Moving clean energy and efficiency to the foreground

The energy bill passed by the Energy Committee last year is a credible effort. Sens. Bingaman and Murkowski are to be lauded for the work it took to put it together. But as they both recognize, much more needs to be done. The political climate is ripe for greater ambition and a host of good ideas on energy, many with demonstrated bipartisan appeal, have been put forward recently.

An effective starting point for the effort can be found in the “practical energy plan” being developed by Sen. Dick Lugar, who, like all of you, is a long-time Senate bridge-builder. His plan is admirable for its simplicity and the clarity of its goals: capturing energy efficiency, diversifying and cleaning up the electricity sector, and reducing foreign oil dependence. Each of those goals is served by a range of policy instruments, from building efficiency standards to loan guarantees for clean energy generators to higher CAFE standards. It’s a strong foundation that should be built on in a few important ways.

1. Strengthen the energy efficiency title.

Efficiency should be at the heart of any bipartisan effort: it saves consumers money, creates jobs, benefits every single congressional district, and can be achieved quickly. As a comprehensive new report from the World Economic Forum and IHS Cambridge Energy Research Associates puts it: “Of all the energy options, [energy efficiency] can provide the biggest ‘amount’ of energy in the near and medium term while contributing to reductions in greenhouse gas emissions.” Strong energy efficiency provisions can easily save consumers more money than a price on carbon would cost them; most people, particularly low- and middle-income Americans, would come out ahead.

The most important efficiency provision to add is a separate, free-standing energy efficiency resource standard (EERS) to complement the clean energy standard. It would require that utilities satisfy a percentage of new demand with efficiency programs of the sort that have repeatedly demonstrated their effectiveness. The American Council for an Energy Efficient Economy has done extensive modeling work on this subject and found that even a modest, easily achievable national EERS has the potential to save American consumers billions of dollars and create thousands of jobs. An ambitious EERS — say, 20 percent by 2020 — can do even more. It’s the lowest hanging fruit in energy policy and can benefit every region and every state.

Other energy efficiency bills focused on the building sector have emerged recently, backed by the Obama administration and several senators. The Home Star and Building Star programs would offer consumers and businesses incentives to invest in energy efficiency retrofits, while creating much-needed jobs for the struggling construction trades. Property-assessed clean energy bonds (so-called PACE programs) remove one of the primary barriers to cost-effective efficiency investments: the steep up-front costs. They have proven wildly popular in a growing number of cities and states. The Rural Energy Savings Program recently put forward by a bicameral, bipartisan group of lawmakers (including Sen. Graham) would extend the same employment and money-saving benefits to rural areas.

More ideas like this emerge every week, as legislators’ eyes open to the win-win potential of energy efficiency. It can serve as the heart of your bill and as common political ground.

2. Strengthen the clean energy standard.

Just this week, a bipartisan coalition of 29 governors joined in a call for a renewable electricity standard (RES) of 20 percent by 2020. The Department of Energy found that an RES of 25 percent by 2025 is both affordable and achievable, and that’s with fairly some pessimistic projections of scale and innovation.

Unfortunately, the RES in the Energy Committee bill — 15 percent by 2021 — would do little to boost renewables above business as usual, according to both ACEEE and the Union of Concerned Scientists. The politics of clean energy have been vexed because some senators, particularly from the Southeast, believe their states have little access to clean energy and will end up subsidizing other regions. This is simply mistaken. As an analysis (PDF) from the Southern Alliance for Clean Energy shows, Southern states have access to copious biomass, along with plentiful solar, geothermal, and offshore wind energy. (West Virginia’s Joe Manchin is part of the coalition of governors.)

Further support could be built by allowing some nuclear power and coal with carbon sequestration to qualify under a broader clean energy standard, of the sort Sens. Lugar and Graham have proposed. If those sources are permitted, however, their contribution should be capped; genuinely renewable sources deserve special consideration.

3. Address the legacy fleet of dirty U.S. coal plants

One of the biggest impediments to the growth of clean energy is America’s fleet of aging dirty coal plants. Just under 10 percent of U.S. power plants produce fully half the power sector’s carbon pollution. Of those plants, 83 percent were built 30 or more years ago. That same group of decrepit plants also produces a disproportionate share of particulate emissions and mercury pollution, at substantial public health cost.

Because they are fully amortized and face no pollution controls (they were “grandfathered” under the Clean Air Act), the energy these plants produce is extremely cheap. For that reason, they have been run more intensively the last 20 years. For the same reason, no carbon price likely in the next 20 years will render them uneconomic. They must be addressed by regulation.

The best way to do this is via regulations of greenhouse gases by the EPA. Those regulations are the subject of heated controversy; legislators from energy- or manufacturing-intensive states are concerned that they will be intrusive and expensive. (Less widely understood is the fact that a few simple legislative modifications to the Clean Air Act could allay those fears. The threshold for a regulated entity could be raised to 25,000 tons, or higher, to insure that only the biggest polluters are subject to regulation. The vexed question of what constitutes “best available control technology” under the Clean Air Act could be settled by Congress in a way that balances economic and environmental concerns.)

If, as is rumored, EPA authority over greenhouse gases is pre-empted by your legislation, Congress will still needs to address the problem. Steadily rising plant-by-plant performance standards would prompt utilities to upgrade or close those plants. Alternatively, T. Boone Pickens and Ted Turner have proposed a “cash for coal clunkers” program that would effectively buy out the oldest, dirtiest plants.

4. Pick the best of the rest

There are plenty of other worthwhile provisions in circulation, in the Energy Committee bill and elsewhere. They address the need for bulked up energy transmission and a smarter grid; the need to establish institutions (like a Clean Energy Bank) to provide stable financing; the need to bring utility regulations into the 21st century. Many of these ideas have, quietly and without fanfare, gathered bipartisan support. Look outside the conventional channels and conventional ideas. Beyond the somewhat stale thinking in the Beltway, many of America’s brightest minds are furiously attacking this problem. Unleash them!

In long-overdue conclusion

America is ready for clean energy. A vast amount of private capital is being held back as investors wait for clear rules. The dispute over carbon pricing should not be permitted to cause further delays, concessions, or trimmed ambitions. The smarter path forward is to establish a minimal or slowly phased in carbon price, acceptable to most industries and legislators, along with a framework whereby it can be raised in the future. With that contentious debate behind you, you can turn to crafting the ambitious clean energy bill for which the American people have unambiguously voiced support.