CLEAN EDGE
Written by Ron Pernick, Founder & Managing Director, Clean-Edge
The election is over and the people have spoken. After months of highly-charged attacks, lively and lackluster debate performances, and never-ending punches and counterpunches, Barack Obama has prevailed as the winner of the 2012 election. It won’t be an easy job. Mr. Obama will need to enable the creation of millions of new jobs, embolden U.S energy, environmental, and national security, and lead our country into a robust economic future – all while dealing with a sharply divided electorate.
Now that the election is over, what steps can the president and new Congress take to ensure our nation’s ongoing clean-energy leadership? Here are five actions for Mr. Obama that, if implemented, we believe would supercharge the U.S.’s clean-tech economy:
1) Open Up Master Limited Partnerships to Renewables and Efficiency
After the energy crisis of the 1970s, Congress created an effective investment structure to support domestic oil, natural gas, coal extraction, and pipeline projects called Master Limited Partnerships (MLPs). These tax-advantaged structures now comprise more than $220 billion in assets, and on average return between five and 12 percent annually to their investors. The president should call on Congress, in a bipartisan manner, to open up these same investment tools to renewables as soon as possible. There’s no reason that fossil fuels should get special treatment, and this effective investment structure is well suited to renewables which have their own built-in annuity streams (electricity generation from a solar, wind, or geothermal installation, for example, could provide a regular revenue stream to investors). U.S. Senator Chris Coons (D-Delaware) has written a bill entitled the MLP Parity Act, which if enacted, could level the playing field and open up critical financing to the renewables sector.
2) Leverage the Nation’s Abundant Natural Gas, Renewables, and Energy Efficiency Resources
The U.S. is blessed with perhaps the most abundant natural gas and renewable sources of any nation on the planet, along with being a global leader in energy efficiency and green building technologies. While the U.S. will continue to use oil and burn coal, the future needs to be built on cleaner, less environmentally destructive, less volatile sources of energy. Based on its unprecedented natural advantage, we believe the U.S. should focus new generation assets on environmentally responsible natural gas, renewables, and energy efficiency-based “negawatts.” To a great extent that’s already been happening, with the majority of new generation assets in 2011 and 2012 coming from new natural gas and wind power plants. The president should further leverage these resources by supporting policies and building bridges between renewables, efficiency, and natural gas interests – and highlighting how these industries can work together to enable true U.S. energy independence and security.
3) Establish a National Renewable Portfolio Standard of 30 Percent by 2030
Nearly 30 states and the District of Columbia have enacted Renewable Portfolio Standards (RPS) that have been one of the most effective tools in supporting the growth of clean energy. California, with one of the most aggressive RPS in the nation, is on target to reach 33 percent renewables by 2020. We call on the president to push for a national RPS of 30 percent by 2030, which would bring this effective tool to the entire nation, while allowing states to exceed the federal target.
4) Rebuild the U.S. Grid to Withstand Major Disasters and Support a 21st Century Economy
In the aftermath of Superstorm Sandy, it’s very clear that our nation’s electric grid is woefully inadequate to meet the needs and requirements of a digital, energy-hungry, and increasingly climate-challenged society. We need to invest billions of dollars (and create millions of jobs in the process) in updating our grid with smart meters, distributed power resources like solar and fuel cells, and backup energy storage built in. And we need to look at burying the most vulnerable utility cables underground so they aren’t constantly subject to high winds and fallen trees. This won’t be inexpensive, but our electric utility infrastructure needs to be upgraded. There isn’t much that the AFL-CIO and chambers of commerce agree on, but they both believe the U.S. must rebuild its infrastructure. The president should make the pursuit of smart, resilient, and secure utilities of the future one of his highest priorities.
5) Phase Out All Energy Subsidies
It’s time to level the playing field and get rid of distorting energy subsidies. While admittedly controversial, this is certainly something where folks on both the left and right can find common ground. Let’s start with subsidies for long-established fossil fuel industries like coal, oil, and natural gas. These entrenched industries simply don’t need government handouts. The estimated $3 billion or so in annual federal subsidies to these industries in the U.S. should be removed immediately. Over the next five to ten years, similar subsidy support should be phased out for renewables and nuclear power. For renewables, a five to ten year phase out makes sense since subsidies are meant to help support expansion of new, fledgling industries. And while the deployment of renewables in the U.S. has doubled over the past four years, they could use a final push. So for now, we should extend successful tools like the wind production tax credit, but have a clear plan to end them within a decade. Nuclear, which has been the most subsidy-dependent of any energy sector, will need five to ten years to see how it might be able to compete in a subsidy-free world. Once all subsidies are phased out, the energy market can compete in a more open and transparent environment.
We believe firmly that clean tech, which represents industrial breakthroughs in energy, water, waste, transportation, buildings, and more, offers one of the greatest opportunities to rebuild our economy, slow the growth of and adapt to climate change, upgrade our failing infrastructure, and create millions of jobs in the process. Voters overwhelmingly support clean-energy initiatives and believe it’s crucial to our nation’s future competitiveness. Governors and mayors on both sides of the political aisle support clean tech and the tens of thousands of jobs it represents to their regions. And clean energy is scaling. Two states, South Dakota and Iowa, already get approximately 20 percent of their electricity from renewable energy, with a host of other states not far behind.
We had an inordinate share of partisan attacks during this election cycle. But now that the election is settled, let’s move on with the business of building a clean-tech nation – with bipartisan support that unleashes American capital, innovation, and leadership. It’s not only up to our 44th president to help make this change happen – but also to business owners, policymakers, investors, teachers, students, and citizens across the country. As former President Bill Clinton wrote in his review of our book Clean Tech Nation, “It’s up to all Americans, across every sector, to follow through.” It will take an all-hands-on-deck approach to rebuild a sustainable, strong, and resilient economy – and President Obama needs to lead the way.
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Ron Pernick is founder and managing director of research and advisory firm Clean Edge and the coauthor of two books on clean-tech business trends and innovation, Clean Tech Nation (HarperCollins, 2012) and The Clean Tech Revolution (HarperCollins, 2007).
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Tags: Clean Edge, Obama, Obama Administration, Ron Pernick, Solar
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