Time for a U.S. energy strategy

Over the next 50 years, progress to meaningfully address the risk of significant climate change will require an estimated 80-percent or more reduction in global greenhouse gas emissions. Global emissions now include more than 7 billion tons of carbon being pumped into the atmosphere annually, three-quarters of which come from fossil fuel combustion (with the remainder largely from land conversion and forest burning), and their rate of accumulation is increasing.

It is now clear that through action or inaction, our collective climate future is strongly tied to what course the United States steers in the beginning of the twenty-first century. As the largest source of accumulated greenhouse gas emissions in Earth’s atmosphere, but more importantly as the nation with the largest energy resource and research base to affect change, the United States is positively poised to play a, if not the critical role.

A range of technologies exist that can protect the environment and improve our economic and political security, in many cases with political and economic benefits to the nation in the form of technological and financial leadership, increased geopolitical stability and flexibility, and job growth in the clean energy sector. To accomplish these goals, we must recognize that replacing the vast infrastructure and economic machinery built to exploit fossil fuels will be a central challenge of the twenty-first century, and one where the paradigm of large, centralized energy monopolies will need to evolve to one of a decentralized, clean-energy marketplace. More than any set of technologies or economic incentives, this is the issue where climate change causes the most uncertainty–and in some cases, fear and pushback.

Despite a great deal of sound and fury, it is critical to recognize that we currently do not have an energy strategy. In the United States, arguably, there has not been anything even remotely resembling an energy strategy since the efforts by Gerald Ford and Jimmy Carter 30 years ago. Recently, however, integrated planning on climate and energy has begun to emerge at the state and regional level, setting a precedent for changing the course of national energy policy. In 1932, Supreme Court Justice Louis D. Brandeis wrote a line that is often quoted in Supreme Court opinions, “A single courageous state may, if its citizens choose, serve as a laboratory; and try novel economic and social experiments.”

Courageous experiments are now taking place in a number of U.S. states, and can form the basis of needed federal legislation and leadership. The 2006 California Global Warming Solutions Act, which mandates a 25-percent reduction in greenhouse gas emissions by 2020, as well as the Regional Greenhouse Gas Initiative in the Northeast and Mid-Atlantic States, another cooperative effort to create a carbon cap-and-trade system, are such examples. By contrast, the federal government’s carbon emission reduction target for 2012 will require only a slight constraint on business-as-usual projections, merely slowing emissions rather than reversing them. This target would actually allow for an increase in emissions over the next five years greater than the 10-percent increase that occurred in the previous decade.

If we are serious about meeting the climate challenge, we need to set a goal consistent with the Energy Department’s Climate Change Technology Plan (CCTP) objective of moving in the long term (by 2050) toward an 80-percent reduction in net emissions. In fact, the CCTP actually mentions a zeroing of net emissions at some time after mid-century.

The California climate change protection plan is one to carefully consider in developing a comprehensive federal climate plan. California Gov. Arnold Schwarzenegger’s strategy to mandate a 25-percent reduction in carbon emissions by 2020, followed by a further 80-percent reduction target for 2050 includes both near- and longer-term goals–including market-based cap-and-trade mechanisms–that delineate a path of emissions reductions toward climate stabilization. The plan includes a set of mutually reinforcing laws and executive orders. The heart of the plan is to cap emissions statewide and reduce them to 1990 levels by 2020 by aggressively deploying energy efficiency at the home, business, and industrial levels; reducing the carbon content of our transportation fuels; deploying solar and biofuels on a large scale; and insisting that all out-of-state electricity we import comes from low-carbon sources.

California’s strategy represents only one such path to a low-carbon society, but it embodies the key features that are required in federal legislation: an integrated, consistent approach that both initiates early action and clarifies the long-term road map to a decarbonized future.

Any low-carbon strategy will also require an ongoing commitment to research. California has the largest state-led energy research program in the nation, and is today developing a plan for a 10-year, $600-million California Global Warming Solutions Institute to put emerging clean energy technologies into practice. As a nation, however, the United States has underinvested in energy research, development, and deployment for decades, and sadly the fiscal 2008 budget request is no exception. Today, federal energy research and development investment is back at levels lower than before the oil embargo of the 1970s–despite the fact that energy dependence and insecurity and the climatic impacts of our energy economy are dominating local economics, geopolitics, and environmental degradation.

As an example of the U.S. government’s lack of serious and sustained commitment to clean energy, consider the Energy Department’s Advanced Energy Initiative budget: At $2.7 billion, the United States invests about $1 billion less in energy R&D today than it did a decade ago. The overall federal energy research and development budget request for 2008 is only $685 million more than the 2007 appropriated budget. Half of that increase is requested for nuclear power research; the rest would moderately increase funding for biofuels, solar, and FutureGen (a clean coal initiative), less $147 million for research on hydrogen fuel cells.

The larger issue, however, is that the U.S. government invests less in energy research, development, and deployment than do a few large biotechnology firms with their own private R&D budgets. This is unacceptable on many fronts, especially since we know that investments in energy research pay off at both the national and private sector levels.

My students and I have documented in a series of papers a disturbing trend away from investment in energy technology–both by the federal government and the private sector, which largely follows the federal lead. This trend is remarkable for two reasons: First, the level of investment in energy R&D in the mid-1990s was already dangerously low, and second, as our analysis indicates, the decline is pervasive–across almost every energy technology category, in both the public and private sectors, and at multiple stages in the innovation process. In each of these areas, investment has been either stagnant or declining. Moreover, the decline has occurred while overall U.S. R&D has grown by 6 percent per year–investments in health and defense have grown by 10 to 15 percent per year, respectively. As a result, the percentage of all U.S. R&D invested in the energy sector has declined from 10 percent in the 1980s to 2 percent today.

Developing a balanced portfolio of energy research, development, and deployment projects is central to meeting the challenge of climate change, but it is equally clear that “technology push” projects must be accompanied by “demand pull” measures. Among the most important demand-pull (market creating or enabling) options available to us today are:

• A national commitment to saving money and energy through energy-efficiency measures (some states, including California, are 40 percent more efficient than the national average);
• Diversified energy portfolios that require increasing percentages of renewable sources;
• Low-carbon fuel standards that evolve in time into sustainable fuel standards;
• Carbon taxes or cap-and-trade systems under which carbon emission rights are limited;
• Carbon footprint analyses for business, industry, municipalities, and (critically) personal purchases;
• and international collaborations and public-private partnerships designed to commercialize (or at least open market space for) clean energy and energy efficient technologies.

This is a remarkably simple list, but one that has enough teeth and economic opportunities to harness the innovative power of the superpower economy. A suitably committed president–or presidential candidate–could put it into action. We are now in a moment–perhaps a first–where a growing view exists that energy and climate could be front-burner issues for candidates and voters. The time is right to focus on the energy system we want, not on the one we had, and sadly, still have.