Reducing regulatory interference and barriers to clean energy — all at once

Creating a 21st century electrical grid is finally a priority and the possibilities seem enormous. Despite the grand potential, though, many of the most important decisions will involve painstaking regulatory and tax reform rather than sweeping mandates. What's politically intriguing about these reforms is that at least in principle they ought to appeal across ideological lines: Conservatives like less regulation and more rational tax policy, and progressives like removing barriers to renewable energy, so this seems like fertile territory for odd bedfellows.

In that vein I recommend two pieces, both adapted from reports from the conservative Manhattan Institute.

The first is "Growing NYC's Grid," an excellent piece in the New York Post from Hope Cohen of MI's Center for Rethinking Development. It notes a simple barrier to expanding the city's grid: transformers, the facilities that take high-voltage juice from transmission lines and convert it to lower-voltage juice for distribution lines, can only be built on industrially zoned property, which is increasingly rare and expensive in urban areas.

But today's transformers are smaller, quieter, and cleaner than they were when zoning regs were passed, and can be integrated into the urban landscape. (There's one in the base of 7 World Trade Center.) A simple regulatory change -- allowing transformers in commercially zoned areas -- can boost the reliability and efficiency of NYC's power. Imagine how many more rules and laws there are like this across the country.

For more on this, see Cohen's full report, "The Neighborly Substation: Electricity, Zoning, and Urban Design."

House Speaker says she has the votes for a cap-and-trade bill, but …

House Speaker Nancy Pelosi on Monday said she has enough votes in the House to pass cap-and-trade legislation aimed at curbing greenhouse-gas emissions, but she's not certain Democrats will be able to do that in 2009.

"I'm not sure this year, because I don't know if we'll be ready," Pelosi said in a press conference yesterday. "We won't go before we're ready."

E&E reports ($ub req'd):

Pelosi acknowledged the December deadline looming over U.N. negotiations toward a new international climate change agreement. "We're sensitive to Copenhagen and the rest of that," she said, referring to the Denmark capital that will host the next annual U.N. conference. "And it's a very high priority for me."

But Pelosi said she could not guarantee that President-elect Barack Obama would be able to sign a cap-and-trade law before Copenhagen.

"I would certainly hope so, but I can't tell you that that is the case right now," she said. "Of all the bills that we have done, you know I sort of know the policies, I know what the possibilities are, this is the most, should we say, controversial, not controversial, mysterious."

Pelosi added that any legislation on cap-and-trade needs to be crafted carefully. "We have to do it right. I don't think we can take any chances. So this is going to take some very thorough scrutiny as to how we go forward."

Transit budget cuts are disasters in the making

Here is the lowdown: Transit fares generally don't cover operating expenses. Transit systems do not, unfortunately, turn a profit. In many conservative circles, this is considered a damning indictment of the whole idea of public transit -- which is itself a damning indictment of the analytical powers of the guilty conservatives.

We should expect those who benefit from a technology to pay for it. This is the basic idea behind a market economy -- people aren't in the habit of giving away something for nothing, and the best way to allocate scarce resources is to let buyers and sellers agree upon a price, which is then paid by the buyer who, we expect, will benefit from the purchase.

But sometimes, when a buyer decides to spend money on a good or service, other people benefit as well. If I build an exceptionally attractive house in a neighborhood, I benefit, but so too do my neighbors, who get to look at the house and whose own homes may appreciate thanks to their location in what is now a more attractive neighborhood. When I pay college tuition and get a degree, I benefit, but so too do future colleagues, who will enjoy greater success as part of a highly educated labor pool. If government does nothing in such situations, then we will get the level of attractive homes or college educations that suits the direct beneficiaries of such investments -- but that doesn't mean that we have provided the number that maximizes the benefit to society as a whole.

Parsing Section 451 of the House stimulus package

Here are some thoughts on the American Recovery and Reinvestment Act recently unveiled by House leaders -- specifically, the appropriation of Section 451 (aka "Subtitle E") from the 2007 Energy Bill.

For obvious reasons, we've been following this bill very closely, which not only provides $10 per MWh to waste heat recovery and high-efficiency cogeneration projects, but it also provides a nice suite of carrots to induce the states to reform their paleolithic electricity regulatory laws. Often these laws have long been perhaps the biggest barrier to reducing the carbon footprint of U.S. electricity generation and distribution.

For less obvious reasons, it's hard to get programs like this through the Congress. This is the result of some peculiarities of the way the federal government makes decisions to spend money:

1. Tax bills require one vote to enact (OK, technically three, since they have to be approved by both houses and then signed by the President, but it is a single vote on a single decision throughout). All other fiscal bills require two votes: the first authorizes the funding, and the second appropriates the money through the budget process. Since no vote is certain, this makes it much easier for regulators to get things done by tinkering with tax policy than through any other measure. In no small part, this is why the tax code is so full of complexity, loopholes, and social-engineering run amok. But I digress.


2. Any appropriation process must be "scored." This is the process by which the Congressional Budget Office estimates the cost of the legislation to the Treasury for the purpose of figuring out whether we can afford it. That's quite reasonable, but the nature of the process is such that it tends to ignore most of the upside because it does not readily differentiate between good and bad investments. (It is as if you made a decision to buy a stock based on the price per share without any consideration of whether it was likely to rise or sink in the future.) This becomes especially problematic when the economy sours, as the stimulative effects of investments are not readily quantified or evaluated precisely at the time when they are most needed.

Frustrating as this may be, the good news is that the limitations are well-understood by those inside the Beltway. Setting aside what the scoring rules say, here is what Section 451 will actually do for the U.S. economy ... with lessons broadly applicable to investments in all flavors of enhanced resource efficiency.

The VC models are to blame, not the green technologies

It’s worth reviewing this great presentation from the folks at @Ventures: [vodpod id=Video.16097730&w=425&h=350&fv=] If they’re right — as I believe...

Senate Environment Committee gets rolling in 111th Congress

Senate Environment and Public Works Committee Chair Barbara Boxer (D-Calif.) said on Wednesday that she has been consulting with incoming Obama administration officials on a climate plan, though she didn't give a sense of when to expect a new bill this year.

"I will be putting out basic principles shortly," Boxer told reporters. "I wanted to have some consultation [with the incoming administration]." As for when to expect a new bill, Boxer said only that her committee will begin working on one "as soon as it makes sense."

She was also asked about what sort of green stimulus to expect in the upcoming economic package, and said that while she didn't give specifics, she foresees it including green measures. "I'm very optimistic we'll have some green jobs in this proposal, but I can't say how many."

Boxer's committee kicked off the 111th Congress on Wednesday with a briefing on "Investing in Green Technology as a Strategy for Economic Recovery," featuring New York Times columnist Thomas Friedman and clean-tech investor John Doerr, a partner at legendary venture capital firm Kleiner Perkins Caufield & Byers. The two guests urged the committee to push for a price on carbon and massive investments in the research and development of new energy technologies.

Climate policy can be fair to families all across the country

As regular readers know, we’ve done a bit of cheerleading for the “cap and dividend” concept, which is also called...

Toward a less efficient and more robust food system

Produce at a farmer’s market in North Carolina Courtesy RICHIR on Flickr Editor’s Note: This is a version of an...

An argument for separating climate action and economic stimulus — sometimes

The January 12, 2009 issue of The New Yorker includes a well-written and in some ways inspiring article by Elizabeth Kolbert, profiling Van Jones, founder and president of Green for All. In the article, "Greening the Ghetto: Can a Remedy Serve for Both Global Warming and Poverty," Kolbert includes the following passage:

When I presented Jones's arguments to Robert Stavins, a professor of business and government at Harvard who studies the economics of environmental regulation, he offered the following analogy: "Let's say I want to have a dinner party. It's important that I cook dinner, and I'd also like to take a shower before the guests arrive. You might think, Well, it would be really efficient for me to cook dinner in the shower. But it turns out that if I try that I'm not going to get very clean and it's not going to be a very good dinner. And that is an illustration of the fact that it is not always best to try to address two challenges with what in the policy world we call a single policy instrument."

That brief quote generated a considerable amount of commentary in the blogosphere, much of it negative, and some of it downright hostile. This surprised me, because I didn't consider the proposition to be controversial, and I had chosen my words carefully, simply stating that "it is not always best to try to address two challenges with ... a single policy instrument." Two activities -- each with a sensible purpose -- can be very effective if done separately, but sometimes combining them means that one does a poor job with one, the other, or even both.

In the policy world, such dual-purpose policy instruments are sometimes a good, even great idea (gas taxes are an example), but other times, they are not. Whether trying to kill two birds with one stone makes sense depends upon the proximity of the birds, the weapon being used, and the accuracy of the stone-thrower. In the real world of important policy challenges -- such as environmental degradation and economic recession -- these are empirical questions and need to be examined case by case, which was my point in the brief quote. Since my further explanation of this point in the green jobs context (in an interview that lasted 30 to 60 minutes -- I don't recall) did not find its way into Ms. Kolbert's article (no fault of hers -- she had plenty of sources, plenty of material, and limited space), let me provide that explanation here.