When it comes to setting policy, we certainly do seem to have a way of putting the cart before the horse.
Instead of probing for the root cause of the global financial meltdown—deregulated, irresponsible and leveraged speculation on inflated assets—and doing something about it, we bail out the perpetrators and then let them dissemble and deny what really happened in order to keep the game going.
Instead of formulating a long term plan for the energy crisis we are hurtling toward, we argue about whether we should invest in Green or Brown energy, without understanding that we're going to need both.
Instead of realizing that the energy is the only real currency, the shortage of which is the source of our economic stall-out, we play wildly reckless games with fictitious fiat currencies, like printing $2 trillion out of thin air, without creating any new energy.
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Focus on Decarbonization
A new report from the London School of Economics argues that if we really want to cut emissions, "the motor of an effective mechanism is a direct approach to the decarbonization of the global energy system, rather than an indirect approach via manipulation of the economy."
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FITs and Starts
One such incentive is feed-in tariffs (FITs), which pay a premium for renewably-generated electricity. It's a market-based approach, it's simple and incorruptible, and it's demonstrably effective in reducing carbon emissions.
FITs have resulted in an explosion of rooftop solar in over 37 countries worldwide including Germany, Japan, Denmark, Italy, Greece, France, Netherlands, Spain, Portugal, and Bulgaria. The US has not supported FITs nationally (although 11 states are contemplating it), and so has watched its share of global photovoltaic manufacturing capacity dwindle from 40% to 7%.
FITs have a number of important side benefits as well. Because the power is generated where it is used, little to none is wasted in transmission elsewhere. They encourage local investment, instead of sending money to some far-off place in hopes it will reduce emissions there. They ensure a steady, growing market by having long (10 years or longer) lifespans, instead of ensuring boom-and-bust cycles as our short-term tax credit incentives do. They insulate both utilities and the consumers who install the panels from the wicked volatility of fossil fuels by having a fixed, known cost under contract for as long as 20 years. And they result in an installed base of clean generation capacity that will produce for 50 years or more, contributing to true long-term energy independence.
Consider the success of Germany. Its 10-year goal to double the share of electricity produced from renewables by 2010 was met three years early under the FIT, and the country now produces more than 15% of its total energy from renewables, more than any other country and far more than the 4% generated in the US. It now produces about half the world's total solar capacity, despite having about the same solar resource as cloudy Juneau, Alaska.
FITs work from the first day they are implemented, instead of being watered down and delayed by opposition from utilities and fossil fuel industries who fear rising costs. As the LSE report put it: "Worthwhile policy builds upon what we know works and upon what is feasible rather than trying to deploy never-before implemented policies through complex institutions requiring a hitherto unprecedented and never achieved degree of global political alignment."
Another truly effective approach is to incentivize efficiency in heavy industry and power generation, which are major sources of carbon emissions. Japan's iron and steel industry reduced its CO2 by 19% from 1991-2008 via efficiency gains, according to the LES report. And the IEA estimates that using the best available technologies in fossil fuel power generation would save 1.8-2.5 Gt-CO2/year, equivalent to China's total CO2 emissions in power generation.
Decarbonizing solutions to the peak energy problem will also solve the climate change problem. But the focus should be on shifting the primary energy loads to renewables, not chasing a fuzzy and much-debated concept like global warming. If we can solve the peak oil, peak gas, and peak coal problems—all of which are likely to occur by 2025—by switching to an all-electric infrastructure increasingly powered by renewable energy, the CO2 problem will take care of itself.
