Up Front

Climate Legislation—Narrow or Broad, It Will Still Slight Innovation

Mark Muro

So as President Obama convenes senators for a come-to-Jesus moment this morning on energy and climate legislation it looks like Senate proponents of an economy-wide cap-and-trade climate bill are preparing to settle for a narrower emissions cap in the electric power sector.

Yet another concession to lawmakers’ skittishness about pricing carbon, the scaled-back approach will not please the absolutists but it does have the virtue of realism. It always seemed a bit of a fantasy that a comprehensive carbon pricing scheme could reach 60 votes in the Senate this year. And for that matter it’s possible the narrower approach really could amount to a first step toward a broader system for reducing emissions, as Eileen Claussen and Jim Rogers, president of the Pew Center on Global Climate Change and Duke Energy respectively, wrote in an op-ed in Politico last week. Incrementalism isn’t always timidity.

And yet, for all that, there is every reason to worry that the latest efforts to gain political consensus in the Senate are continuing to neglect a crucial aspect of cleaning up the country’s energy system—technology innovation.

As we and many others have been saying for years, the nation badly needs to sign up for a new push for energy system innovation that seeks countless efficiencies but also triples to quintuples today’s anemic baseline level of federal energy innovation R&D. (For some great discussion of this need see recent posts by Microsoft founder Bill Gates, a group of 34 Nobel Laureates, NYT Dot Earth blogger Andy Revkin, and Teryn Norris of Americans for Energy Leadership).

The trouble with the new utility-only approach to emissions reductions, however, is that none of its proponents are saying anything that makes it seem likely that an adequate slice of the potential revenue the narrower system might generate will be reserved for technology innovation.

In fact, it’s pretty obvious that with few emissions allotments to auction off much less revenue would be generated through a utility-only program than under an economy-wide pricing system.

That’s a problem because not only do we need to get a lot more money into the innovation system as soon as possible (so new technologies can roll out in time to help reduce climate change in this century) but because a smaller revenue pie will only intensify the inevitable interest group scuffle over the money to the detriment of the R&D claim.

And so the possibility of a scaled-back climate and energy bill—while a disappointing reminder of how hard transforming the U.S. Energy system is going to be—really doesn’t change the fundamentals of the present juncture. Bill by bill, the energy innovation remains an afterthought, the potential yield for R&D remains paltry, and the temporary burst of investment applied through the stimulus package continues to look like a one-shot wonder without follow-through. In that sense, what bears watching is not just the breadth of whatever carbon initiatives emerge in the coming weeks but their seriousness about financing a new push for energy innovation.

But don’t take it from me. Listen to Daniel Kammen, an energy and policy expert at the University of California at Berkeley, whose remarks in another great post at Dot Earth I will defer to as a closing. Writes Kammen—

…the 800-pound gorilla in the room is not being addressed: what plans or political will or results exist to justify and maintain…funding levels post-ARRA stimulus?

The key issue is to develop a sane and calm path from where we are now—with a large amount of short-term funding—to a strategy for long-term investment in energy science and technology that has a clear management plan to bring these to the market. Right now many federal agencies are awash in funds, but as the ramp-down happens, infighting and battles over which program is better on merits, or better-connected politically, will emerge.

To avoid this we need clear energy and climate legislation (which could be combined or could be separate) and a national strategy. That would send important priority and marching orders across agencies, and allow an orderly evolution, not a destructive scramble.