The EPA analysis of the American Power Act released last week was reassuring in its conclusion that the economy can absorb a shift to low carbon energy, and that costs will be no more than a 40 cents a day for households. (The reason that costs phase in later is that allowances to utilities in the early years serve as rebates to consumers to allow for a transition period of no added costs.)
But, as the bill’s co-sponsor Senator John Kerry (D-Mass.) notes, while the costs are relatively easy to model, some of the benefits are not. Among those is the fact that APA is, in essence, a very cheap insurance policy against the real costs from droughts, floods, storms, oil spills and other consequences of unchecked climate change and continued reliance on foreign oil. By including a cap on carbon, APA offers a very cheap insurance policy.
And there are other significant benefits, too. A year ago today, President Obama’s Economic Recovery Advisory Board voted 15-1 in favor of submitting a memo to the president endorsing a cap on carbon, specifically:
“The single most important policy is to put a price on carbon. Businesses want the certainty that will unleash innovation and investment to create jobs now and ensure America is the worldwide leader of the next great global industry: sustainable energy. We are not on that path today.… “
The memo went on to note that we are ceding leadership in new energy technology to other nations.
“The U.S. is now home to only two of the ten largest solar photovoltaic producers in the world, two of the top ten wind turbine producers and one of the top ten advanced battery manufacturers. That is, only one-sixth of the world’s top renewable energy manufacturers are based in the United States. Last year, less than half the 8,500 gigawatts of wind turbines used in the U.S. were made in the U.S.”
A cap creates the customer demand that allows companies to build market share and move into export markets. The emerging clean energy market could be anywhere from $500 B globally by 2020 to a trillion.
Are we in? So far, not really. A home market attracts investment and helps build local manufacturing. For example, after FedEx pledged to buy low-pollution hybrid delivery trucks, vehicle manufacturers started producing them – and once cleaner trucks were on the market, other U.S. companies started buying them too. The U.S. now leads globally in manufacturing key components for hybrid trucks. In contrast, “after estimating that China would be producing two-thirds of the world’s solar panels by the end of this year,” the U.S. solar equipment supplier, Applied Materials, set up its latest solar research labs in China. Without a cap on carbon emissions, private capital sitting on the sidelines can easily go to other countries, creating jobs and export opportunities elsewhere.
America has demonstrated time and again that we are an innovative global leader when we put our minds to it. It’s time for us to commit ourselves, our minds as well as our dollars, to a clean energy future that will spur the new economy and encourage green job growth.