A Threefold Strategy for Carbon Reduction

San Francisco -- As Congress considers clean-energy and climate legislation, most of the fuss has been about whether (and how) to use price signals to encourage clean energy and reduce our dependence on dirty fossil fuels. Should we have a cap-and-auction system (as President Obama prefers), a carbon tax (as many economists have argued), or cap and trade (as the House recently voted)? Or, should we just pretend that energy markets work just fine without price signals, as the Republican leadership and the Chamber of Commerce seem to prefer? Markets where you don't have to pay for what you use (in this case, the planet's limited carbon sinks) used to be associated with communism. Now they're the heart of a weird cult that calls itself conservatism.

But the argument has begun to shift a bit. Now the question is, if we have a market price on dumping carbon pollution into the atmosphere, does that mean we don't need any other reforms of our energy sector in order to create a clean-energy future, cut our dependence on imported oil, and stabilize the climate? That's not the approach taken by the recently passed Waxman-Markey bill (H.R. 2454). It includes a robust, if partial, suite of investment and regulatory features. But some macro-economists (and some figures in Congress) clearly see a price signal as a substitute for comprehensive energy market reform. Harvard's Robert Stavins recently wrote  "the other titles of the bill include a host of conventional standards, many of which (under the cap and trade umbrella) will have minimal or no environmental benefits, but will limit flexibility and thereby have the unintended consequence of driving up compliance costs."

This belief that a price signal on fuel purchases alone will fix our energy sector is simply unfounded. Creating a clean-energy economy requires three key reforms. First, we need public investment to develop low-cost, low-carbon energy technologies faster than private R&D can get there -- just as we needed public investment to get the infrastructure for the information revolution in place. Second, we need to reform energy markets so that incentives are aligned and market failures fixed -- if banks won't take the energy efficiency of a new house into account when approving a mortgage, then builders simply can't put the most cost-effective furnaces, windows, and lights into the home -- because they can't recover their investment. And third, we need price signals -- not just on fuel costs, as a carbon tax would do but also on purchases of new vehicles and other energy equipment. That's because the price volatility of oil mean we can't always count on consumers to buy a fuel-efficient car to save on gasoline -- they need an incentive on the sticker at the dealer's lot.

These three strategies are at the heart of the Sierra Club's Climate Recovery Partnership. But you don't have to take the Sierra Club's word for this commonsense proposition that there is no single solution to our utterly broken, backward, and polluting energy economy. Last week the Business Roundtable issued a report documenting that the combination of price signals with technology development and regulatory reform would reduce our emissions of carbon dioxide twice as fast at half the price. So technology + policy reform + price equals a package that is four times as effective as price alone.

(The Round Table's report also emphasizes its desire for huge new investments in nuclear energy and a greater emphasis on domestic oil production through opening up public lands and waters. Because H.R. 2454 doesn't, in its view, do enough for these pathways, the Round Table declined to embrace H.R. 2454, but commended the House for moving it forward -- putting it in the same camp as the Sierra Club, albeit for very different reasons.)

A concrete example of how policy, innovation, and price work together showed up on this morning's New York Times business section. Once the federal government set efficiency standards for lightbulbs, researchers began a race not only to find substitute for the conventional incandescent bulb but also to modernize the conventional bulb to make it efficient so it could meet the new standards.  According to Chris Calwell, a researcher with Ecos Consulting who studies the bulb market, "There have been more incandescent innovations in the last three years than in the last two decades." Think about that -- a simple government regulation increases the pace of innovation 700 percent!

Whether you think, with the Business Round Table, that combining price with other reforms improves performance fourfold, or take the lightbulb example as a better predictor because it's a real world example, in which case we will make progress seven times as fast, it's absolutely critical that we understand that we need a strategic combination of technology, policy, and pricing to solve our energy dilemma and start curbing the climate crisis.

Follow Carl Pope on Twitter: www.twitter.com/CarlPope

Comments

[watchTVgetSTUPID]

Agribusiness doubles the concentration of CO2 inside green houses. The plants grow bigger faster.

Horay for India and China for not going along with the BS about man made Global Warming. Heck even the offical mantra has changed from "global warming" to "Climate change" for a reason ... the Cap N Trade boosters who plan to make a ton of money off it don't believe it is defensible.

There should be research done to better understand our climate changes. Too bad the Global Warming "experts" claim they already understand it.

[research]

Maybe not: http://www.newscientist.com/article/dn11655-climate-myths-higher-cosub2sub-levels-will-boost-plant-growth-and-food-production.html

[Tom-Harris]

What is “carbon tax” and “carbon pollution” in the subject piece by Carl Pope? Are they concerned about soot emissions (i.e. structureless carbon, a pollutant), graphite or diamonds? Those are what carbon is.

What Pope means are “carbon dioxide tax” and “carbon dioxide pollution”.

This is not merely an academic point but is part of the way the language of the debate is distorted to bolster concerns about possible human-caused climate change. Ignoring oxygen atoms and calling CO2 ‘carbon’ is like ignoring the oxygen in water (H2O) and calling it ‘hydrogen’. Most of the public would regard such a communications trick as ridiculous. Imagine getting a hydrogen tax bill, only to be told later that was water tax.

Such deceptions do serve a purpose, however: to frighten the public into CO2 cuts. Using such phrases as “harmful carbon emissions” encourages people to think of the gas as ‘dirty’, like graphite or soot. Referring to CO2 by its proper name only would help people remember that it is an invisible gas essential to plant photosynthesis and so all life.

[research]

It's just shorthand, get a grip.

[sheila]

Actually, what we need is much more simple. We need to STOP EXTERNALIZING THE COSTS OF POWER PRODUCTION ONTO RATEPAYERS, TAXPAYERS AND THE PLANET, which means the darlings of the Envirocrats, Big Solar and Big Wind will not pass muster (which is a good thing).

Once the REAL costs of destroying, say, desert ecosystems for crappy, water-wasting, SF6-spewing Big Energy Boondoggles are attributed to it, we will see the truth, shining through - that the BUILT ENVIRONMENT is the solution.

Efficiency gains which benefit ratepayers and Feed in Tariffs for property owners who produce more clean energy than we use are the linchpin of a sustainable energy economy, not "society investing in private profiteering that kills our planet," as suggested.

We cannot base a "renewable energy economy" on the same broken Robber Baron model of the 19th century - remote, wilderness-killing power production, eminent domain, GHG emissions (sorry, supergrid, but you are the biggest polar bear killer out there), and ripping off/hijacking ratepayers. Decentralized, democratic, point of use solutions solve every problem presented - grid decongestion, less rate increases, property values, no water waste, eminent domain, SF6, unreliability and grotesque Big Energy profits.

[research]

Absolutely! The Sun already has it's own distribution system. The average house can collect twice as much electricity as the it uses from rooftop solar panels. Even with financing and taxes etc...Solar will cost the average home 120$ per month, whereas the average utility charges 12 cent per KWH for 170$ per month. CA and other states have much higher peak electrical rates of 30 cents to 2$ per KWH. See my profile for details and links.

BioChar of wastes can provide all the fuel we need and dramatically reduce our waste problems at the same time!.

[martinfrosa]

Sorry Carl,

Average world temperatures have declined by .74 degrees since Al Gore produced "An Inconvenient Truth." Sun activity is at an all-time low, causing this summer's cool temps. I predict that after another brutally cold winter in 2009-2010, global warming alarmists like yourself will be on the defensive. That is what happens when you form a hypothesis first and then ignore any data that might disprove it.

[nuttybutty]

where's this summer's cool temps? we are not seeing it down here in texas, only record breaking heat! if you find some, send some down here quick!!!

[watchTVgetSTUPID]

Too bad the tax/fee on CO2 producers will force the elimination of many American jobs while at the same time increase inflation and cost of living. All for a lie. Gore's book "An Inconvenient Truth" is propaganda designed to motivate through fear ... no different than Bush propaganda designed to get us into the Iraq war. Page 178 has an outright LIE. Science Journal reported the Antarctic land ice is thickening in a large region. Gore claims it is thinning everywhere. Gore LIED

[RomeoMD25]

less than 2/1,000 of all CO2 is produced by human activity. So even if we wiped out every car,
power plant, jet liner, and human being from the face of the earth, there would be no noticeable effect on global CO2 levels.

The most important greenhouse gas by far is water vapor, which evaporates from oceans, lakes and rivers.
Water vapor accounts for up to 90% of the earth's greenhouse effect.

Exxon Mobile Funded latest climate bill(interesting)

Industries and individual companies with a stake in the landmark House climate and energy bill poured money into lobbying early this year

Exxon Mobil Corp. spent the most within that group, paying $9.3 million on lobbying the first quarter of this year.
Last year the company spent $29 million, its highest level ever.

Carbon and CO2 (carbon dioxide) are fundamental for all life on Earth. CO2 is a colorless, odorless, non-toxic gas.

[research]

CO2 IS TOXIC.

8% will kill you.

[guinganbresil]

The dose makes the poison.

Just because something is toxic or hazardous in large doses doesn't make it bad.
Radiation exposure is an excellent example.

[friedfish2718]

water killed more people than carbon dioxide.
water is thus toxic.

[RichZ]

Co2 is about as benign a gas as you can imagine, it has an insignificant forcing on atmospheric temperature, and is a basic nutrient for all life on Earth.

There is only one factor that singles it out from all the natural mechanisms that swing the climate wildly and unpredictably.

It is a by-product of not only all respiration, but almost all human economic activity,
it appeals to our intuitive sense of - 'it must be pollution if humans produce it'
and hence is a blatantly obvious target for political/environmental control/taxation.

That's why the story of 'Global Warming' exists without scientific evidence, it has everything it needs already.

[research]

"The permanent gases in gas we exhale are roughly 4% to 5% carbon dioxide"

That percentage is sufficient to kill us eventually. CO2 is toxic@ get over it.

4-8% CO2 will kill you, 70 Nitrogen won't, nor helium, etc...

CO2 is our exhaust. Our exhaust is toxic to us. Like most living things.