The House of Representatives passed the American Climate and Energy Security Act in June and sent it to the Senate. The House bill, running to 1,428 pages, aspires in one breathtaking stroke to take on renewable energy, carbon capture and sequestration (CCS), nuclear power, electric vehicles, carbon cap-and-trade, power transmission, energy efficiency and climate adaptation. It ranges from grand vision to minuscule details such as technical specifications on lighting fixtures.
What’s missing in this sprawling draft is prioritization. The bill rightly recognizes that America and the rest of the world require a fundamental overhaul in energy technology and use. The insecurity of global oil supply lines, the growing global scarcity of conventional fossil fuels and the urgency to reduce carbon emissions all point to the need for a fundamental energy overhaul. Yet to accomplish such a worldwide, fundamental energy overhaul, we will need to keep our eye on the big picture—the technology systems that will make a large and lasting difference—and not get mired in excruciating details.
Of the dozens of actions discussed in the bill, only a half dozen or so are likely to make a consequential difference. Putting a price on carbon is the single most important policy, because that will indeed send a signal through the economy to shift to low-carbon technologies. Alas, a straightforward tax on carbon would be far superior to the cumbersome and nontransparent cap-and-trade system based on tradable emissions permits that is proposed in the House bill. Politicians hate the word “tax” and like to distribute free emissions permits to powerful interest groups. The result is an overly complicated and somewhat arbitrary system, but still much better than nothing. At least carbon emissions would finally bear a market price under the legislation, and the Senate still has time for major improvements.
Ramping up nuclear power is probably the second most important measure, because it is currently the most scalable, cost-competitive, base-load source of non-carbon electricity. The legislation is decidedly ambivalent about nuclear power, reflecting the continuing divisions within the environmental community between advocates and staunch foes. Whether or not we choose to expand nuclear power, China and many other countries certainly will. The U.S. should as well; it is necessary to accomplish a cost-effective reduction of greenhouse gas emissions.
Third, we need to test and, if successful, rapidly deploy CCS on a large scale. The legislation rightly champions CCS, though many environmentalists continue to oppose coal unconditionally. Yet as with nuclear, even if environmentalists turn up their noses at coal, China, India, and other countries will continue to use it on a massive scale. So too will the U.S. The key is to ensure that future coal plants are using CCS.
Fourth, we need to develop our tremendous solar potential. The Mojave Desert alone could provide up to half of electricity needs in the U.S. if a high-voltage direct current transmission grid were available to carry the power to major population centers, and if the remaining technological obstacles and cost factors can be resolved. If ever there were a case of learning-by-doing, it’s this one. Investments in large-scale solar power are very likely to pay off massively within years or decades, but we will need an integrated strategy of R&D, feed-in tariffs for solar power, federal land management support and high-voltage grid development to bring that great potential to fruition.
Fifth, we need to speed and complete the changeover from a vehicle fleet powered almost entirely by internal combustion engines to a new generation of electric ones, including plug-in hybrids, battery-operated and fuel-cell automobiles. Either America will learn to produce such cars competitively or we’ll end up importing them from China, Europe and Japan, which are also gearing up for this historic change. There is a good bet that the entire world will make the transition to electric vehicles in the next 20 years. American global competitiveness as well as cost efficiency in greenhouse gas reduction should prompt us to make major investments in this effort.
Sixth, we need to exploit the vast unfulfilled opportunities for energy efficiency in electric motors, light bulbs, consumer appliances and home heating and cooling. Energy efficiency programs in California and Japan during the past 20 years have shown the remarkable gains that can be achieved with concerted effort, often at large savings to consumers.
The bill covers all of these topics, but also countless sideshows and boondoggles. There is continuing support for a corn-based biofuel policy, which wastes food supplies and taxpayer dollars without doing much to reduce carbon emissions (chalk this policy up to the political weight of the Iowa caucus).
The legislation proposes many important reports, studies and analyses by the Environmental Protection Agency, the Department of Energy, the Office of Management and Budget and the National Academy of Sciences within a year or so of the legislation’s passage. The truth is that our government should be preparing such reports even without a congressional mandate. The reason we have a 1,426-page bill rather than a strategic 250-page bill is that the executive branch has so far proposed no targeted low-carbon strategy.
The administration has so far let Congress do what it does best: to put everything into the stew, with every interest group stroked, compensated or subsidized, but without prioritizing the key steps that will determine success or failure in overhauling the energy system. The administration has again shown its deft political touch in nudging the draft legislation through the House and on to the Senate. Now the challenge cries out for a similarly deft touch in policy design and management.