Tuesday, October 26, 2010

Post-Partisan Energy Policy

A paper written by scholars from the American Enterprise Institute, the Brookings Institution and the Breakthrough Institute calls out both Republicans and Democrats for uselessly stalling energy research and development in the United States and recommends shifting emphasis from subsidies that encourage deployment of additional current energy technologies from Fossil fuels to wind and solar power to research and development to help bring down costs and further encourage future innovation in energy development.

The paper is available here from the AEI, or here from the Breakthrough Institute here.

David Leonhardt, writing for the New York Times, has this to say of the study, and I certainly think it’s worth listening to:
But history shows that government-directed research can work. The Defense Department created the Internet, as part of a project to build a communications system safe from nuclear attack. The military helped make possible radar, microchips and modern aviation, too. The National Institutes of Health spawned the biotechnology industry. All those investments have turned into engines of job creation, even without any new tax on the technologies they replaced.

“We didn’t tax typewriters to get the computer. We didn’t tax telegraphs to get telephones,” says Michael Shellenberger, president of the Breakthrough Institute in Oakland, Calif., which is a sponsor of the proposal with A.E.I. and Brookings. “When you look at the history of technological innovation, you find that state investment is everywhere.”
One could go further to say that intense governmental interest in winning the Cold War helped spawn the planet’s space program via Apollo and research into nuclear physics through the Manhattan Project. The Marshall Plan at the end of World War II helped to reconstruct a continent.

The report begs the question: Why can’t we do the same kinds of things, on the same massive scale, with energy research and development today? Surely there is enough collective intelligence to find innovative ways to produce the energy we need, while at the same time reducing subsidies necessary to deploy that energy and the pollution some of that energy produces.

Oddly enough, Dr. Strangelove has the answer (start at about 1:50 and go to about 2:05):

To accomplish this, the paper calls for efforts:
to reduce ineffective, even wasteful energy research spending and more effectively utilize federal resources, America needs to create a national network of decentralized energy innovation institutes that can bring private sector, university, and government researchers together alongside investors (e.g., venture capitalists) and private sector customers to tackle big energy challenges, translate basic science insights into commercial innovation, and strengthen diverse regional clean tech clusters.
Such ideas aren’t farfetched. Offhand, I can think of two organizations that already fall into this category: The Energy Dynamics Laboratory, operated by Utah State University in Logan, Utah, and the Center for Advanced Energy Studies, operated by the Department of Energy at the Idaho National Laboratory in Idaho Falls, Idaho.

The paper also calls for a compromise on nuclear power:
Long-time opponents of nuclear power must rethink their opposition given the potential for new nuclear plants to help solve several energy challenges – economic, environmental, health, and safety – at once. However, nuclear proponents must also recognize that America cannot bank everything on a single technology or design. A full portfolio of clean, affordable, and reliable energy technologies will be necessary to fully confront the nation’s energy challenges. The DOE and DOD should therefore have the budget to develop and procure all promising energy technologies, from advanced solar and geothermal to biofuels and batteries.
To pay for it, the paper calls for what it calls “a modest sum” of between $15 and $25 billion a year strictly for R&D – an effort tthat would pull DOE away from its current emphasis on cleaning up leftovers from the Cold War (a project I happen to work on currently) into living up to the energy part of the department’s name.

That money would come from:
  • Eliminating current subsidies for wind, solar, ethanol and fossil fuel energy production
  • Modestly increasing royalties charged to oil and gas companies, directing that money into new energy technology
  • Fees on imported oil
  • Implement an “energy modernization fee” on electricity sold in the US
  • A $4 to $5 per ton charge on carbon emissions, wherever they may come from.
The paper goes on to say:
Any one of these funding sources could raise sufficient funds from within the energy sector itself without appreciably increasing energy prices or impacting American firms or consumers. Different approaches may be combined and tailored to different energy sectors, piece-by-piece, rather than seeking a one-size-fits-all approach.
This is, of course, where politics come back into the picture. Selling any kind of commodity price increase – whether through increased taxes on electricity to increased taxes on gasoline – will be a hard sell to many Americans. The oil and gas industry can be expected to lobby heavily against increasing royalties, while proponents of solar and wind power will lobby equally as hard to retain current subsidies. What’s going to have to happen, of course, is a paradigm shift in the way most Americans look at how they consume energy, whether it be in the form of gasoline for an SUV or produced by the wind. We’ll have to exchange short-term gains and pain for long-term benefits, and, increasingly, people in general – not just Americans – seem unwilling to do this. I, for one, am willing to give it a try.

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