Energy Race: United States Needs Coherent Clean Energy Strategy
Kent Garber

 

It's easy to see inaction. In the Senate, everything crawls. At the climate change talks in Copenhagen, the outcome was disappointing. For those who wanted bold action on energy, the past year has left much to the imagination.

But things are changing, incrementally.

In subway cars in New York, there are now ads for job training in renewable energy scattered among ones for English lessons and clinical drug trials. Clean energy is forcing its way into the American narrative.

America has been drunk on fossil fuels for decades.

At various points, politicians have intervened, only to walk away defeated. In 2008, gas prices soared, the economy tanked, and another wave of panic emerged. In 2009, President Obama came into power with energy and climate issues among his priorities. He has vowed not to repeat the mistakes of the past.

The stimulus package is putting $80 billion into clean energy, the biggest investment of its kind in U.S. history, once it all gets spent. In February, Obama pledged $8 billion to build the country's first two nuclear reactors in nearly 30 years. The

Energy Department, under Steven Chu, is getting a makeover, with massive investments in new research.

These are pieces. They are starts. They are the beginning of something. But they are certainly not enough. The emerging metaphor in the energy world is that of a race, like the space race or the atomic race. Now there is an energy race. China is the main competitor, spending $9 billion a month on clean energy projects. There are other competitors, too: India, Europe, Japan, Brazil. Everyone is angling for a spot that could bring supremacy, jobs, and wealth.

Running a race requires a strategy. The U.S. strategy is something of an ill-defined mess. If dirty fuel is an addiction and clean energy a pathway to recovery, the country is still at a stage somewhere after recognition. It's trying to develop a plan for quitting, but it wants to minimize the pain that will come in the process, and it's having trouble thinking long term. Legislation to curb greenhouse gases is stalled in Congress; critics say it will kill jobs and raise energy prices. For its proponents, the bill is the holy grail, the thing that will give businesses the green light to invest in energy technologies.

Any strategy has to be concerned with money: how to fund new projects and how to make clean energy profitable. And the recession has hit not just government money but also private investors. Back in the day, much of it came from the banks; many of those banks no longer exist. Much of the rest came from venture capital, from the cowboys of Silicon Valley. But they're looking east for help now. "Washington and Silicon Valley were two ends of the spectrum," says Steve Milunovich, a renewables analyst for Bank of America-Merrill Lynch. "Now all these clean-tech venture capitalist guys are going to Washington."

In the absence of a national strategy, the United States has gotten by on piecemeal measures. These have worked as well as they can. The wind and solar industries had record years in 2009, thanks in large part to tax credits for developers. This is despite predictions that 2009 would be a bust year.

Leading the way. But these numbers tell only part of the story. In 2008, the United States surpassed Germany as the top producer of wind turbines. The news was greeted with great fervor. After years of ups and downs, of government incentives being granted and revoked by Congress, the American wind industry was coming into its own. In 2009, it was expected to maintain its lead. But that's not what happened. China became the world's top wind turbine manufacturer.

If the United States wants to lead, it is going to have to think harder and longer. It is going to have to think about 2020, not just about 2010. "What we are faced with right now is that there isn't a long-term market that can be seen for renewable energy," says Matt Guyette, leader of GE's renewable energy marketing. GE would know. GE is the country's top producer of wind turbines. It got into the business in the early part of the past decade, sensing a major opportunity. Since then, it has invested more than $850 million in wind technology, making turbines that are better, cheaper, more reliable. But it needs customers. "You need that market," Guyette says. "Without that market, how do you keep investing?"

Some buyers have already stepped aside. T. Boone Pickens, the star hedge fund manager, the oil man of the '80s, had grand plans to build the country's biggest wind farm in Texas. Washington swooned over the idea, and the media swooned over Pickens. But last year he gave it up. First there was a problem with financing. Then there was a problem with transmission, because Pickens needed new electric lines to connect his wind farm in western Texas to the cities on the other side of the state.

Before he walked away, Pickens was advocating the "Pickens plan," a broad strategy to promote wind for electricity and natural gas for fuel. The contents of the plan might have been questionable, but it was still a plan, something broad and coherent and far-reaching. Everyone is still waiting for a plan from Washington. In its absence, the states have stepped in. They are incubating clean energy within their borders. Thirty out of 50 states have policies requiring utilities to generate a certain percentage of their electricity from renewables. Others are likely to follow. And they are getting creative with financing, too. In California, New York, and many other states, cities are making it easier for homeowners to buy solar panels by awarding special bonds that have no upfront cost.

In the nation's capital, all eyes are on the Senate. A trio of senators, Massachusetts Democrat John Kerry, Connecticut independent Joe Lieberman, and South Carolina Republican Lindsey Graham, started working last year behind the scenes to craft a bill that would cap greenhouse gases and spur all sorts of domestic energy production, from nuclear power to geothermal to offshore drilling. A carbon cap, after all, isn't everything.

Whatever the outcome in Congress, there are others who have given up waiting. The Environmental Protection Agency is moving forward on regulating emissions from large industrial sources. The Securities and Exchange Commission is telling businesses to publicly declare their risk from climate change.

But none of this is a strategy yet.

It is a hodgepodge, a smattering. It is action in a vacuum. And the addiction continues.

Available at Amazon.com:

The Next Hundred Million: America in 2050

 

 

 

 

Energy Race: United States Needs Coherent Clean Energy Strategy | Kent Garber

 

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