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On The Real Policy Lesson From the Chinese Wind Turbine "Scare"

" In contrast Americas 104 reactors produce energy at a very low cost, and manage to make a profit without production subsidies.  "

No production subsidies, but government-financed research and government-backed loan guarantees and government-authored laws to limit overall industry liability in the case of reactor accidents...  The nuclear industry is hardly a paragon of the rugged self-reliance of the private sector.  I think we're going to have to get comfortable with the idea that well-designed public policies (and that generally doesn't include what we've got on the books yet) are needed to catalyze a variety of clean and low-carbon technologies and move them forward to the point where they can ultimately provide low-carbon, affordable power without ongoing subsidy.  Wind and nuclear included.  Cheers,
Jesse
November 12, 2009    View Comment    

On VIDEO: Jumpstart Clean Energy with a National Institutes of Energy

Rod, sorry for my abbreviated version of US DOE history, but ERDA was indeed responsible for both energy-related research as well as the research and management of the U.S. nuclear weapons arsenal and continued weapons-related research (including overseeing the National Labs, the first of which came out of the Manhattan Project).  ERDA was only in operation for two years before formation of the USDOE and during that time hardly differed from the rough description given above (e.g. focus split between nuclear weapons management, weapons research, basic science and energy innovation).  

The influence of money in politics is certainly nothing new.  And again: what's your answer?  The U.S. private energy sector invests paltry - almost criminally small - sums of money in research and innovation for a sector its size.  If this were, say, the dog food industry, I don't think we'd care.  But with our climate, national security and economic competitiveness all depending on dramatic clean energy innovation, I contend we face no real choice but to wrestle with the halls of power on this one.
Jesse
November 10, 2009    View Comment    

On VIDEO: Jumpstart Clean Energy with a National Institutes of Energy

Hey, snark is excused! And working as a DOE contractor is enough to make anyone a bit jaded and snarky I'm sure.

But if we can't work for government reform of the energy innovation system, as imperfect as it will be, then we're lost.  Private sector R&D investments are about one quarter of one percent of industry revenues.  That's just one tenth of the U.S. industry-wide average of 2.5% of revenues invested in R&D and two orders of magnitude less than what leading innovative sectors like biotech and IT invest in R&D (e.g. 10-20% of revenues annually).  So if you're waiting for the private sector and the "perfection" of markets to spur the dramatic energy innovation we need, we'll be waiting until I'm at least as old and jaded as you... ;)

Cheers,
Jesse
November 10, 2009    View Comment    

On VIDEO: Jumpstart Clean Energy with a National Institutes of Energy

Hi Ed, thanks for the snark... er comment. Please skim the brief report for more on why DOE is actually not the energy research agency we all think it is - and why a National Institutes of Energy is what our nation needs.  

DOE was cobbled together from a bunch of weapons research labs and a nuclear energy agency and to this day it's not really in the energy innovation business.  The majority of the agency's budget is still devoted to managing and cleaning up after our nation's nuclear arsenal and the research conducted at our network of National Labs is similarly focused on a wide range of activities, much (the majority I believe) not related to commercializable energy innovations, including high-energy particle physics, nuclear sciences, and weapons research.  Until the creation of ARPA-E, our nation has lacked ANY agency singularly focused on energy research.  While under the direction of Secretary Chu, DOE has hewn towards reforming and expanding the DOE energy innovation apparatus, it's got a long way to go (to say the least), and efforts to reform and strengthen DOE should proceed apace with efforts to establish new and innovative institutions to catalyze the energy research we need. 

Jesse
November 10, 2009    View Comment    

On Road to Copenhagenm, Part 5: Awesomely audacious leadership vs. nattering nabobs of negativism*

"The Future We Want: Despite the strange box-office appeal of apocalypse, we’re in danger of becoming emotionally battered these days by Hollywood’s versions of civilization’s collapse. The Eleventh HourThe Day After Tomorrow and now 2012 threaten to scare the living optimism out of the American people.

Understanding the terrible consequences of inaction is important.  Conservatives use fear as a tool to resist change; climate activists use it to urge change. The problem is, by focusing on collapse with too little counter-focus on what we can build, we are in danger of creating the future we fear.

I believe we are poised for hope. We want hope. We hope for hope. Hope is what got President Obama elected; it should be the foundation on which he rallies us to build an historic legacy at this turning point in the American story"

Well this is a welcome realization from a guy who wrote a book titled "Hell and High Water" filled with the kind of apocalyptic stuff that paralyzes so many into inaction.  Of course Dr. Romm doesn’t understand the well-established social psychology at work here: Conservatives (effectively) use fear as a tool to resist change precisely because it triggers system justification, survivalism, individualism and other psychological reactions resistant to change and collective action, whereas climate activists (ineffectively try to) use fear to urge change and inadvertently trigger many of the same reactions in their audiences... 

This is of course something that the Breakthrough Institute has been counseling climate advocates on for years, paying keen attention to the results of both our own social values research and the work of leading social psychologists like Dr. John Jost.  For more, I highly recommend Dr. Jost's paper here: "Political Conservatism as Motivated Social Cognition
November 10, 2009    View Comment    

On The Innovation Consensus: $15 Billion for Clean Energy R&D

Hi Mark. I'm glad you think this looks like "an intelligent use of limited government funds."  I find your comment about trusting the sources a bit of a red herring though.  I guess if we can't trust policy think tanks, businesses (including those who's core business has nothing to do with energy technology), universities, scientists and researchers, I'm not sure who we can trust.  The government?!

But I say it's a red herring because you don't need to take their word for it Mark, just look at the facts.  I assume you agree we need a dramatic transformation of the global energy system.  I know from prior posts and conversations with you that you are not a part of the 'we have all the technologies we need and we've just got to deploy them, not matter the costs' camp.  We can get somewhere with the technologies we have now, but nowhere near far enough, nor at an affordable cost tolerable to the body politic.

That means we need a revolution in clean energy technology. So where's that going to come from?

You can see clearly that the private sector R&D investments are chump change when compared to the size of the sector they must revolutionize.  They are not under-spending by a little bit. It's two orders of magnitude less than the innovation intensity of the biomedical, IT and semiconductor industries.  

Now that might be fine if this was say, the dog-food sector we were talking about.  I've seen these hilarious ads on the air lately bragging that their new dog chow "promotes optimal stool quality" and turns your dog into "a champion pooper."  Nice. Now I'm a dog lover and I've got nothing against improving my pet's stool quality, but if the dog food industry had neglected it's R&D spending, the world could get by without that new product.  

You cannot for a second say the same thing about the energy sector.  The imperative is clear. Innovation is essential. A revolution in technology is needed. The private sector cannot fill the gap.  So I don't think you need to trust anyone to recognize that $15 billion per year in new government R&D spending is a no brainer, no matter how conservative your views on the role of government.

In fact, the record is also clear that public investments in R&D are essential for a vibrant private sector.  They stock the innovation pipeline with new technologies and concepts that VCs and entrepreneurs can help take to market, creating new businesses, industries and jobs.  Public R&D spending actually crowds in additional private-sector R&D spending (as has been the case in the health care, IT and energy sectors), rather than risk crowding out private investment (as you fear is the case for the electric vehicle loan guarantees you've criticized). 

Even for sectors like health care, IT and microchips with exponentially greater R&D spending levels, the public sector has invested additional funds to support innovation in these sectors.  The health and biomed industry invests $60 billion of it's own money in R&D every year, but the public sector still chips in an additional $30 billion annually.  That compares to a paltry $3b in private spending and $5b in public spending for the energy sector.  And of course, without the public R&D investments that led to the invention of the Internet, GPS, and the graphical user interface - not to mention the creation of the computer science programs that trained our IT geniuses and the huge public procurement contracts that created the microchip industry and help drive rapid and remarkable reductions in cost per chip - we wouldn't even be having this online back and forth, right now, would we?

Public investment in R&D is the norm for sectors of the economy that are critical to our nation's wellbeing, not the exception.  The inadequate investments now leveled by both the public and private sectors in energy R&D will prevent us from solving climate change and finally securing our energy independence, not to mention ceded the invention and commercialization of tomorrow's clean energy technologies to our competitors overseas.

You want to stop climate change? Then I'd hope for more ardent support for clean energy R&D spending, on the scale of $15 billion per year, than you've voiced so far. What do you think Mark?

All the best,
Jesse
October 30, 2009    View Comment    

On Kerry-Boxer Bloated with Methane Offsets

Excellent post. The "stronger" 20% cap target in K-B is undermined by the exclusion of methane emissions sources like natural gas distribution and coal-bed methane from the emissions cap and inclusion as sources of offsets instead.  While K-B is more restrictive of international offsets (in it's current form at least) than W-M, there's still plenty of offsets hot air stuffed under the cap to render it essentially non-binding for at least a decade.  That's only likely to get worse as the Senate moves ahead...
October 23, 2009    View Comment    

On Nations cannot cover the globe in windmills

David, have you looked closely at the Clean Energy Deployment Administration proposed by the Senate (in the Energy and Natural Resource Committee's energy bill, S. 1462)?  It looks as close to that proposal as anything.  I'm exploring ways to expand their ability to invest directly in equity stakes in projects, which CEDA currently lacks.  That would bring it one step closer to what you're talking about, as would upping the funding for the new agency.
October 21, 2009    View Comment    

On U.S. wind energy industry installed 1,649 MW in third quarter, more than Q2 and Q308

Once again your (lack of) logic confounds.

Wind is booming despite the recession due to significant direct incentives and investments made in the Stimulus bill (ARRA).  Most notably a cash grant worth 30% of the project costs is now available for wind programs, but regardless, the rapid growth in the wind industry has been propelled by a direct tax credit worth roughly $20 per MWh (the PTC).

Now your logic goes: incentives and cash grants spur wind growth, therefore, we need to pass a "climate and clean energy" bill that will do little but establish a modest price on carbon worth less to wind developers than the existing PTC.   That's the answer to spur a clean energy revolution?  Doesn't make sense.

ARRA invested roughly $35b per year over two years in clean energy, efficiency and related infrastructure.  The House-passed ACES bill will invest roughly $10b, or less than a third as much in the same areas.  

I'm all for passing a real clean energy bill that builds on the momentum created by the stimulus (and other direct incentives), which your graphics above illustrate.  But that would imply investing at least $35b per year and more like $50b per year to spur forward not just wind but a whole suite of clean and low-carbon energy sources including other renewables, CCS, nuclear and, on the transportation side, plug-in hybrid electric vehicles and high-speed rail.  But that's not the bill you're advocating Joe.  And you're doing little to help the Senate do better with your full throated endorsement of the House-passed bill, which you claim "will complete America's transition to a clean energy economy."
October 21, 2009    View Comment    

On Nations cannot cover the globe in windmills

Thanks for the reply Dan. Just to clarify, I'm talking about $5b per year.  Assuming an average federal-private cost share of 60-40, that'd be enough to finance the construction of $8.3b in first-of-their kind commercial-scale projects annually.  Seems like that could easily get the first half a dozen new nukes, new CCS plants and new EGS plants each built over the next decade.  You could probably build two nuke or CCS plants annually plus another set of much less expensive (because they are smaller scale) EGS, wave and/or floating offshore wind projects each year.  Just scribbling  back of the envelope here and if it'd take more money then up the amount.

Just saying, if what you are looking for is risk-tolerant, patient capital to build the first few projects, why do we keep trying to entice it indirectly with tax incentives and loan guarantees when we can provide it directly for demo projects.  Public financing of demo projects is a common practice in a multitude of industries.  Cheers,
Jesse

October 20, 2009    View Comment    

On Will the Real U.S. Chamber of Commerce Please Stand Up?

I posted videos of the Fox and CNBC coverage of the fake press event as well as screenshots of the Reuters and National Journal stories (before corrections were issued) at WattHead.org here.  You can also watch Rachel Maddow discuss the wacky events with reporter Kate Sheppard, who was at the press conference (you see her at the end of the video posted above) here.

The hoax certainly caught the MSM!  If the guy had printed out fake business cards, he could have even fended off the real Chamber of Commerce guy at the end!  Heck, next time they pull a stunt like this, they should plant a fake "real" Chamber rep to confront them at the end of the press conference and reiterate the Chambers "real" position on climate policy (embellishing the details steadily until the press gets the absurdity of it all)...  If you see that stunt in the future, I'm in no way legally culpable for this suggestion!
October 20, 2009    View Comment    

On Nations cannot cover the globe in windmills

Do we have any indication that loan guarantees, however much is approved, will do the trick to get a new generation of nuclear plants built?  We've got enough loan guarantee money authorized to build several reactors, but they don't get built.  The challenges are more about technology risk and cost uncertainty than they are about getting a loan.  Put another way: if you don't know how much a plant is going to cost (and there's some risk it won't work at all), how do you know how much you need to get a loan for?  If that's the case, it doesn't matter if loan guarantees help you to secure a loan at a lower interest rate (by reducing risk of default to the lender).  

If we were serious about restarting nuclear, or at least giving it a shot, shouldn't we really just be putting the public funding together needed to build the first half dozen plants (using a few different designs) so that engineering services firms can get used to building them again and on their way down the learning curve, utilities and financial firms can get an accurate picture of what they really cost, and any technical challenges can be identified and solved?

That's the kind of deal CCS gets in the House energy bill.  $1b/year for commercial-scale demo projects starting in 2010 and a production incentive worth up to $90/ton for each ton of CO2 sequestered.  For comparison, the federal cost share on the FutureGen advanced coal+CCS demo project is about $1b, so that'd be like one FutureGen every year for the next ten years.  

Why not put together about $5b/year in funding and distribute that competitively to demonstrate a suite of first of their kind clean/low-carbon energy sources, including new nuclear, CCS, enhanced/engineered geothermal energy systems (EGS), floating offshore wind turbines, and whatever else needs large-scale demo within the next 10 years?

That sounds to me like the way to get nuclear and others rolling.  Forget loan guarantees.  They are a pretty blunt and ineffective instrument it would appear.  

Thoughts?
October 20, 2009    View Comment