Every year, Gustavus Adolphus College in tiny St. Peter, MN holds a Nobel Conference, authorized by the Nobel Foundation of Stolkhom, Sweden. The conference brings together renowned experts to discuss timely issues, like aging or globalization. This year, it was “Heating Up: The Energy Debate.”

I attended the two-day event, which delivered in its round-up of impressive energy and global warming experts: Nobel Laureate in Physics Dr. Stephen Chu, biofuels expert Dr. Lee Rybeck Lynd, peak oil expert Ken Deffeyes, economist Paul L. Joskow, polar explorer Will Steger, hydrogen expert Joan M. Ogden, and James Hansen, Director of NASA’s Goddard Institute for Space Studies.

While at times the science got a bit thick, the message from all of the lecturers was clear: Global warming is urgent, we need to do something NOW, and many different solutions will get us there.

I was most interested to hear from Paul L. Joskow, an MIT economist who discussed the best methods for regulating carbon dioxide (CO2), a major contributor to global warming. Many politicians favor a cap-and-trade policy, in which a limit on CO2 is determined and then tradable/sellable permits to pollute are issued to utilities and industry. Economists, on the other hand, generally prefer a carbon tax that simply taxes CO2 at a certain rate.

Although an economist himself, Joskow argued that a cap-and-trade policy is the best way to create a market for CO2 and drive down emissions. First of all, a cap-and-trade policy is politically feasible, and making sure it actually has a chance of passing Congress in our lifetime is the most important thing to slowing global warming. Secondly, a cap-and-trade plan links the U.S. with other nations (and other states) that have already started down this path, thus creating a global solution to a global problem.

While economists favor a carbon tax that the feds could ideally use to cut taxes in another area, like income, Joskow said “perfect the enemy of good.” Sure, in a perfect world we would tax bad stuff and never tax good stuff (like working). But the urgency of global warming calls for a good system that is feasible now and gets us in sync with the rest of the planet. And the best system for that is a cap-and-trade policy.

Joan M. Ogden lectured on a hydrogen economy, although her fellow panel discussion presenters were skeptical of using hydrogen as a fuel source, at least in terms of it being ready fast enough to fight global warming. Although no option should be taken off the table, hydrogen could play a more important role in bettering existing technologies (like ethanol production) rather than creating an entirely new infrastructure.

Dr. James Hansen – you may remember him from his accusations that NASA officials edited his global warming reports – said that if someone is seriously concerned about climate change, any elected official they vote for should agree on three principals:

1) A moratorium on traditional coal-fired power plants (until we can sequester the CO2, building more plants moves us backwards)

2) Policies that encourage more renewable energy

3) Incentives for energy efficiency.

With the clean technology here but the leadership lacking, the issue of urgency was paramount throughout the lectures. In fact, I thought the statistics and scenarios put forth more dire than those I normally read in the media. More than one expert prefaced a recommendation with something like, ‘A year ago I would’ve been laughed out of the room for saying this, but now I can say that what we need to do is…’ The extensive media attention on global warming, along with some serious dialogue and action by the business sector and politicians, have made it “safer” to talk about the true consequences and costs of global warming without immediately being labeled a nutcase.

For example, MIT economist Paul L. Joskow said that any sort of carbon regulation is going to raise our utility bills “and anyone who tells you otherwise is lying.” With a cap-and-trade policy that sets CO2 at $50 per ton (a price he thinks is likely), it could drive up utility bills 40-50%. But this would not happen over night: Any measure passed by Congress would give utilities several years to implement efficiency programs to soften the landing. But the message was still clear: This isn’t going to be easy, but we can do it.

Polar explorer Will Steger, who has been traveling and studying the arctic and Antarctic regions for 40 years, gave an eyewitness account of global warming’s effects at the poles (in May I interviewed him about his most recent trip). I’d heard his talk several times, but there was a big difference this time: He showed a slide of polar bear and then said in his quiet-but no-BS –sort-of-way, “This is our friend the polar bear. I’m afraid there’s nothing we can do for them – they will go extinct. I couldn’t say that 18 months ago to people, but now I am.”

Despite the wake up calls – no use in sugarcoating at this point – it was still uplifting to know that some of the planet’s smartest people are working on this and elected leaders are slowly getting the message.

Now, it’s time for the rest of us to get to work. For starters, check out Will Steger’s “Template for Action,” Lighter Footstep’s “10 First Steps,” or the Union of Concerned Scientist’s “How You Can be Involved.”

While voters, businesses, and politicians are calling for carbon regulation, exactly what that regulation would look like is far from decided.

Carbon taxes and cap-and-trade systems are the two most-cited proposals for cutting carbon dioxide (CO2), a major contributor to global warming. Supporters argue over which plan would be the most efficient method of cutting emissions while allowing for flexibility in the economy.

A carbon tax is a tax levied on CO2 emissions. Those who favor a carbon tax say it will drive innovations and technologies that allow for the same amount of work to be done with less pollution, and decrease the demand for products that are dirtier and thus more expensive. Critics point out that a tax would have a harsher impact on the poor, while others argue that carbon tax revenues could be used to lower other taxes, like income taxes or payroll taxes.

A carbon tax also makes many elected officials nervous: New taxes, fees, or whatever you want to call them, are rarely popular with voters. One notable supporter of carbon taxes — although he’s not running for office anymore — is Al Gore. He has promoted a carbon tax in addition to implementing a cap-and-trade program.

A cap-and-trade system requires an overall cut in emissions. Companies that cut emissions further than required are issued permits that they can then sell to companies that can’t or won’t cut emissions far enough.

Promoters of cap-and-trade say that the system provides an incentive — rather than a heavy-handed tax approach — to cut emissions because companies can sell the excess permits. It also requires a definitive limit on emissions, while some are afraid that a carbon tax would simply drive companies to pay the fines, pass the increase along to consumers, and keep on polluting. Companies like GE, DuPont, Duke Energy, and Toyota back a cap-and-trade policy, as do many environmental groups and labor unions. Presidential candidates like Hillary Clinton, John McCain, and Barack Obama also prefer it.

This fall, Congress could see a slew of measures to cut CO2. Senators Joe Lieberman (I-CT) and John Warner (R-VA) are planning to propose a cap-and-trade bill. Representative John Dingell (D-MI) is expected to introduce a carbon tax proposal — not in the hopes of actually passing it, but rather just to show how unpopular such a tax would be.

San Francisco Chronicle
Wall Street Journal, via Environmental Economics

The big news this week was that the U.S. House passed an energy bill that for the first time included a federal renewable energy standard (RES). This RES – an amendment to the energy bill sponsored by Representatives Tom Udall (D-NM) and Todd Platts (R-PA) – requires utilities to get 15 percent of their power from renewables by the year 2020. Other components of the House energy bill include:

• Moving $16 billion in tax incentives away from oil companies and putting it towards renewable energy.
• New energy efficiency standards for appliances and building codes.
• The creation of a Solar Energy Industries Research and Promotion Board to raise national awareness of solar energy options. The program would be funded completely by a portion of solar industry revenues, with no appropriations authorized.
• A modified 4-year extension of the wind power Production Tax Credit (PTC) that limits the credit to 35 percent of wind project costs.

Not in the bill is an increase in the Corporate Average Fuel Economy (CAFÉ) standards (a.k.a. “fuel efficiency”) that was a hot topic as the session came to a close. By avoiding a vote on CAFE standards, Democrats avoid public in-fighting with fellow Dems from auto industry states, notably Commerce Committee Chairman John Dingell (D-MI).

The Senate already approved an increase in fuel efficiency back in June, which will be just another piece of the Senate bill to be reconciled with the House version in conference committee this fall. In addition, the White House has threatened to veto any legislation containing a renewable energy standard.

Renewable Energy Access
The Sietch Blog
Yahoo News

They may not have been rocking out at Live Earth, but business leaders from 150 companies around the world – including 30 Fortune Global 500 ones - have called for action on global warming.

The leaders signed a declaration at the United Nations Global Compact Leaders Summit, committing themselves to cutting carbon dioxide (CO2) emissions from their products and services and to report annually on their progress. They also called on governments to agree as soon as possible on measures to secure climate market mechanisms for after 2012, when the Kyoto Protocol expires.

But don’t presume that global warming is necessarily seen as a threat to businesses. On the contrary, many view the problem as an enormous opportunity for innovation, profits, as well as saving the planet and its people. So noted the executive director of the UN Environment Program, Achim Steiner:

"In terms of global warming and climate change, the key to rapid progress is in part premised upon getting markets and, by implication, businesses to become not skeptics and doubters and therefore brakes on progress, but rather catalysts, innovators and multipliers for a transition to a more energy efficient economy.”

Companies aren’t about to go gangbusters on energy innovation and carbon-cutting technology without some stable rules and policies, however. Mindy S. Lubber is the president of Ceres, a coalition of investors and environmental groups that work with companies to address issues like global warming. She explained on WorldChanging.com:

“…investors tend to weight their equity portfolios towards companies focused on succeeding in stable and predictable markets, not on those gambling on doubtful, uncertain regulatory landscapes. The current lack of a coherent, comprehensive U.S. strategy for addressing climate change is hindering the ability of American businesses to invest and innovate…And that means we need – some businesses will argue, they crave – a national climate change policy with specific, mandatory limits on carbon emissions.”

Many companies around the globe have begun to tackle global warming but can and want to do more. Although each of us can screw in a CFL bulb or drive a fuel-efficient car, we will see the swiftest action on global warming when government sets the rules of the CO2 market and businesses - and their consumers - fully take advantage of those opportunities.

CSR Wire
Voice of America
WorldChanging.com

Oregon’s legislative session went out with a bang. Building on the renewagble energy standard passed earlier this summer that requires 25 percent of energy to come from renewables by 2025, this week Governor Ted Kulongoski signed key solar power policies that will continue to encourage solar manufacturing and solar energy systems in the state.

For starters, the tax credit for solar power projects jumped from 35 percent of project costs to 50 percent. A tax exemption passed for solar net metered systems, and a provision requiring public buildings to set aside 1.5 percent of their construction budget to fund onsite solar power technologies also made it through.

Jon Miller, executive director of the Oregon Solar Energy Industries Association, explained why solar power is good for Oregon:

It's another example of how we're growing manufacturing in the northwest. We're now a powerhouse in the United States in solar manufacturing. Oregon's established and educated semiconductor workforce makes it a natural fit for the solar PV industry.

Solar business is booming in Oregon. Indeed, two manufacturers (Germany-based SolarWorld AG and California-based Solaicx) have already committed to the state, and overall the solar industry is growing more than 30 percent annually. Oregon ranks 5th in the U.S. for solar hot water systems and in the top 10 for photovoltaic (PV) systems. By 2009, Oregon is expected to be the largest producer of PV cells in the U.S.

Renewable Energy Access

Late last week in a vote of 65-27, the Senate passed an energy bill that made progress in some areas but was stripped down in others.

The crown jewel was certainly a near-40 percent increase in fuel efficiency requirements for vehicles by 2020. For the first time, SUVs, vans, and small trucks fall under the same regulations as passenger cars. Each vehicle group must achieve a 10 miles per gallon (mpg) increase in fuel efficiency by the target year, with an overall average requirement for the manufacturer’s fleet increasing from 27.5 mpg to 35 mpg. The current requirement has not changed in nearly 20 years.

Senator Carl Levin (D-MI) fought the standards and wanted to instead pass a more auto industry-friendly fuel requirement. But he admitted that one reason for his effort’s failure was the growing concern over global warming. From the Associated Press:

“‘The public wants action, rightfully so, on global warming,’ Levin said in an interview. And he added, the auto industry is ‘a juicy target.’”

Although an improvement in fuel efficiency is a long-overdue step forward, some perspective is required. Watthead over at Cleanergy.org points out the 35 mpg standards by 2020 is about where China and Japan are today, where the European Union was five years ago, and where states that adopt California’s tailpipe standards will be in five years.

Other achievements in the energy bill include:

• A 36 billion gallon by 2022 renewable fuels standard, including the specification that at least 60 percent of the requirement must be met by “next generation” biofuels like cellulosic ethanol. Cellulosic ethanol is not made from corn but rather other plant materials like switchgrass.

• New appliance and lighting efficiency standards, as well as a requirement that the federal government accelerate the use of more efficient lighting in public buildings.

• The development of an action plan (but not a requirement) to cut oil consumption by 2.5 million barrels per day by 2017. That’s roughly the same as the total current imports of oil from the Middle East. The Office of Management and Budget is responsible for the plan.

Here’s what didn’t make it in the energy bill:

• No support for coal-to-liquids synthetic fuel production and no support for expanded coal, nuclear, or oil use. So although some key pieces of progressive clean energy legislation were left out, at least we’re (so far) not expanding more of our dependence on dirty fossil fuels.

• No package that would have extended production tax credits and other financial incentives and offsets for renewable energy. The $32 billion package, previously approved 15-5 by the Senate Finance Committee, also included a repeal of tax credits for major gas and oil companies' domestic manufacturing activities.

• No national renewable energy standard that would have required 15 percent of our energy to come from clean, renewable sources by 2020.

The Senate energy bill now awaits action in the House. The House Ways and Means Committee passed a tax provision last week that includes support for wind and biodiesel. Speaker Nancy Pelosi (D-CA) and Representative Edward Mackey (D-MA) have both agreed that gasoline use must be more efficient and plan to work to ensure that the House’s action mirrors the Senate’s.

Associated Press, via CIO Today
BioCycle
Cleanergy.org
Sioux Falls Argus Leader

If lawmakers on Capitol Hill want to cut carbon dioxide (CO2) emissions that cause global warming, they will have to face another giant to make real progress: A government program, hailing from the Depression era, that sends billions of dollars of low-interest loans to rural areas to build coal plants. The Rural Electrification Administration was created in 1935 by President Franklin Roosevelt to bring electricity to U.S. farms. The mission has been accomplished, but the money keeps coming.

Rural electric cooperatives ("co-ops") are nonprofit organizations that distribute electricity and are owned by their customers. There are more than 800 of them across the U.S., and more than 50 of them own a power plant. The co-ops plan to spend $35 billion to build old-fashioned coal plants over the next 10 years. A sobering reality check: That’s enough to offset all state and federal efforts to cut CO2 emissions over that time.

The Office of Management and Budget wants to end the loans for new power plants and limit the ones for transmission projects in the most remote areas. But the National Rural Electric Cooperative Association is a powerful lobby, and sent 3,000 members to Capitol Hill last week to keep the lending program rolling, arguing that the new coal plants are needed to keep energy cheap and reliable.

Glenn English, chief executive of the National Rural Electric Cooperative Association, pointed out that taxable utilities get tax breaks to encourage renewable energy projects and efficiency measures, but rural co-ops can’t. He wants Congress to give the nonprofit co-ops incentives too, like no-interest loans.

Besides political influence, co-ops often carry a lot of clout in their communities because they are more involved than just distributing electricity. English explained that one co-op reopened a gas station that went out of business. Another bought and kept open the local Dairy Queen.

Others argue that many of the co-ops shouldn’t qualify as rural anymore because of their expansion into densely populated zones, like Dallas-Fort Worth area and Atlanta. Additionally, the low-interest money they receive removes any incentive to promote energy efficiency or go after renewable resources. In fact, rural co-ops get on average 80 percent of their electricity from coal, compared to 50 percent with the rest of the country. Their energy demand is also growing at twice the national rate.

This is going to be a tough political issue for Congress to tackle. Both sides may have valid points, but the system must be restructured to be a more efficient process that emphasizes clean, renewable, local energy. If not, than all the state and federal goals, programs, and initiatives that aim to cut climate change emissions will be simply blown away.

Washington Post

Last week, Bill Chameides, chief scientist at Environmental Defense, talked with Ira Flatow on National Public Radio’s Talk of the Nation: Science Friday about market-based policies to cut carbon dioxide (CO2) emissions, a big contributor to the global warming problem.

Chameides argued that the fastest, most cost-effective way to reduce CO2 emissions is with a policy called cap-and-trade. This system tells big emitters – like powerplants, automobile manufacturers, etc – that they have to cut their CO2 emissions by a certain amount by a certain date. For companies that make deeper cuts than what is required, a credit is issued and can be traded (sold) to other emitters that don’t meet the targets. With this system, explained Chameides, government plays “a fairly light role” by ensuring that technologies are valid and are reducing emissions, while carbon dioxide becomes a commodity and sold on the open market. Companies are rewarded for innovations that take them beyond targets set by lawmakers.

Cap-and-trade isn’t a new concept: A cap-and-trade policy was enacted with the 1990 Clean Air Act amendments to cut emissions that cause acid rain. According to the current Bush Administration, the cap-and-trade system has been a “resounding success,” cutting annual sulfur dioxide emissions ahead of target dates and at one-third of the expected cost.

When a caller pointed out the lack of action from the federal government on CO2, Chameides noted that states have taken the initiative. For example, the Regional Greenhouse Gas Initiative (RGGI) is an effort by Northeastern and Mid-Atlantic states to reduce CO2 emissions. RGGI employs a multi-state cap-and-trade program and requires electric power generators to make the cuts. California is also implementing a cap-and-trade system (one that targets all big emitters, not just the electricity sector, and which covers all six major global warming gases, not just CO2), and Europe’s cap-and-trade came into effect over two years ago. As important as it is for states to forge ahead, Chameides is concerned that without leadership from the federal government, we won’t get the cuts we need and we’ll fall behind in renewable energy innovation:

“Europe is way ahead of us in renewable energy technology and that’s where we’re really going to have to play catch up…If we wait long enough, we’ll have to be an importer of these technologies instead of an exporter.”

There are several bills in Congress that have cap-and-trade policies, and many see a “clear preference” for this approach among utilities, compared to a carbon tax. In fact, 91 percent of California businesses in one survey responded that a cap-and-trade policy was the best way to meet CO2 reduction goals. Chameides argued that a carbon tax – besides being “a political nonstarter” – doesn’t allow for measurable reductions, and the government sets the price on CO2 rather than the marketplace. The best way to slow global warming, spur technological innovation, boost our economy, and clean up our environment is with a measurable, market-based system like cap-and-trade.

UPDATE: See Maria Energia for another point of view: Fareed Zakaria of Newsweek argues that a global carbon tax is the most efficient, market-friendly way to cut emissions that cause global warming.

Business Wire, via Find Articles
Climate Action Network Europe
MarketWatch
National Public Radio
Regional Greenhouse Gas Initiative
Terra Daily
WhiteHouse.gov

Pennsylvania – quite the forward-thinking state when it comes to renewable energy development, especially wind – has passed a new state law ruling that wind turbines, like any other business equipment, cannot be counted by tax assessors.

The controversy began when Wayne County considered the wind turbines on the Waymart wind farm to be power plant buildings, rather than business equipment. At that time, state law exempted the value of business equipment, but stated that buildings surrounding power plant structures could be taxed. When the law was written, no one considered that energy could be made without a traditional building around the source, and so the confusion and lawsuit began.

Critics point out that regulatory uncertainty like this one and the undulating production tax credit are hampering wind’s growth. Although wind is the fastest growing energy source, it could be growing even faster with a stable and uniform regulatory climate. Stay tuned to the next round of legislative sessions to see what states do to encourage renewable energy development and move toward a more secure and efficient energy system.

Photo credit: NREL/DOE

AP: PA wind farms get help from new tax law

ABC News: Wind is fastest growing energy resource