Energy Independence

July 24th, North American Energy Community Event

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In case you missed the event and live webcast, here is the full video coverage of the event.

North American Energy Partnership: A Discussion with Bill Richardson

Dear Friend,

Join us on Wednesday July 24th for a curtain raising conversation about the emerging possibility of a North American Energy Partnership.

Our keynote speaker is Bill Richardson, former Secretary of Energy and Governor of New Mexico.

New leadership in Mexico is changing the politics of energy for North America. The United States and Mexico are uniquely positioned for an emerging partnership based on energy and economic development – with wide ranging impacts for both countries.

This event will take place at our event space.

12:00 Noon – 1:30PM

NDN/NPI Event Space

729 15th St NW

Washington, DC 20005

RSPV here

What's Next for Clean Energy

This past weekend, I attended the Aspen Institute's Clean Energy Roundtable, an annual gathering of business, political and policy leaders working in clean energy. Inspired by the many insights and ideas presented, here are my thoughts on the state of clean energy today and what lies ahead. 

First the good news.  Prices of key clean energy technologies are plummeting, bringing many technologies such as distributed solar and energy storage closer and closer to mass deployment.  The cost of solar panels today is about 20% below that of a year ago.  And it should continue dropping for the forseeable future. In other words, the performance/price ratio is improving exponentially, like computer chips if not quite as fast and for different reasons, cost economies for the most part as opposed to breakthrough technologies.  The main driver of the plummeting costs is volume and successful efforts by the Chinese government to vertically integrate the Chinese solar industry--that now supplies over half of the world's solar panels.  (In advanced thin films, costs per watt are also coming down.)  Even more dramatic price drops are occurring in battery storage across a range of chemistries with prices halving in the the last year.  Plummeting prices that translate to rising performance are good news for developers, electric car-makers and the global industry at large.

The story is more complicated, however, in the United States where we are in what might be described as the best and worst of times.  This past year saw torrid growth in solar deployment in the US with solar capacity doubling; Wind installations also grew and wind is now a very competitive source of power.  Solar--already competitive with subsidies and in some markets--will be very competitive in several years.  That is the good news.  The bad news is that solar generation still supplies only .2% of US electricity and, what's more, growth has been driven by the 1603 provision in the tax law that allows tax credits to be redeemed for cash.  This provision expires on December 31 this year. Since the financial crisis, tax credits deals to build everything from affordable housing to energy have exceeded the pool of capital from investors seeking to shelter profits.  That means tax credits absent the 1603 provision can be worthless.  With extension of Section 1603 uncertain , the solar industry may face significant challenges beginning this winter.

Similarly, on the wind side, the end of the 1603 credit would take a toll and the production tax credit for wind, itself, expires at the end of next year. While companies are scrambling to start projects before these deadlines pass, afterwards activity may fall of the proverbial cliff.  In short, while global fundamentals for clean energy remain strong, the sector remains quite sensitive to government subsidy.  In the US with subsidy likely to to change and-especially with gas prices likely to stay low as more shale gas comes onstream, we may see more clean energy activity shift overseas.  (One potential fix to this problem: moving clean energy off "subsidies" and giving them equal access to the master limited partnership tax break that extractive industries like oil and gas enjoy.)  Cheap American shale gas could nicely complement intermittent, renewable energy, but effortst to bring the technologies together have lagged.

Indeed, despite intense focus by Silicon Valley and the support of the US government, the US is not catching up with Europe or China on clean energy and in many measures, we are falling further behind.  A few years ago, Germany adopted an export promotion plan that included factories as exports.  It exported gas turbine and solar panel factories to China which is how China has so rapidly come to dominate many areas of clean manufacturing.  The Germans have done well selling machine tools to the Chinese while creating demand (and green power) at home through an aggressive feed in tariff  The US, however, except for a few bright spots like Applied Materials that makes equipment to manufacture panels, First Solar, a thin film manufacturer, here and there innovators like Sun Edison and Tesla--and a few large companies such as GE and IBM, has yet to find its way.

Why?  Unlike Germany that has deep credentials in improving manufacturing incrementally, we have excelled through innovating and creating new industries. For example, France Telecom deployed the minitel years  before America  went online but US companies ultimately came to dominate online technology once we created the open Internet platform that allowed yankee entreprenurship to flourish.  Yet despite developing scores of breakthrough energy technologies in our national labs and robust funding of clean energy companies, as I have written before, clean tech innovators have run up against the brick wall of a regulatory system that funnels purchasing decisions to regulated utilities.  The latter are dis-incented by law to invest in new technologies.  Meanwhile, in many states, the consumer remains locked out of the action entirely behind the Iron Curtain of the electricity meter. The sector is still attracting capital but time is running out to upgrade the regulatory structure to what I have described as Electricity 2.0 to create large, gatekeeper-free platforms that reward innovation and investment.

If there is one strong positive on the clean energy front, it is that the consumer has been given a small seat at the table, notably through the introduction this year of the first two electric cars, the Chevy Volt and Nissan Leaf, and in the form of the proliferation of direct generation of electricity, primarily from solar.  The electric car is a technology that can engage the consumer on the ultimate playing field of new, more,  better.  However, if the the cars fail to thrill, clean tech will experience a potentially huge setback.  For that reason making electric cars and charging infrastructure work has to be a key priority for the industry.

More broadly, the once almighty American Consumer who has not only driven domestic growth in recent decades by controlling a huge chunk of GDP but also funded the development of the Pacific rim, has been the missing force in the clean energy sector.  Consumers are prohibited from directly buying clean energy by law in many states in contrast to communications or the Internet where consumer demand drives rapid product life cycles and profits at a speed in synch with venture capital.

Indeed, the write once, make money everywhere, model of the Internet is providing stiff competition for capital to clean tech where local regulations and the gate-keeping role of utilities can sap the energies of even the best funded, most visionary entrepreneurs.

Nonetheless, my final takeaway was that while challenges abound, clean energy remains one of the largest, most important and potentially, most transformative projects of the 21st Century.   Our job is to engage the consumer, sweep away barriers and play to America's strengths in innovation, entrepreneurship and out-of-the box thinking  in the face of obstacles.

The 2012 Election Implications of Mandatory National E-Verify And Florida

Questions of whether E-Verify, an immigration employment verification system, should be made mandatory have been getting a lot of coverage both nationally and in local papers. Local papers in Florida, a key battle ground state, in particular have been following the situation closely.

Florida has been at the center of a recent fight over mandatory E-Verify in the local legislature, which it sould be noted did not pass.  Congressional Republicans have announced that this week they will hold a hearing to discuss national mandatory E-Verify.

Marco Restrepo of the Florida Independent has been writing about E-Verify from a local Florida perspective, and has written an article detailing the politics of the legislation:

On Wednesday, a U.S. House subcommittee will discuss a bill filed by chair Lamar Smith, R-Texas, that would require the use of E-Verify, the federal program that verifies if a worker is authorized to work in the U.S. The House Subcommittee on Immigration and Policy Enforcement will address Smith’s “Legal Workforce Act,” which would amend the Immigration and Nationality Act to make the use of E-verify mandatory and permanent.

The article also does a great job of highlighting some of the problems inherent in the system:

Tyler Moran, policy director for the National Immigration Law Center, said: that if mandatory E-verify is implemented without broader immigration reform it will force some workers into the cash economy outside of our tax system, ship agricultural jobs overseas and force between 3 and 4 million American workers to stand in a government line to correct their records or lose their jobs, and that 770, 000 people will likely lose their jobs because of government database errors in E-Verify.

Craig J. Regelbrugge, vice president for government relations and research at the American Nursery & Landscape Association said: that mandatory E-Verify without broader solutions would have the largest impact on the agriculture and seasonal employment sectors of the economy, resulting in economic dislocation, production declines, fewer jobs and more imports.

Given Florida businesses utter rejection of E-Verify, it will be interesting to see how the politics of this play out in the coming eleciton cycle.

NDN in New York - Electricity 2.0: Unlocking the Power of the Open Energy Network.

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.

On May 21st, NDN and New Policy Institute Green Project Director Michael Moynihan will host a presentation in New York, examining the electricity industry and why the uptake of renewables 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. Michael will argue that America must upgrade to Electricity 2.0, an open, distributed network capable of fostering innovation and a clean technology revolution.  

We hope that you will be able to join NDN in New York.  Please RSVP if you can attend. 

Electricity 2.0 paper available here.

Electricity 2.0: Unlocking the Power of the Open Energy Network

Friday, May 21st
8:30 AM, breakfast will be served

Speaker:
Michael Moynihan, Green Project Director and Electricity 2.0 author

Location

The Harvard Club of New York
The Mahogany Room 35 West 44th Street
New York, NY 10036
United States

The Tremendous Cost of Oil Dependence

The good people at the Truman National Security Project are out with a new study today on the costs to American security of reliance on oil. Truman COO and Iraq veteran Jon Powers' op-ed on Huffington Post previews the study and includes a telling quote from former CIA Director James Woolsey:

Except for our own Civil War, this [the war on terror] is the only war that we have fought where we are paying for both sides. We pay Saudi Arabia $160 billion for its oil, and $3 or $4 billion of that goes to the Wahhabis, who teach children to hate. We are paying for these terrorists with our SUVs.

From an economic perspective, the reliance on oil is also tremendously costly. This graph (via calculatedrisk) illustrates that more than half of America's trade deficit now consists of imported oil:

Electricity 2.0 Featured in SF Chronicle, Paper Release Today

UPDATE: Michael Moynihan's new policy paper, Electricity 2.0: Unlocking the Power of the Open Energy Network, is now available online. 

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.

Read the full piece.

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, a live webcast will begin at 12:15 p.m. ET.

This Thursday - Electricity 2.0: Unlocking the Power of the Open Energy Network

ElectricityClean 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. 

For more on this topic, please see:

Removing Roadblocks to the Growth of Renewables by Michael Moynihan, August 17, 2009

Bipartisan Action on Climate Change Is Exciting, As Long As It's Also Multilateral

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."

As does President Obama

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.

Recap: Insights into the Future of Clean Transportation

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.

Here's the video of the full session:

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