This morning, readers of the San Francisco Chronicle opened to page A-10 and saw this op-ed from NDN Green Project Director Michael Moynihan:
To get clean energy, upgrade to Electricity 2.0
While clean energy has captured the imagination of everyone from Silicon Valley venture capitalists to President Obama, it has yet to fulfill its job-creation promise. Non-hydro renewable power accounts for just 3.5 percent of electricity in the United States, compared with 28 percent in Denmark, a leader in the transition to renewable energy. In a study released today, I examine why progress has been so slow in the electricity industry - the network at the center of the wider energy network. The answer turns out to be that our highly regulated system, uniquely complex by global standards, is blocking progress.
Put simply, only by upgrading from Electricity 1.0 - the closed, highly regulated network created a century ago - to Electricity 2.0 - an open, distributed network - can America unlock the potential of clean technology and experience a renewable energy revolution.
It is often said that an inadequate electric grid is slowing the rollout of clean renewable energy. But why is the grid inadequate? Because the regulatory regime of Electricity 1.0 guarantees the current state of affairs. While the industry research consortium, Electric Power Research Institute, has done an outstanding job in improving the reliability of the network, utilities do virtually no research and development. Laws bar them from trying new business models, innovating and taking risks. This bias against innovation prevents utilities from purchasing technologies developed by others. Thus, entrepreneurs find the gates of the network closed. It should not be surprising that a highly regulated industry cannot lead a revolution.
So, how can America upgrade to Electricity 2.0? As with telecom reform, Electricity 2.0 will require nothing less than a Big Bang that includes federal legislation as well as close cooperation with the states to harmonize rules of the road. Partial reform, such as has taken place in Texas and California, is a start, but it is not enough. What's needed is an entirely new plug-and-play architecture that opens the grid to everyone, making connection the norm not the exception.
For more on Moynihan's compelling vision for Electricity 2.0, join NDN at 12pm today for a presentation of the paper. Copies of the paper, entitled "Electricity 2.0: Unlocking the Power of the Open Energy Network," will be available for distribution.
Electricity 2.0: Unlocking the Power of the Open Energy Network Thursday, February 4, 12 p.m. NDN: 729 15th St. NW, 1st Floor RSVP
If you are unable to join us in person, alive webcast will begin at 12:15 p.m. ET.
Clean energy has captured the imagination of people from Silicon Valley, who invested $5.4 billion in the sector last year, to President Obama, who highlighted it in his State of the Union Address. However, it has yet to fulfill its economic promise and displace legacy fuels in America’s electricity sector, especially when compared with the significant progress made in other countries. Today, non-hydro renewables account for just 3.5% of electricity in the US.
This Thursday, NDN and New Policy Institute Green Project Director Michael Moynihan will release a study examining the electricity industry – the network at the center of the wider energy system – to understand why progress has been so slow. He argues that the answer lies in the outdated and complex structure of Electricity 1.0, a closed, highly regulated network created a century ago, fundamentally incompatible with clean technology and renewable power.
Moynihan will argue that America must upgrade to Electricity 2.0, an open, distributed network, or there will be no clean energy revolution, no explosion of wealth, and no creation of millions of jobs. But if we do make this shift, America can unlock the potential of clean technology and experience a renewable revolution.
On Thursday at 12pm, Moynihan, a former Senior Advisor on E-Commerce to Treasury Secretaries Summers and Rubin, will describe the transformative power of Electricity 2.0 and will outline the steps America needs to take to achieve this vision. Copies of the paper will be available for distribution, and lunch will be served. If you are unable to join us in person, the event will be live webcast beginning at 12:15pm, and copies of the paper will be posted on the NDN and New Policy Institute websites later in the afternoon.
Electricity 2.0: Unlocking the Power of the Open Energy Network Thursday, February 4, 12 p.m. NDN: 729 15th St. NW, 1st Floor A live webcast will begin at 12:15 p.m. ET RSVP : Watch Webcast
I look forward to seeing you on Thursday for this important presentation.
Last night's compelling and in many ways inspiring State of the Union speech by President Obama should come as good news to the clean technology community and anyone who cares about the climate, energy independence and American economic leadership. The President not only higlighted clean energy throughout his speech, but also signaled his continuing view, shared by many, that it must be at the heart of America's economic revival.
While clean energy has advanced since last year's clean-weighted stimulus bill, the critical stage of moving clean technology from a promising funding category in Silicon Valey to a major engine of economic revival remains ahead. Here is how to accelerate that process.
First, as the president indicated, innovation is key. But innovation is not just about advanced research and grants to large companies--the focus of last year's stimulus. To really get the job machine revving, we need to move innovation into the marketplace. And we need small companies to turn into large ones. That is where job creation really occurs--in the transformation of a startup consiting of a two enrepreneurs into a massive global company employing tens of thousands. (Think Apple, Yahoo or Google.) As I have long been arguing, the major obstacle here is a complex and highly regulated energy landscape that presents a roadblock to the purchase and uptake of clean technologies. It is time to change that landscape.
Second, we need to direct R&D funding toward smaller businesses. Since the 1980s, American industry has had a problem that while we may invent great technologies in our universities, other countries reap the commercial benefits because of a lower cost structure and also because they have efficient networks of small companies backed by large ones or other sources of funding able to exploit cutting edge American technology. We are seeing in batterty technology today precisely what we saw in semiconductors and LCDs in the 1980s.
During the 1990s, Silicon Valley helped address this problem by funding the stage between reserach and commercial exploitation in California, specifically around Stanford University. A disproportionate share of entrepreneurs came from Stanford and the surrounding community. But there is great science going on around the country that needs development funding to begin producing American jobs.
The answer to this problem are programs such as the Advanced Technology Program introduced in the 1990s to help startups survive the Valley of Death, more small business innnovation and research (SBIR) grants and other funding opportunities available on a peer reviewed bases to startups. Virtually all of the smart grid money in the first stimulus went to large utilities. However one 50 million grant to a utility could fund 500 grants of 100,000 to startups. The latter is, by far, the better bet for our nation's money.
Third, it's not just about money. In many cases, the key to innovation is getting government out of the way. This was essential during the Internet era. Many policy efforts currently are focused on getting the government more involved in the energy space, when in fact, the more cure--since government is already heavily involved in protecting incumbents is to remove those protections so as to give new technologies and new players a shot.
Finally and most importantly, the public must be engaged. Only people can make a revolution. Until consumers are part of the action, clean technology will move forward awkwardly. During the Internet era, consumers downloading new software, building websits, rigging up home networks, starting online stores and staying up to write code were critical to the revolution. To move clean tech into high gear, we need to empower the American people to generate power, use new technologies and fight climate change. At NDN, we have been working a great deal on how to empower people to lead the clean technology revolution and I will be debuting a paper on the subject shortly.
The president has set the correct overall direction. It's up to his policy experts, those in Congress and stakeholders to craft a set of policies. But it will be up to the American people to create the clean technology revolution.
NDN and the New Policy Institute are pleased to announce the release of a major new paper on clean technology and the nation’s electricity system by NDN Green Project Director Michael Moynihan. A former Senior Advisor on Electronic Commerce to Treasury Secretaries Rubin and Summers, Moynihan will lay out a compelling vision on breaking down barriers to a low-carbon economy.
An op-ed by Moynihan on this subject in today's San Francisco Chronicle is available here.
The paper release will occur at 12pm on Thursday, February 4 at NDN.
This event will be live webcast. The webcast will begin at 12:15 pm. Watch the webcast here.
Join NDN and the New Policy Institute on Thursday at 12pm for the release of a major new paper by NDN Green Project Director Michael Moynihan.
The Copenhagen climate conference ended on Saturday without unanimous agreement as the world’s biggest economies backed a limited accord that leaders said would form the basis for a future deal to tackle global warming.
Ban Ki-moon, UN secretary-general, acknowledged that the outcome was “not everything we hoped for” but described it as an “essential beginning” as he brought a close to two weeks of fractious negotiations in the Danish capital.
Talks had continued through Friday night into Saturday morning in a bid to reach consensus on a tentative agreement struck between the US, China and other big emerging economies on cuts in greenhouse gas emissions and financing to help developing countries cope with climate change.
But several developing countries, led by Venezuela and Bolivia, refused to endorse the deal, ensuring that the conference would end without an official agreement. Instead, all 193 countries agreed to “take note of the Copenhagen Accord” without committing to accept it.
It is unquestionably the case that the Accord represents the best agreement that could be achieved in Copenhagen, given the political forces at play. Indeed, were it not for the spirited – and as I suggested above, quite remarkable – direct intervention by President Obama, together with the other key national leaders, there would have been no real outcome from the Copenhagen negotiations.
The Copenhagen Accord, agreed to on Saturday, is neither earth-shattering nor a failure. It avoids an international political mess that appeared likely as late as Friday afternoon. It falls short of expectations mainly because expectations had been ratcheted up far beyond what was realistic. It is a meaningful step forward, but its ultimate value remains to be determined.
Attention should now turn to elaborating the transparency measures contained in the text, and to implementing ambitious and intelligent domestic emissions-cutting efforts in the major emitting countries. It would be unwise to place significant hopes on converting the deal into a legally-binding pact soon.
The most interesting point to me, though, is what the process in Copenhagen means for Europe. Europe, unquestionably the leading region of the world in addressing climate change, was rendered virtually diplomatically irrelevant by the United States and a group of emerging economies:
Mr. Reinfeldt said President Barack Obama had been “very constructive” at the talks, creating a basis for the accord by smoothing over the dispute with China over an international monitoring system for emissions.
Still, the Swedish leader hinted that the Europeans had been caught badly off guard.
Mr. Reinfeldt said he had gotten his first signals that a deal had been struck while still engrossed in meetings.
“We had very tough negotiations two and a half hours after I read on my mobile telephone that we were already done,” he said.
Well, it's over. The 2009 United Nations Climate Change Conference ended not with a bang, a whimper or a treaty but rather with something akin to a scream from developing countries--some like Tuvalu that may one day end up under water--whose objections to a plan cobbled together at the last minute prevented the conference from reaching a formal agreement. Instead, the organizers "took note" of an accord forged by the US, China, India, South Africa and Brazil that now lacks even the mild imprimateur of formal endorsement by the UN conference.
And what of the Accord reached by those five countries that other countries may now sign onto? Given the fear and loathing that broke out earlier in the week between the developed and developing nations that with disastrous logistics threatened to make Copenhagen the Seattle of climate change negotiations, it was as good an outcome as could have been hoped for by the end. However, the deal struck--to commit to reduce emissions with transparent reporting--was far weaker than what appeared achievable earlier in the week let alone expectations for the conference. It keeps the idea of a global climate change accord alive but just barely.
In retrospect, the idea of forging an international agreement requiring the acceptance of every country on earth during the greatest global financial crisis since the Depression to deal with a crisis whose greatest effects may not be felt for decades, may have been overly ambitious. The promise of a global agreement on climate change that began in Rio made sense for many reasons. The atmosphere moves across the face of the globe so that gases emitted anywhere impact global weather. However, the bar for concerted action--a global treaty with billions of zero sum dollars at stake--is clearly high. It can take the US years to negotiate a tax treaty with a single county. With the Accord a guide to a more formal agreement, countries will work over the coming year toward a binding agreement in Mexico. But in the wake of Copenhagen, action appears no closer than before and perhaps further. The Accord does give President Obama something to show Congress to encourage action on climate change. But what form should the action take? The centerpiece of the House bill is, of course, a US cap and trade system. Cap and trade has proved effective in lowering NOX emissions . However, it is a mistake to view action on climate change and cap and trade as synonymous. Europe has had cap and trade in place for several years and has not succeeded, for the most part in actually reducing emissions. A cap and trade system like a carbon tax provides an incentive to adopt new technologies or change behavior to produce less carbon. But it is only a means, not the end.
What is the end? The end is new low or no carbon technologies that are the necessary and sufficient condition to lower greenhouse gas emissions. Emissions will go down when electric cars powered by renewable electricity replace gasoline cars and industry, homes and business run not on carbon-intensive fuels but on clean, renewable energy. While a cap and trade system or carbon tax would make high carbon technologies more expensive, the real long term goal is to lower the price of clean alternatives. That means breakthrough technologies and disruptive innovation.
Fortunately, breakthrough innovation and transformative technologies are their own reward and do not depend--in the long term--on making carbon more expensive. There are other ways to accelerate innovation. In the context of electricity, a key task is to break down barriers blocking the uptake of clean technology. One such barrier that will remain whatever happens to the price of carbon is the cumbersome process by which utilities, heavily regulated and incented to do the wrong thing, not the right, currently source--or don't source--clean technology and renewable power.
The good news is we still control our destiny since if the US can pioneer new technologies, not only will we reduce our own emissions, we will harvest the economic benefits of selling this technology to others. Whatever happens in Congress with cap and trade and with international climate negotiations, it is vital that we move forward on accelerating clean innovation now and tear down barriers blocking the free flow of clean technologies and energy to market.
The New York Times"Wheels" blog delivers some interesting news on the Nissan “Leaf” (not sure about that name), the company’s new electric vehicle that is being introduced in Los Angeles today.
The Leaf, an all-electric five-door hatchback, will have a 100-mile range, Nissan said.
Mr. Ghosn said last month, in introducing the Leaf at the Tokyo Motor Show, that the vehicle would be priced “competitively” compared with other cars its size. This has been estimated at $25,000 to $33,000. But the price won’t include the lithium-ion battery packs; those will be available for lease separately. The spent battery packs will be recycled by Nissan and reused.
The Times writes those last two sentences (emphasis added) as if leasing the battery packs is some kind of "catch" in the pricing. It's not. Rather, the battery pack and the electricity to charge it are analogs to gasoline in conventional vehicles, which is never sold with the car.
For this reason, Nissan is on to something with the battery leasing. Like Better Place, which is building infrastructure for electric vehicles (and is teamed up with Renault-Nissan), Nissan knows that the key is not to build a car with a battery for the same price as a conventional gasoline car. Rather, the key is building a battery-less car for the same price as a conventional car. And once that happens, because electricity is far cheaper than gasoline, all one has to do to beat conventional cars is make the lease cost of a battery plus the electricity costs competitive with the cost of gasoline over the same period (which is already a reality in many countries). Incorporating the battery and its cost into the vehicle is likely not the right way to go for so many reasons, but on the financing side the cost of actually making a car go is always an addition to the purchase cost.
Fully electric cars have some way to go – charging infrastructure needs to be built out and standardized, battery costs still have to come down, and capacity should go up – but getting the cost structure right is crucial in creating this piece of the low-carbon economy. Electric vehicles will ultimately offer tremendous benefits to consumers, from price stability to never having to go to the gas station, and to the electricity system, as the aggregate storage capacity in batteries will provide a demand response capability. And while I might prefer a name that connotes a bit more strength, the Leaf is a nice step forward.
Over the weekend, Senators John Kerry and Lindsey Graham penned a joint op-ed in the New York Times that has made those of us who care about action on climate change pretty happy. The prospects of Republican support extending beyond the Snow-Collins duo to John McCain's best friend in the Senate this early in the process is exciting, to say the least. And the compromise that Graham wants isn't too far-fetched.
There is, however, one piece of the op-ed that has made many who understand that combating climate change is a multilateral challenge nervous:
Fourth, we cannot sacrifice another job to competitors overseas. China and India are among the many countries investing heavily in clean-energy technologies that will produce millions of jobs. There is no reason we should surrender our marketplace to countries that do not accept environmental standards. For this reason, we should consider a border tax on items produced in countries that avoid these standards. This is consistent with our obligations under the World Trade Organization and creates strong incentives for other countries to adopt tough environmental protections.
I agree that we can't sacrifice jobs to overseas competitors. Competitiveness is one of the best reasons to pass climate legislation that spurs innovation and deployment of a whole generation of low-carbon technologies domestically. That said, climate change is a pressing global challenge that inherently requires unprecedented levels of global cooperation, but the proposed punitive trade policies are expressly unilateral mechanisms. This is a policy mismatch that will not help us solve this challenge.
If we want the developing world – from which the vast majority of emissions growth is expected in the coming decades – to be on board with creating a solution to climate change and to buy our climate-friendly goods, slapping a tariff on them right away is not the way to make friends and influence people. And it's not as if the United States has been leading on climate issues – Imagine the American response if Europeans had imposed these tariffs. I don't want to begin to imagine the retaliation that other nations may decide upon; what do we do if China and India – who already have high barriers to climate friendly technologies – decide that they're not quite high enough, especially for American goods?
Additionally, it's crucial to note that climate legislation already allots (as opposed to auctions) permits to energy intensive industries. Tariffs amount to a double correction. Here's leading international economist Jagdish Bhagwati at a recent NDN-New Policy Institute event speaking about the tariffs and the WTO compliance of a cap and trade regime:
Some important people are wary of or opposed to these tariffs: The head Intergovernmental Panel on Climate Change, Rajendra Pachauri, thinks they're a bad idea:
"This is a dangerous thing, and I think people in Congress must understand this," said Pachauri, who spoke with the AP after he addressed the National Press Club. "Please don't use this weapon. I'm afraid that those that have been pushing these provisions probably don’t realize that all of this can cause a major negative reaction," Pachauri added. "The United States has always stood for a free market system. … Legislation to move away from that principle is clearly counterproductive."
At a time when the economy worldwide is still deep in recession and we've seen a significant drop in global trade, I think we have to be very careful about sending any protectionist signals out there. There were a number of provisions that were already in place, prior to this last provision you talked about, to provide transitional assistance to heavy manufacturers. A lot of the offsets were outdated to those industries. I think we're going to have to do a careful analysis to determine whether the prospects of tariffs are necessary, given all the other stuff that was done and had been negotiated on behalf of energy-intensive industries.
So certainly it is a legitimate concern on the part of American businesses that they are not disadvantaged vis-a-vis their global competitors. Now, keep in mind, European industries are looking at an even more ambitious approach than we are. And they obviously have confidence that they can compete internationally under a regime that controls carbons. I think the Chinese are starting to move in the direction of recognizing that the future requires them to take a clean energy approach. In fact, in some ways they're already ahead of us -- on fuel efficiency standards, for example, they've moved beyond where we've moved on this.
There are going to be a series of negotiations around this and I am very mindful of wanting to make sure that there's a level playing field internationally. I think there may be other ways of doing it than with a tariff approach.
I'm excited that the chances for getting climate change legislation through the Senate have grown, I just don't want to see them destroy the chances for multilateral climate action. Both are important for American competitiveness, jobs, and the creation of a low-carbon economy.
Yesterday, NDN hosted three experts in the automobile industry to discuss the future of clean transportation. NDN Green Project Director Michael Moynihan moderated this wide-ranging and well attended discussion, the video of which can be found below.
Kim Hill, the Associate Director of Research at the Center for Automotive Research and the Director of the Sustainable Transportation and Communities Group, spoke about a recent study he conducted on the economic impact ATT’s shift to a more efficient vehicle fleet. The short version: the conversion to CNG and hybrid vehicles saved fuel and money and created jobs. The detailed study can be found here.
Mike Granoff, the Head of Oil Independence Policies for Better Place, the first service provider for electric cars, building infrastructure, software and the user interfaces to make electric cars available for mass adoption, spoke about the Better Place vision and business model and updated us on Better Place's progress. During the session, he mentioned the video of the battery swap station at work, which can be found here on the Better Place website.
Finally, Dr. Kathryn Clay, the Director of Research for the Alliance of Automobile Manufacturers spoke about the industry's efforts to innovate to cut greenhouse gas emissions and the regulatory environment around those efforts. More on the Auto Alliance can be found here.
One of the most important pieces for the future of transportation, energy, and climate is how we power automobiles. An interesting piece from the Wall Street Journal's "Environmental Capital" blog discusses a new study on the future of global oil supplies:
Here's an intriguing thought: Global oil supplies are indeed set to peak within a few years, and no, that is not bullish for oil. Quite the contrary—it will spell the end of the "oil age."
That's the take from Deutsche Bank's new report, "The Peak Oil Market." In a nutshell: The oil industry chronically under invests in finding new supplies, exemplified both by Big Oil’s recent love of share buybacks and under-investment by big oil-producing nations. That spells a looming supply crunch.
That will send oil to $175 a barrel by 2016—and will simultaneously put the final nail in oil's coffin and send prices plummeting back to $70 by 2030. That’s because there's an even more important "peak" moment on the horizon: A global peak in oil demand. That has already begun in the world’s biggest oil-consuming nation, Deutsche Bank notes:
US demand is the key. It is the last market-priced, oil inefficient, major oil consumer. We believe Obama’s environmental agenda, the bankruptcy of the US auto industry, the war in Iraq, and global oil supply challenges have dovetailed to spell the end of the oil era.
The big driver? The coming-of-age of electric and hybrid vehicles, which promise massive fuel-economy gains for short-hop commuting but which so far have not been economic.
Peak Oil, which used to be dismissed by many as kind of wacky theory (even though the idea was originally formulated by an oil company geologist), seems to have arrived firmly in the mainstream with the likes of Deutsche Bank onboard. Some argue that the arrival of peak oil will generate a massive shock to civilization, but, true or not, it will certainly be a game-changer that necessitates and speeds the deployment of new technologies. So if the Peak Oil believers are right, it's incumbent on us to start investing in these technologies today: Oil prices spikes have generally been economically problematic – or worse – some have triggered recessions.
For more on the "coming-of-age of electric and hybrid vehicles" and the general future of clean transportation and automaking, join us at NDN at noon today for Insights into the future of Clean Transportation, which will showcase speakers from the Center for Automobile Research, the Auto Alliance, and Better Place. If you can't make it, watch the event live online.
Clean energy has captured the imagination of people from Silicon Valley, who invested $5.4 billion in the sector last year, to President Obama, who highlighted it in his State of the Union Address. However, it has yet to fulfill its economic promise and displace legacy fuels in America’s electricity sector, especially when compared with the significant progress made in other countries. Today, non-hydro renewables account for just 3.5% of electricity in the US.
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