a Republican from South Carolina who has been deeply involved in climate change issues in Congress. “Now my concern is that every day that we delay trying to find a price for carbon is a day that China uses to dominate the green economy.”

He added: “China has made a long-term strategic decision and they are going gang-busters.”

Christine Lagarde, the French finance minister, agreed. “It’s a race and whoever wins that race will dominate economic development,” she said….

In the energy sector alone, the deployment of new technologies, like wind and solar power, has the potential to support 20 million jobs by 2030 and trillions of dollars in revenue, analysts estimate.

That’s the NY Times reporting Saturday from Davos, “Race Is on to Develop Green, Clean Technology.”  And they have another terrific piece today on the front page from Tianjin, “China Leading Global Race to Make Clean Energy.”

Politics aside, what is most amazing about the emergence of the conservative senator from South Carolina as a leader on climate and clean energy is that he is clearly better at messaging on this than most progressives, possibly even including the president.  Why?

Graham understands the core issues and is not afraid to be blunt about them — see Lindsey Graham: “The idea of not pricing carbon, in my view, means you’re not serious about energy independence. The odd thing is you’ll never have energy independence until you clean up the air, and you’ll never clean up the air until you price carbon.”

Some 20 million jobs — and trillions in wealth — by 2030 are at stake, and America may give up without much of a fight.  We only have one hope of matching China, as I (and others) have said again and again (see “The only way to win the clean energy race is to pass the clean energy bill“).

The one-time stimulus bill had nearly $100 billion of federal clean energy investment that generated some $100 billion of private sector clean energy investment.  But as Graham understands, we can only come close to that level of U.S. investment each year with a rising price for carbon .

That should be obvious to all, but few in the traditional media really get it besides columnist Tom Friedman.   The two NYT pieces this weekend constitute the best straight news reporting on the subject I’ve seen, so let me except them at length, starting with the Davos piece.

In China, the government poured an estimated $440 billion into clean energy last year. It is investing heavily in renewable energy and nuclear power. It also is pursuing efforts to make extraction of its vast coal reserves cleaner. Already home to one-third of the globe’s solar-energy manufacturing capacity and 400 solar-energy companies, China is expected to surpass Spain this year as the No. 3 country in terms of wind power installations, behind Germany and the United States….

In the United States, meanwhile, President Barack Obama faces an uphill battle in Congress to pass politically-sensitive legislation aimed at capping carbon emissions.

“China has the type of centralized industrial policy that we can’t match and don’t want in the United States or the European Union,” said Fred Krupp, president of Environmental Defense, a U.S. advocacy group. “What we have to compete with China is the power of our marketplace. A clear and declining cap on carbon emissions will send the essential market signal to industry, and that will engage our market directly in this competition.”

Precisely.

China gets it, which becomes even clearer from today’s piece:

Renewable energy industries here are adding jobs rapidly, reaching 1.12 million in 2008 and climbing by 100,000 a year, according to the government-backed Chinese Renewable Energy Industries Association….

As China seeks to dominate energy-equipment exports, it has the advantage of being the world’s largest market for power equipment. The government spends heavily to upgrade the electricity grid, committing $45 billion in 2009 alone. State-owned banks provide generous financing.

China’s top leaders are intensely focused on energy policy: on Wednesday, the government announced the creation of a National Energy Commission composed of cabinet ministers as a “superministry” led by Prime Minister Wen Jiabao himself.

Regulators have set mandates for power generation companies to use more renewable energy. Generous subsidies for consumers to install their own solar panels or solar water heaters have produced flurries of activity on rooftops across China.

China’s biggest advantage may be its domestic demand for electricity, rising 15 percent a year. To meet demand in the coming decade, according to statistics from the International Energy Agency, China will need to add nearly nine times as much electricity generation capacity as the United States will.

Again, there is only one way American could possible match China’s advantages — we need to create rising domestic demand in this country for low-carbon energy.  And that, as Lindsey Graham understands, requires a price on carbon, since we’re obviously not going to deficit-finance federal spending on China’s scale.

The question is, are there 59 other Senators who understand this — or will anti-science ideologues kill the bill and strangle those millions of potential American jobs in the proverbial crib?  We will find out this year.

Related Post:

Tags

36 Responses to Lindsey Graham: “Every day that we delay trying to find a price for carbon is a day that China uses to dominate the green economy.

  1. paulm says:

    I can only say I hope O reads this blog!

  2. fj2 says:

    What is missing in the NYT “China Leading the Race to Make Clean Energy” is that China is also leading the race to clean transportation building extensive mass transit in addition to 430 million cyclists and 100 million electric bikes and growing.

    The Institute for Transportation & Development Policy (ITDP)reports that Bike “Sharing Goes Viral” where Hanghou, China has a total of 40,000 bikes double the size of the Paris Velib system.

  3. Jeff Huggins says:

    OK Economists — SPEAK UP NOW (or forever lose your credibility!)

    Economists understand that you can’t expect, or count on, a “free market”, on its own, to lead to healthy outcomes that address all key factors unless (at a minimum) there are prices or costs associated with those factors.

    In other words, as long as it’s free to pour carbon dioxide into the air in large quantities, or to sell products that do so (without any cost assigned to doing so), the “free marketplace” cannot be counted on, or expected, to address our climate and energy problems. Period. Simple as that.

    This is not a matter of political ideology. All economists — “right” and “left” and “middle”– understand this, or should understand this. It’s basic economics.

    So, now that THE STAKES ARE VERY HIGH, all economists should be speaking out strongly on this issue — or at least on this very clear aspect of the issue.

    It would be an immense intellectual and moral SIN, to put it quite bluntly, for the economics profession to continue allowing people to think that an unregulated “free marketplace” can be counted on to address the problem even without any mechanism to put a price on carbon.

    Period.

    Time to speak up, economists. Or turn in your credentials, yes?!

    Be Well,

    Jeff Huggins
    Harvard Business School, class of 1986, Baker Scholar
    McKinsey & Company, 1986-1990
    Concerned citizen and parent

  4. fj2 says:

    3. Jeff Huggins, “OK Economists — SPEAK UP NOW”

    Columbia Earth Institute’s Director Jeff Sachs and Joseph Stiglitz in his new book “FREEFALL” are economists that “address our climate and energy problems” but, more importantly it may be the time to start investigations into automatic assumptions about money, economics, and cost of living.

    Money in its most fundamental level is an expedient method or exchange system for providing the necessities . . .

    People living in cities ideally benefitting from a “designed” environment where the cost of living is quite low including food, housing, and transportation (largely augmented by integration with natural systems) money has reduced importance except perhaps for personal power and other things . . .

    . . . Feeding off the notion that we are entering, by necessity, a period of accelerated change to civilization as we know it; hopefully, much more civilized which seems to be the trend despite local aberrations.

  5. h20_nh says:

    To get a bill passed climate change does not even need to be mentioned (and in a weird way may even be couterproductive, it’s too political, althoug of course it is the driver) what does is

    Energy independence
    Jobs
    China eating our lunch

    To the last point, I think many realize the economic power of China is immense and that we cant simply hand over the industry to them (the US natural competitiveness mindset seems to take over). As mentioned in the blogs and comments, Friendman from NYT, in my opinion, is “must” read on the subject.

    Graham is the key and I think he’ll get the job done (i.e., convince several Republican Senators to go along with him, especially if 6 yrs to reelection or from the Northeast). At least that’s my sincere hope for my children’s sake.

    As an aside, I’ve also decided that my litmus test for voting in the future is simply – do you act like an adult? Unfortunately, I may have to write-in a lot of candidates…..Vote for an adult! I think I may be on to something…..

  6. Craig says:

    The moon race propelled the United States to the lunar surface in under a decade. It was driven by fierce competition between two powerful opponents.

    The clean energy race could play out in much the same way. If provided the right narrative. JFK challenged the nation to send a man to the moon in under a decade. And the nation responded.

    Anyone who cares about a livable climate should adopt similar messaging. Obama’s State of the Union speech and back-and-forth with the GOP was a good start. But the message needs to get amped up big time. Something like this: “China has seen the future of energy technology and they are pursuing it relentlessly. If America does not act, and act soon, we will be forever playing catch up. And risk losing our position of leadership in the world.”

    Americans respond to challenges. And America is an intensely patriotic nation. Combine the two and you have a recipe to decarbonize our economy.

    The trick is to channel that nationalism in a healthy direction.

  7. Craig says:

    And on a more tactical level…

    What a powerful weapon this could be for getting a climate/energy bill passed. Obama touched on it in both of his major appearances in the past week. It essentially amounts to leapfrogging the scientific “debate” and putting opponents on the defensive.

    Senator A (in favor of pricing carbon) says to Senator B (opposed to pricing carbon), “You might not accept the near conclusive evidence that humans are warming the planet, but the Chinese have. And they are racing ahead of us to create millions of new JOBS. And they are going to eat our lunch and take JOBS away from American workers. So if you oppose pricing carbon, then I guess that means you must be in favor of letting the Chinese become the world leaders in energy technology and losing millions of JOBS.”

    The scientific argument, which should be a strong enough motivation for action, is obviously failing. The recent PEW poll showed that. But livable climate proponents can box conservatives in on this issue by stressing that delayers are weakening American power. And then say it again and again and again

  8. Doug Meyer says:

    The morph is on! The name Climate Progress seems off message now. BeatChina Progress, maybe?

    Totally predictable, just like mainstream enviros giving up their principles to “keep their seat at the table”.

    Can’t wait for Graham’s .00000001 cent carbon price, to be paid by nobody.

    You guys are pathetic!

  9. Rick says:

    I don’t quite follow this. China has the advantage of cheap labor. The US can’t stomach the concept of cheap labor and the loss of the western lifestyle. Therefore China gets the jobs.

    We’re talking about a “solution” that involves borrowing trillions of dollars from China (stimulus money) to temporarily prop up expensive American jobs.

    If this works – then I’m going to borrow a couple million dollars and then – just retire I guess.

  10. Dan Galpern says:

    Joe,

    I agree, of course, with the necessity to ensure a sound investment horizon to ensure a quickly increased share of power from renewables.

    Two things:

    First: How do you reconcile Sen Graham’s points recounted here with his recent apparent rejection of current Congressional measures, including the W-M and K-B bills — at least their center-piece efforts to impose a price through a cap and trade mechanism? See: http://www.nytimes.com/2010/01/27/science/earth/27climate.html. What does he have in mind instead of c&t?

    Second: Assuming a price on carbon is set, potentially through some other mechanism, what will it take to ensure that this in fact serves to get the US back on top of the renewables competition?

    A recent proposal by Ken Johnson, a colleague in California, might be on point, as it promises a direct route to sustained increases in renewable generation, namely by applying revenues generated by fees exclusively to subsidize new, low-carbon generation sources.

    See: http://dx.doi.org/10.1016/j.enpol.2009.12.044

    I am interested in your take on that. Thanks.

    Dan Galpern
    Eugene, Oregon

  11. Prokaryote says:

    “Clean energy force is a pathway to many abilities some consider to be natural.”

  12. oliver says:

    Seems like the Chinese approach of simple fees on electric bills to help subsidize renewable energy R&D and infrastructure (grid) improvements is working well for them. No emissions caps, no trading schemes as far as I can see. It’s a nice straightforward approach.

    A bill based on those principles would stand a chance. There’s no reason I can see why it has to be one giant bill either – multiple smaller bills might enable quicker progress to be made (sounds like Obama is thinking along these lines lately)

  13. Leif says:

    The mind boggles at the thought of a new international “Arms Race” for supremacy of green energy and sustainability! $100B to leverage another $100B private! Great! Just imagine what we could do with the $645 Billion Defense budget focused on the accepted “National Security” of sustainability. Now we are talking bucks. We might even be able to catch up to China in a year or two. The military can keep enough out for a few guns for old times sake. But really, what the hell good are guns when the earth’s life support systems are red lining?

  14. Doug Bostrom says:

    This extremely sobering article provides a bigger perspective on how crucial it is that we seriously engage on this, if we’re to see concerted action on a global scale:

    http://www.guardian.co.uk/environment/2010/feb/01/climate-change-deal-impossible-2010

    Just selecting suitable quotes is too depressing. Suffice it to say, without the U.S. and China coming together and setting an example through binding commitments, there will be continuing paralysis on internationally mandated cuts in C02 emissions.

    I’m wondering if we’re going to see a hybrid scenario where countries such as China win the so-called “energy race” even while as a whole we continue to pump C02 into the air unabated. No reason why both should not happen simultaneously, unfortunately.

  15. mike roddy says:

    Thanks to Senator Graham for his plain talk here.

    We seemed to be mired in competition for government funding. Let’s start fresh this way: tell the oil and coal companies that their annual $30- 40 billion subsidies will be canceled next year. Let the members of Congress who work for them have to defend them in public, and let those who stand up to them make a fight on this. Then, we could see some changes.

  16. Ken Johnson says:

    Regarding Fred Krupp’s comment about China’s “centralized industrial policy that we can’t match and don’t want in the United States …,” that sounds to me a lot like a top-down, economy-wide cap-and-trade system in which central planners set production targets and allocate quotas.

    [JR: It may sound a lot like that to you — but not to anyone else. It is the opposite of central planning and it is Orwellian to say otherwise.]

    [snip]

  17. Tim L. says:

    Funny how in the late 90s, conservatives opposed Kyoto because they feared we’d lose our competitive edge to the Chinas & Indias of the world. So, we killed Kyoto in the U.S. and guess what? China’s now cleaning our clock on clean energy because we were foolish enough to listen to idiots like Rush Limbaugh. Let’s hope Graham can help break the Senate logjam on climate & energy and get a bill done that we desperately need.

  18. Chad says:

    I have been saying this for several years to conservatives: Green is certainly going to happen…it is only a question of who leads and who gets stuck buying from the leaders. Graham is completely right in this sense.

    Going green, in the broad sense, is inevitable. It is good for the economy, good for our health, good for the environment, and good for all future generations.

    It is time to shut up and get green done.

  19. Dan B says:

    I second the support of Ken Johnson’s “Fee and Invest” proposal. He has a thorough detailed proposal for the policy wonks.

    To put it simply: A similar policy worked with incredible speed to reduce nitrous oxide pollution in Sweden. The cost was so far below estimates it was astounding. Utilities began to invest in new low-emissions technology before the ink was dry on the legislation. They had a clear signal that their investment would be rewarded and the businesses that did not invest would fall far behind. It transformed the energy industry. As I recall emissions reductions exceeded 60% in 5 years!

    Imagine 60% reduction on Greenhouse gases from the electricity sector in 5 years in the US!! To borrow a line from Jeff Huggins, we’d go from SIN to SALVATION. And the jobs created would be far larger than the status quo.

    The most impressive aspect of Ken Johnson’s proposal is there’s no upfront cost. The approach leverages the investments of the utilities. Once they have certainty that they’ll be repaid (and fall behind if they don’t keep ahead of the cohorts in their sector) the money falls into place.

    Get this proposal to Lindsey Graham (and John Kerry)!

  20. Leif says:

    Dan Galpern, # 10: ..”namely by applying revenues generated by fees exclusively to subsidize new, low-carbon generation sources.” I am a long way from understanding all I know about Law or economics but IMO, as mentioned above , stop the subsidies to Fossils right now and completely. Use that money to leverage the most efficient “GREEN” out there. If you think we can get out of a history of rape and pillage without a concerted effort and some upfront costs you are deluded. How can you justify not dinging the fossil industry for some of the damage of their efforts? It is not like they can plead innocence! Did you feel justified in attempting to recoup medical funds from the tobacco industry?

  21. paulm says:

    Fee and Invest…I think thats Hansen’s idea.

    It certainly is getting some spotlight up here in Canada in the main papers and even in some of the right wing sections as they see it as more transparent an manageable locally. Not least it will be cheaper to implement and more effective.

  22. Doug Bostrom says:

    “You guys are pathetic!”

    Actually, I’m embarrassed, for you. Stop talking for a moment and ask yourself, will the sort of intellectual effort you just displayed here suffice, against pragmatic and determined competitors?

  23. tpinlb says:

    China is investing in wind and solar, but they are investing far more in developing nuclear power plants. China is an early deployer of small 10 megawatt pebble bed reactors that can produce cheap electricity and process heat for desalination, chemical plants, etc. Indeed Asia is seeing a true renaissance of nuclear power export deals among India, South Korea, Russia and China. The US is being left behind. Nuclear energy is the energy of the world’s future. Wind and solar can never be more than minor components of the power that supports an industrial civilization. The real moral question is whether the wealthy western countries will deny poor third world countries the benefits of rapid and cheap electrification using fossil fuels. China and India are insisting there be no carbon limits on poor third world countries.

  24. progressive says:

    Reacting sharply to the guidelines issued by the US Treasury Department to the World Bank, not to lend money to the nations applying for coal-fired power generation, executive directors representing China and India, in association with their colleagues representing at least another 88 nations, sent a letter to the World Bank arguing that their first priority is alleviating poverty. To achieve that end, the letter said, access to plentiful and inexpensive coal-fired energy is vital for all nations. “The Bank should be concerned about climate change only to the extent it impinges upon the efforts of the developing countries toward achieving poverty alleviation and economic growth,” the directors wrote. The US Treasury letter has called for the World Bank to “remove barriers and build demand for no, or low, carbon resources” in borrowing nations.

  25. Ken Johnson says:

    Joe – I’m sorry that you found my comments #16 so objectionable. My apologies. I will briefly summarize by quoting Kerry, and will cross-post on Grist:
    “Comprehensive climate change (legislation) means pricing carbon and setting a target for reduction. It’s open to how you price carbon. People need to relax and look at all the ways you might price carbon. We’re not pinned down to one approach.”

  26. George says:

    China’s technology is truly scary… They are past developing some gadgets that we don’t know… Who knows they already have robots for war…

  27. Gallent says:

    >> George – almost all countries are developing their weaponry so if there;s a war this could end the world…

  28. fj2 says:

    usually, power is in the eye of the beholder. when the president learns to lead us straight ahead with wartime speed to deal with the climate change and financial crisis which give him big sticks herd this country with things will change dramatically.

  29. ken levenson says:

    this is the type of logical inversion that can cause a very good tipping point and a breakthrough we can believe in…. go lindsey!

  30. mark says:

    where does the cost of transportation to and from China and other low labour cost, low standard countries fit into the solution?

    Panama shipping registrations, (no liability), dumping worn out freighters on African coasts, (no decommissioning costs), the apparent immunity from action for dumping bilge,

    and lots of other things that I don’t know enough to bring up discuss.

    It seems that this is part of the problem;

    that if these costs were actually part of the cost of shipping, the field would be evened up quite a bit, to offset the labour advantage that China and others now have.

    For instance, right now it is cheaper to ship fish from the east coast of Canada to Asia to process, than to process it within a few miles of where it is caught.

    This is nonsensical.

  31. Jeff Huggins says:

    JOE — Invite Fifty Leading Economists (Suggestion)

    Joe, here’s a thought.

    How about calling fifty leading economists with the following question:

    According to basic economics, can an entirely unregulated free marketplace, on its own, be expected to consider all key factors in a situation and lead to outcomes (or solutions) that take into account all key factors, if one of the factors has no “price” or “cost” — in financial terms — associated with it?

    In other words, all else equal, does “Factor X” need to have a price or cost associated with it, in financial terms, in order for an entirely “free market” to take it into account, and weigh it, in transactions and economic decision-making?

    I think you should engage a large number of excellent economists — on the “left”, “right”, and “middle” — on this simple and particular question. Send them a brief excellent survey. Follow up in writing. Call those who haven’t responded. Present the results of the survey here. Ask a good number of them to explain the point in a post. Also ask them, Why aren’t more economists speaking out on this central matter? Why is the economics profession allowing this whole simple point to remain in an utter state of confusion in the public’s mind?

    The idea is to ask the economics profession to make this basic point clear, as it should do under the circumstances. Apparently, it needs to be prompted.

    Be Well,

    Jeff

  32. Rick says:

    Whats really happening here is China sees a market for all things green and so they are cornering that market with their masses of cheap labor. They don’t have the slightest concern about climate or renewable energy but they want in on the action.

  33. paulm says:

    Rick, and how do you know this?

    You could also say…the US (right mostly) does see any gain in things green or sustainable, they have not the slightest concern for the faith of our planet and future generations, so they are bilking everyone.

  34. The Clinton, Bush and now Obama administrations and mainstream Democratic and Republic congressional leaders have all ignored the fact that natural gas is the cleanest, safest and most affordable low-carbon MOTOR FUEL available in the United States today. Natural gas vehicles are reliable, clean and would be affordable IF mass produced.

    Advanced Biofuels and electric vehicles are not yet available, reliable or affordable and, in any case, will not yield substantial policy benefits for many, many years. Natural gas motor fuels offer society immediate benefits with proven technologies at an affordable cost. Natural gas motor fuels also create commercially viable pathways or bridges to much more sustainable zero-carbon hydrogen and electric motor fuels and engine technologies.

    Why is this pathway NOT being supported by our political leaders? Is the oil industry really that powerful?

  35. Jeff Huggins’ free market comment resonated with me. I am NOT an economist, but I find that I am arguing economic policy in my quest to replace liquid petroleum-based motor fuels with more sustainable low-carbon alternative motor fuels. I can see how widespread use of natural gas motor fuels today will create market demand and thus commercial pathways to zero-carbon hydrogen and electric motor fuels. Many environmental advocates discount this line of reasoning and instead advocate an immediate jump to advanced biofuels and electric technologies. The problem is that these high-tech solutions require substantial government subsidies and will not be reliable, let alone available, for many, many years. In the meantime, emissions and economic uncertainty continue.

    I believe that many consumers would act to solve our oil problem immediately and voluntarily IF they were empowered to do so. The federal policy solution is simple: 1) require auto makers to mass produce and sell fully certified engines / vehicles designed and built to use both liquid and gaseous motor fuels. 2) At the same time monetize the external costs of air & water pollution (criteria and carbon)and ecosystem distruction into the cost of all motor fuels.

    In other words, give consumers the opportunity to buy an affordable vehicle that can run on either liquid gasoline-based fuel AND natural gas. This vehicle would be affordable and would be sold with the life-cycle performance information needed for consumers to make rational choices between competing gasoline-based biofuels and natural gas motor fuels at the point of sale. This is a practical and reasonable low-cost solution to a difficult political problem.

  36. Doug Bostrom says:

    Rick says: February 1, 2010 at 11:33 am

    So what? We’re going to miss the party because we don’t like the decorations? Why? What would that prove?