by Kate Zerrenner, via Environmental Defense Fund

When a state is facing electric resource shortages, like Texas is, it’s just common sense to explore all the ways to make our electric use more efficient.

We know efficiency makes sense – in terms of grid reliability, lower emissions, and reduced costs to ratepayers. But there is a barrier to some ratepayers in implementing more energy efficiency: upfront costs. Several options currently exist to finance efficiency, such as home equity loans and incentive programs through utilities. But what about creating a market to allow private investors to invest in the market by offering lower rates for utility customers by ensuring some security through repayment on the utility bill? That’s what on-bill repayment aims to do.

On-bill repayment (OBR) offers an opportunity for home and building owners to finance energy efficiency and renewable electricity generation projects through cost-saving loans from third-party investors. The loans are repaid through customer’s utility bills.  The money comes from private sector lenders at no cost to ratepayers or taxpayers.  OBR also allows for longer term loans with lower interest rates.

The general concept of OBR is not new. Several utilities around the country have instituted on-bill finance programs. However, there is a key difference. On-bill finance programs use utility money to finance the program, thus creating an additional cost for the ratepayers. On-bill repayment would use new money from third parties, such as banks, to create a new market that is secure, cost effective, and enables more bang for the buck in terms of what the ratepayer receives.

OBR is a flexible program that works for a wide variety of properties and vendor business models.  In some programs, contractors are told what solutions can be offered to each customer.  OBR, on the other hand, allows each contractor or vendor significant latitude to design solutions that meet the needs for their customers.  This could include everything from insulation upgrades for residential customers or lighting upgrades for restaurants all the way to deep retrofits of commercial or industrial properties.  All of these would be delivered by the private sector and would be completely voluntary to each property owner.

Benefits of OBR include:

• Job growth: We estimate that it could generate 100,000 new jobs to install energy efficiency and renewable electricity.
• New market creation: We estimate that OBR could generate $13.5 billion over a decade in private sector investments in energy efficiency, renewable generation, and demand response projects.
• Ratepayer and state savings: OBR would promote energy efficiency and distributed energy resources that avoid the cost of expensive new power plants and other high-cost generation—saving ratepayers $4.8 billion in energy bills.
• Flexibility for contractors and vendors: Program participants would have considerable discretion to design product offerings and go-to-market strategies to meet their customers’ needs.

In a state like Texas that prides itself on making its economy attractive to investors and creating markets, especially in the energy sector, OBR could be an effective tool to opening up the state to a private sector solution that can ameliorate our Texas energy crunch. Efficiency is an investment that makes sense for Texas. As utilities face increasing demands on their energy resources, and fewer dollars to spend on efficiency for their customers, giving them another tool, energized by funds from the private market, will benefit the entire state.

Kate Zerrenner helps develop and implement strategies to promote energy efficiency in Texas and leads EDF’s multi-year campaign to influence and enact state and national energy efficiency policy. This piece was originally published at EDF’s Energy Exchange and was reprinted with permission.

by Peter Lehner, via NRDC’s Switchboard

The average American idles his or her engine about 16 minutes a day. That means we burn about 10.6 billion gallons of gas each year–nearly a month’s supply–to go absolutely nowhere. That gas is wasted.

According to the automotive experts at Edmunds.com, “You can make a Corolla get the same gas mileage as an 18-wheeler by sitting in the car with the air-conditioner running while waiting in an elementary-school pickup line.”

Experts concur that if you’re waiting for more than 30 seconds, you’ll save gas by stopping and restarting your engine. You’ll keep the air cleaner, too. Some cities and states even have anti-idling laws to prevent air pollution. When I was at the New York Attorney General’s Office, we brought a series of anti-idling cases that resulted in mandatory driver training for most of the public school bus fleet, protecting kids from breathing in polluted air outside schools.

However, a recent survey from Vanderbilt University shows that many people are unaware that most engine idling is unnecessary, wasteful, or even dangerous. We have our own calculus as to when to cut the engine–depending on how hot or cold it is, how long the line is, or who we’re waiting for. What we don’t think about is how much gas we’re wasting.

An improved engine technology, already widespread in Europe, takes the guesswork out of when to stop idling–and will save drivers hundreds of dollars each year in gas costs. It’s also helping drive job growth in the Midwest, the heart of the automotive manufacturing industry.

Stop-start technology automatically shuts off your engine when your car is stopped, but leaves your radio, air conditioning, and other electronics running off the battery. When you release the brakes or engage the clutch, the engine seamlessly restarts. The technology can boost fuel efficiency by 5 to 10 percent.

This feature has actually been around since the 1980s, but improved batteries, such as absorbent glass mat, or AGM batteries, have made the system a lot smoother. Reviewers test driving the 2013 Ford Fusion say “you barely feel the transition” (Autoweek), and that the technology is “smoother than that of the 3 series BMW” (Road and Track).

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by Wayland Radin, via Center for Progressive Reform

Action on climate change should be one of the first things President Obama takes on in his second term. There are countless steps the President might take, but perhaps one of the easiest things for him to do on that front is to instruct the Office of Management and Budget (OMB) to release eight Department of Energy (DOE) rules regarding energy efficiency currently under OMB’s review.

Regular readers will know that OMB is a kind of regulatory purgatory where rules can be held up seemingly indefinitely or sent back to the agencies responsible for them to be reconsidered in light of OMB’s widely questioned cost benefit analysis. As Earthjustice and others have noted, President Obama could make substantial progress on climate change by telling his own OMB that it needs to move on the rules.

Some of the DOE rules have been at OMB for well over a year, and the benefits of energy efficiency are being foregone while they are held up. DOE’s Fossil Fuel Energy Consumption Reduction for New Construction and Major Renovations of Federal Buildings rule, for instance, has reached the final rule stage but has been stuck at OMB since August of 2011. Beginning one year after it is finalized, the rule would require that new federal buildings and those that undergo major renovations adhere to new limits on their fossil fuel consumption. Five years after that, stricter limits would go into effect for further renovations or constructions. So, the sooner OMB releases the rule the sooner the rule will take effect and we can start realizing its significant benefits.

DOE estimated the rule will bring significant emissions reductions:  in the first year after the rule takes effect it will prevent 52,700 metric tons of carbon dioxide, 111 metric tons of methane, 53 metric tons of nitrogen, and 151 metric tons of sulfur dioxide from entering the atmosphere. These reductions will increase rapidly as other buildings are renovated and the standards are tightened at five-year intervals.

Another stalled rule is DOE’s Metal Halide Lamp Fixture rule. In that case, the proposed rule has been at OMB for nine months and will result in significant energy savings when finalized. Halide lamps are generally used in big box stores and athletic venues. They also consume a significant amount of energy. DOE has estimated that the rule will save as many as 1.6 quads (quadrillion British Thermal Units) of energy from 2015 to 2045. To put that in perspective, one quad is roughly equal to 8 billion gallons of gasoline combusted, or almost 300 billion kilowatt-hours.

The pending DOE efficiency standards are certainly just one small part of what needs to be done on climate. And it’s past time they get done.

Wayland Radin is Policy Analyst with the Center for Progressive Reform.

What did it feel like to publish a book on the future of cleantech in the U.S. just as the sector became a target in national politics?

“It was pretty tense there for a while. We were holding our breath,” says Ron Pernick, managing director of the market research firm Clean Edge and co-author of the new book, Cleantech Nation.

Forget about selling books. This is an industry that Pernick, along with his co-author and Clean Edge co-founder Clint Wilder, lives and breathes. And for people who’ve watched the industry grow from lab-scale tinkering to a full-on industrial powerhouse, the vicious attacks were, well, insulting.

“It was very disconcerting to all of us to watch the amount of money that came from entrenched interests and helped influence a very strong partisan line attacking and marginalizing the industry,” says Pernick. “But it backfired. It didn’t work.”

In 2007, about a year after I started covering this sector, Pernick and Wilder released their first book, Cleantech Revolution. It was one of the best resources out there on activity in the public and private sectors. At that time, cleantech was just becoming a mainstream term in investment circles. It was also right around the time when some of the biggest industrial companies started making strategic investments in renewables, smart grid technologies, and advanced transport.

Driven by concerns about climate and bi-partisan support for diversifying our energy mix, 2004 through 2011 was a period of incredible growth in cleantech. In 2004, global clean energy investments amounted to $53.5 billion. In 2011, global investments reached $260 billion — surpassing fossil fuel investments for the first time and marking the trillionth dollar put into the sector.

But in the last 18 months, the turbulence that has always defined the clean energy sector intensified: Countries have pulled back financial support due to economic struggles; venture capitalists have changed investment strategies after realizing the amount of capital required to scale; once-promising companies have fallen in dramatic fashion due to intensifying competition; and a new unconventional fossil fuel boom in the U.S. driven by fracking has deflated some of the bipartisan enthusiasm for renewables.

If Cleantech Revolution marked the first era of major growth, then Cleantech Nation marks the second: one filled with even greater political uncertainties and market risks, but even greater rewards as the sector continues to expand. For anyone who wants to understand the scope of investment activity underway in cleantech — along with the political imperative for encouraging growth in the sector — Cleantech Nation is a good read.

My biggest gripe with Pernick and Wilder’s new book is that it focuses almost entirely on the positive stories when there are so many important lessons to be learned from countries over-investing in certain sectors, companies being too optimistic in their technologies or market forecasts, and the realities of how political ideology can present enormous barriers. The authors touch on these a bit in the book, but mostly breeze over them in favor of success stories.

As a book designed to provide a forward-thinking framework for policy making and corporate planning, I suppose that makes sense. Indeed, it does provide a detailed look at the forces driving the sector — from CEOs, to mayors, to venture capitalists, to the biggest countries in the world — and wraps them together into an action plan for capturing the sector’s value in America.

Post-election, as we come out of an intense period defending the industry, it’s time for proponents to go on the offense. Cleantech Nation provides a blueprint for a potential game plan to get the job done.

I spoke with Ron Pernick about the post-election environment for cleantech and about what excites him about the next phase of growth. Below is an excerpt from our interview:

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by Auden Schendler, via EDC Magazine

Sometimes a failure can arrive disguised as a success. For example, DDT. The A-bomb. “Don’t Ask, Don’t Tell.” The Industrial Revolution (if it ends up destroying civilization with runaway climate change). Highly profitable energy efficiency.

Wait—energy efficiency? Isn’t that what’s going to help save humanity?

Well, yes. Efficiency is one of the key climate solutions, according to virtually anyone thinking about the problem. Joe Romm, of the blog “Climate Progress,” points out that it’s cheap, easily and rapidly deployable, abundant, and therefore arguably the biggest carbon-free resource we have. Studies confirming this abound, whether from Mckinsey[1] or PricewaterhouseCoopers[2].

So how can energy efficiency, especially the really profitable kind, be a failure dressed as success?

Here’s how: Successful energy efficiency programs almost always mean “picking the low-hanging fruit” or “cream skimming.” This means implementing the most cost-effective retrofits—upgrades that offer the largest and quickest return on investment (ROI). This sort of action is praised as “win-win” by consultants. You save tons of energy and money, and do good for the environment. What’s not to like?

The problem is that even though “picking the low-hanging fruit” implies there’s more work to be done (now get the higher stuff!), nobody ever gets the ladder. Progress typically stops with the out-of-the-park home run project that was almost too good to be true, like a lighting retrofit. The result is that only the highest ROI projects comprise the entirety of an organization’s or household’s energy efficiency program, achieving, say, 5 or 10 percent of the total available carbon footprint reductions (if you’re lucky) and leaving the rest on the table.

While climate scientists tell us we need to cut CO2 emissions 80 percent globally by 2050 if we hope to stabilize warming, our energy efficiency efforts typically stop at a fraction of their full potential.[3] The result: While property owners save money, help reduce emissions and get great PR helping to “save the planet,” collectively we fail in the ultimate goal of stopping or abating climate change. This state of affairs remains true even though many leaders know that runaway warming will hurt their business or community, or could eventually render them unviable.

This cream skimming problem has been documented by The American Council for an Energy Efficient Economy’s 2009 Survey of Corporate Energy Efficiency Strategies,[4] which showed an average corporate energy savings target of 20 percent: “Simple payback criteria were mostly three years or less, though two were as high as five years.” Even at five years, that’s the definition of cream skimming.

Cream skimming isn’t all bad. I’ve argued that purely cream-skimming projects can sometimes help grease the skids for future, bigger energy efficiency work by educating how incredibly profitable efficiency can be.[5] After a few successes, managers might as well happily move forward with deeper (and typically lower return and longer tenor) investments.

But my experience suggests that while that may happen sometimes, the mainstream reality is less rosy. In fact, picking the low-hanging fruit, while cutting emissions and creating great PR, actually hurts deeper sustainability and prevents firms, governments and households from undertaking more comprehensive efficiency.

Why it Can Be Harmful

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by Jessica Lawrence, via Institute for Market Transformation

The requirement to benchmark energy use and report that information to various stakeholders, including the general public, is a relatively new responsibility for U.S. real estate owners.

While leading cities and states such as Seattle, New York City, and California have pioneered required benchmarking in the U.S., the bulk of the real estate market’s energy use remains outside of public scrutiny. That, however, is changing.

Benchmarking and public disclosure policies are gaining momentum, and the number of cities that require disclosure of building energy use is expected to sharply increase over the next ten years. Is all this new data – the data on building energy use that is the outcome of benchmarking and disclosure polices – the groundwork for disruptive innovation?

The concepts of sustaining innovation and disruptive innovation, coined by Clayton M. Christensen in 1997, were originally applied to the march of progress in the technology world. Technological advancement has caused rapid cycles of change in how we interact in an increasingly digital world, and this cycle of displacement is disruptive innovation: cell phones displacing landlines, for example.

Contrast this with a sustaining innovation: the touch-tone phone replacing the rotary phone. It was an advancement, no doubt, and greatly decreased the time it took to make a call, but a whole new market? – a new way of using phones in our lives? – hardly.

The core principle of disruptive innovation is that it creates a new market and value network that eventually disrupts an existing market and value network. The real estate industry may be on the brink of a disruptive innovation renaissance when it comes to how energy is used in buildings.

A key ingredient, actual building energy consumption data, is finally becoming widely available for thousands of properties, with more on the way. We have already seen a surge in benchmarking and auditing jobs that coincides with the rollout of policy.

Looking forward, many more individuals and companies will be competing to combine this wealth of data with various technologies and business models to create new markets, new methodologies for constructing and renovating buildings, and new types of ownership structures.

Christensen’s disruptive innovation theory tells us to look to the fringes of the market to see whether a new market is on its way, or simply a refinement of the old. For real estate, that means the less traditionally desirable properties, the small owners and asset managers, and the new types of service providers.

One radical and definitely disruptive idea that could change the business model for real estate is creating a building that generates rather than uses energy. As technology advances, a savvy business person could use building benchmarking data to identify buildings that have low energy use profiles, acquire them, perform deep energy retrofits, and equip them with energy generating flooring and cladding, thereby creating an entirely new income stream.

This may sound far-fetched, but does it seem as unlikely as a telephone market dominated by cell phones seemed 40 years ago?

Jessica Lawrence is Program Manager for Building Energy Performance Policy at the Institute for Market Transformation. This piece was originally published at IMT’s Current and was reprinted with permission.

by Walter Frick, via BostInno

Remember how your Little League jersey sported the name of a local business? Well, the Framingham Jr. Flyers football team has an unconventional sponsor: energy efficiency.

Through a partnership with Boston-based Next Step Living, for every energy assessment completed using the Flyers’ referral link, the team earns $10. The alliance may seem unorthodox – and it is – but it’s consistent with Next Step’s unique vision for spreading the energy revolution. The key to selling energy efficiency in the residential market, according to Next Step CEO Geoff Chapin, isn’t fancy technology, sleek web apps, or colorful fliers. It’s building trust within the community.

While high profile cleantech startups continue to go bankrupt, Next Step has done work in 20,000 homes and grown to over 400 employees, hiring for a wide range of skill and education levels. Though the luster of green jobs may have vanished at the national level, it’s alive and well at Next Step. It’s a success story built around strong execution rather than exclusive IP, and potentially a model for venture capitalists looking to reset their approach in the energy space.

How To Pick Up One Dollar Bills

There’s a famous joke, if you could call it that, among economists that goes like this: two economists are walking down the street, and one of them spots a dollar bill on the street. “Look, a dollar bill!” one says. “Impossible,” replies the other. “If that were true, someone would have picked it up by now.”

Energy efficiency is sort of like the dollar bill. Free market types are puzzled as to why homeowners haven’t already invested in improvements, if doing so would save them money, as is often the case (especially once state incentives are taken into account).

But anyone in business knows it doesn’t work that simply. You might have a great idea for a product or service, but getting people to take time out of their busy days to even learn about it, much less buy it, can be a daunting task. It’s hard enough to get users to download a free mobile app; imagine convincing them to replace all their windows.

That’s where community groups and local sports teams come in. Back when Next Step was founded four years ago, it was selling energy audits and efficiency improvements to environmental types, the true believers who wanted to do the right thing. But that only gets you so far. And a lot of potential customers motivated purely by ROI frankly won’t believe you if you just show up and promise them huge savings, Chapin told me. They’ll only listen “if they’re approached by groups they trust,” he said.

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The American Petroleum Institute's vision for America.

If you’ve turned on the television, walked by a bus stop, or visited a social networking site in the last 10 months, there’s a very good chance you’ve been targeted by the American Petroleum Institute’s “Vote 4 Energy” campaign. It’s one of the most prominent and consistent ad buys amongst the tidal wave of spending from fossil fuel groups this election season.

Launched at the beginning of the year, the campaign was rolled out in conjunction with an energy plan that calls for unrestrained oil and gas drilling in the Gulf of Mexico, Outer Continental Shelf, onshore and offshore in the Arctic, and public lands around the country. The plan also calls for developing the Keystone XL pipeline and increasing production of tar sands — one of the most environmentally-destructive and carbon-intensive resources — by 250 percent.

API’s vision, which brings “drill, baby, drill” to the absolute extreme, is a one-size-fits-all energy plan that treats fossil fuel extraction as the only solution to creating jobs and economic progress.

The plan isn’t just a high-end guidepost. It has been copied by Mitt Romney, who recently laid out an energy plan featuring virtually identical proposals.

Oil expert Michael Levi has called out this strategy for being a “pipe dream” based on false promises that an all-out approach to fossil fuel drilling will dramatically lower gas prices and make America truly energy independent.

Whether or not it’s realistic, API’s messaging has put President Obama on the defensive.

In the 2008 election, Obama was very blunt about the environmental imperative for transitioning away from fossil fuels: “We can’t simply drill our way out of the problem. And we’re not going to be able to deal with the climate crisis if our only solution is to use more fossil fuels that create global warming,” he said in a presidential debate against John McCain.

Today, as the oil and gas industry spends more than $150 million on the presidential campaign to promote fossil fuels, Obama has completely stopped talking about climate change and is battling Romney over who will promote more oil drilling. This stunning reversal is a direct consequence of API’s public campaign and private lobbying in Washington.

The saddest part of the whole exercise is that talk about climate change has been completely lost. Because when you actually factor in the pressing need to reduce greenhouse gas emissions today, the API plan is revealed for what it truly is: a climate disaster in the making.

By building out a massive new round of fossil fuel infrastructure that will last for many decades, we’re locking in gigatons of new carbon dioxide emissions that we simply can’t afford to emit. But somehow, an extreme energy plan that completely ignores the reality of global warming is now the “center” of the debate in Washington political circles.

That’s why I really like a new report released today by my colleagues at the Center for American Progress and the Center for the Next Generation. In an attempt to strike a new middle ground and counter API’s powerful messaging, the authors break down a more realistic approach to energy production and job creation through regional-specific solutions like efficiency, advanced automobiles, coastal restoration, and renewable energy.

The report isn’t meant to be a one-for-one jobs plan that directly counters every one of API’s employment assumptions. It also recognizes that fossil fuels are an enormously important part of our economy and will likely play a substantial role for some time to come. Instead, it tries to center our sights on a path forward that addresses environmental realities and recognizes the diversity of the American economy.

Here’s the basic premise:

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by Casey J. Bell

The impact of investments in energy efficiency extends well beyond reducing energy costs or addressing the environmental impacts of energy extraction and use. These investments provide jobs for American workers and help them to support their families and communities.

ACEEE has just released a series of six profiles of real world experiences in energy efficiency job creation. These profiles describe programs, policies, investments, partnerships, and business models that have catalyzed regional increases in employment. While previous ACEEE work has provided an analytic framework for how jobs are created through efficiency, this paper focuses on the jobs themselves.

Energy efficiency catalyzes employment opportunities that draw upon the broad range of Americans’ skills. Moreover, as companies’ investments in energy efficiency improve their bottom lines, they experience increased competitiveness, which is a potential contributing factor in bringing jobs back to American soil. Each profile serves as an independent portrait of the various driving forces behind energy efficiency job creation, illustrates the diversity of energy efficiency jobs, and demonstrates the extent to which they draw upon Americans’ existing skills and competencies.

Highlights in the paper distilled from conversations with program representatives and literature review include:

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This excerpt from a 2011 post is relevant again today as advanced battery maker A-123 Systems files for bankruptcy protection. We will have a post on that shortly. You can read the Department of Energy response here.

The National Academy of Sciences concluded in 2001 that a handful of clean energy technologies returned about $30 billion on an R&D investment of about $400 million. The United States is an amazing venture capitalist when it comes to clean energy R&D.

But the all-Solyndra, all-the-time stenographers of the status quo at the Washington Post put out this context-free nonsense:

That article demonstrates the Post doesn’t understand the first thing about venture capital nor have they done even the minimal amount of homework on the myriad major independent studies of the value of clean energy research.

You’d never even know from the article that most private sector VC investments go bankrupt or have no significant positive return. It is a risky business that investors put money into for the few really big wins. You’d never know that VC investments are judged by their portfolio return — and by that criteria you would have to say that federal clean energy investments are wildly successful, as I’ll discuss in this post.

The Post makes the briefest passing mention to a key point:

Many policy experts say some of government’s biggest energy investment payoffs have come in the small stuff, such as testing the use of magnesium alloys to make lightweight car batteries more efficient or developing ballasts that make compact fluorescent bulbs more efficient.

Actually, it isn’t just “many policy experts” who say this, it is the National Academy of Sciences, among others. And their findings invalidate the Post’s entire analysis and most critiques of the  will clean energy investment failure. Here’s the back story.

I was at the US Department of Energy when the Gingrich gang took over and tried to shut down all of DOE’s applied energy research, claiming it was a waste of the taxpayers money. I helped organize a major report documenting the large return to the US taxpayers of federal spending on energy efficiency (and other energy technologies). The once-honorable GAO (formerly General Accounting Office, hypocritically renamed Government Accountability Office) didn’t want to meet the same fate as the Congressional Office of Technology Assessment, so parts of it became a wing of the Gingrich hit squad.

The GAO tried and failed to debunk the report, but the end result was a request to the National Academy of Sciences to independently verify the stated benefits of DOE energy research. The ensuing report Energy Research at DOE: Was It Worth It? Energy Efficiency and Fossil Energy Research 1978 to 2000 was a stunning vindication:

… the report examines 17 R&D programs in energy efficiency and 22 programs in fossil energy funded by the U.S. Department of Energy (DOE). These programs yielded economic returns of an estimated $40 billion from an investment of $13 billion.

Three energy-efficiency programs, costing approximately $11 million, produced nearly three-quarters of this benefit. Most significant were advances made in compressors for refrigerators and freezers, energy-efficient fluorescent-lighting components called electronic ballasts, and low-emission, or heat-resistant, window glass. Standards and regulations incorporating efficiencies attainable by these new technologies ensured that the technologies would be adopted nationwide, thus dramatically compounding their impact.

Let me expand on that last point: The handful of energy technologies cited above, developed through funding by my old office, the Office of Energy Efficiency and Renewable Energy, have returned some $30 billion on an R&D investment of about $400 million. I defy anybody to identify an independent report from a body as credible as the National Academy showing such a staggering return on investment for US taxpayer dollars.

Of course, you can’t know a priori which investments will pay off and which won’t, so you need to invest in many technologies, just to have a few winners. The GAO actually argued in a Congressional hearing where I was a DOE witness that if the DOE invested in 10 technologies for $10 million, and nine of the technologies failed, but one of the technologies saved taxpayers $100 million, that the entire effort was a waste of money. Such was the logic of the Gingrich Congress. Such apparently is the logic of the Washington Post.

I would add that the above numbers do not even count the environmental benefit of reducing pollution, although the report notes that, on the whole, the energy technologies in the report avoided “more than $60 billion in damage and mitigation.” And even that estimate does not include any benefit from carbon reductions.

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