That view of clean tech, enforced by conservative presidents and legislators for a quarter-century, is precisely why the U.S. — the leader in solar and wind technology development and use in 1980 — has ceded technology and marketplace leadership to Japan, a variety of European countries, and even China in the crucial carbon-reducing, job-creating clean industries of this century.
So what about energy efficiency, probably the most important greenhouse gas reduction strategy? A recent study by McKinsey & Co. found that energy-efficiency measures for buildings and industry could allow this country to achieve deep reductions in greenhouse gas emissions at a negative cost — the exact same finding the Intergovernmental Panel on Climate Change made in 2007. McKinsey concluded, however, that achieving such low- and no-cost reductions “will require strong, coordinated, economy-wide action that begins in the near future.”
“The Secretary of Energy shall establish a program to reduce greenhouse gas emissions through the deployment of energy efficiency measures, including appropriate technologies, by large commercial customers by providing for energy audits. The program shall provide incentives for large users of electricity or natural gas to obtain an energy audit.”
Energy audits? He must be joking. Having spent two decades working with businesses to help them adopt energy-efficient technologies, I can state unequivocally that energy audits qualify as a weak, uncoordinated, narrowly targeted action. They will barely have any impact, especially when it comes to large commercial users who can already afford them. And let’s hope by “commercial” he means “commercial and industrial,” as it’s large industrial users that have the largest opportunities for energy savings.
The DOE does have a terrific program that does audits for small and medium-size industrial companies that typically can’t afford them. McCain seems unaware of the program, given the obvious thing to do in his legislation would be to expand that successful but underfunded program. But then McCain seems unaware of most elements of a genuine energy-efficiency strategy.
To see what a real, sustained energy-efficiency effort looks like, consider California. In terms of electricity consumption, the average Californian generates less than one-third of the carbon dioxide emissions of the average American, while paying the same annual electricity bill. Where the rest of the U.S. has seen electricity per person rise 60 percent in the past three decades, it has been flat in California. The state accomplished this remarkable achievement through:
- The strongest building-energy codes in the country.
- A state energy commission that helps oversee considerable subsidies and deployment programs for energy efficiency and renewable energy.
- The toughest air pollution regulations in the country.
- Smart utility regulations.
The companies best suited to accelerate deployment of energy-efficiency technologies are electric utilities. The biggest obstacle to their leadership on efficiency is not lack of energy audits, it is that most utilities in this country make profits only by selling more electricity and building more power plants. So, naturally, that’s what they try to do. California, and a few other states, changed the utility regulations to decouple electricity sales from profits. That allows them to make money by saving energy, and do so at a net cost far lower to them and their customers than building new power plants.
The energy plans of both Barack Obama and Hillary Clinton seek to change electric utility regulations and toughen appliance standards. Both would set standards for renewable power and fuels. Both would spend $150 billion over 10 years on developing and deploying clean technology, green buildings and advanced electric grid infrastructure.
McCain believes the most important strategy is a “cap and trade” system that creates a price for carbon dioxide in the form of a tradable emissions permit, with the goal of mobilizing the marketplace to solve the climate problem. Yet while a cap-and-trade system is necessary to solve the climate problem, it is not sufficient. Indeed, if you adopt a cap-and-trade system without an aggressive federal effort to encourage the deployment of clean technologies, you are almost sure to fail politically, probably sooner than later.
A price for carbon does encourage switching fuel from traditional coal to nuclear power, renewables and advanced coal with carbon capture and storage. But it is far less effective in spurring energy efficiency in the electricity sector or emissions reductions in the important transportation sector. Well-crafted and well-funded government efforts to develop and deploy clean tech, including smart energy regulations, would be far more successful. In fact, large efficiency savings are cost effective today, as California and a few other states and companies have shown. But when government encourages utilities to build and sell more power plants, it works against efficiency.
Most traditional economic models take a similarly flawed and incomplete approach. They don’t typically model the huge efficiency opportunity because they view it as contrary to standard economic theory, which says the economy is always operating efficiently. That’s a key reason those models usually require a high (politically unacceptable) price for carbon to get deep emissions reductions. Over the next couple of years, you will see an unending stream of such models, some funded by fossil fuel companies, and some from credible-seeming places like the U.S. Energy Information Administration (EIA), all designed to scare the public into opposing serious action on climate.
How scary will the models be? In 1998, EIA concluded that merely meeting the Kyoto target would require a 7 percent reduction below 1990 levels of greenhouse gases by 2008-12. Achieving that reduction strictly through domestic reductions in energy-related emissions would require the price of carbon to reach politically impossible levels, $348 per metric ton, which, in the EIA analysis, doubles the price for electricity.
That price for carbon would raise gasoline prices by approximately 90 cents a gallon. Yet that spike wouldn’t drive much efficiency or fuel switching, just as the recent price jump from $2 a gallon to $3 didn’t. Also note that $348 a metric ton of carbon would add over 9 cents per kilowatt hour for traditional coal, tripling or quadrupling the cost of power from existing plants, rendering them uneconomical.
The EIA model is flawed and incomplete, and contradicted by technology-based analyses used by McKinsey and cited by the IPCC. But imagine if we adopted cap and trade without an aggressive efficiency and clean-tech deployment effort: Long before the big price hikes, long before overall electricity prices would double — perhaps during the first recession after a cap-and-trade system was adopted — businesses and consumers would demand the price be capped, or the program shut down entirely. Thus pouring all your political capital into a cap-and-trade system, as McCain is likely to do, is destined to fail to arrest global warming.
But what about his silver-bullet technology solution? As he said last year, “I think we need to go nuclear power, I think we need to do it heavily.”
Let’s say that McCain’s policy focuses on building nuclear plants, not efficiency, and somehow we build 100 new nuclear power plants, plus replacements for existing plants, by 2050. Those nuclear power plants would still deliver under 10 percent of the total energy used by the country. What are the chances of building 200 nuclear power plants over the next four decades in this country? Not bloody high. How about building five times that number worldwide, as would be needed for nuclear to comprise even 10 percent of the global GHG solution. Not gonna happen. We will no doubt build some new nuclear plants — as will the world — but it is no silver bullet, and cannot hope to make the same contribution that energy efficiency can at one-quarter the price and with no long-term waste or proliferation concerns.
Given the lost Bush decade, avoiding catastrophic global warming will be one of the most difficult things this country and the world has ever accomplished. Only mandated emissions reductions coupled with aggressive federal tech deployment strategies (managed by appointees who believe in climate change and those strategies) can save future generations from a ruined planet. Only strong and consistent public advocacy by the next president and his entire administration, along with Congress, can reverse the years of muzzling and misinformation of the Bush administration and its conservative allies.
McCain does not appear to be that advocate. He is a conservative who happens to be on the only intellectually defensible side of the climate change debate. But he is still a conservative, and the vast majority of the solutions to global warming are progressive in nature — they require strong government action, including major federal efforts to spur clean technology. McCain will inevitably appoint to key positions a great many conservatives who are skeptical of global warming and government-driven solutions. And he has promised to oversee the transition to a smaller government — which will be inevitable if he slashes spending in order to make the Bush tax cuts permanent while funding the Iraq war for the duration of his presidency.
McCain belongs in the Senate, where he is a rare conservative vote for action on climate change. But a President McCain is not likely to be the leader this country and the world needs to maintain the planet’s livability for our children and the next 50 generations.