Climate Solutions: Charting a Bold Course

A cap-and-trade system is not the answer, according to a leading alternative-energy advocate. To really tackle climate change, the United States must revolutionize its entire energy strategy.

More than 30 years ago, President Jimmy Carter called for a daring transition to a new energy future, an effort he likened to “the moral equivalent of war.” But the hard truth is that the United States is in far worse shape in the energy realm today than it was when Carter left office.

Since 1981, annual greenhouse gas emissions have grown from 4.7 billion metric tons of carbon dioxide to 5.9 billion metric tons. America imported 1.6 billion barrels of oil in 1981; by 2007 imports had ballooned to 3.7 billion barrels. Today, oil prices have surged past $130 per barrel, and the best evidence suggests that total global oil production is at or nearing its peak. Under President Carter, America dominated the world in renewable energy research, development, and commercialization, but in the ensuing decades our federal government has thrown away that lead.

With the economy now staggering from its addiction to oil, and with evidence of global warming having persuaded all but the knuckle-draggers, is America at last getting serious about freeing itself from carbon fuels?

Actually, no. Most environmentally sensitive politicians and even many national green groups are remarkably blithe that the Lieberman-Warner bill — a 500-page cap-and-trade law filled with more holes than a Madonna dance outfit — will take us there.

The tragedy is that we still have a chance to solve the global warming crisis, but we are blowing it by chasing false hopes in the form of an inadequate cap-and-trade bill.

Acting fast enough and on a large enough scale to avoid unthinkable climate consequences will require a more ambitious effort than the New Deal, the Interstate Highway System, and the Manhattan Project, all rolled into one. Serious efforts to stabilize the world’s climate will have dramatic consequences for industry, transportation, architecture, agriculture, leisure, and consumerism, and so, many of these changes will be fought tooth and nail — as was evident last week when Republican Senators attacked and derailed the Lieberman-Warner bill, forcing Democratic leaders to place the initiative on hold until a new president takes office.

The truth is that all our largest current energy sources will need to be replaced by new sources — over the ferocious opposition of the powerful companies that market them.

The story of how we got into this crunch is a tale of political opportunism and shortsightedness. For had America continued on the course we’d embarked upon in the mid-1970s, the task ahead would now be much less expensive, much less painful, and much more certain of success.

In 1979, after the Arab oil embargo, Carter announced that by the year 2000 America was to get at least one-fifth of all its energy from renewable sources — mainly solar energy, wind, and biofuels. The Solar Energy Research Institute, which I then served as director, was at the heart of this effort. Leading a team of scientists and analysts drawn from national labs and major universities, SERI prepared the detailed technical and policy blueprint to meet or surpass the 20 percent goal.

In 1981, halfway through his first year in office, President Ronald Reagan abandoned the 20 percent goal, reduced SERI’s $125 million budget by $100 million, and installed a dentist named Jim Edwards as Secretary of Energy. To demonstrate his contempt for the notion of alternative energy, Reagan ordered the solar water heaters ripped off the White House roof. We’ve never recovered.

The successive administrations of George H.W. Bush and Bill Clinton, bobbing along on a sea of cheap oil, did little to shift America’s economy to renewable energy sources. And for the past seven years, the United States has been led by a president who projects such a breathtaking marriage of arrogance and incompetence that his refusal to even acknowledge the reality of climate change has not generally been considered one of his more glaring flaws.

As climate science has grown increasingly clear, many corporate CEOs have become convinced that global warming has a human signature. The brightest CEOs of Fortune 100 companies realized that once the Democrats took back control of Congress, it would be only a matter of time before climate legislation was enacted. The next president, whoever it is, will demand action. These CEOs all wanted to be at the table — in Washington, if you aren’t at the table, you’re likely to wind up on the menu.

Environmental groups soon found themselves being courted by business leaders who recognized that the climate threat would require a serious national response. They formed the U.S. Climate Action Partnership and other alliances that offered benefits for environmentalists but also entailed subtle costs. The most obvious benefit was that environmental leaders are taken more seriously on Capitol Hill when they arrive linking arms with the CEOs of General Electric, Caterpillar, DuPont, and General Motors.

The cost was the natural downside of consensus building: Policies cannot significantly harm the core interests of any of the participants. When the participants include the world’s largest automobile company, the largest manufacturer of jet engines, the largest maker of mining equipment for coal and bituminous sands, etc., this is not an insignificant cost.

What emerged from this unexpected alliance was a consensus that the centerpiece of climate policy should be a cap on CO2, generally applied as close to the point of emission as realistically possible. Additionally, there was widespread agreement that (a) between 25 percent and 80 percent of all emissions permits should be given away to major emitters for a transitional period; (b) the law should provide ample “offsets” available for purchase by companies failing to meet reduction targets; and (c) “safety valves” should permit relaxed enforcement in case greenhouse gas reductions cause temporary economic hardship.

Unfortunately, these are genuinely terrible ideas. They are not bad because they lack ambition; rather, they are bad because they move boldly in the wrong direction. They don’t merely ignore the way that the global economy responds to real-world policies; they ignore everything we have learned about human nature since Rousseau’s belief in humanity’s innate goodness crashed on the shoals of 18th-century reality.

So what should a serious energy and climate policy look like?

The backbone of any comprehensive policy to limit greenhouse gas emissions must cap carbon at the places — coal mines, oil fields, pipelines, ports — where it enters the economy.

Instead, at the behest of corporate behemoths and their green enablers, our political leaders are focusing most of their attention on smokestacks, and when that is obviously impossible (e.g. with gasoline or propane) on refiners or distributors. They want to cap CO2 where it enters the atmosphere — an approach that is guaranteed to fail because there are far too many point sources.

Europe has already attempted a cap-and-trade program, and it belly-flopped. Senators Warner and Lieberman, who should be applauded for at least acknowledging that global warming is a problem, failed to absorb some important lessons from Europe, including:

  • The most important part of cap-and-trade is the “cap.” Any successful law must place an impermeable lid on the amount of carbon that enters the atmosphere. To whatever extent additional trees or windmills are used to “offset” additional carbon-based fuels, the exercise is self-defeating.
  • In contrast to regulating a sea of smokestacks, the best course is to require carbon permits at the 2,000 sources where carbon enters the economy. It would be simple, straightforward, and impossible to “game.” It is vastly more effective than trying to police carbon dioxide wherever carbon is burned. In setting the number of carbon permits issued — and thus determining how much coal, oil, and gas can enter the economy — the government would be setting an absolute, easily-enforced cap on emissions.
  • All carbon permits should be auctioned — not given away. In Europe, permits were given away to large carbon users to ease their transition to the new regime. Major polluters made cheap improvements, lowered their emissions, and sold their unneeded permits. This gave windfalls to the worst polluters, penalized companies that had already invested in efficient new factories and renewable energy, and helped guarantee that Europe would miss its Kyoto targets. Auctioning 100 percent of all carbon permits is fair and transparent; it eliminates backroom special-interest pleadings. By reducing the number of permits auctioned each year, the government can guarantee that its emissions targets are met.

Use Auction Revenues Intelligently

The most vital use for most of the revenues would be to serve such climate-related public purposes as building the infrastructure needed for a national “smart grid” for electricity and for high-speed electrified railroads, assuring large federal markets for the sunrise industries of the post-carbon economy, and finding ways to accelerate the solution of the climate problem through huge boosts in federal support for basic research. However, a portion of the revenues should compensate for the regressive nature of what is effectively a carbon tax, perhaps by using them to meet the shortfalls facing Medicare and Social Security and helping to underwrite training for green-collar jobs.

Promote Renewable Energy

Government has a long tradition of helping sunrise industries supplant their well-entrenched predecessors. Canals were encouraged as more efficient than horses. Railroads were viewed as a way to open the west. The interstate highway system replaced many of the functions performed by railroads.

Some renewable energy sources would benefit greatly from a focused, long-term federal commitment to R&D. Others are already poised to ride learning curves to lower prices through economies of mass production — but require guaranteed markets to elicit the necessary investment. (Computer chips went from being high-priced luxuries to cheap-as-dirt commodities only because the Air Force and NASA bought them in bulk until their prices fell to a level where the private market took over.)

The federal government should be buying photovoltaic devices in bulk and installing them on all federal buildings, military bases, and the backs of billboards, and pouring the power into the grid. The goal should be to grow the market in a rapid yet predictable way linked to constantly lower prices. The start-and-stop unpredictability of renewable energy tax credits over the last 30 years has severely undermined the wind and solar industries, and placed American companies at a huge disadvantage with foreign competitors. As recently as 1998, America was the world’s largest manufacturer of solar photovoltaics — a technology that was invented here. But Japan, with a long-term strategy, sped past the U.S. the following year. A few years later, led by Germany, much of Europe implemented tariffs that vaulted the solar field into hyperdrive. If current trends continue, annual global photovoltaic production by 2011 will be a stunning 30 gigawatts, of which the U.S. will contribute perhaps 4 percent.

Construct a Resilient Nationwide Smart Grid to Take Power from Anywhere to Anywhere

The arguments for a national smart grid are legion; the arguments against it don’t hold water. Many carbon-neutral renewable energy sources are intermittent or diurnal, and the best locations both for sources (sunlight, wind, geothermal) and for storage are widely dispersed. We need to be able to knit the nation together. Only the government can assemble the corridor rights to make such a development possible.

Get Serious about Automobile Mileage

In World War II — without Representative John Dingell Jr. to protect it from reality — Detroit was ordered to stop making cars and start making tanks. Today, Detroit needs to be ordered to stop making civilian tanks and start making cars. Manufacturers should be free to use any technology that can get 50 mpg by 2020 and 100 mpg by 2030. The world cannot afford yet another abysmal failure by the once-proud American automobile industry.

Build High-Speed Electrified Railways for Our Busiest Corridors

The answer to every intercity travel need is not an airplane or a car. America is the only industrial power on earth without high-speed electrified rail — a super-efficient mode of intercity travel that can be carbon-free. I don’t know a single American who has traveled on the bullet train from Tokyo to Osaka who hasn’t wondered, “Why can’t we do that from Boston to Washington? From San Francisco to LA?” It would require the same sort of government effort that built the interstate highway system — or, for that matter, the original railroads.

Set Strong Building Energy Performance Standards

We need to make all new buildings carbon-neutral by 2030, requiring vast increases in efficiency and walls and roofs that harvest energy directly from sunlight. The astonishing rate at which voluntary LEED standards have swept across the country suggests a deep hunger on the part of smart architects and builders for structures that will make sense throughout their 50-year lifetimes. We need to build on that momentum to create a new generation of energy efficient “living buildings.”

Train the Labor Force

Reversing climate change has an enormous potential to put America back to work. The greatest employment opportunities are for those who will transport and install solar modules, build and maintain wind farms, construct and operate the high-speed rail system and the “smart grid.” Programs, mostly at community colleges, to teach these new skills need to increase 100-fold, and a special emphasis should be placed on retraining the “losers” in the energy transitions — such as workers in coal mines and coal-fired power plants, etc. — and inner-city poor who have seen their job prospects disappear in the globalized economy.

The Time is Now

Following decades of political denial of climate science, America now lags far behind Europe and Japan in creating most of the basic building blocks for a carbon-neutral era. In several core renewable energy technologies, we have already been passed by China.

It’s not too late to get back in the game. But the global industry is rapidly expanding and maturing, and it has supportive government policies in Germany, Japan, the Nordic states, the Netherlands, South Korea, and China.

America has unparalleled scientific and engineering excellence, formidable financial muscle, bountiful natural resources, a democratic political system, and an entrepreneurial culture well-suited to helping to lead the world into a prosperous, carbon-neutral era. But we have been dragging our heels, as if this were a problem for our children to fix.

Global warming is our problem, and it’s time to get serious about solving it.