TIME Magazine has an interesting piece in its April 28 issue where it equates the energy crisis facing the US with a war like any other. They compare it to the Great Depression, the construction of the railroads, the space race, the fight against polio, and so forth. If the US stood up to the those immense challenges, what makes the energy crisis any different? For one thing, this challenge is much harder to overcome. A major problem in the current mix of affairs is that there’s little consensus on how they should approach the crisis, but, as TIME points out, there are a handful of common elements to forthcoming plans which everyone seems to agree upon:
1. Carbon cap-and-trade
We pointed out earlier that Obama suggested a cap-and-trade scheme to deal with carbon emissions. TIME says this is the most important part of a likely blueprint to deal with the crisis.
As long as the sky is free, renewable energy will never beat fossil fuels. But put a price on carbon, and suddenly the alternatives look a lot better. The most feasible way to do this is through a cap-and-trade system that sets ceilings for carbon output and lets companies that come in under the limit sell credits to those that don’t, allowing them to keep polluting—a little. The effect is that overall carbon levels fall, and there is even money to be made by being greener than the next guy. That drives investment and research dollars into renewable energy and efficiency.
The bill that is seen as the best candidate for the job is known as the Lieberman-Warner bill, which mandates a return to 2005 levels of emissions by 2012, followed by a further reduction of 70% below 2005 levels by 2050. Naturally, a clean environment comes at a cost, and one study estimated that this bill would cost the US 4 million jobs by 2030. On the other hand, a study by the EPA predicts that Lieberman-Warner will only curb GDP growth by 1% between 2010 and 2030, not taking into account its possible economic benefits. Since utility companies will be forced to jack their prices following a cap-and-trade system, one green entrepreneur, Peter Barnes, recommends a cap-and-dividend system which will return some of the revenue to consumers in the form of flat rebates.
Unfortunately, after the TIME article came out, Lieberman-Warner was blocked in the US Congress. Lawmakers indicated that they will only make a next attempt once the country has a new president - a promising plan seeing as both John McCain and Barack Obama indicated they would have supported the bill had they been able to attend the vote.
2. Efficiency surge - cutting waste
A study by McKinsley Global Institute found that the US will be able to cut its energy use by at least 50% by 2020 using existing efficiency improvements. A name that is almost always cited is that of Amory Lovins of the Rocky Mountains Institute, one of the leaders in efficiency research and activism. Furthermore, McKinsley estimates that with $170 billion of investment each year in ventures such as green buildings and more environmentally friendly cars, an additional $900 billion can be saved each year by 2020.
Whereas the US has reluctantly jumped on the bandwagon for better fuel economy, countries like Japan have much more effective ways of dealing with this: its Top Runner program takes the vehicle with the best efficiency in the market, and sets its performance as the industry standard. TIME suggests that such a scheme should be applied to architecture, which would be especially effective since half of US energy use is channeled through its buildings.
3. Invest in renewable energy ventures
Admittedly the hardest part in any plan is weaning the nation from carbon. Fortunately, investment in green technology, especially in Silicon Valley, is booming: $5.18 billion in 2007, up 44% from 2006. The Federal Government budgets $5 billion per year for tax cuts and research into renewables and efficiency, but there is much room for improvement: the federal budget for 2008 was $2.9 trillion, and the Iraq war takes $12 billion per month on its own.
On top of this, the Democrats suggested a plan to eliminate $18 billion in tax breaks for the oil industry, using the money for research instead. As John Berger, CEO of Standard Renewable Energy puts it,
How can the oil industry need a dollar in the days of $100 crude oil?
Setting the example - California
California is the US leader in many areas related to mitigating climate change. In 2006 Governor Arnold Schwarzenegger signed the most drastic carbon reduction bill in all of the US, known as law AB 32, which requires attaining 1990 levels of greenhouse emission levels by 2020 (25% reduction). A study by UC Berkeley found that this would augment the state’s economy with 17′000 jobs and a $60 billion GDP boost by 2020 as it sparks innovation, arguably proving the critics of such regulation policies wrong. It is, however, imperative that the US implement a federal (nationwide) policy, since there is the risk that some businesses might flee to adjacent states to escape regulation.
Ever since California has introduced a variable-pricing plan for home energy use, which makes it easier to save energy, demand has already fallen by 13%. California’s per capita energy use has remained constant for 30 years, whereas the average per-capita energy use in the US rose by 50% in the same period.
The utility PG&E estimated that overall, California’s policies have eliminated the need for approximately 24 power plants over the last 30 years.
Epilogue
If the requirement for massive political will is ever met, the outcome of the plan outlined by TIME is anyone’s guess, but it could very well cause the breakthrough the world has been waiting for:
If we took all the steps outlined here—a national cap-and-trade system with teeth, coupled with tougher energy-efficiency mandates and significant new public and private investment in green technologies—where would that get us? We’d be a little poorer—a sustained battle against climate change will hit our wallets hard, absorbing perhaps 2% to 3% of gdp a year for some time, according to energy expert Henry Lee at Harvard’s Kennedy School of Government, though unchecked warming could end global prosperity. But think of it as an investment: that money, if matched by action internationally, can reduce emissions radically over the next half-century, contain warming and lead us to a postcarbon world.
In the light of the current economic woes, this presents a bright beacon of opportunity:
The U.S. has enjoyed an awfully good run since the middle of the 20th century, a sudden ascendancy that no nation before or since has matched. We could give it up in the early years of the 21st, or we could recognize—as we have before—when a leader is needed and step into that breach ourselves.
It was widely reported that LS9, a startup company in Silicon Valley, claims to have genetically modified E.coli to excrete crude oil, and they further claim the process is carbon negative:
Subscribe in a reader
