Paolo von Schirach
December 25th, 2020
WASHINGTON — As president-elect Joe Biden announced his team in charge of climate change and energy, it seems we are still at the virtue signaling stage. As expected, Biden nominated people with unassailable green credentials, starting with former Secretary of State John Kerry who helped shape the 2016 Paris Agreement. Beginning on January 20, 2021, Kerry will fill a new “Climate Envoy” cabinet level position, coordinating and directing all climate change issues for the Biden administration.
America will go green
I fully understand the intention to convey to the American electorate and to the world in general that the Trump administration “climate denial” beliefs were a temporary aberration. The new message is that from now on America is and will be an active player when it comes to international efforts to cut down emissions at the source of global warming.
Regulations alone will not do the trick
That said, I am concerned that these green technocrats will focus primarily on the tools they have, that is imposing mandates through regulations, (it will be hard to pass significant green legislation in this deeply divided Congress), in order to speed up the conversion leading to a non carbon economy. And this would be unfortunate, simply because regulatory tools by themselves are inadequate.
We need new technologies
Indeed, contrary to popular narratives, America’s inability to properly deal with the global warming challenges we are facing is not caused mostly by entrenched fossil fuels lobbies and their Republican defenders in Congress who cleverly place obstacles in the way of green progress.
Yes, the fossil fuels lobbies do play a role. But the real problem is that America will be able to make fast progress on its way to becoming green only when we shall have truly cost-effective technologies that will be able to successfully replace the carbon based systems we have now, without any significant economic penalties in terms of higher energy cost for both corporations and consumers, and loss of productivity.
The problem is that the non carbon energy and industrial technologies we have today, while vastly better and cheaper than what we had only a decade ago, are still not very efficient and cost-effective. They are inadequate and still too expensive. If the Biden team using its regulatory powers will force their adoption at the current stage of development, this “solution” will not allow us to get to a rapid and efficient transition away from fossil fuels.
No storage systems for electricity produced by renewables
Case in point, solar and wind power generation has become much cheaper and more effective. However, a dramatic renewable energy scaling up is hampered by the lack of energy storage systems (think of giant batteries or something equivalent) that will guarantee uninterrupted electricity supply when the sun does not shine and the wind does not blow. On account of this unsolved storage issue, solar and wind today require back-up systems powered by fossil fuels. The need for back ups means added costs and lowered efficiencies.
Until scientists invent and build commercially viable energy storage systems, the full potential of renewables cannot be displayed. And electricity production is only one part of the lack of critical innovation problem. Many key industries, from cement to steel to petrochemicals, use technologies that produce great amounts of emissions. To date, we simply do not have viable alternatives to these technologies.
We need innovation…
Put it simply, we need dramatic innovation across many sectors in order to get from a carbon dependent to a non carbon economy. Using regulations and mandates to force the adoption of the imperfect tools we have developed thus far, simply because Washington is and will be under pressure to demonstrate that “we are doing something”, will cost a lot and will not help us much in our effort to substantially cut down emissions while retaining a vibrant economy.
Do not get me wrong. We do have some tools, such as electric vehicles, solar and wind power. For sure, due to the persistence and ingenuity of many scientists and entrepreneurs, they are getting better. But, at the moment, their cost is still too high and their performance too low in order to become viable alternatives across the board.
In order to get there, it will take truly cost-effective alternatives, whose adoption will be a no brainer for anybody looking at value for money (irrespective of their impact on CO2 levels in the atmosphere). In order to begin transforming our 20 plus trillion dollar economy (still based on dirty technologies relying on dirty fuels) into a super efficient green giant, we need breakthrough innovation that we simply do not have today.
For example, only once we have a $ 20,000 Tesla (or equivalent) that can travel 600 miles on a single battery charge we shall see the mass adoption of electric vehicles. The electric vehicles we have now are interesting. But they are not transformative.
…In many sectors
And this is not just about oil and gasoline and electricity still produced by natural gas and coal. It is about large, high emissions industrial sectors like cement, steel, petrochemicals, and more. In order to make real progress in our efforts to reduce greenhouse gases, we need innovations that will allow us to radically reengineer most of our industrial base, on top of the transportation and power generation sectors.
This is an enormous challenge. Having good people with unmistakably good green credentials in charge of the policy-making process in Washington –people who seriously believe that we have to do a lot more, starting now– is important. But well intentioned technocrats do not do magic. They cannot will critical transformative innovation into existence.
What can Washington do?
So, what can the US Government do? It can still do a great deal. Many envisage a two pronged approach. Number one: create real federal incentives to difficult open-ended research, via substantial public funding. Number two: enact a carbon tax that will reflect the true cost of carbon-based fuels and technologies in terms of additions to harmful emissions, air quality impact, and health hazards. This tax will signal producers and consumers that it is time to reduce reliance on fuels and processes whose real cost to our society is not reflected in their price.
Boost government funded R&D
Regarding the first point, Washington must launch a major publicly funded R&D effort aimed at boosting basic research in difficult and unproven areas affecting energy and various high polluting manufacturing technologies. Washington can do much more to spur innovation by supporting new research efforts that commercially driven enterprises shun because they are not persuaded that spending on such research can lead to money-making solutions within a realistic time frame.
Granted, much of this new government funded basic research will probably yield little, or nothing at all. But we have to try, simply because we know that what we have now will not do the job. With Washington in the lead, America must launch a massive multi-year national effort aimed at discovering and then refining new modalities to power our economy and new, cost-effective, non polluting ways to make things.
If Uncle Sam agrees to bear the cost of major risky efforts that the private sector will not engage in, this may change the mood of the nation. Scientists eager to pursue interesting but unproven new concepts will get funding. Many new wheels will start turning. New connections and synergies will be created. In time, valuable green innovation will be produced and eventually adopted.
The second component of this strategy will be a carbon tax. Of course, new tax laws will require the creation of a bipartisan congressional consensus uniting Democrats and Republicans. A very difficult but not impossible objective. Washington should match new R&D spending into unexplored or ignored fields of research with a reasonably high carbon tax that will signal to producers and consumers that it is time to start moving away from emission producing technologies and products. If properly modulated, a combination of government money hopefully leading to valuable innovation and a carbon tax that clearly signals that we have to start shifting away from dirty technologies may do the trick.
Mandates alone will not do
The alternative is not very promising. The alternative is to impose more and bigger mandates that will force energy producers, utilities and various industries to reduce emissions by adopting as yet inefficient and therefore very expensive solutions. While this approach may yield significant emissions reductions, this will be done in a non cost-effective manner, this way hampering the overall US economy and its vibrancy. As a result, scarce capital will have to be devoted to expensive conversions that will do something, but not enough to transform our gigantic economy into a nimble green machine.
I am not suggesting that throwing billions of US tax-payers dollars into unproven fields of research, in combination with a carbon tax, will magically and quickly produce the innovation we need. Still, this approach will stimulate research and new efforts that may indeed produce something valuable, at some point. Imposing green standards by regulation will also produce some results. But the unintended effect will be the stifling of the entire US economy without getting us to the green transformation we are seeking.
|Paolo von Schirach is the President of the Global Policy Institute, a Washington DC think tank, and Chair of Political Science and International Relations at Bay Atlantic University, also in Washington, DC. He is also the Editor of the Schirach Report.