Innovating Our Way Into Benefits From Energy Policy

We hear a lot about how legislation to mitigate the worst effects of climate change will cost a bundle. And to be sure, it does SOUND like transferring to a new energy economy would require a period of adjustment, and the costs would get passed onto the customer. But the CBO study of the Waxman-Markey bill specifically showed those costs to be miniscule, the price of a postage stamp per day. And David Roberts says that, when you factor in all the savings of the bill, Americans will come out ahead:

Cost-effective low-carbon alternatives are plentiful. Many remain unexploited not because they can’t compete in a free market, but because there isn’t one. A variety of market barriers, market failures, and behavioral failures plague the energy sector: monopolies, oligarchs, myopic accounting, misaligned incentives, perverse regulation, information bottlenecks, immature business models, cultural inertia, plain old bad habits. Underutilization of cost-effective clean alternatives is especially true in efficiency. (See: McKinsey & ACEEE.) Hell, recycled waste heat alone could generate 742 terawatt hours of power a year in the U.S., according to Lawrence Berkeley National Lab (PDF).

Market failures can be overcome through smart legislation, regulation, and investment designed to encourage not just alternative technologies but alternative systems. When we get our accounting right, we see they’re all over. The era of cheap energy in the U.S. has produced, among other things, a relatively sclerotic and unimaginative energy sector, particularly in electricity, which is dominated by monopolies. (The average power plant is no more efficient today than it was 50 years ago.)

But that languid pace of innovation is changing, and quickly. The past or even present pace of energy innovation is no adequate predictor of the explosion on its way.

In addition to the avoidance of costs that would be due to climate change, observers underestimate the value of innovation and efficiency, particularly the latter, a key obsession of Energy Secretary Steven Chu. Yesterday the White House announced a series of energy efficiency efforts which, if successful, will save millions of tons of carbon dioxide and gigawatts of power over the future. These things tend to snowball, as efficient lighting can beget even more efficient lighting, and efficient windows can beget even more efficient windows, etc. If we start building with efficiency in mind today, the savings in the future are really exponential. And the market has already been created for green building.

So I would rather talk about the benefits of climate change legislation than the costs, because over the long run, the benefits will more clearly show themselves.

The White House Goes All In On Green Jobs

Joe Biden presided over a summit in Philadelphia of his Middle Class Task Force today, and the subject was green jobs. Vice President Biden had an op-ed in the Philadelphia Inquirer today making the case.

So what exactly are "green jobs"? They provide products and services that use renewable energy resources, reduce pollution, and conserve energy and natural resources.

Investing in green jobs also means keeping up with the modern economy. At a time when good jobs at good wages are harder and harder to come by, we must find new, innovative opportunities.

According to the Council of Economic Advisers, green jobs pay 10 to 20 percent more than other jobs. They also are more likely to be union jobs. Building a new power grid, manufacturing solar panels, weatherizing homes and office buildings, and renovating schools are just a few of the ways to create high-quality green jobs that strengthen the foundation of this country.

It's the ultimate win-win. Green jobs can revitalize impoverished communities by bringing back industry, increase unionization and the rise of the middle class, add to re-industrialization, reduce energy costs for the whole country, make us energy independent and save the planet. Most important at this point, they can help increase GDP, as Gar Lipow explains:

The main extra benefits economists overlook are the helpful side effects other than mitigating the climate crisis -- "positive externalities," in economic jargon.

For example, about half of all economic activity takes place in climate-conditioned buildings. Greening these buildings could increase[PDF] productivity [PDF] by around 10 percent. Similarly, switching most long-haul freight trucking miles to long-haul freight rail would increase productivity in transportation. Many energy-saving practices in industry, such as reducing scrapping and reducing spills and other types of emitting stoppages, would increase productivity as well. A switch to wind and solar would reduce labor productivity in the electricity sector; the conventional wisdom is that a switch to organic agriculture would do the same in that sector, though I think this is much less certain that people think. At any rate, sectors where productivity would rise greatly outnumber the tiny sectors where it might fall -- resulting in a huge net increase, probably greater than 5 percent for the economy as a whole.

Another example would be huge benefits to health. Eliminating or greatly reducing the use of fossil fuels would reduce air pollution, water pollution, and exposure to toxics. A switch to organic and low input agriculture would decrease direct ingestion of toxics, and increase available vitamins and minerals in food. Whether such a switch alone would encourage a switch to healthy increase in the consumption of non-starchy vegetables and fresh fruits I don't know, but it certainly could be part of policy that accomplished this. Overall, I think it is almost impossible that switching from fossil fuels to renewables and efficiency, that switching from toxic soil-consuming agriculture to non-toxic soil building agriculture, from unsustainable to sustainable forestry, would not increase GDP.

Because so much of the Administration's success depends on major increases in GDP after the recession ends to close the debt and reduce unemployment, they know that green jobs which can spur industrial growth are crucial. We're seeing much more activity in this area than even talked about during the campaign.

Here's a liveblog of the summit, with remarks from Biden and green jobs advocate Van Jones, among others. And here's a staff report from the White House going into more detail on the preferred policies on green jobs from the Administration, in the stimulus and beyond. Finally, the Departments of Energy and Housing & Urban Development have announced a partnership to spend $16 billion dollars in stimulus funds to retrofit and weatherize existing homes, lowering energy consumption in those homes by 20-40% and creating thousands of jobs.

These aren't bumper stickers or slogans, these are real policies that will have a lasting effect.

Old Tech, New Tech, Lower Emissions

We have such an urgent need to reduce greenhouse gas emissions that we must explore all options. Some are very forward-thinking, like Democrat Chris Van Hollen and Republican Zach Wamp's proposal for green banks:

Reps. Chris Van Hollen (D-Md.) and Zach Wamp (R-Tenn.) wrote a letter to Obama this week urging his support for a national “green bank,” and a fund to help homeowners retrofit their homes for energy efficiency.

They say private sector support for the projects is flagging in the face of falling fuel prices and the evaporation of credit markets.

“The current financial crisis has not only thrown us into recession, it has significantly derailed or killed off virtually every alternative energy project in the pipeline,” the duo wrote in a letter to Obama this week, “making renewable energy yet another victim of the economic fallout.”

The “green bank” has a more formal name, the National Clean Energy Lending Authority. The $10 billion program would be a government organization intended to finance the transformation of the energy sector.

I agree, says the guy with SRI (socially responsible investing) funds that have lost 60% or more!

More seriously, thinking long-term on funding green investment and future innovation in the sector is a brilliant idea. But there are also more immediate solutions that aren't totally intuitive, but would reduce emissions in a big way. Phillip Longman writes about freight rail.

For now, Virginia lacks the resources to build its "steel wheel interstate," but that could change quickly. Thanks to the collapsing economy, a powerful new consensus has developed in Washington behind a once-in-a-generation investment in infrastructure. The incoming administration is talking of spending as much as $1 trillion to jump-start growth and make up for past neglect, an outlay that Obama himself characterizes as "the single largest new investment in our national infrastructure since the creation of the federal highway system in the 1950s." We’ll soon be moving earth again like it’s 1959.

By all rights, America’s dilapidated rail lines ought to be a prime candidate for some of that spending. All over the country there are opportunities like the I-81/Crescent Corridor deal, in which relatively modest amounts of capital could unclog massive traffic bottlenecks, revving up the economy while saving energy and lives. Many of these projects have already begun, like Virginia’s, or are sitting on planners’ shelves and could be up and running quickly. And if we’re willing to think bigger and more long term—and we should be—the potential of a twenty-first-century rail system is truly astonishing. In a study recently presented to the National Academy of Engineering, the Millennium Institute, a nonprofit known for its expertise in energy and environmental modeling, calculated the likely benefits of an expenditure of $250 billion to $500 billion on improved rail infrastructure. It found that such an investment would get 85 percent of all long-haul trucks off the nation’s highways by 2030, while also delivering ample capacity for high-speed passenger rail. If high-traffic rail lines were also electrified and powered in part by renewable energy sources, that investment would reduce the nation’s greenhouse gas emission by 38 percent and oil consumption by 22 percent. By moderating the growing cost of logistics, it would also leave the nation’s economy 13 percent larger by 2030 than it would otherwise be.

Yet despite this astounding potential, virtually no one in Washington is talking about investing any of that $1 trillion in freight rail capacity. Instead, almost all the talk out of the Obama camp and Congress has been about spending for roads and highway bridges, projects made necessary in large measure by America’s overreliance on pavement-smashing, traffic-snarling, fossil-fuel-guzzling trucks for the bulk of its domestic freight transport. This could be an epic mistake.

Again, I agree. The over-reliance on "shovel-ready" projects encourages unsustainable suburban sprawl. The current mania for infrastructure spending offers an opportunity to change that dynamic and use the latest in technology as well as old tech like freight rail.

The California Report - News Of The Good

We spend an inordinate amount of time on the bad of California politics here on the site. And with a system this dysfunctional, there's a lot of bad to go around. But as the budget hostage crisis continues, and state workers don't know if they'll be able to afford their bills come Monday, I wanted to at least recognize some of the positive developments around the city and state:

• The Governor signed a bill today banning trans fats in all state restaurants and bakeries by 2011. Combined with the law signed earlier this week to crack down on the sale of downer cattle in US groceries, and the LA City Council moving forward on a one-year moratorium on new fast-food restaurants in South Los Angeles, this is a good week for food safety, nutrition and public health.

• As mentioned by Shayera, the Los Angeles City Council voted to ban plastic bags by 2010, if the state does not mandate a $0.25 charge for every bag by then. Additionally on the environmental front, there's also the statewide green building code adopted by the California Building Standards Commission, and another passage for the third year in a row, of a port container fee which would be invested in fighting pollution (Hopefully this time the Governor will sign it). This too is good.

• Leland Wong was convicted yesterday on 14 counts of public corruption and bribery while he was LA City Commissioner. Accountability is good.

• In Orange County, the Laguna Beach City Council, which is majority Republican, became one of the first to publicly oppose Prop. 8, the hate amendment. Saying no to hate is good.

• Unfortunately, not everything is good. Foreclosure rates are skyrocketing nationwide, more than doubling in the second quarter. In one incredible example, almost 1 in 20 homes in Merced have been lost to foreclosure, the highest rate in America. Wow. Not good.

The Green Cultural Movement

I went to the Dwell on Design show over the weekend, a look at home furnishings from the architecture and design magazine. And what amazed me was how foregrounded the green credentials of all the products were. Even in front of the design qualities. From VOC-free paint to tabletops that don't emit radon gas to solar panels to tankless water heaters and on and on, there was practically nothing at this design show that was purely aesthetic.

The green movement is cultural. It's not using the usual measures of politics to gain power, but creating a lifestyle that incorporates eco-friendly elements into it. It's starting in building and re-design, and because of the price of gas is moving quickly into transportation. Both Nissan and Saturn are putting a significant investment into electric cars, and as most Americans expect gas prices to remain high it's very likely they'll buy them and find alternative means of travel.

Of course, this cultural movement is going to leave some people behind. Green technologies are expensive now, and out of reach to many. That's what I thought when I read this article about how rural Americans are suffering the most from higher gas prices. Electric cars aren't coming to the heartland anytime soon. How do we deal with this?

Across broad swaths of the South, Southwest and the upper Great Plains, the combination of low incomes, high gas prices and heavy dependence on pickup trucks and vans is putting an even tighter squeeze on family budgets.

Here in the Mississippi Delta, some farm workers are borrowing money from their bosses so they can fill their tanks and get to work. Some are switching jobs for shorter commutes.

People are giving up meat so they can buy fuel. Gasoline theft is rising. And drivers are running out of gas more often, leaving their cars by the side of the road until they can scrape together gas money.

The disparity between rural America and the rest of the country is a matter of simple home economics. Nationwide, Americans are now spending about 4 percent of their take-home income on gasoline. By contrast, in some counties in the Mississippi Delta, that figure has surpassed 13 percent.

As a result, gasoline expenses are rivaling what families spend on food and housing.

“This crisis really impacts those who are at the economic margins of society, mostly in the rural areas and particularly parts of the Southeast,” said Fred Rozell, retail pricing director at the Oil Price Information Service, a fuel analysis firm. “These are people who have to decide between food and transportation.”

Outside of rebates, I don't know how you deal with that. Building an entirely new energy infrastructure, new bus routes and mass transit, in areas that have none, is prohibitively expensive. A windfall profits tax won't impact these people, at least not to the extent that they can fit transportation cleanly into their budget.

Something to think about.