Brookings embraces American Enterprise Institute’s climate head fake along with right-wing energy myths

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"Brookings embraces American Enterprise Institute’s climate head fake along with right-wing energy myths"

I’ll bet you didn’t know that

  • The success Republicans had killing the climate and clean energy jobs bill means they are now ready to embrace a big new federal spending effort of $15 to $25 billion a year for low-carbon technology.
  • Such RD&D could, all by itself, bring the cost of new carbon-free power plants below the cost of existing coal plants.
  • A massive federal RD&D effort, even if it were not politically untenable, could, all by itself, avert catastrophic climate change.
  • “Liberals often maintain” the “choice” is between “global warming apocalypse or mandating the widespread adoption of today’s solar, wind, and electric car technologies.”
  • Nuclear power is likely to be a key part of an effort to deliver cheap, low-carbon power.

You didn’t know any of that because none of it is true. But it’s all part of a new report by Steven F. Hayward of the American Enterprise Institute, Mark Muro of the Brookings Institution, and others, amusingly titled, “Post-partisan power.”

It’s no surprise the American Enterprise Institute pushes myths on global warming and clean energy.   They are still crazy with climate denial and delay after all these years.  And they even compared EPA Administrator Lisa Jackson to Clint Eastwood and carbon polluters to criminals.  Heck, last October, Hayward himself wrote:

The brain waves of the American right continue to be erratic, when they are not flat-lining.”

If this new report was his attempt to restart those brain waves, let’s go to the monitor to see if it did:

http://2.bp.blogspot.com/_I9k8M-1s2j0/SAHsiNZmUNI/AAAAAAAAAZw/kUcMZQ34Yj8/s400/flatline.jpg

You might think it odd that AEI would support a massive government spending program that has no chance whatsoever of getting even one Republican vote in either house — at least not from a member that wanted to avoid a Tea Party primary challenger.  It would be great if AEI actually lobbies for these ideas, however pointless that might be to do.  The mistitled NYT story on the report, “A Climate Proposal Beyond Cap and Trade,” actually buried the lede at the very end:

Politically, the weakest link in the pro-research argument is that no one knows exactly where the money will come from….

When Mr. Hayward and I were talking, I asked whether he could imagine Republican leaders’ supporting more research spending no matter where the money came from. Probably not in the near future, he acknowledged. For now, Republicans will focus on shrinking government.

But at some point, maybe if oil prices spike, Mr. Hayward thinks the party may well be interested in a policy that fosters innovation, creates jobs and helps national security.

At some point in the unknown future, pigs might fly.

For the record, the last time oil prices spiked to $140 a barrel, Republicans didn’t rally around a massive federal clean energy program, possibly built around raising fossil fuel prices (or cutting fossil fuel subsidies).  In fact, they did the exact opposite!  They called for cutting energy prices and freezing energy spending (see my April 2008 post “McCain reveals cynicism, hypocrisy with call for summer gas-tax holiday, energy budget freeze“).

You can be 100% certain that the a top priority of the Tea-Party-led Republicans, especially if they take the House or Senate, will be to cut funding for clean energy.  Whenever conservatives have the presidency or control of Congress, they have gutted or blocked funding for clean energy:

  • President Reagan gutted Jimmy Carter’s renewable energy program (see “Who got us in this energy mess? Start with Ronald Reagan“).
  • Newt Gingrich blocked President Clinton’s effort to boost funding for solar PV research and deployment programs.
  • Even “moderate” conservatives like John McCain and Judd Gregg opposed the kind of funding and incentives that countries like Japan and Germany embraced.

How I wish the Brookings-AEI proposals were “post-partisan.”  But they aren’t.

So what’s going on with this dead-end proposal?  Some history might shed a little light.

THE TECHNOLOGY TRAP

For some two decades now, many of us have been trying to sharply ramp up federal spending on clean energy, to restore the leadership that President Carter had given us in a host of cleantech industries, to help deal with rising oil dependence, to help fight global warming.

But pro-pollution conservatives from Reagan to Gingrich to Bush and McCain fought that effort bitterly because they didn’t/don’t believe in clean energy and/or because Big Oil and the other dirty energy special interests that back them won’t stand for it.  The smarter conservatives — or at least the ones with smarter advisers — did figure out that they should pretend to support cleantech, while basically opposing it, as I detail in my post, Bush climate speech follows Luntz playbook: “Technology, technology, blah, blah, blah”).

Indeed, in his famous 2002 memo on how conservatives could pretend to care about global warming without doing anything about it, Frank Luntz wrote:

Technology and innovation are the key in arguments on both sides. Global warming alarmists use American superiority in technology and innovation quite effectively in responding to accusations that international agreements such as the Kyoto accord could cost the United States billions. Rather than condemning corporate America the way most environmentalists have done in the past, they attack us for lacking faith in our collective ability to meet any economic challenges presented by environmental changes we make. This should be our argument. We need to emphasize how voluntary innovation and experimentation are preferable to bureaucratic or international intervention and regulation.

The point is to use the technology argument to beat down the strategies that might actually solve the problem.

Now let me be 100% clear on this, since I’m quite certain folks will want to take me out of context and claim that I oppose all the ideas in this report.  In fact, most of the proposals in the new report aren’t a bad idea — I’ve been pushing similar ones for two decades and wish they were “post-partisan.”

That said, the omission of any federal standards for either energy efficiency or renewable energy is quite glaring.  Indeed, for all the report’s emphasis on getting clean energy cheaper, the fact is that energy efficiency is already cheaper than every other form of power.  Without a broad set of energy efficiency standards, that large opportunity will be missed.  The almost complete neglect of energy efficiency in the report is one of its biggest flaws.

Even odder, the only low-carbon technology singled out for special emphasis is nuclear power.  Nuclear isn’t going to be a low-cost climate solution in this country for a long, long, long time no matter how much we spend on it (see Exelon’s Rowe: Low gas prices and no carbon price push back nuclear renaissance a “decade, maybe two” and “Intro to nuclear power” and “Nuclear Bombshell: $26 Billion cost “” $10,800 per kilowatt! “” killed Ontario nuclear bid“).  Sure, if you’re going to spend $15 to $25 billion a year on clean energy RD&D, then you’d certainly spend some money on nuclear R&D.  But after decades of failed effort to lower prices, nuclear would certainly be among your lowest priorities.

No, my central criticism of this report — beyond the myths it promotes and the apparent rejection of clean energy standards, particularly for efficiency — is that it is just grossly disingenuous to claim that their set of proposals

  • is somehow more politically tenable than regulations or
  • could avert catastrophic climate change

But that is precisely the spin this report attempts to push.  That is clear from the Conclusion, which begins:

America is once again at an energy crossroads, but the choices it faces are not those that many aligned with either the right or the left have imagined. The choice is not, as liberals often maintain, between global warming apocalypse or mandating the widespread adoption of today’s solar, wind, and electric car technologies.

That second sentence is perhaps the most disingenuous in the entire report.  Liberals don’t “often maintain” that.  Indeed, the entire energy and climate debate over the last 18 months was over a proposal whose primary strategy for accelerating clean technologies into the marketplace was NOT mandates but a market-based system that set a shrinking cap and a rising price — a system that let the marketplace figure out the most cost-effective strategies for reducing emissions.

Liberals embraced the centrist cap-and-trade approach — a business friendly strategy built around a strategy developed by mainstream economist and embraced by moderate Republicans of the near past, like George Bush’s father — precisely because conservatives had demonized regulations and mandates.

But it is quite clear that if you want to avoid multiple catastrophes from unrestricted emissions of greenhouse gases, then you either must have a rising price on carbon dioxide or mandates. That’s because there is no possibility that R&D could bring the cost of new low-carbon energy below that of existing coal plants — and you can run coal plants for decades and China in particular is building new ones at a rapid pace.

As the executive director of the International Energy Agency said last year, “we need to act urgently and now. Every year of delay adds an extra USD 500 billion to the investment needed between 2010 and 2030 in the energy sector”.

Simply put, whatever this Brookings-AEI report is, it ain’t a “climate proposal.”

Indeed, most of us pursuing the crucial goal of averting the multiple catastrophes that come with unrestricted greenhouse gas emissions came to realize that even large, politically untenable increases in federal clean energy spending, particularly RD&D (research, development, and demonstration) spending, while desirable, could not possibly take us anywhere near what was needed to avert catastrophic global warming.  I explained that length in “The breakthrough technology illusion.”  And so because a massive ramp up in federal clean energy spending was neither politically possible nor nearly sufficient, most people in the policy arena who were serious about tackling global warming  moved on to some sort of means of pricing carbon.

That was the only realistic hope for:

  1. Generating the kind of spending in clean energy (public and private) at the levels needed to match foreign spending (see “The only way to win the clean energy race is to pass the clean energy bill“)
  2. Generating the kind of private sector investment in clean energy deployment need to have a shot at anywhere near 450 ppm (see Must read IEA report: Act now with clean energy or face 6°C warming. Cost is NOT high “” media blows the story).
  3. Have any chance of having new clean energy technologies compete with existing fossil-fuel powered systems.

Now it is quite obvious to any political observer, including myself, we’re not going to get a cap-and-trade bill anytime soon — see “What are the prospects for comprehensive climate and clean energy legislation in the coming years “¦.” But it should also be obvious we’re not going to get a massive federal clean energy program either.  In fact, conservative politicians  have opposed that idea for longer than they have opposed cap-and-trade.  It’s beyond disingenuous to suggest otherwise.

I do think progressives will need to get more realistic about what kinds of energy and climate strategies we pursue at a federal level for the foreseeable future.  But if we’re going to be realists, we won’t waste any time on this Brookings-AEI report.  And we certainly want to keep open strategies that this report appears to reject but have had bipartisan appeal in the past, including energy efficiency and renewable energy standards.

The central intellectual thrust of this new report is how important it is to lower the cost of clean energy.  While RD&D can play a useful role here, even more important is rapid deployment in the marketplace, as I explained at length here.  So if a think tank is going to advance a climate proposal but rule out a cap-and-trade, then it certainly can’t also rule out clean energy standards.  That smacks of ideology, not post-partisan pragmatism.

The bottom line:  The way this report has been framed, it is not a useful contribution to the debate.  Quite the contrary — it pushes unhelpful myths and ignores key bipartisan climate and clean energy policies. The overall set of policy proposals it does push are simply not politically tenable today.  And if one is going to push proposals that are not currently politically tenable, you might as well push ones that could solve the climate problem.

WASHINGTON

Brendan Hoffman/Bloomberg News

Michael Greenstone has said that the cap and trade bill would have disappointed supporters.

Readers’ Comments

Michael Greenstone has the r©sum© of somebody who should be despondent over Washington’s failure to pass a climate bill. An environmental economist who worked in the Obama White House, he is now back to being an M.I.T. professor and also runs the Hamilton Project, the well-connected, Democratic-leaning research group.

But Mr. Greenstone is not despondent. He thinks the benefits of the bills that died in the Senate “” which would have raised the cost of carbon emissions, through a system known as cap and trade “” were sometimes exaggerated. Once the necessary compromises were made, the bills might not have raised the cost of carbon by much. And they obviously wouldn’t have done anything about fast-growing emissions in China and India.

“The first best hope was getting a world price for carbon, and that now looks remote in the coming years,” he says. “But there are ways in which the other options may be preferable to a price only in the U.S.”

To put it another way, the death of cap and trade doesn’t have to mean the death of climate policy. The alternative revolves around much more, and much better organized, financing for clean energy research. It’s an idea with a growing list of supporters, a list that even includes conservatives “” most of whom opposed cap and trade.

On Wednesday, the reliably conservative American Enterprise Institute and the left-of-center Brookings Institution will release a joint proposal to increase federal spending on clean energy innovation to as much as $25 billion a year, from the currently planned $4 billion a year. The proposal would also toughen rules for such money, so that recipients could continue getting it only if they were reducing the cost of clean energy. Today, many subsidies for wind, solar power and ethanol are more lenient.

Along similar lines, Al Gore is working with Reed Hundt and John Podesta, former Clinton administration officials, on a proposal aimed at “lowering the cost of clean,” as Mr. Hundt recently told the Web site Earth2Tech. The current rock-bottom interest rates would help the government finance the investments.

These proposals reflect the political reality that raising the cost of dirty energy is unpopular, especially when the economy is so weak. Finding the money to make clean energy cheaper, even when government budgets are tight, will probably be an easier sell.

The approach does have one big disadvantage, of course. It does not leverage the power of the market, the way that a cap-and-trade system (or direct carbon tax) would. If the price of emitting carbon went up, companies would devote more of their own research budgets to finding new energy sources.

But history shows that government-directed research can work. The Defense Department created the Internet, as part of a project to build a communications system safe from nuclear attack. The military helped make possible radar, microchips and modern aviation, too. The National Institutes of Health spawned the biotechnology industry. All those investments have turned into engines of job creation, even without any new tax on the technologies they replaced.

“We didn’t tax typewriters to get the computer. We didn’t tax telegraphs to get telephones,” says Michael Shellenberger, president of the Breakthrough Institute in Oakland, Calif., which is a sponsor of the proposal with A.E.I. and Brookings. “When you look at the history of technological innovation, you find that state investment is everywhere.”

“¢

The big question for anyone worried about global warming is whether to keep pushing for a cap-and-trade system above all else or to begin looking for alternatives. In many ways, I’m sympathetic to the cap-and-trade crowd. The market “” which is to say, prices “” can be a fearsomely powerful force.

But there are two questions worth asking. First, when will Congress take another shot at cap and trade? Given the gains that Republicans are likely to make in next month’s elections, 2013 seems the soonest that is remotely fathomable. In the meantime, climate change will march on. This year is on pace to tie 2005 as the warmest on record, according to NASA, and the 10 hottest years have all occurred since 1998.

Second, how confident should we be that cap and trade will work as advertised?

Back in March, when a Senate climate bill was still possible, Mr. Greenstone gave a speech in Chicago explaining why it might disappoint its fans. The speech was striking from somebody who supported the bill and had even worked on it as chief economist of the president’s Council of Economic Advisers.

By raising the cost of dirty energy, a cap-and-trade system would give American companies an incentive to use less energy. But the cost would probably not be so high that they would need breakthrough technologies anytime soon, Mr. Greenstone said. Instead of investing in basic research, companies might make more modest changes, using energy sources that emitted somewhat less carbon, like natural gas, or making their offices and factories more energy efficient.

As beneficial as these changes might be, they would not help China and India keep global emissions from reaching levels that scientists consider ominous. As Mr. Greenstone said in Chicago, “All the action is really going to be occurring in developing countries.” And developing countries can’t caulk or insulate their way to a green future. They need breakthrough technologies that can compete on a grand scale with coal and oil “” the kind China is now pursuing and a major research program in this country could, too.

Mr. Greenstone called for $25 billion in annual research money, the same figure that’s in the plan being released Wednesday. (He did not work on the plan.) That’s less than half the estimated net cost of the main Senate cap-and-trade bill. It’s also less than the $32 billion budget for the National Institutes of Health.

The National Institutes are a model in another way, too. It makes decisions based on a rigorous scientific process. The research money for clean energy, on the other hand, is distorted by politics. Iowa’s influential presidential caucus, for example, is one reason the corn-based fuel known as ethanol receives so much money.

The experts at A.E.I. and Brookings specifically suggest making the Defense Department a bigger part of clean energy research. The American military has such a successful record of fostering basic research partly because it ends up using the results of that research. The military also has a clear interest in alternative clean energy, given that it consumes more oil than some entire countries and that the soldiers on its fuel convoys are sometimes killed in action.

Politically, the weakest link in the pro-research argument is that no one knows exactly where the money will come from.

Congress could cancel current subsidies, for both clean and dirty energy, but that would not raise anywhere near $25 billion. Steven Hayward of A.E.I. notes that the royalties that oil and gas companies pay on future projects could also be increased, as Representative Devin Nunes, a California Republican, has suggested. The A.E.I.-Brookings plan even raises the idea of a small cap-and-trade program, charging about one-third as much for carbon emissions as the Senate bill would have “” but no cap-and-trade program will happen anytime soon.

When Mr. Hayward and I were talking, I asked whether he could imagine Republican leaders’ supporting more research spending no matter where the money came from. Probably not in the near future, he acknowledged. For now, Republicans will focus on shrinking government.

But at some point, maybe if oil prices spike, Mr. Hayward thinks the party may well be interested in a policy that fosters innovation, creates jobs and helps national security.

E-mail: leonhardt@nytimes.com

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20 Responses to Brookings embraces American Enterprise Institute’s climate head fake along with right-wing energy myths

  1. Dano says:

    The bottom line: The way this report has been framed, it is not a useful contribution to the debate.

    It depends upon your definition of “useful”. If by useful you mean a cudgel to wield or excuse to utter, then it is very effective. Somehow Brookings got snookered into this unfortunate shelf art.

    Best,

    D

    [JR: The media calls Brookings liberal-leaning or center-left. But it really isn't in most areas any more.]

  2. Sasparilla says:

    Excellent analysis Joe. You really took it apart well.

    I read this NYT article this morning and had this feeling (despite the headline title) that the proposals wouldn’t have a chance in reality, obviously it was complete nonsense / another distraction. Based on this document’s pedigree, as you explained, that’s not surprising at all.

  3. mike roddy says:

    Deniers like Watts are starting to look pretty out there even to the educated Right, so “more clean energy R&D” is a backup meme, useful as a stalling tactic. We’ve seen it before, and I’m not surprised to see it moved to the front of the line again.

    Gates and Buffet and conflicted NGO’s like BTI are all over it. Guess who gets to pay for it? Taxpayers, since Bill and Warren don’t want to interrupt the income from their coal train and oil portfolios, and are certainly not interested in either risk or waiting a few years for a return.

    Either Gates or Buffet could jump start the best solar or wind technology, including deployment, with the change they find behind their couches. No chance of that happening, though.

  4. Ziyu says:

    The EIA said every year of delay creates $500 billion in extra costs of investment needed between 2010-2030. Conservatives main arguement is that clean energy costs too much so they continue to delay it, knowing that doing so will raise costs and support their arguement. That is sick and twisted.

    [JR: IEA. But yes.]

  5. Jeff Huggins says:

    Consistency, Reason, and Milton Friedman

    I think it’s striking that so many people who claim to “believe in”, and understand, markets and economics and business are so darn confused and confounded these days. They are losing all credibility. What’s much worse, they’re making a big mess of things, including thinking itself, as they go.

    How is it that people who say they favor harnessing the power of markets, and allowing companies to make market-based decisions, fight so hard against any genuine method that would result in a price for carbon? They fight against the very thing that would harness the power of markets in the most market-based approach possible!

    And how is it that so many supposed economists and business experts do not understand that the main ways to get the costs of clean energy technologies down necessarily involve actual large-scale deployment, economies of scale, and the cumulative learning that comes with deployment and experience?

    I don’t get it. How much nonsensical thinking are we going to entertain and put up with? Are we being told, by this report, that the task can be accomplished without a price on carbon and that we should all just give up on that aspect of the matter? Are we being told, by this report, that R&D alone can result in the sorts of cost reductions that will be necessary without a price on carbon?

    Nonsense. If that’s what the report is presumably suggesting, the writers should all be sent back to high school.

    Long ago, in his book (based on his even earlier lectures) “Capitalism and Freedom”, Milton Friedman wrote about the role of government in a free society, in Chapter II of the book, a chapter titled (you guessed it) “The Role of Government in a Free Society”. In the section called “Action Through Government on Grounds of Technical Monopoly and Neighborhood Effects”, Friedman wrote:

    “A second general class of cases in which strictly voluntary exchange is impossible arises when actions of individuals have effects on other individuals for which it is not feasible to charge or recompense them. This is the problem of ‘neighborhood effects’. An obvious example is the pollution of a stream. The man who pollutes a stream is in effect forcing others to exchange good water for bad. These others might be willing to make the exchange at a price. But it is not feasible for them, acting individually, to avoid the exchange or to enforce appropriate compensation.”

    Yes, you read it right: Milton Friedman explaining why entirely free markets can’t be expected to address certain sorts of matters and why, in those cases, government involvement is valid and necessary. (I suggest reading the full book for context: It’s not long.)

    Economists and business people who admit the reality of climate change should honestly and intelligently face the realities of what we understand about markets, neighborhood effects and externalities, the motivations of businesses, how cost reductions occur, and related matters. These days, I read and hear so much nonsense from so many economists, think tanks, and people who claim to understand business that it makes me sigh in frustration.

    Jeff

  6. richard pauli says:

    They are not stupid. In order to derive intelligence behind the actions of right-wing climate denialism, we should reverse engineer a motive from looking at their actions.

    Lets suspect for a moment that they know that unified obstructionalism and denialism will make matters worse for destabilized warming on a global scale. They might secretly agree with most sane and sober scientists, that catastrophic warming and climate destabilization is inevitable. And now all actions will be in choosing the degree of severity.

    It fits the philosophy of unbridled capitalism that the population should be decimated every so often. In the past, it worked to permit vital new growth. Letting the climate do that means avoiding the expense and mess of promoting other violent conflicts.

    Seeing a chaotic world 10 to 30 years hence, it seems the goal of the current political maneuvering is to gain and secure a powerful standing in a post-apocalyptic world. Of course, the risk of this maneuver is to underestimate the destructive potential of climate change. Carbon industrialists may know that there is a slight chance that much more CO2 will kill us all. But no matter what the future, we are now forced into a world of survival struggles.

    As we combust our way forward into this chaotically destabilizing world — for those wishing to retain power, the strategic course today would be to hide the fact of the inevitable decline as much as possible; to deny, continue the plunder, and build the necessary fortresses and seed banks required for life in such a world.

    Whether the human population reaches zero or merely 5% of current, the tactic would be the same – deny warming, deny human cause, continue carbon profits, push opponents to the back of the line, gather wealth and power.

    Such a unified strategy just tells me that this is a very well-thought out plan. To me, that is the only thinking that fits their behavior.

    I hope there are other explanations, but crazy and stupid really does not fit right now.

  7. Chris Winter says:

    I guess it’s a corollary to George Santayana’s dictum: “Those who can persuade others not to remember the past are permitted to repeat it.”

  8. Russell says:

    Cuccunelli should check out AEI- clear signs of post-normal policy analysis

  9. espiritwater says:

    Where’s the video about mountain top removal in West Virginia you had yesterday?! (with the song). I wanted to send it to someone! That was the most upsetting video I ever saw!

    [JR: Still here.]

  10. Great post, great comments.
    I am concerned that the decreasing population growth will hamper economic growth, which will in turn leave us with less money to invest. I don’t see anybody discussing that much.

  11. Alteredstory says:

    There is a tendency for “belief” in climate change to be more than just bad wording. There are plenty of folks who never took the time to actually look into it, and so when a reasonable-sounding argument comes along, they don’t have much to say. I don’t know how big that subset of the non-denier population is, but I can’t help feel like their influence is on part of why things move so slowly, especially with regard to public education on the issue.

    Then, when you run into people pointing out the toxicity of electric car batteries, or saying “well, there are conservatives working on it, they’re just not nuts like you.”, there’s a hesitation, because some of us want to believe that they are working on it, or we’re worried about the less devastating hazardous chemicals that might be produced, or we realize we don’t have the facts to back up our rhetoric at hand. That hesitation, that momentary pause can be political gold, and so a combination of Belief and a desire to not overstate what we know sets us back another day, or another week, or another year, and the constant delays mount up.

    And then I get frustrated and leave ranty comments on people’s blogs.

  12. Steven Hayward says:

    Gosh Joe, I had no idea you were such a fan.

    [JR: You should read Climate Progress more.]

  13. William T says:

    A bit of thought would have shown them their plan to “research our way out of this hole” is not plausible without an international agreement on carbon pricing/reduction.

    As they say, non-carbon energy sources are more expensive than fossil fuels. If the proposed research does manage to find a “cheaper” source of energy then widespread adoption of that new source will reduce demand pressure on fossil fuels and thus their price will drop. It’s a losing battle, given the energy density of fossil fuel and the fact that they’re simply there waiting to be dug up. Unless the imagined new energy source is able to so severely undercut fossil fuel pricing that present and future mining becomes totally uneconomic despite the advantages of incumbency and present-day infrastructure. Hard to see that happening on any reasonable time-scale (of course there is always the science-fiction scenario, but even then the barriers to entry are immense as the report itself outlines).

    If the US manages through whatever process to reduce its consumption of fossil fuels, then without international agreements the effort is wasted because other countries will simply take up the slack.

    So I’m afraid that I’ll have to agree with the supposed liberal mantra that it is a choice between a future of unmitigated global warming or a globally co-ordinated effort to cap and reduce carbon emissions.

    Indeed, as soon as the world is able to provide some mechanism for ensuring that fossil fuel costs are on a long-term upwards trend (based on a phase-out scenario rather than the uncertainty of demand alone) then it’s almost certain that private investment will begin to pour into all sorts of alternative non-carbon energy projects.

    So what are the conservative critics afraid of again?

  14. Ken Johnson says:

    While I agree with Joe’s analysis, I think the alternative of “federal standards for either energy efficiency or renewable energy” is unsatisfying. For example, the recently-upgraded CAFE standards for fuel economy will only motivate an investment of around 30 cents or less to save one dollar in fuel (discounted present value), assuming gasoline prices averaging $3.18/gal in the 2010-2030 time frame. Is that the best we can do? Trying to impose ever more stringent standards is an uphill battle because future compliance costs cannot be predicted with certainty. Is there any way to supplement standards with policy measures that would create stable incentives to spend up to one dollar to save one dollar, even in the face of unpredictable technological evolution? (If there were, maybe the private sector would drive the “massive RD&D effort” that Hayward and Muro are trying to foist on the federal budget.)

    [JR: There are many useful policy measures. But they supplement standards, not replace them, and are quite unlikely to achieve deep and lasting results without the.]

    Joe says “… it is quite clear that if you want to avoid multiple catastrophes from unrestricted emissions of greenhouse gases, then you either must have a rising price on carbon dioxide or mandates.” This strikes me as the kind of simplistic, backward thinking that went into the now-defunct federal climate bill. You need a price incentive that is initially high, when clean-energy alternatives are expensive, but which could decline as clean energy gains market share and achieves economies of scale. But the initially high price incentive need not be in the form of high carbon fees; it could just as well take the form of initially high subsidies for new renewable energy sources. While renewable energy is a comparatively small portion of the entire energy market, a very modest carbon fee could finance a substantial price subsidy for renewable sources. (Alternatively, modest utility rate premiums could finance new renewables via feed-in tariffs.) As renewables gain market share, the per-MWh subsidies could decline, while per-MWh carbon fees increase, to maintain both revenue neutrality and stable price incentives for decarbonization. (This is analogous to a “rising price on carbon dioxide”, but the real kicker is the clean-energy price subsidy — it is not the carbon fees, which could start out near-zero.)

    [JR: Well, this report opposes current subsidies, which, in any case, are less efficient than a standard or a shrinking cap/rising price.]

    Regarding Joe’s comment that “… there is no possibility that R&D could bring the cost of new low-carbon energy below that of existing coal plants …”: If R&D cannot, then what can? This may not be the most relevant question in the U.S., because our “existing” coal plants will soon be approaching obsolescence. But the critical question for China and other developing nations is “How can you rapidly bring the cost of new low-carbon energy below that of new (non-existing) coal plants, so that low-carbon energy does not later have to compete against existing coal plants?” You don’t need an “economy-wide” carbon price to do that — what you need is price incentives that are focused primarily on new sources.

    [JR: Again, either a price or some standards. China will indeed shut down many of its current generation of coal plants in the 2020s. And they will either do it through a price or standards/mandates, the latter being their current preferred method for dealing with inefficient or polluting facilities they want to shut down.]

  15. Kevin says:

    Recent analysis within the electric sector shows that as the very old coal plants retire due to pending EPA regs (non-co2), they will be replaced with conventional natural gas generating plants. The industry was counting on a CO2 price to provide the incentive for the new technologies (nukes and CCS) though it was always understood that the first CCS projects would always need additional govt support while learning occured. Now that a CO2 price is stalled, there is a real risk that all the investments made in building up the infrastructure to deploy these techs will go to waste.

    Joe is correct that there is no chance that R&D will bring down the cost of these new techs enough to compete with existing techs. If they are to deploy, the choice in no-CO2 price world is either a huge subsidy (impossible these days and unwise due to the picking winners problem) or a tradable clean energy standard (Graham or Lugar plans). This would provide a large enough market based premium on the electricity from these new sources so that they would deploy. It isn’t the most efficient in terms of reducing emissions, but it is pretty good in terms of pulling the technology and getting it built.

    A large R&D program is needed, but beyond that an incentive to deploy is vital or the problem Joe has identified will absolutely have us sitting on the same techs we have today. If these guys don’t get that, they don’t understand the energy sector at all.

  16. jyyh says:

    upscaling the existing tech, to get experience on the necessary structures didn’t happen during the prev government, so I’m not buying that post-partisan either. meanwhile the energy sector elsewhere in the world will have a hard time powering US in the future.

  17. CW says:

    I think I’m detecting a bit more of a humorous tone or approach than normal these days. Am I right? I like it a lot regardless.

  18. Omega Centauri says:

    I don’t see it as quite so disingenuous as you. Sure the part about just fund some research and we will find a painless way out, is too unlikely to be taken seriously. But, we haven’t seen conservatives shy about spending public money on corporate interests, when they are in power. The biggest example is Medicare part D, funneling taxpayer money to big pharma. So if they had control of the purse strings they might well try to do this. Remember, attacking spending when it is the other guy, but ignoring it when it is yourself has been a pretty useful strategy of theirs.

    If conservative think tanks are saying this, then you can bet it has the blessing of their plutocratic donors (mainly fossil fuel interests). Money for advanced nuclear (actually not a bad idea) is big money for big corporations, just as big money for fancy defense systems is. So I don’t actually think the prospects of them following through are as low as you put them.

    And, of course politically it is a win for them either way. If they get the spending, then big Nuclear (and probably hydrogen and fuel cell car) interests have a field day. If they don’t it was successful delay tactics. And they can claim to be for the environment. Most of the public wants to believe in the tooth fairy, “all our energy and environmental problems will be solved by high tech”, so politically, it might make a good sell. Remember, this is the same public that thinks we spend orders of magnitude more than this on welfare Cadillacs, and foreign aid, they just won’t look up the facts, or do arithmetic, they will fall for it. And heck, stuff like 4th gen Nuclear are a couple of decades away, fossil fuel interests will be running out of resource by then anyway, so why should they fear longterm efforts to create an alternative -just so long as the alternative is far enough in the future.

  19. John McCormick says:

    Honest observers are questioning the value and effectiveness of environmental NGOs leading US and global climate change campaigns; trust and loathing seem to be low on the former and high on the latter for too many Americans and likely public attitudes elsewhere.

    Now, begins the heavy lifting on rational and safe energy policies in the early days of end-of-oil. Will environmentalists try to own that fight as well. I believe they will.

    Wind and solar do not (cannot) power cars from Baltimore to DC every morning and evening. That is truth and no renewable portfolio standard is going to change that any time soon.

    Fact: If (when) repugs take over the House Joe Barton will again chair the Energy Committee and he will focus not on climate change (save for gutting EPA). His focus will be on assuring American motorists have access to liquid fuels. Canada tar sands will have a bright future. He will report out a repeal of the restriction on Defense purchasing polluting fuels.

    Then, he will ramp up energy R, D & D for the sweet nectar of oil shale recovery, coal to liquids and drilling on the White House lawn if geologists find any oil or gas deposits there.

    Peak oil does not mean the beltways of America become less traveled or empty. We and Appalachian towns and villages watched helplessly and Blankenship and his thugs raped the mountains for Clean Air Act compliance coal. What will stop the AEIs and APIs from gutting the Western Rockies for synfuels from oil shale deposits? You think water resources will be a limiting factor? That is what Barton will be focused on; R&D for less water dependent oil shale technologies.

    The script is being written and enviros are gearing up for another Earth Day to demand an end to fossil fuel dependence. Except, China, with its several coal to liquids plants up and running, will not. Nor, will American commuters. We are a selfish lot, we adults.

    John McCormick

  20. Dan says:

    Joe,

    There’s a simple policy maxim that AEI/Brookings/TBI continually forget:
    “Target directly what you intend to.”

    If we care about climate change, focus on greenhouse gas emissions. If we can’t do that, focus on mandates and standards for RE and EE. Your call for standards and a (distant) cap are correct: R&D is a second cousin of direct action on climate change.

    This needs to be said again and again.