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Action needed to save climate, create jobs

MIT Energy Conference speakers see need to boost clean-energy businesses through a price on carbon and incentives for manufacturing
Democratic Sen. Jeff Bingaman of New Mexico delivers a keynote address at the annual MIT Energy Conference.
Democratic Sen. Jeff Bingaman of New Mexico delivers a keynote address at the annual MIT Energy Conference.
Photo courtesy of the MIT Energy Conference

Clean-energy technologies offer the promise of revitalizing a dwindling base of manufacturing jobs in the United States while also addressing the problems of climate change and energy security, said Democratic Sen. Jeff Bingaman of New Mexico in a keynote speech at the annual MIT Energy Conference. But as great as the potential may be, it won't be realized unless substantial new policies and regulations are put in place — and the chances of that happening anytime soon are slim, he said.

While Congress and the Obama administration have taken some first steps, he said, "the policies that have been enacted to date are clearly not sufficient to establish the U.S. as the leader in clean technology." Right now, he said, "90 percent of the production capacity for new clean technology is outside the United States."

Bingaman added that "China is moving ahead very aggressively," and the United States needs to act soon to reverse the present tide. For example, while lithium-ion battery technology was developed in this country, only 1 percent of the manufacturing of these batteries — now used mostly in portable electronics devices, but seen as a key to the next generation of electric vehicles — takes place in the U.S.

That view of great potential but political stagnation was echoed by several speakers at the conference, which was held on March 6 at the Sheraton Boston. Speakers representing various levels of government, industry, academic research, international organizations, and the financial sector, among others, tended to agree that government action will play a crucial and decisive role in determining how the world responds to the challenges of growing energy demand and the risks of climate change, and how different nations' economies fare as a result.

There were two areas where clear government action was seen as being especially important: first and foremost, setting in place a clear and predictable system that puts a price on emissions of carbon, whether it be in the form of a cap-and-trade system, as the U.S. Congress has been considering, or simply a direct tax on carbon, which many consider to be a better option but not a politically feasible one; and second, offering financial support for new energy technologies, not only at the research stage but also in establishing manufacturing capacity.

Regaining the competitive edge

Globally, the trend toward non-fossil-fuel energy is clear: In 2008, Bingaman said, for the first time global investments in clean energy technology exceeded those for fossil fuel technology. But for U.S. competitiveness, the trend is not encouraging. For many years, he said, the U.S. made the technological breakthroughs, while other countries, especially Japan, provided the follow-through. But now, other countries are joining in the follow-through, and "the U.S. no longer has a monopoly on the breakthroughs."

There are ways to turn that around, suggested Bingaman, who chairs the Senate Energy and Natural Resources Committee, but only with substantial policy changes. Clean technology "offers the opportunity to revitalize our manufacturing sector," he said, but in the past the kinds of incentives the government has provided "were concentrated downstream," on the consumers or suppliers rather than on the manufacturing end of the spectrum, and the policies have tended to come and go with changing political tides, resulting in "government-driven boom-and-bust cycles."

To change that, several senators and congressmen, with President Obama's support, are urging the creation of a substantial loan-guarantee program for clean-tech manufacturing. The biggest impact of all, Bingaman said, could come from improvements in energy efficiency, which could both produce a dramatic lowering of greenhouse emissions and oil imports, and at the same time create large numbers of long-term jobs. But to make that happen requires some form of price on carbon-emitting fuels, he said.

That's not likely in this country anytime soon, he added. "Getting comprehensive climate-change legislation is not that promising this year," he said, though he still has hope for some steps in that direction. And what might be possible next year depends on the outcome of the fall elections, he said.

Looking for innovation — and consistency

"The government's role is vital, and temporary," said David Anthony, managing partner of the investment company 21Ventures, at the conference's closing panel discussion about the financing of energy technology. He stressed that the government's main role is to invest in basic research and development, at the early stages where private financing is too difficult to secure. "The government needs to fix the problem, and then get out of the way," he said.

But while the legislative process is moving slowly, many segments of industry are moving ahead. "It's easy for me to be pro-climate legislation — it is in my economic self-interest," said John Rowe, CEO of Exelon, the nation's largest electric utility company and owner of the nation's largest fleet of nuclear power plants. Rowe, one of the conference's keynote speakers, explained that the greatest danger, from a business point of view, lies in "continuing to deal with energy in ways that are haphazard," as opposed to setting a clear policy in place that businesses can base their plans on.

Rowe, whose Chicago-based electric utility holding company has already closed many of its coal-burning plants and plans to eliminate all of its 15 million tons of greenhouse gas emissions by 2020, said that addressing the problems of greenhouse-gas emissions will depend on putting a price on carbon, either through a cap-and-trade system, or a carbon tax.

"We ought to have a predictable, confident and decisive policy on climate change," he said. Public resistance is largely based on incorrect assumptions, he suggested, because polls show people oppose carbon taxes or cap-and-trade systems because they believe those will cost them money, but they support renewable energy standards — requiring utilities to provide a set percentage of their power from renewable energy — because they believe those are cost-free. That kind of free lunch, he suggested, is an illusion.

But if policies are put in place that set a realistic price on carbon emissions, he said, the marketplace will do the rest. With such a policy, "you'll be surprised at how much can happen in 10 years."

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