Engel told him: “We’ve had 35 new competitors coming out of China in the last 18 months, and not one out of the U.S.”
That’s right; no American company is chasing down the leader of one of the fastest growing markets of the 21st Century: renewable energy systems.
But America isn’t cashing in as much as we could be. Not only are we failing to develop a clean energy infrastructure here at home, we are also missing out on a global market opportunity. China, meanwhile, is not making the same mistake.
Why are we? I think there are two reasons.
Americans don’t have much experience with seeing clean energy in action. Most of us have seen oil drills; all of us have visited the gas station. But how many of us have seen wind farms, solar panels, and efficiency investments powering a sophisticated economy?
I have seen it. Like Friedman, I have seen it in Denmark. Denmark gets 20 percent of is electricity from wind and is 100 percent independent of foreign energy sources. Renewable energy, public transit, and efficiency investments are the norm there, not a think-tank projection or computer model.
Two summers ago, I saw the wind miracle for myself. I sailed beneath sculptural wind turbines in the Baltic Sea, and I spoke to residents of nearby tourist towns who said the wind farms did not hurt the local economy at all. In Copenhagen, I asked a taxi driver if he thought of the wind farms in the city’s harbor interrupted his view, and he said, “It’s better than pollution.”
Denmark—like Germany, Japan, Norway, and others--has a suite of policies that have nurtured renewable energy for decades. What does America have? We really only have one comprehensive tool for promoting green energy and energy efficiency: the renewable energy production tax credit:
With a policy atmosphere like this, it is no wonder that Vestas has few American competitors in the wind market.
If you were a private equity firm considering investing $100 million in a turbine manufacturing company, would you take the chance that the tax credits will be there in America or would you take your money some place else? Like China, for instance.
]]>Congress was dug in fighting over drilling when it should be talking about a new energy economy that will truly drive down energy prices and create jobs.
In last week’s debate and this week’s calls for Congress to return from its recess for the sake of drilling, it seems like our elected officials are forgetting two important realities: 1) America’s energy and economic troubles are interrelated, and 2) so are the solutions.
Clean Tech: Engine of Economic Growth, Not a Luxury
Some people ask whether we can afford the ‘luxury’ of investing heavily in clean energy now that capital markets are in trouble and the economy increasingly in turmoil.
My answer is that we cannot afford NOT to make these investments. In fact they’re the best, most lasting economic stimulus plan I can think of.
The fact of the matter is, over the next 20 years, America will spend an estimated $3 TRILLION dollars on energy infrastructure.
It’s our choice whether to spend that money smart – on clean, efficient technologies that cut emissions, create new jobs and new wealth for our society – or spend it dumb, on more of the same 19th century technologies. And every dollar spent on a dumb idea that moves us back is a dollar taken away from smart solutions that move us forward.
We Are Not Just Talking about Solar PanelsRemember, a clean energy economy isn’t just about wind farms and solar roofs. We’re talking about hundreds of thousands of jobs for architects and engineers; drywall and air conditioning contractors; software designers and lighting companies.
These are opportunities in precisely the sectors that are experiencing the greatest difficulties right now. These are jobs in businesses that pay lasting dividends to the U.S. economy through increased competitiveness and reduced dependence on energy imports.
Here is an example of how just one clean energy solution—increasing energy efficiency—can boost the economy:
Putting the Green Thumb on the Invisible Hand
At a time when the nation’s economy is sliding into recession it is doubly critical that we seize these clean tech opportunities now and for the long term. It is time for us to realize that that economic growth and clean, sustainable energy go hand-in-hand.
I believe in the power Adam Smith’s invisible hand because I’ve seen it work. But I believe just as deeply that we need that hand to have green thumb in order to make sure it’s pointed in the right direction.
But we have to move quickly. There are several tools for jumpstarting sweeping investment in clean energy, ranging from the renewable energy tax credit which is up for reauthorization to a comprehensive bill to tackle global warming that will likely come to vote in the next Congress.
These measures should appeal not only to clean energy advocates, but to economists and business leaders as well.
]]>Investors hate uncertainty, and with this kind of roller coaster tax planning, they have a hard time assessing whether their investments will pay off. In the face of this uncertainty, many investors will simply take their money elsewhere. I know because several told me so themselves.
The US Doesn’t Get the Investment Dollars
Two weeks ago, I traveled to the Arctic Ocean on the National Geographic Endeavor. Also onboard were several venture capitalists and renewable energy executives. To a person, they said that in the absence of stable incentives in the U.S. market, they are putting their money in countries that take renewables seriously: Germany, Japan, Spain, and Denmark.
Even Norway. Norway is not the sunniest place in the world, but it has nurtured a growing solar panel manufacturing industry.
What It Looks Like When a Nation Take Renewable Energy Seriously
On the Arctic trip, I met Alf Bjorseth, the CEO of Scatec. With incentives from his government, he bought old manufacturing plants in the far north of Norway. He took the factories lock, stock, and barrel, converted them, and used their trained work force to make solar panels. Now his company is one of the largest solar manufacturers in the world. He exports to Germany, Japan, and Spain. But not the United States. The market isn’t big enough here.
I asked Bjotseth, “Are you selling solar panel in Norway?” His answer was no, because it is dark half the time there. But that doesn’t mean Norway isn’t benefiting from Scatec’s jobs, income, and taxes.
That could be America, only we haven’t set up the right incentives and opportunities to encourage massive solar and wind markets.
If our elected officials are serious about driving down energy prices, they should start by promoting wind and solar--two limitless resources that will never inspire costly supply crises in global markets.
See if your representatives are interested in real solutions. Call their offices and ask if they are going to support extending the renewable energy production tax credit if it comes for a vote this fall.
]]>
Remember, it’s not that we don’t know how to break our oil addiction or build a vibrant, clean energy economy. Experts have already created the clean-car technologies and written the draft policies. Renewables are ready to be unleashed into the market place. That part is done. What is missing is leadership—guidance from those who can motivate our country to strive and achieve something truly great.
The changes we need right now won’t be incremental; they have to be transformative. Yet the White House keeps offering the same policies—drill more, burn more fossil fuels—that got us into this mess.
Luckily, two strikingly different figures have stepped into the breach this month and offered bold visions for tackling the energy crisis this month.
The Oilman Follows the Wind
The first is the unlikely T. Boone Pickens, a geologist who has been in the oil business his entire career. Pickens asserts that we cannot drill our way out of this energy crisis--in the Arctic, in the OCS, or anywhere. He believes the only way for America to advance is to move to different energy technologies. He is putting his money where his mouth is. Pickens is:
• Investing $10 billion in what he calls the largest wind farm in the world
• Launching a public education campaign, promising that America will see as much of him in the coming months as they will of Obama and McCain.
The Nobel Laureate Gets Specific
The second bold plan comes from a more likely, but no less influential voice: Al Gore. Last week he gave a rousing speech that called for America to become carbon free by 2018. What I like about his plan is it calls for a bold target, it recognized the potential of renewable energy, and it takes the automobile sector down a very different path with plug-in hybrids.
Talking with Jimmy Carter About How We Got Here
But good ideas like Gore’s and Picken’s don’t succeed without sustained leadership. Last week, I had the chance to talk with President Jimmy Carter about our current energy crisis. It was both enlightening and disturbing to hear from the man who steered our country through the last energy crisis.
Carter mentioned that during his time in the White House, he put in place a host of policies to expand renewable energy. Thanks to this leadership, a thriving solar industry was up and running by the early 1980s. But then the Reagan administration obliterated almost every single R&D and tax incentive programs for renewable energy.
In the Absence of Leadership, America Gets Left Behind
Where has that left us? Tied to the same old dirty fuels 28 years later. I just got back from Europe:
• In Europe, people understand that renewables are readily available and actually producing as much as 20 percent of their energy.
• In the US, there is still a question mark about whether renewables work, because we have done a terrible job of putting the right policies in place.
We have missed out on nearly three decades of progress because of the absence of leadership on America’s energy system. Gore and Pickens offer interesting alternatives, but as Carter reminded me, it doesn’t help us if these ideas become the road not taken.
Congress can prevent another missed opportunity. Contact your representatives and let them know they should be drafting bold visions for a clean energy future.
The Climate Security Act is up for a Senate vote this week, and as a result, there has been a lot of media discussion about the costs of climate change: the price of tackling global warming and the far greater price of not tackling it. But what's been missing from this coverage is the economic reality that charging money for something prompts the market to find cheaper ways of doing business.
Right now, releasing carbon dioxide--the main global warming pollutant--into the air is free. It’s no wonder power companies are hesitant to invest in equipment to capture this unregulated pollutant. Doing nothing is cheaper.
Yet that is a short-term look at the bottom line. Energy experts from MIT have concluded that the longer the coal power industry waits to invest in cleaner technology, the more expensive future efforts to control global warming pollution will be.
It’s a simple case of a pay some now or pay a lot later. Just look at the numbers:
Imagine the exorbitant costs we will face:
These are grave prospects, but in the meantime, energy companies don’t have an incentive to make the long-term commitment to cleaner technology. Investors hate uncertainty. And while just about everyone from Wall Street to Duke Energy headquarters recognizes that America must pass a law regulating carbon emissions, a lot remains unclear.
When will the law get passed? How much will carbon cost per ton? How many allowances for releasing carbon will be given away for free?
We can resolve those questions by passing the Lieberman-Warner Climate Security Act. It will put a price on carbon. And as power companies search for ways to reduce their carbon costs, they will drive down prices for technologies that reduce carbon pollution.
We have seen it before. When the environmental community first demanded that the power industry reduce acid rain, companies claimed sulfur dioxide scrubbers were too expensive to install. But after Congress created a cap-and-trade system for sulfur dioxide emissions in 1990, the scrubbers were rapidly deployed at much reduced costs. The industry estimated that it would cost $6 billion a year to comply with acid rain regulations; in fact, it cost only 30 percent of that.
Let the Climate Security Act cap-and-trade program do the same for carbon capture and storage.
]]>When we talk about opportunities to cut global warming emissions, most of us think about wind turbines, solar panels, and hybrid cars. But according to a study done by the financial analysts at McKinsey & Company, the fastest, cheapest, and easiest way to reduce global warming pollution is energy savings.
Investing in energy efficiency is our best defense against global warming. A recent study commissioned by NRDC found that it could bring us almost 20 percent of the emissions cuts required by Lieberman-Warner.
But America hasn’t had enough incentive to pick this low-hanging fruit. (See my colleague Dave Hawkins’ take on what incentives work in a Forbes piece on CNN.com.) If we enact firm limits on global warming pollution--through the Lieberman-Warner Act--we will create an enormous and profitable market for energy efficiency. And the energy savings will be sweeping.
How Small Efficiency Improvements Save Billions of DollarsConsider the humble computer monitor. There are more than 100 million monitors in use in U.S. homes and businesses, and together, they consume almost 1 percent of our nation’s electricity use. A few years ago, NRDC asked monitor manufacturers to set a more stringent performance standard for the popular flat panel LCD monitors. Thanks to these changes, the EPA estimates that by 2010, the nation will save approximately 5 million tons of carbon dioxide--the equivalent of taking 3 million cars off the road. It will also save consumers billions of dollars in lower electricity bills.
Computer monitors are just the beginning. Flat-screen TVs, cable boxes, dish washers, home furnaces, office heating systems, big-box-store air conditioning; all of these can become more energy efficient.
Efficiency Fuels Economic GrowthMaking products and buildings more efficient can generate high-paying jobs on American soil not only for engineers and software designers, but also “green collar” jobs that provide a pathway out of poverty for people who become trained as lighting and insulation installers and weatherizing specialists. Department of Energy studies show that energy efficiency measures can create up to four times as many jobs as constructing and operating large central power stations.
When businesses and consumers save money on their utility bills, they have more money to invest in other parts of the economy--a development that has been shown to generate jobs.
Efficiency & Economic Growth Go Together: The California Example
Over the past two decades, NRDC has helped California enact a suite of energy efficiency standards for appliances and buildings. Now the average California resident uses 40 percent less electricity than the typical American. And still California’s gross state product more than doubled since the efficiency programs were created.
At a time when the nation’s economy appears to be in recession, it is especially critical that we seize the low-hanging fruit of energy efficiency--and all the economic and environmental benefits that come with it.
I am proud to say that NRDC leads the pack on this issue. NRDC has been a leader for 35 years in crafting the strongest efficiency standards. We recently concentrated our expertise in our newly opened Center for Energy Efficiency Standards.
But we can’t win this fight alone. While NRDC works on the policy side, I encourage you to bring the simplicity and greatness of the energy efficiency solution to your own homes and offices.
]]>This official government forecast confirms what NRDC, financial institutions, and scores of major US corporations have been saying for the past few years: solving global warming is affordable.
Here is just one sample indicator.
Early this week, President Bush stood in the Rose Garden grumbling that many members of Congress support legislation--Lieberman-Warner--that will make energy more expensive and hurt the economy. The President’s own Department Energy refutes that point.
In fact, we can take the profits from the pollution allowances created by the proposed cap and trade system we can invest them in two critical programs. First, we can offset any increases in utility bills for low income families. And, second, if we reinvest them in energy efficiency and clean energy technologies, Lieberman-Warner will be a growth engine for green jobs and a booming clean energy sector.
]]>I do agree with the president on one thing: we do need to address our energy needs. But I know there are better solutions out there. The best way to lower gas prices is to apply American ingenuity to making and marketing fuel-efficient and alternative-fuel vehicles. We can do this and transform our energy future, curb global warming, and stimulate the economy all at the same time. See the NRDC Action Fund ad running in USA Today for a brief look at how this can work.
But it would help if instead of blaming Congress for high prices, President Bush would stop threatening to veto the renewable energy tax credit, a program that has proven to bring clean energy prices down. (See Tom Friedman’s crisp analysis of this program in today's New York Times, and my own blog post about how a similar one has helped Germany’s green energy market boom.)
While Bush finds himself stuck in the past, I have traveled the country and talked with the clean technology innovators in the Silicon Valley, visited the wind farms off the shores of Europe, and met with the big box retailers like Wal-Mart that want to put affordable energy efficiency lighting and appliances into the hands of American consumers. That is what the future looks like. And it is starting to happen now.
Maybe someone should call President Bush to the Rose Garden to tell him the news.
Because yesterday’s Rose Garden performance revealed not only that this administration is bereft of new policy solutions. The policies it does offer--or dust off--have already become proven failures.
Over the past eight years, I have helped lead the fight to block drilling for oil in the Arctic Refuge, and each time we have been successful. Why? Because Congress and the American people have concluded that trading the crown jewel of our wilderness heritage for a few drops of oil isn’t worth it.
In his press conference yesterday, Bush implied the subsidizing the nuclear power industry--in addition to the more than $150 billion it has already received in the past 60 years--would somehow lead to lower energy costs. But his numbers don’t add up.
“Have the dynamics between your industry and environmental NGOs shifted?
"What are the hard trade-offs and challenges in forging partnerships between businesses and NGOs?”
These are some of the questions posed right now in a forum on the Harvard Business Review’s Green.org site. I was asked to be a featured contributor and so far the discussion has been very interesting.
Judith Samuelson of the Aspen Institute kicks off the conversation by chartering the changing development of the green stakeholder.
She points out that in the past when corporations went to battles over environmental issues it was usually against activists or NGOs like NRDC. More recently, though, the pressure for corporations to account for environmental risk is also coming from big investors like pension funds, institutional investors, and bankers.
So who are the corporations turning to for guidance? The NGOs they used to spar with.
Check out the site to see how both environmental leaders and businesspeople view the opportunities -- and the limitations -- of these partnerships.
]]>This is particularly true in Silicon Valley, where last week I had dinner with Eric Schmidt, the CEO of Google, and other technology leaders. Schmidt said to me, “We are surrounded here by people who are innovative and looking for solutions. That is what we do, so of course we should be doing it for clean energy.”
The sense of possibility is contagious in Silicon Valley. The engineers, the executives, and the venture capitalists are all confident they can deliver clean tech answers, because they have delivered so many solutions to our economy already.
That is a departure from the mood in Washington, where Congress tends to focus on who will be the losers under a cap and trade system for global warming emissions instead of figuring out how to ensure our nation as a whole will win and prosper.
Our capitol could use a dose of California can-do attitude. We have to be brave and bold in what we do to address global warming. We have to truly transform our energy economy. This is a daunting prospect that will mean redirecting millions of dollars of capital from dirty polluting energy into clean tech solutions.
But we will not only gain a healthier climate. We will also gain jobs. The clean tech solutions being hatched by Silicon Valley firms translate into tens of thousands of jobs for architects and engineers; air conditioning contractors and solar panel installers; software designers and energy auditors.
These are jobs that cannot be shipped offshore in businesses that pay lasting dividends to the U.S. economy through increased competitiveness and reduced dependence on energy imports.
And at a time when the nation’s economy appears to be teetering on the brink of a recession it is doubly critical that we seize these now and for the long term.
California is pointing the way, but even Silicon Valley’s advances in clean tech are not enough to lift our entire country. We need to nurture other regional pockets of innovation--in the wind farms of Texas, the factories in the Midwest, the labs of MIT or the software office parks of Seattle.
Innovation after all, isn’t only a California trait. It’s as American as Ben Franklin discovering electricity. We created airplanes, cars, and computers. Now we can create more sustainable energy solutions--and the jobs that go with them.
]]>
The article described how hazardous discharges from several plants that make biodiesel out of soybean oil have polluted streams in Iowa, Missouri, and Alabama. In one incident, an anonymous caller tipped off officials that a tanker truck was dumping “milky white goop” into a waterway. The goop turned out to be from a biodiesel plant and it killed 25,000 fish.
It doesn’t matter if toxic goop comes from an oil refinery or a biofuels refinery. Pollution is pollution and needs to be halted.
As NRDC’s biofuels expert Nathanael Greene has said, current federal biofuels policies reward volume. They assume that more is better. That kind of thinking has created a frenzied rush to build hasty and sometimes unpermitted refineries.
But not all biofuels are created equal: some produce more global warming emissions than they save. Some result in the polluted streams and dead fish described in the New York Times article. Some degrade crop lands with excessive pesticide use.
So rather than thinking that more is better, it’s about thinking that better is better. Biofuels that are made with better, safer, more sustainable practices are the fuels that should get the tax credits and incentives.
This is not a simple process. Biofuels are quite possibly the most complicated renewable energy source to produce in an environmentally friendly way. Never mind the politics of this issue; we still have a host of engineering challenges to work out.But at the same time, we most certainly need biofuels if we are going to combat global warming. The key is to put rigorous environmental standards in place that favor green performance and penalize pollution and degradation.
There is a lot of money to be made in the biofuels market, but not all of that green will come from green practices. NRDC’s staff--from our biofuels and vehicles experts to our land and water teams--is vigilantly tracking this burgeoning industry. We are drafting and helping pass the policies that will reward only the cleanest producers.
]]>It’s a sign of the changing times that last week I read this sentence in Business Week: “Thanks to smart regulation, Germany has become a global powerhouse in green energy.”
That’s right, smart regulation enhances the bottom line. In Germany it has given rise to a green energy sector that generates $33 billion in annual sales and employs more than 235,000 people.
Germany isn’t the only nation trying to bolster the clean energy market, but what makes its regulations so smart is consistency and long-term planning: Germany ensures that wind and solar power generators will be guaranteed an above-market price for electricity for as long as 20 years.
The Business Week article writes: “The crucial point,’ says Paul Buchwitz, a Deutsche Bank fund manager who focuses on renewable energy, is ‘you know how much you will get in advance.’”
Compare that to the regulatory situation in the United States, where the main green energy incentive--the renewable energy tax credit--has to be extended every 1 to 2 years. It has been allowed to lapse three different times since 2000, prompting some investors to leave the market. It’s up for renewal right now, and its future is uncertain. If it expires again, the U.S. could loose 75,000 jobs in the wind sector in one year alone.
Businesses crave predictability. If you are a fund manager deciding whether to invest $100 million in a plant that manufactures silicon solar panels for the U.S. solar market, you have very few sign posts telling you what the landscape will look like in 5 years, never mind 20.
It doesn’t have to be that way in the United States. We can write the rules of the game so business can scale up clean energy solutions quickly and profitably. We can give investors greater clarity, so they know what the rules will be for a long period of time.
Ideally regulations that spur market growth should be so successful that they become redundant. Japan passed green energy regulations similar to Germany’s, and the sector has expanded so dramatically that solar power is already cost competitive with conventional power. The government has largely phased out subsidies for the residential sector.
It’s true that 20 years ago some of my battles over coastal regulations ended up in acrimony or court. But today, I spend a lot of time in board rooms talking with CEOs about national policies that will help bring cheaper solar panels and more efficient appliances to market.
Smart regulations--those that are both environmentally sustainable and good for investors--are something we can agree on and need to make happen.
]]>
The plant will be run by the German firm Schott AG. Germany is the world’s second largest producer of solar energy after China. If Germany -- not known for its sunny skies and warm weather--can make this kind of commitment to solar power, surely the U.S. Sun Belt can too.
This plant in New Mexico is a great contribution to our nascent efforts. So is the solar thermal plant outside of Las Vegas that was just featured in the New York Times -- and the 10 more in the works for Arizona, Nevada and California.
In these dusty, sunny outposts, we are seeing the future emerge: a future that is cleaner and creates more jobs on American soil. At the New Mexico plant, Schott expects to invest $500 million and employ up to 1,500 people.
The more examples we can point to of thriving wind farms, solar plants, and renewable manufacturers, the more Americans will be convinced that we can do this. We can create a cleaner energy future and solve global warming.
See it happening in the sunny plains just south of Albuquerque.
]]>
There’s no question that there is a lot of hype out there. But underneath it all, I do think that we have undergone a fundamental change in thinking--in a way that we have not seen the start of the environmental movement almost 40 years ago.
For generations, American industry treated “the environment” as a cost of doing business.
Now we’re seeing a new generation of leaders who understand that the environment is an opportunity to grow their business. That solving environmental problems brings profit rather than pain.
This is something I plan on talking a lot about in the coming months. In a speech last week at San Francisco’s Commonwealth Club, I mentioned that more than 200 years ago, Adam Smith--the founding father of economics--described the power of markets as the Invisible Hand.
Today, we are proving that the invisible hand can also have a green thumb. Here are just a few examples:
The profit motive is an incredibly powerful force for change. NRDC’s first commitment is to protecting the Earth. But within that work, we will try to ensure that economic change benefits the environment, and that it is good for all of us and good for the generations that will follow in our footsteps.
]]>Yesterday Jones came over to NRDC’s San Francisco office to speak with us about his vision for a new energy economy that provides green collar jobs across America.
Jones is charismatic and compelling. After working for years to help kids stay out of jail, he began focusing on how to provide enduring jobs that could bring people dignity and a path out of poverty. Although he has faced some of the toughest issues of urban poverty, Jones is an optimist with a vision and hope.
At NRDC we have been talking about the green energy economy for some time, advancing the policies that will unleash renewables and allow investments in efficiency. Jones is working on the ground to prepare people for those jobs. Someone needs to install solar panels, to put in more insulation, to weatherize windows. Someone has to draft plans for greener office buildings and design more efficient appliances.
These are good paying jobs aimed at producing a safer, cleaner, more sustainable way of life for all of us. They are also, Jones likes to point out, jobs that stay in America: You can’t do energy audits of California buildings when you are sitting in China or India.
Jones proposes creating a green job corps that will train people in the new skills needed to build a clean energy economy. It will be similar to Roosevelt’s CCC, the Civilian Conservation Corps.
When I’m home, I often hike in the Palisades along the Hudson River and around every bend sits an enduring legacy of the CCC, whether a picnic table made out of stone or a old carriage road carved out of the forest. And you recall what caused this to happen: million of Americans out of work, without hope, joined the CCC for a path to a better life.
When you listen to Van Jones you can feel a movement being born, one that will draw us together with common goals but different strategies. He reached out a hand to join with us, to find common ground out of conflict, and to advance the same green economy that we are all passionate about.
I left the room feeling, we will get this done. And then I heard the news that the energy tax package passed the House, and I thought: we’re on our way!
]]>