PCAP’s Common Ground Series
This paper is one in a series of issue briefings the Presidential Climate Action Project is preparing for the presidential candidates and the next president’s transition team on issues where there is potential for bipartisan cooperation.
The United States has reached an inflection point in its energy mix and the infrastructure necessary to support it. Several disruptive forces are at work. We are being pulled toward a cleaner energy economy by new and increasingly competitive energy technologies that offer significant environmental, social, economic and national security advantages over the old. We are being pushed into a historic transition of America’s energy economy by a variety of risks and realities, among them the need to significantly reduce CO2 emissions from fossil fuel combustion; reduce the power system’s vulnerability to cyber-attack, service interruptions and extreme weather; protect public health from other energy-related air and water pollution; conserve essential natural resources including fresh water supplies; and respond to the growing desire of consumers to produce their own energy.
This inflection point offers a once-in-a-century opportunity to ensure that the world’s largest economy has the world’s most advanced, secure and sustainable energy system. It is an opportunity for the United States to make the transition to a clean energy economy – a goal that because of the risks of climate change must be accomplished more rapidly than any other major energy shifts in the history of industrial nations.
To seize this opportunity, we need public policies that encourage major private investment in infrastructure modernization, that remove perverse incentives and barriers to system modernization, and that more accurately assess the true benefits and costs of our energy options.
Most important, we need a comprehensive national energy plan to focus investments in energy infrastructure, to guide the diverse state and federal agencies that regulate the energy system, to identify critical needs for research and development, to acknowledge and mitigate risks to energy security, and to provide the policy certainty necessary for all stakeholders to help reinvent the power system.
Toward that end, the President of the United States should lead a transparent bipartisan process with full public participation to develop a national energy plan that has sufficient political support to survive changes in political leadership. Such a plan is not only desirable. The president is required by law to produce it.
“As we rethink our nation’s energy policy,” U.S. Sen. Lisa Murkowski, R-AK, wrote in 2013, “it is important to face questions about the risks of energy and resource development including questions about climate change. We need to discuss these questions openly and find common ground on prudent steps to take in the face of uncertainty.”i
Here are some of those questions:
- To what extent will our energy security require the continued or expanded use of conventional fossil fuels and nuclear power? What improvements in technologies and public
policies are necessary to accommodate these conventional energy resources in a clean energy economy?
- Given the costs of infrastructure modernization and the investments in technology necessary to avoid greenhouse gas emissions, will coal and natural gas be able to compete in the marketplace with inherently clean energy technologies?
- What should the balance be between central-station and distributed power production?
- How should the anticipated impacts of climate change be factored into infrastructure design, materials, and siting?
- How should we protect the energy system from risks that range from cyber-attacks to physical attacks, and from extreme weather events?
- To what extent should important externalities be internalized in our assessments of the benefits and costs of energy options? What are those externalities and how to do we quantify them?
- Based on true cost analysisii, what energy choices and supporting infrastructure provide the greatest economic, social and environmental benefits at least direct and indirect cost?
- What types of energy resources and technologies are necessary for the United States not only to remain competitive in the international economy, but also to lead the world by example in designing and building a sustainable energy system?
- Most important in the near-term, what is our goal and vision for the nation’s energy future? How can we arrive at a grid modernization plan that has sufficient public and political support to remain consistent through our frequent changes in leadership?
Vision and Goals
In the broadest sense, there are two competing visions for the future of America’s power sector: business as usual on one hand and a clean energy economy on the other.
Business as usual: This is the future created by the “all of the above” energy strategy currently supported by leaders in both political parties. We would continue aggressive production of oil, coal and gas for as long as these fuels are technically and economically recoverable. We would repair and expand fossil energy infrastructure. We would build new nuclear power plants and recommission old ones. We would be content to have solar, wind, geothermal and other renewable resources contribute to the grid, but in small numbers and without major efforts to expand their use. In short, we would repair and try to continue operating the electric power system we built in the 20th century.
A clean energy economy: This is the future created by a revolutionary transition to a clean energy resources and technologies. It requires that we either phase out carbon-intensive fuels or successfully mitigate their social, economic and environmental costs. Zero carbon, domestic and renewable resources such as solar and wind power, biofuels, geothermal energy and hydropower would dominate the energy mix for power generation. While clean energy technologies would continue to evolve, the shift to domestic renewable resources would minimize the likelihood that the United States would have to undergo the costs, dislocations and disruptions of another major energy shift in the future.
Western Clean Energy Advocates, a coalition of organizations working to build consensus on the energy future of the American West, describes the challenge that applies not only to the west but also to the entire country:iii
The western United States is at a crossroads. Wise electricity sector investment choices will lay the foundation for a robust, competitive and healthy west for generations to come. Unwise choices will leave western businesses at a competitive disadvantage in the global marketplace, western consumers with higher electricity bills and westerners of all walks of life with an unhealthy environment…
If no choice is made, investment will be driven by inertia rather than intention and the grid of 2030 and 2050 will look very much like the grid of 2010…Failure to make a wise, intentional choice now could saddle future electricity consumers with stranded costs, damage the natural environment, deprive job seekers of employment opportunities and leave western businesses with a grid that causes a competitive disadvantage in global markets. The choices made now will also affect the capacity of the West to reduce carbon emissions for decades to come.
A National Energy Plan
In separate issue papers, PCAP will go into greater depth about what America’s energy mix should be and what a national energy plan should contain. In short, we will recommend that the next president discard the “all of the above” energy strategy that leaders of both political parties currently embrace in favor of a “best of the above” energy policy based on intelligent choices and obvious needs – for example, energy supplies that are abundant, domestic, efficient, affordable, clean, environmentally benign, universally available, diverse and secure.iv
In regard to the energy infrastructure to support a clean energy mix, the national energy plan should:
- Define an energy mix and infrastructure to reduce the nation’s CO2 emissions at least 80% by 2050 compared to 1990 levels, and to get as close as possible to a carbon neutral energy system.v
- Include the ability to integrate and store electricity generated from non-distributable renewable resources such as solar and wind power.
- Accommodate distributed generation at multiple scales including the islanding of critical facilities such as hospitals, emergency response centers and water treatment plants.vi
- Set the goal of doubling the nation’s energy productivity by 2030 and making the United States the most energy-efficient economy in the world by mid-century.
- Give high priority to moving clean electricity from remote sites where it is generated to populated sites where it is consumed and to capturing the full potential of offshore wind.
- Include ongoing research and development to reduce the incremental costs of the 80% carbon-reduction scenario.vii
As many of our most prominent energy experts have noted, we already have the technologies and capital to create a clean energy economy; the missing ingredient is the political will to make tough but necessary decisions and to create a national energy roadmap with sufficient support to ensure policy stability through the nation’s frequent changes in leadership.
The Decline of the World’s Greatest Machine
America’s electric system has evolved over 130 years into a truly remarkable achievement. Little more than a century ago, most Americans could only dream about what an electrified nation would be like. Today, our power system has been called the largest interconnected machine on the planet and the “greatest engineering achievement of the 20th century” — high praise in a century that saw revolutionary advances in information technologies, air travel, and human space exploration.viii
By the beginning of this century, the U.S. power system was producing nearly 3,400 terawatts of electricityix in power plants fired predominantly with coal and nuclear fuels. Electricity was moved to consumers through more than 7 million miles of transmission and distribution lines that delivered $400 billion worth of electric power to nearly 140 millionx customers across the United States.
Even great machines age, however. They wear out and become substandard or obsolete when new and better technologies emerge. Eventually, it is no longer practical, optimal or cost- effective to continue repairing, rebuilding and expanding the last century’s power system.
That time has come. Our interconnected power system includes generation plants that became operational more than 30 years ago. By 2002, there was “growing evidence that the U.S. transmission system is in urgent need of modernization,” in the words of then-Energy Secretary Spencer Abraham.xi DOE has concluded that the U.S. electric grid is “aging, inefficient, congested, and incapable of meeting the future energy needs of the information economy without significant operational changes and substantial public-private capital investment.”
Figure 1: The goal of moving toward a low-carbon energy portfolio is consistent with public opinion. In 2015, Gallup asked American adults about the domestic energy resources the United States should emphasize. Clear majorities favored more emphasis on solar and wind power and to a lesser extent, natural gas. Fewer than 1 in 3 Americans wanted more emphasis on coal; 4 in 10 favored oil and about 3 in 10 wanted more emphasis on nuclear power.
The insufficiencies of the current power system can be a drag on the economy, on business and on international competitiveness. The United States experiences more power interruptions than any other developed country, costing U.S. businesses as much as $150 billion each year.xii According to the Congressional Research Service (CRS), outages caused by bad weather alone cost the economy as much as $70 billion annually. Among the things our current system cannot do, as Scientific American points out, “is support the massive shift to low-carbon power that scientists warn will be needed to avoid catastrophic climate change impacts.”xiii The technologies to deliver that low-carbon power – for example, wind turbines and solar photovoltaic cells — are ready for prime time, but our energy infrastructure, regulations, and utility business models are not ready for them.
More than a decade after Secretary Abraham’s assessment, threats to the power sector have increased. “In recent years, record temperatures, droughts, and floods have damaged energy infrastructure and disrupted energy systems, affecting American families and businesses across the country,” Energy Secretary Ernest Moniz said in 2015. “To address the harsh impacts of climate change and extreme weather, we need innovative solutions that will make our energy sector more resilient, more flexible, and more efficient, as we build a cleaner, more climate-friendly energy system.” In short, our electric system must be reinvented to serve an opportunity-filled but carbon-constrained economy that can withstand modern threats.
This will require major capital expenditures. The National Governors Association (NGA) estimates that to fully modernize the grid, utilities would have to increase their investment from approximately $34 billion annually to as much as $50 billion annually through 2030.xiv The American Society of Civil Engineers (ASCE) estimates that government agencies, regulated utilities, private investors, developers and nonprofit cooperatives will have to fill an investment gap of nearly $100 billion by 2020 just for transmission and distribution lines.xv “Determining which entities will bear those costs, including how much of the cost utility customers pay, will be a critical factor in how extensively and rapidly the grid is modernized,” the NGA says.
On the other hand, the NGA estimates that an electric system that increases reliability and resilience, enhances cyber-security, integrates renewable energy resources, and improves the use of data could result in economic benefits of $2 trillion by 2030, “if the interests of consumers, utilities, and state policymakers and regulators are aligned as much as possible” (Figure 1).xvi
In short, the most innovation-driven economy in the world todayxvii is supported by electric infrastructure that is rapidly aging, unable to cope adequately with rising risks, or to keep up with the dramatic progress being made in the performance and price of clean energy technologies. Nevertheless, many stakeholders who remain vested in the 20th century power system and its fuels are pushing back against the public policies that would unleash private investment in the technologies and infrastructure the nation needs today.
There are other barriers, too, including inconsistent policies, bureaucratic and regulatory lag and broken price signals in the nation’s energy markets.
Policy uncertainty: No level of government in the United States has the resources necessary to fund trillions of dollars of work on energy infrastructure. Much of the money must come from private investors, as it does now. However, investors like high certainty and low risk, qualities they cannot find in the polarized public policy debate today.
On-again, off-again renewable energy subsidies have been a case in point. So is the unresolved need for the market correction known as carbon pricing. There is no national renewable energy standard or nationwide energy efficiency standard. There is no national energy roadmap or infrastructure plan that would make government policies more predictable and give direction to the many organizations involved in designing, financing, building and regulating the power system. While the president can use his or her convening authority and bully pulpit to promote such a plan, the federal government has a limited role in financing or regulating the electric system. Utility regulation is the province of the 50 states, each with public service commissioners who are likely to reflect the politics and priorities of the governors who appoint them.xviii
Bureaucratic lag: The Energy Information Administration (EIA) among others projects that the demand for electricity will grow more slowly in the years ahead, caused by consumers adopting more energy efficient technologies along with government policies that encourage greater energy productivity. The EIA estimates that the growth in electricity sales will average only 0.7% annually.
At the same time, the growing costs of power generation and transmission will drive the average retail price of electricity up 18% by 2040, EIA predicts. Ron Lehr, a former utility commissioner in Colorado and now an energy consultant, says these trends mean “utilities will need to deploy capital at an accelerated rate while simultaneously being deprived of the familiar engine of earnings – customer load growth. There is no precedent for this combination of pressures and challenges.” Lehr says the pressure on utilities will be amplified by a dramatic increase in the use of renewable energy.xix EIA estimates that electric generation from renewable resources will increase 72% from 2013 to 2040 and will meet much of the nation’s growth in electricity demand during that period.xx Other experts say the growth of renewable power is likely to be much greater.
Reinventing the Great Machine
Despite obstacles like these, the future is battering at the barricades of the old energy system. “It’s become cliché to suggest that the utility industry is on the brink of a massive transformation,” one power industry newsletter observes. “Analysts told us this would happen — the traditional electric utility model would be upended, and utilities would need to adjust their business models to operate in a new energy future. Now, with plummeting prices for renewables and energy storage, the finalization of the nation’s first carbon regulations, and the proliferation of distributed energy resources, changes are taking hold faster than many expected. The electric sector is no longer simply anticipating a revolution — depending on where you are, it is embroiled in one today.”xxi
Solar and wind energy are leading the revolution as they reach grid parity.xxii In parts of the United States and the world they already have. Market analyst GTM Research reports that residential solar energy systems have reached grid parity in 20 states. Under business as usual conditions that number will double in the next four years, GTM says.xxiii By the end of February 2016, 1 million solar electric systems graced the nation’s roofs and fields, enough to power 6 million homes according to the Solar Energy Industries Association.
As the cost of low-carbon energy technologies continues to decline, there will be more rooftops equipped with photovoltaic cells and more independent power producers who want to generate and sell clean power. Electric infrastructure planning and investment must take into account that the growing popularity of these distributed technologies will add to pressure on utilities and on the grid.
Understanding & Mitigating Climate Risks
“By far the most important environmental factor affecting TS&D (transmission, storage and distribution) infrastructure needs now and going forward is global climate change,” according to DOE. “Sea-level rise, thawing permafrost, and increases in weather extremes are already affecting TS&D infrastructure in many regions. The need to mitigate global climate change by reducing GHG emissions, moreover, is accelerating changes in the mix of energy supply options and end-use patterns, and over time, it is likely to become the dominant such influence.”
Some of the risks associated with climate change are unfamiliar to the energy sector and its stakeholders. In October 2010, the National Infrastructure Advisory Council reported:xxiv
Electric utilities are very experienced in emergency response and recovery, and have evolved risk management models that help predict the impact of weather, unforeseen equipment failure, and natural disasters, enabling them to more effectively prepare… An evolving risk profile and new threats to grid resilience, however, are causing grid operators to prepare for risks outside of their traditional experience and responsibilities. Grid resilience is entering an area of joint responsibility where a coordinated industry and government approach is imperative.
The American Society of Civil Engineers (ASCE) says that local climate risks are not well understood by many of the civil engineers who plan, design, construct, operate and maintain energy infrastructure. In 2015, the ASCE published an analysis of the challenges civil engineers must contend with in adapting their practice and projects to climate change.xxv The analysis notes that new infrastructure is expected to remain functional, durable and safe for long periods, typically 50 to more than 100 years, even though much of it is exposed to the climate effects DOE cites. It goes on to identify these issues:
- There is significant uncertainty about the location, timing and magnitude of climate impacts over the lifetime of infrastructure. “There is a gap between climate science and engineering practice that must be bridged,” the ASCE says. “It is only when engineers work closely with scientists that the needs of the engineering community become fully understood, the limitations of the scientific knowledge become more transparent to engineers, and the uncertainties of the projections of future climate effects become fully recognized for engineering design purposes.”
- Engineers should develop a new paradigm for engineering practice in a world in which climate is changing, but cannot be projected with a high degree of certainty…Engineers should seek alternatives that do well across a range of possible future conditions.
The biggest uncertainty facing the oil, gas, coal and utility industries – the elephant in the room – is the so-called “carbon budget” defined in 2013 by the Intergovernmental Panel on Climate Change (IPCC).xxvi The IPCC calculated how much carbon fuel can be burned before global warming exceeds 2oC, the limit beyond which international scientists have concluded that climate disruption would become catastrophic.xxvii
Unfortunately, industrialization used most of the budget during the last 200 years. The latest science tells us that to keep from going over budget, as much as 80% of the world’s proved reserves of fossil fuels must remain unburned between now and 2030.xxviii If that finding were enforced, oil, gas and coal companies would end up with trillions of dollars of stranded assets (by some estimates more than $20 trillion). The carbon budget calculation adds considerable risks and uncertainties to decisions about the energy infrastructure we need.
Former Treasury Secretary Henry Paulson is among the prominent thought leaders who have drawn attention to this issue, in his case in an op-ed published by the New York Times.xxix Paulson pointed out that because of the carbon budget, the fossil energy industry’s underground reserves are vastly overvalued. He called this the “carbon bubble” and compared it to the credit bubble that triggered the worldwide economic recession in 2008.
“For too many years, we failed to rein in the excesses building up in the nation’s financial markets,” Paulson wrote. “When the credit bubble burst in 2008, the damage was devastating. Millions suffered. Many still do. We’re making the same mistake today with climate change. We’re staring down a climate bubble that poses enormous risks to both our environment and economy. The warning signs are clear and growing more urgent as the risks go unchecked.”
Investor concerns that the climate bubble will burst are exacerbated by the failure of many oil and gas companies to adequately and regularly assess their climate-related risks, as they are advised to do by the Securities and Exchange Commission (SEC). Ceres, an investor organization, has found that corporate compliance with the SEC’s guidance it is woefully lacking.xxx As one Bloomberg analyst explained about the oil and gas industry’s vulnerability to investor worries, “What we’re talking about is a miscalculation of risk. We’re talking about a business model that is predicated on never-ending growth, a business model that is predicated on being able to find unlimited supplies of capital.”xxxi
Since we cannot expect Mother Nature to increase the carbon budget and because we have not yet found, and may not find, a cost-competitive, risk free and scalable way to keep fossil energy emissions out of the atmosphere, the danger of exceeding the carbon budget must be mitigated by transitioning to carbon-free fuels and the energy system to serve them.
Some of the world’s larger oil companies may now be accepting that conclusion. Companies including Shell, Total and Statoil of Norway have begun investing in renewable energy technologies and enterprises “to hedge their bets that markets for oil and gas will exist decades from now,” according to an industry analyst.xxxii
Storage: The future of fossil energy and intermittent resources such as sunlight and wind will depend largely on the issue of storage. The solar and wind energy industries are anticipating improvements in batteries to store their power for use when the sun isn’t shining and the wind isn’t blowing. The electric utility and fossil energy industries are counting on another type of storage called carbon capture and sequestration (CCS) technology. It is an engineered method to trap CO2 and permanently store it in underground geological formations. CCS reportedly could capture as much as 90% of CO2 at fossil-burning facilities. Despite years of effort on R&D, however, the ability to apply CCS at commercial scale remains uncertain. Cost is among the barriers. DOE has estimated the technology would add 80% to the price of electricity from a new pulverized coal plant and about 35% to the cost of power from a new advanced coal gasification plant. There has been little discussion about how electricity from power plants equipped with CCS could compete against renewable energy technologies whose costs are rapidly declining and whose “fuels” are free.
A less expensive way to store carbon is to increase the capacity of “carbon sinks” — soils, wetlands, grasslands and forests — to absorb CO2 that is already in the atmosphere. The ecosystems are always in flux, but when they are well managed and healthy, nature serves as an important part of the energy system, particularly if we want to reduce atmospheric concentrations of greenhouse gases to more tolerable levels. These natural “carbon sinks” currently offset about 16% of the United States’ anthropogenic carbon emissions.
The U.S. Department of Agriculture launched a program in 2015 to increase the size and performance of carbon sinks by working with ranchers, farmers, foresters and others on the management, restoration and preservation of these ecosystems. Many other federal agencies have related tools and missions, from the U.S. Forest Service to NASA. Research and policy projects are underway in the private sector, among them an initiative by the nonprofit organization Forest Trends and the Nicholas Institute at Duke University to develop a policy roadmap for more intensive use of bio-sequestration in the United States.
Natural carbon sinks have limits, however. Their capacity to store carbon changes as a result of aging, disease, seasons, and human incursion. Many experts anticipate that the carbon storage performance of natural sinks will begin to decline in a decade or so, largely due to the aging of forests. Experts in the White House and private sector hope that the decline can be prevented with better care and management of ecosystems, but PCAP has encountered no one who believes that natural sinks can by themselves compensate for the amounts of CO2 pollution in a business as usual future.
Journalist and energy analyst Gavin Bade has listed his version of the top 10 disruptive forces in the energy sector today. They all have implications for the nation’s electric infrastructure. In reverse order, they are the decline of coal power; the rapid growth of natural gas; renewable energy technologies reaching grid parity; load defection as more customers install solar energy systems; utilities moving into solar energy; debates over rate design that properly values distributed resources; the need to upgrade and modernize transmission and distribution grids; the need for energy storage; greater attention to customer expectations; and the pressure to change traditional utility business models.xxxiii
Other disruptive forces are at work, too, among them growing concerns about energy security and growing international competition in the fast-moving global clean energy sector.
Energy security: In a prescient report to the Pentagon in 1982, energy experts Amory and Hunter Lovins gave a disturbing assessment of America’s energy infrastructure:xxxiv
The United States has for decades been undermining the foundations of its own strength,” they wrote. “It has gradually built up an energy system prone to sudden, massive failures with catastrophic consequences. The energy that runs America is brittle—easily shattered by accident or malice…This danger comes not from hostile ideology but from misapplied technology. It is not a threat imposed on us by enemies abroad. It is a threat we have heedlessly—and needlessly—imposed on ourselves.
The U.S. power system is vulnerable to threats both domestic and foreign. In April 2015, DOE’s first Quadrennial Energy Review (QER) focused on energy transmission, storage and distribution infrastructure. It reported that in the previous five years, cyber-security threats to the grid had “become more numerous and sophisticated”.
After a cyber-attack was launched against the Ukrainian electric system in 2014, new concerns grew in the United States about our vulnerability. The Department of Homeland Security (DHS) downplayed the risks of a major cyber-attack here, but conducted a series of briefings on the dangers for U.S. companies involved in electric power infrastructure.
So far, however, physical attacks on the power system are a greater threat than cyber-attacks. In August 2014, Inside Energy used DOE data to construct a list of 15 years of power outages in the United States. The data showed 1,652 outages between 2000 and 2014, an estimated 20% of them caused by vandalism and physical attacks.xxxv
In February 2014, a report by security officials in New Jersey detailed multiple incidents of apparent sabotage or vandalism in their state and at electric system components in Arizona, Arkansas, and California. Those appear to be the tip of a malicious iceberg. DHS reports that the U.S. power grid is hacked or physically attacked an average of once every four days, including 331 such attacks from fiscal year 2011 to 2014.xxxvi
We don’t need saboteurs, cyber-attacks or ISIS to bring down our power systems, however. The systems are so “brittle” that tree branches can do the job. In July 1996, for example, an overheated power line sank onto a tree in Idaho, interrupting power for two million people. A month later untrimmed tree branches touched a power line in Oregon, causing a short circuit that took out electricity for 7.5 million customers in seven western states and two Canadian provinces. Inadequate tree trimming also was a factor in August 2013 when 50 million people in eight northeastern states and Ontario went without power for up to four days. Extreme weather events and disasters are much larger threats than trees, but these examples illustrate just how fragile our power system can be and why resilience is such an important factor in modernizing it.
These and related vulnerabilities have drawn considerable attention from the
Pentagon. Military bases are creating micro-grids so that they can keep operating when the civilian grid goes down, and the Department of Defense has directed the armed services to obtain 25% of their energy from renewable resources by 2025. In the same way that the military has introduced many other technologies that later were adopted by the civilian world, it is likely that micro-grids eventually will be used by hospitals, first responder facilities and critical government functions.
In another issue paper, PCAP discusses the national security impacts of climate change in detail.
International competition: Clean energy is the fastest growing energy sector in the world todayxxxvii. Global investments in wind, solar and hydroelectric energy reached $286 billion in 2015, setting a new world record. It was more than double the amount invested last year on fossil-fired power plants. xxxviii
Based on an analysis of 74 nations, the U.S. International Trade Administration (ITA) concludes that the global import market for renewable energy will reach $195 billion cumulatively in 2016 and 2017.xxxix We can expect it to keep growing. The International Energy Agency (IEA) projects that renewables will dominate the world energy market at least until 2020.xl The potential is huge. More than 1 billion people do not have access to electricity. It is significant that in 2015, renewable energy investments in developing economies rose 19% faster than the growth in the developed world.
Emerging and developed economies both intend to use clean energy technologies to reduce their greenhouse gas emissions. In preparation for the Paris climate agreement at the end of 2015, nearly all advanced economies and 40% of developing economies submitted plans to increase their deployment of renewable energy. Ninety countries included some form of carbon pricing in the plans they submitted to the United Nations; 39 nations already have put a price on carbon.
The United States could fare better in the growing international competition to capture clean energy markets. We led the world in PV solar technology at the turn of the century. Today, we rank only fifth in the world in “PV manufacturing attractiveness”xli, behind China, Singapore and Taiwan. The world’s first wind turbine was introduced in Ohio in 1888. California pioneered the evolution of the wind power industry in the 1970s and 1980s. But by 2000, Europe was the world leader in turbine manufacturing. Last year for the first time, a Chinese company became the world’s largest manufacturer, with Denmark second and the United States third.xlii
“Unfortunately, U.S. exporters are relatively ill-positioned to benefit from rising demand globally,” the ITA says. It projects that U.S. exporting companies “will capture just 5.6% of the global import market through 2017” because of “missed opportunities in certain key markets where renewable energy is growing rapidly.”xliii
What of the research and innovation necessary to build a clean energy economy and compete internationally? The United States ranked only fifth in the world last year, based on the capacity of our universities to do leading research, the extent to which government policies encourage it and economic benefits of its results.xliv
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These pushes and pulls are disruptive but they are not necessarily negative. They are pressuring the United States and the rest of the world to go in the direction we must go. It may be coincidence or it may be good fortune that a suite of clean energy technologies is becoming cost-competitive just as we must modernize our electric power system. Either way, the benefits of this inflection point far outweigh the cost of doing nothing or of trying to sustain an energy infrastructure that is vulnerable, obsolete, uncompetitive and unworthy of the world’s largest economy.
What’s the Cost & Who Will Pay?
“At the end of the day, the whole discussion begins and ends with: How do we finance this?” observes Lesa Mitchell, who leads innovation at the Kauffman Foundation. “Somebody is going to come along and figure out the for-profit angle. But