Obama and Renewable Energy
A Changing of the Energy Guard
I woke up smiling on Wednesday morning. With Kansas roots and a worldwide perspective, Barack Obama and I share a good deal. But more than being a reflection of any one American story, President-elect Obama represents whole-hearted transition to a new economy—one where renewable energy will drive growth.
Eager industry watchers are expecting a full $150 billion in alternative energy commitments from the Obama administration. That will be spread out over the next decade, and measures to put money in the right hands are already underway as part of the transition process.
Yet for all the hope Obama's candidacy and win engendered throughout the world, there are plenty of veterans of clean energy who have gotten burned before by unfulfilled political promises.
Others doubt that a cap-and-trade system for carbon emissions, which may catalyze private and public R&D, can be pushed through Congress quickly. Judging by U.S. history, we can't blame our international friends for their skepticism.
The American Association for the Advancement of Science shows this alarming trend for non-military research and development funding:
Notice how energy funding ballooned in the Carter administration, only to deflate when Reagan pulled the solar panels off the White House and oil prices plummeted.
"I'd like to see the first $15 billion funded in his first budget," Australian sustainable energy analyst Mark Diesendorf told Reuters.
Nothing is certain, but the next commander-in-chief seems to be off to a flying start when it comes to energy strategy.
As of November 6, Politico.com reports that Obama is considering the creation of a new Energy Security Council at the executive level.
John Podesta, Bill Clinton's Chief of Staff who now heads Obama's transition team, recently published "Green Recovery: A New Program to Create Good Jobs and Start Building a Low-Carbon Economy." Podesta heads the Center for American Progress, a Washington think tank, and his report may serve as a road map for Obama's energy policy.
A Greener White House
The Bush administration has balked at any real progress on limiting greenhouse gas output, as fossil-fuel industries prophesied economic disaster.
Retooling coal-fired power plants and spending money on rooftop solar at big factories would cause major job losses and reduce shareholder value, they argued.
Well, look at what has happened in the past several months:
- The stock market has tanked.
- Unemployment is on the rise.
- Technical recession is already upon us.
That's nearly all attributable to speculation in housing and deceptively clever financial innovations.
So can anyone honestly say that mitigating climate change and investing in a new economy driven by renewable energy is still the riskiest thing we can do?
There is also the competitiveness argument. In its 2007 Environmental Policy Outlook report, the American Enterprise Institute, a conservative Washington think tank, called the framing of a global climate change regime a "classic chicken-and-egg problem."
The AEI report continues to say that the U.S. "does not wish to enter into a regime of economically costly emission caps or taxes that would have the effect of driving industry and jobs to nations such as China and India that do not participate in such caps."
As a result of that mentality, inaction has been the rule in the White House, and the competitive balance now favors other countries like Germany and Denmark, where renewables have become a national priority and point of pride.
After Australian Prime Minister Kevin Rudd signed his country onto the Kyoto Protocol earlier this year, the United States is now the only industrialized country not party to the agreement.
There are exceptions in the United States, namely California, that defy federal intransigence. Under the leadership of Governor Arnold Schwarzenegger, and one of the most progressive state governments in the country, California passed the Global Warming Solutions Act of 2006.
California's country-sized economy has become one of the most attractive markets for renewable energy companies from around the world, both because of that law and its abundant sunshine.
Solar energy is more cost-effective in high radiation regions like California and the Mediterranean, but geographical variation is no reason to stall national goals in the U.S.
Arnold Schwarzenegger had been cast as a likely pick for John McCain's would-be cabinet, but knowing Barack Obama's penchant for surrounding himself with experienced bipartisan leaders, the Governator may just find himself in a Democratic government as Secretary of Energy.
And the Golden State's industrial gem, Silicon Valley, will probably see its own leaders rise to prominence in Washington.
From Sacramento and Silicon Valley... Straight to Washington
Last week I told you about some of the challenges that Google faces in reducing data center energy usage. Being the top dog in a fairly new industry—infotech—means that Google execs have unique insight into how the country can move forward. CEO Eric Schmidt may become the nation's tech czar and expand the company's R&D goals (the "Renewable Energy Cheaper than Coal" program especially).
Google.org, the company's philanthropic arm, is endowed with $1 billion in Google stock. This past July, Google.org's head, Dan Reicher, addressed a congressional hearing called "Efficiency: The Hidden Secret to Solving Our Energy Crisis."
Reicher wasn't just there to talk about server farms and the plug-in electric vehicles being tested all around his company's sprawling corporate campus. Instead, he focused on weatherizing 20 million homes for low-income Americans. At a cost of about $2 billion, Reicher highlighted the role that high technology can play in keeping utility bills down.
"The increasing interplay between energy hardware and information software—and the corresponding rise of the Internet and the connectivity it brings—adds to the potential to make and to use energy more productively," he said.
"From smart meters and smart appliances to smart homes and a smart grid, we are poised to significantly advance our ability to monitor and manage energy."
And that's really where the rubber hits the road in a national plan to get the most out of every energy dollar, creating jobs and increasing competitiveness at the same time.
French analyst Emmanuel Fages of Société Générale says, "I don't see the U.S. becoming competitive again in the car industry, cement [etc.]. Renewable energy could be a new source of growth."
Dan Reicher surely shares the more optimistic, latter part of that appraisal. While no American likes to see Detroit dwindle in importance or jobless rolls grow, either Reicher or Schwarzenegger could provide real insight into how we can move forward profitably and responsibly.
P.S. - Dan Reicher and other American energy visionaries are speaking the parlance of international clean power. "Feed-in tariffs," "renewable portfolio standards," and "cap-and-trade" are ingrained in the vocabulary of many world capitals, and D.C. is looking to top countries like Japan, Germany, Israel and even Abu Dhabi to see how ambitious goals are brought to fruition practically. In the meantime, listed companies around the globe are profiting, with or without the White House's help. To learn more about leading international clean energy companies and how smart policy has fostered green GDP growth, check out Green Chip International today.