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Clean-Energy Wish List: Six Federal Policy Actions to Ensure U.S. Leadership

Ron Pernick

As we move toward climate talks in Copenhagen, and energy policy is being debated and formulated within the Senate and House, I thought it was a good time to take a look at my own clean-energy policy wish list. In a recent Clean Edge/Green America report, we highlighted five financing models that could serve the U.S. on the capital investment side of the equation. But to remain competitive on the global clean-energy playing field, and to ensure our status as the world's preeminent innovation nation, the U.S. must implement aggressive federal policy and regulatory actions.

Here are six federal policy actions that I believe would go a long way in moving the clean-energy needle forward -- and ensuring America's status as clean-tech leader, rather than laggard.

1) Enact a Federal Renewable Energy Standard (RES). For the past decade, states have been in a leadership role when it comes to renewable energy standards (RES) and renewable portfolio standards (RPS). California Governor Arnold Schwarzenegger recently issued an executive order to increase the state's RPS to 33 percent by 2020. While I want to guarantee that states continue to have the right to manage and implement their own standards, a federal RES would go a long way in providing guidance and guaranteeing that more states join the movement. We believe that a minimum federal RES of 20-25 percent by 2020 or 2025, designed with enforcement mechanisms -- real incentives for succeeding and penalties for failing -- is doable and desirable. And renewables must be clearly defined. There's a reason why 26 states out of 29 with RPS, like California and Illinois, don't include nuclear power and "clean coal" in their standards toolkit. I advise the U.S. federal government do the same.

2) Ensure Government Procurement of Clean Energy, Green Buildings, and Energy Efficiency. The federal government has often been a leader in moving markets via its procurement decisions. It has happened with aerospace, transistors, and other technologies in the past. As one of the largest single purchasing entities in the world, its purchasing decisions can have a significant impact on success vs. failure for an industry. Recently, the federal government has made some significant strides in aligning its purchasing with sustainable practices, like Obama's recent energy efficiency, resource conservation, and sustainability directive for federal agencies. But now government agencies must not only create their own plans, but meet targets, offer transparent information, and influence suppliers. They would do well to take a page out of Wal-Mart's current sustainability initiatives, in which vendors need to supply to certain standards or get out of the way.

3) Overhaul energy subsidies to shift from imported fossil fuels to domestic clean energy. Historically, the U.S. has supported energy industries that are already relatively mature. The U.S. still provides hundreds of millions of dollars in subsidies to oil and gas industries that are controlled by some of the wealthiest companies on the planet. I believe that the federal government should reassess this focus on supporting profitable fossil fuel industries, and shift these subsidies to the industries of the future: solar, wind, geothermal, energy efficiency, and the like.

4) Improve Energy Efficiency Standards Across the Board. Energy efficiency, often called the "fifth fuel," is usually the least expensive option for reducing energy demand. The federal government can go a long way in reducing energy use, greenhouse gas emissions, and U.S. reliance on foreign fossil fuel supplies by setting aggressive efficiency standards for vehicles, buildings, appliances, HVAC, industrial motors, and more. Many of the energy efficiency provisions in the Waxman-Markey (ACES) bill have been hailed for their job-creating, energy-reducing impacts -- and I agree that this is one of the best areas to focus efforts.

5) Put a Price on Carbon. For a number of reasons, this remains the most contentious policy recommendation. But I see three major options that would begin to bring the U.S. into alignment with other nations that are supporting climate policies and working to cap emissions. The following ideas are not mutually exclusive -- indeed a combination of the following could go a long way in putting a price on carbon and setting an enforceable cap:
a. Implement a transparent cap-and-trade system that has checks and balances to guarantee that the system results in meaningful carbon reduction.
b. Deploy a carbon tax along with a clear and enforceable cap -- and make sure the tax is near revenue-neutral. In other words, after a set amount of money is funneled into clean-energy development and deployment -- say $15 billion per year for a decade -- return the balance of tax receipts to individual taxpayers.
c. Retain the right for the EPA to move forward with regulating carbon dioxide and other greenhouse gas emissions under the Clean Air Act -- just like it does with other pollutants. The Supreme Court has ruled that the EPA has the right to regulate greenhouse gas emissions, and we believe the tool should be used if necessary. It has worked effectively for reducing other emissions.

6) Support the Build Out of New, Reliable Electric Grids. The electric grids in the U.S. are outdated and deteriorating. By making the build out of new electric transmission lines and smart grids a national priority, the U.S. would be investing in our collective future. Policies would need to streamline and speed the process of building new lines to renewable generation sources -- and the federal government could play a supportive role in setting open standards for smart-grid devices and networks that make the grid more intelligent, efficient, and reliable. Industry and government groups played a central role in setting the open standards that enabled the build out of the Internet, and they can do the same thing for the smart grid.

I firmly believe that we can meet our future energy needs with conservation and efficiency; the build out of a smarter more reliable 21st century grid (including electrified transportation); and the deployment and integration of renewables such as solar, wind, and geothermal along with advanced energy-storage technologies. This is not some far flung pipe dream, but an achievable reality being pursued by smart, technologically savvy global stakeholders. But shifts in policy, like those highlighted above, will be required to meet these ambitious and critical national clean-tech goals. If the U.S. wishes to lead and innovate, the Federal government must act now.

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Ron Pernick is cofounder and managing director of Clean Edge, Inc. and coauthor of The Clean Tech Revolution.