Some Energy Policy ideas that might help….

Today’s post: Weds, 2-6-2008

The world's economy today is almost exclusively based on burning carbon based fuels. (At this time, nuclear and renewable energy are supplemental only although in some places, are a significant supplement.)

As we spoke of last time, our national security in the United States, the health of the economy, & possibly our survival, look to depend on switching to a 100 % renewable energy based economy.

I. Since we are already desperately late in doing this, it needs to be done very rapidly and on a large scale.

II. And, if the effort is to succeed, it needs to reward current businesses for doing the right things far more than it does penalize them for doing the wrong things. In my view this is essential to avoid slowing the process.

Businesses, particularly the stronger ones, tend to go much faster when thy have something to gain. And, if they will lose money now available to them, they often try to get out of it or delay as long as they can, or implement these changes as slowly as they can manage. And, we need maximum speed here. Yes we need to have businesses stop doing some things as fast as possible. But to get them to do it quickly, we need to also give them some strong incentives & help them to avoid losing too much money. To the maximum extent, we need to put them in a position to make MORE by replacing the things they should no longer do with those that they should do.

In addition, these businesses are where most of the developed talent, people, management, & capital now are available to get the job done. And, this is critical since we need speed, scale, and a gradually accelerating pace of change.

One way to do this is to create the new businesses & technologies we need. And, that process is well started. Both venture backed startups & some of the more visionary & informed large companies are doing this.

In the area where I live, Ausra, Nanosolar, & Applied Materials are good examples of this. Honda in Japan is another. General Electric is a bit slow & behind based on what I saw on their website. But they show signs of moving in the right direction now.

And, my examples are likely less than one percent of what is already happening.

The bad news is that we are at least 25 years behind & we are only about one percent of the way to an economy based on renewable energy.

III. Here’s a partial to do list that would help.

1. A. We can dramatically expand the generation of solar energy to electricity. By doing that we can get close to 100 % of our electricity from renewable sources if we expand solar enough.

We can increasingly use electricity to power transportation, particularly by car with electric cars & plug-in hybrids.

This is clearly a very high priority item. So the development of thin film solar & other ways to drive the cost down; electric & plug-in hybrid cars; & improved battery technology are also imperative.

Germany has a special incentive program that is proven to sharply increase the deployment of solar electric generation. So, a logical policy would be to require every utility regulating entity in the United States to adopt that policy in whole or in part within a year.

A similar & related policy is to insist that when homes & businesses create more energy than they use, they be paid for it. In California now, you can pay for the grid electricity you use with solar electricity you generate, which can result in a zero utility bill.

But if you install a lot of solar & add energy conservation so well you generate MORE than you use, you get no money. Given the current energy & CO2 situation, that stupidity must be stopped everywhere as soon as is possible.

More money for venture capital in this area will help.

But one of the most important policies our government should adapt as soon as possible is to create a huge funding agency to finance the deployment of solar electricity generation & conversion costs for both industry & consumers.

As the dollar cost, let alone the real environmental impact cost, of fossil fuels rises, getting solar power instead will be cost effective within at least 20 years & increasingly much faster. But businesses & consumers need financing that allows them to pay for the installation & conversion now through the financing that also has at least half the interest cost paid by the government. It would also help if the payments could then become part of their utility bill & paid over a 30 year period. That way, the costs will be less than the savings very quickly and as many as ten times as many people will deploy solar soon.

Another policy area for government is the rapid installation of roofs with solar electricity generating cells in place over every parking lot in the United States. Such roofs will also provide shade in the summer & protection from the rain. Even better, they use land already available & paved over that is right next door to the potential users. That is a HUGE opportunity that government should boost in every way possible.

2. We will still need liquid fuels for air transport and for the transition period while most of our vehicles still use it. And, particularly at first, we will need a source of what is now called “natural” gas for heating.

We need gradually to develop sources like agricultural waste, switch grass & similar plants than can be grown on land not suitable to grow food, & algae as sources for hydrocarbons as this is powered by solar energy & removes CO2 from the air.

And, we will need to learn to use solar electric powered refinery & conversion sites that will enable us to replace, from this source, 100 % of the petroleum & natural gas we now use & cannot replace with solar electricity.

This will need venture capital, some of which it’s getting now. But of much greater importance it will need large amounts of expansion capital once the technology is in place.

The seed or starter funding for this is a good policy for our government to have.

3. Aggressive re-forestation & a slow down of the reverse is paramount, since we need the trees to continue to remove CO2 at no further charge.

So the development of effective & economically doable ways to do this is a priority.

4. The more energy efficient we are the faster we can reach 100 % of our energy from renewable sources.

Energy conservation is therefore paramount.

a) Conservation that involves doing without things requires sacrifice & constant attention to work. This can only be done successfully for a short time. So I think it should either be not done or done for a five year period only, when the extra energy will empower one of these other changes to get to 100 % faster.

b) Selling people on avoiding waste, however, & culling wasteful & unnecessary practices in part by taxing them, will work just fine.

That can be done by government policy & be a source of revenue besides.

c) The huge opportunity though, is in deploying energy conservation devices & infrastructure rapidly.

Those need not require sacrifice & can save money. Even better, they do not need continuous attention or effort once they are in place.

Examples, if homes & businesses become better insulated & are retrofitted to prevent summer heat from entering in other ways, we will need dramatically less energy for heating & cooling. And, that will free solar generated electricity for other uses & reduce the amount of heating oil & natural gas we burn.

Another example is LED light bulbs. They use even less energy than compact fluorescents; & they do not have mercury in them that is already causing dangerous mercury pollution problems from disposal of compact fluorescents.

Government must put incentives & financing in place to deploy the existing technologies & to deploy the better technologies as they come online.

Further, they need to partner with venture capital & large appropriate businesses like GE to get cost effective LED light bulbs & similar technologies developed & deployed.

5. We need to start taxing the use of fossil fuels.

Since doing it in huge amounts now will crash the economy & hurt innocent people & make enemies of businesses doing so is an absolutely horrible idea.

But in the same way that income tax started as a very small part of federal funding, I think we should begin to tax fossil fuels at least some immediately.

We can then fund the other programs from this tax. And, as the conversion process makes alternatives available, we can gradually increase the rate from the one % or so where we start to 500 % over the next 40 years.

Also, particularly in the early stages, vetting real & effective programs to offset CO2 emissions & allowing businesses to pay this tax or avoid it temporarily by buying carbon offsets is an excellent idea.

Since the places to put this carbon offset money have often NOT been vetted or been that effective now, a very important government priority needs to be putting that in place as soon as possible.

6. We need a President next time who makes this area a number one priority no matter what.

That even the candidates who say they understand this issue are not running as if this area is a priority, I am gravely concerned.

I’m also surprised & disappointed. In this I’m not alone. I’ve gotten an email from the Sierra Club requesting help in getting press coverage of this issue.

So, if you have the ear of a candidate or their campaign chairpeople, please put in good word for the idea.

I believe it will be a significant competitive advantage for the candidate who does it first & the one who does it best.

This is in part because the voters are quite concerned about the economy which will soon be in serious, serious trouble without these policies.

To re-phrase an old Bill Clinton slogan, “It’s the energy economy stupid.”

That’s my take on it.