The U.S. House of Representatives passed the American Clean Energy and 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 minutiae.
Yet missing from this sprawling draft is prioritization. To accomplish a worldwide, fundamental energy overhaul, we will need to keep our eye on the big picture—the technology systems that will make a large, lasting difference—and not get mired in excruciating details.
Of the dozens of actions discussed in the bill, only half a 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 cap-and-trade system 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 is 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.
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Ramping up nuclear power is probably the second most important measure, because it is currently the most scalable, cost-competitive source of noncarbon 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 for a cost-effective reduction of greenhouse gas emissions.
Third, CCS needs to be tested and, if successful, rapidly and extensively deployed. The legislation rightly champions CCS, although 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 keep on using it heavily. 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. Investments in large-scale solar power are very likely to pay off monumentally within years or decades, but an integrated strategy of R&D, feed-in tariffs and other forms of support to bring that great potential to fruition will be essential.
Fifth, the U.S. must speed and complete the changeover of its vehicle fleet to a new generation of electric ones, including plug-in hybrids, battery-operated vehicles and fuel-cell automobiles. Either America will learn to produce such cars competitively, or it will end up importing them from China, Europe and Japan.
Sixth, we need to exploit the vast, unfulfilled opportunities for fuel efficiency in electric motors, lightbulbs, 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, often at large savings to consumers.
The bill covers all these topics, along with 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 White House 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 shown again 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.