Climate Exchange Cool heads tackle our hottest issue
by Marilyn Berlin Snell
(page 3 of 5)
Bettina Poirier: One of the things we can do in the Senate, and particularly with Senator Boxer as chair of the Environment and Public Works Committee, is to bring the spectrum of voices to the table. We'll have several new subcommittees this year. One will be chaired by Senator Joe Leiberman; its goal is to include the business and consumer perspective and provide private solutions to global warming. We're trying to build those issues directly into our process.
Reicher: Good. What Vinod calls "scalability" I call "deployment." In the energy sector, we literally spend 20 or 30 years developing a technology, and then it takes another 20 or 30 years to get it deployed. Consider energy efficiency. In many respects, efficiency is our cheapest, fastest, and cleanest option. Why is it that an energy source that can be deployed at two to four cents a kilowatt-hour isn't being deployed--when some of the other things we're excited about, like solar, cost ten times as much? If I had to name one area that offers the nation huge opportunities, it's efficiency.
Khosla: Former UC Berkeley efficiency expert Art Rosenfeld says that if the United States were working at the energy-efficiency level of the early 1970s, we would be spending $700 billion a year more on energy alone. This is not a green argument; it's an economic argument.
Paul Anderson: I am very much in concert with this efficiency argument. But first we need to change the strategic imperative of the United States so it's no longer "cheap available energy for all"--an approach that goes back to the 1950s. We decided then that we were going to build a highway system, and we were going to use trucks instead of barges and trains; we were going to build our cities sprawling, and people were going to drive to their jobs instead of live close to them in highrises. Finally, we were going to make sure that certain special interests were never taxed for the total cost of their energy because they have huge political clout.
We aren't going to solve environmental problems unless we actually have a cost to using energy that's commensurate with the damage it does to the planet. That would be a huge turnaround. I have never heard a politician say, "My goal is to make energy more expensive in this country," but if they really want to reduce carbon emissions, that should be their goal. It absolutely has to be their goal.
That said, whatever we come up with in terms of solutions has got to avoid a political grab bag like what happened with the sulfur dioxide cap-and-trade system. If you were emitting so many tons of SO2 as of the baseline year, you got X number of allowances. If you cut back on emissions after the baseline year, you could sell your excess allowances to somebody else. This scenario, whether for SO2 or for carbon, actually creates an incentive to do nothing that reduces your emissions before the system is in place because you might be forgoing a tremendous asset.
Pope: You talk about the need to change strategic imperatives, Paul. The Sierra Club has been a public-policy organization for 115 years, and yet recently our board decided that we should target capital markets, not government. Our strategic imperative is to move capital markets from the past to the future.
But government does have an important role to play, for instance, in modernizing the electricity grid to improve reliability and efficiency and to better accommodate power generation from solar, wind, microturbines, etc. In the United States, consumers pay an extra $150 billion a year because we haven't modernized.
The energy industry is by far the least innovative sector in the American economy, and I'd argue that the reason for this is government. Compare the energy sector's lack of innovation with the steel industry. A steel mill today does not look or work anything like a steel mill of 30 years ago. Nobody is keeping old steel mills alive with special government exemptions. Yet power plants are still being kept alive.
Anderson: I've been in the steel industry and witnessed its disruption, and I've been in the power industry. The big difference is that one is totally independent and the other is centrally planned by government agencies. The steel industry did not change because it wanted to; it changed because people took it out and shot it. In the case of the power industry, you can't shoot anybody; it's all centrally planned.
Khosla: Beyond steel, other industries have successfully transformed as well. One is telecom. Ten years ago, for example, every single CEO of every major telecom in the world said they would never adopt the Internet as their core network. They would offer it as a service but never adopt. All that has changed. IBM is another example. People thought nobody could touch IBM. When we started Sun Microsystems in 1982, the basic assumption was to be peripheral to or add on to IBM, not to disrupt it. I'm optimistic about changing radically old industries.
Pope: I'm optimistic as well. My premise is that government is preventing that kind of necessary disruption in the energy industry.
Anderson: My solution is very simple and absolutely not new. We need to have a carbon tax. Let's call it a carbon fee, like a value-added tax, based on carbon content. This fee would immediately send a signal that there is going to be a cost to carbon--that carbon will not be an asset but a liability. It doesn't even matter what the level is. The fee would exempt no one. It would accomplish everything you're looking for--promote new technologies, cause people to change old equipment, switch fuels--and it is the only thing that would have an impact tomorrow.
Schneider: During the Kyoto Protocol negotiations, I argued for a carbon tax that involved everybody, including China and India. However, I believed we should recycle the revenue from the tax back to developing countries, even more than they paid in, because you don't subsidize poverty with artificially low prices of commodities that are anti-sustainability. You subsidize it with money, but you target that money toward projects that help advance sustainability. Nobody wanted to talk about that at Kyoto.
If you want to be effective, you have to deal with the people who are hurt either by the climate change or by the policy. Most poor people don't live near their work. It's not because they don't want to but because of housing prices. They don't drive 15-mile-a-gallon cars because they like clunkers. If the price of energy is increased through a carbon fee, we'll need what economists call "equity side payments." If you want to call them a political bribe, fine. For the poor person who has to pay more for gas, I wouldn't offer cash back. I'd give them a voucher for $10,000 to buy a better-than-40-mile-a-gallon car. You could even do it in such a way as to have an internal win--say in Detroit, which would make the fuel-efficient vehicles. You need public-private partnerships.
Reicher: I second the call for a carbon tax. Putting a price on carbon is the motivation we need.
Khosla: If a genie gave me one wish, it would be a price on carbon.
Reicher: Let me offer two smaller ideas. First, I was struck by what the public pension funds in California did a few years ago in deciding to move increasingly serious amounts of money into things green. Collectively, CalPERS and CalSTRS control over $350 billion. If we could make it work both for the bottom line of the people who manage these pension funds and also respond to the social needs of the people for whom these funds are run, we could do a lot of good.
Second, the National Academy of Sciences met several years ago to address what its research agenda ought to be in terms of climate change and energy. Someone asked what one energy technology can cause a net reduction in atmospheric carbon. It's obviously not coal, oil, or gas. It's not solar or wind, because they're net zero. It's biomass. Here's how: The plant, which produced the biomass originally, removes CO2 from the atmosphere in the photosynthesis process. If we then use biomass to produce energy--electricity or biofuels--and, after that, capture and sequester the resulting CO2 from this process, we get a net reduction in atmospheric CO2. By piggybacking on the sequestration-technology work under way for coal, biomass could become an even more attractive energy source and new investment.