I wrote a while back about how the Obama administration was advocating for some policies that are typically included in proposals for a carbon tax as part of their cap and trade plan. Specifically, the idea of using revenues raised as a tax refund to offset increased costs to end-users.
It turns out, it’s not the only part of the proposed legislation that merges aspects from two policy ideas. The National Journal has a very well-written piece that examines how some of the details of the carbon legislation floating around the Hill actually take the best aspects of the cap and trade and carbon tax ideas. Here’s an excerpt:
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Last week, the House Committee on Energy and Commerce released a discussion draft of the American Clean Energy and Security Act of 2009. The bill, sponsored by Representatives Waxman and Markey, represents a substantial step forward for those eager to see the development of a clean technology economy here in the US. From a clean energy standpoint alone the proposed legislation calls for a package that includes a federal RPS (requiring 6% renewable power by 2012 and 25% by 2025), carbon capture and sequestration, clean fuels and vehicles, and smart grid and electricity transmission deployment. But the bill (nice summary found here) is about more than just clean energy, as it includes title provisions on energy efficiency, global warming pollution, and economic transition. In short, the bill contemplates not only our fuel sources, but the manner in which we deliver and consume fuel, how we manage the associated greenhouse gas emissions, and the necessary economic and trade steps to ensure a successful transition.
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Using thermal imaging cameras to look for criminal activity within homes is a tactic usually reserved for law enforcement in the fight against drugs. But a municipal government in the UK has appropriated the tactic, and hired a plane outfitted with such technology to identify homes that are wasting energy. Apparently, it’s not the first UK city to do so either.
The tactic obviously raises privacy concerns, even in the UK, where the use of closed circuit television (CCTV) cameras is common. In the US, the approach would likely be considered illegal - the Supreme Court has ruled that the use of thermal imaging technology, even for offenses like marijuana cultivation, requires a warrant.
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As many news outlets are reporting, the Obama administration’s proposed budget presumes about $75 billion in annual revenue from the sale of carbon allowances (even though a cap-and-trade bill has yet to be implemented). While this is certainly an interesting move, and perhaps a way to exert pressure on Congress to move forward with cap-and-trade legislation, what caught my eye is what Obama is proposing to do with the majority of the revenue from auctioning the permits to pollute - give it back to Americans in a tax cut that will help offset the increase in energy costs that will result under such legislation. The remainder of the funds, about $15 billion a year, will go towards energy R&D.
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The wires were buzzing this morning with news that the South Carolina Public Service Commission had officially rejected Duke Energy’s energy efficiency program and cost recovery plan, known broadly as Save-A-Watt. While Duke must no doubt be disappointed with this decision on their widely-publicized plan, they can take encouragement from the fact that the topic of utility incentives for demand-side investments is only going to get more and more attention going forward. What may have initially seemed like a radical approach may find itself with more company as states begin taking bolder steps to incent utilities to do more with the demand side of the equation.
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I was recently in Washington DC for the National Association of Regulatory Utility Commissioners (NARUC) Conference. At both the conference, and in the halls of Congress nearby, there was much discussion about the need to create policy “on-ramps” to eventual climate change legislation. The thinking appeared to be that putting a price on carbon is so politically untenable that we should work in the interim on piecemeal approaches, like a federal Renewable Energy Standard. I’m not convinced this is a good approach however. There are plenty of signs that carbon legislation is indeed politically possible, and there are good arguments against interim solutions.
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A lot of people expect the incoming Obama administration to fundamentally alter the way our country thinks and acts around energy and environmental issues. While a lot of change can certainly come from top-down Federal initiatives (a country-wide cap-and-trade system, nationwide renewable portfolio standard, or federal tax incentives for renewable energy or energy efficiency investments are examples), at the end of the day energy policy really is a state issue. So we certainly need Federal action and direction, but ultimately we need legislative and/or regulatory bodies in 50 states and DC to take action as well.
This week we saw New Jersey and Virginia stake large claims toward a cleaner and greener future. And as a result, it looks likely that we can expect “big splash” actions in the near future from both states that would be similar to what I recently wrote about in Hawaii. The landmark reports that came out of New Jersey and Virginia are pretty thick and comprehensive so I’ll just offer a quick highlight of each and note that they are definitely worth a gander.
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About a year ago I attended a carbon conference in New York and I thought one of the best sessions focused on whether there were too many greenhouse gas allowances in RGGI (Regional Greenhouse Gas Initiative, the country’s first mandatory cap-and-trade market that goes live on January 1, 2009 - PDF overview here). One of the first questions that must be answered when designing a good cap-and-trade market is the level of the cap. Set the bar too high and it will be easy to meet which makes allowances essentially worthless (see Europe’s first attempt at cap-and-trade); set it too low and the cost of compliance could drive electricity rates much higher than anticipated.
One presentation delivered at that session was from Environment Northeast (PDF from the ENE website) which posited that weather and commodity costs caused RGGI’s cap to be set higher than perhaps it needed to be. Apparently 2005, the year that set the trajectory for the cap, had higher than normal emissions because it was both a “bad weather year” which led to higher demand and many bi-fuel generators in the northeast (that can run off either natural gas or oil) were using dirtier oil due to the huge spike in natural gas prices after Hurricanes Katrina and Rita. 2006 and 2007 saw milder weather and a heavier reliance on natural gas as oil prices steadily rose — which naturally resulted in lower emissions. The concern a year ago was that RGGI would remain overallocated and, like Europe’s carbon first trading scheme, be less than successful as a result. The latest from ENE (PDF), released yesterday, shows further cause for concern as the gap between actual emissions and the cap appears to have nearly doubled.
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This week the state of Hawaii announced plans to partner with Better Place to create an electric car infrastructure throughout the Aloha State. This follows the announcement from late October that an agreement with the state’s electric utilities had been reached to implement the Hawaiian Clean Energy Initiative — which among other bold moves calls for 70% of the state’s transportation and electric energy to come from clean sources by 2030. 40% of electricity would be derived from renewable sources by 2030, effectively doubling Hawaii’s currently renewable portfolio standard (RPS) of 20% by 2020.
These are certainly bold goals, but I think Hawaii has a shot at achieving them. My confidence stems primarily from the fact that the state’s plans indicate a different psychology around this new era of energy in the state.
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Understandably, there has been significant debate regarding whether or not the Big 3 US automakers should be bailed out of their current financial trouble. Most observers, including myself and Tom Friedman, believe that many of the auto-industry’s problems are self-inflicted. That said, how to handle the problem is far more contentious - is a restructuring under Chapter 11 protection the best bet, or should the government actually fund/invest in these companies provided there are certain conditions?
As part of this proposed industry bailout, a few small, American companies that are focusing on hybrids and electric vehicles have asked for assistance (see here and here). Some have even purchased full-page ads in the NYTimes asking to be included. Now this post wont attempt to answer what the best method for dealing with the Big 3 is, or if the proposed bailout package is the proper vehicle to direct funding towards these small innovative companies. Rather, I’d like to focus on the rationale these companies are espousing as it relates to the role of government and its support of emerging technologies.
Let’s focus on the best-known of these small companies, Tesla Motorcars. It has asked for 400 million worth of guaranteed loans to be used towards improving their battery manufacturing process and developing a new electric sedan.
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