Judi Greenwald's blog

I spent the last few days at the eleventh annual Carbon Capture Utilization & Sequestration Conference (CCUS) in Pittsburgh.  

For its first 10 years, it was the CCS conference, focused primarily on advancing efforts to capture and permanently sequester carbon emissions underground. This nascent technology is absolutely critical if we are going to continue burning fossil fuels and have any hope of averting dangerous climate change.

This year the conference organizers added “Utilization” to the title. This addition reflects a new reality: in the absence of strong climate policy, the key driver of CCS innovation is the utilization of CO2 for enhanced oil recovery (CO2-EOR). This is a little-known technique in which CO2 (usually drawn from naturally occurring underground reservoirs) is injected into declining oil fields to boost their output. It now accounts for about 6 percent of domestic U.S. oil production.

This blog post is co-authored by Engelina Jaspers, Vice President, Sustainability at HP

How can we address climate change and achieve robust economic growth? Innovation in low-carbon technologies is critical, and businesses are the engines of innovation. With this in mind, we—the C2ES and HP—set out to explore how leading companies successfully execute low-carbon innovation strategies, with the aim of sharing lessons learned.  Today we release the key findings in a new report, The Business of Innovating: Bringing Low-Carbon Solutions to Market, which will also be the focus of a conference in Atlanta on October 25-26.

Our partnership leveraged the insights and expertise of C2ES staff, members of the Center’s Business Environmental Leadership Council (BELC), and HP’s commitment to applying innovative technologies and approaches to environmental challenges. The report’s author, Andrew Hargadon, Professor at University of California, Davis’ Graduate School of Management, studied the BELC members and other leading companies, including an in-depth study of eight low-carbon solutions from HP and three other companies: Alstom, Daimler and Johnson Controls. The report outlines the barriers particular to low-carbon innovation efforts and provides a set of seven practical lessons for companies.

This post also appears in the National Journal Energy & Environment Experts blog in response to the question: What should drive fuel efficiency?

At a moment when it appears to many that our government can’t do anything right, the current approach to regulating vehicle fuel economy and greenhouse gas (GHG) emissions is a bright spot.

After decades of failing to tighten corporate average fuel economy (CAFE) standards, and several years when California and other states began to take the matter of setting vehicle GHG standards into their own hands, the federal government finally got its act together. In 2007 Congress enacted the Energy Independence and Security Act of 2007, tightening CAFE. In 2010, NHTSA and the U.S. Environmental Protection Agency (EPA) jointly set GHG and CAFE standards, and California agreed to conform its rules to the federal ones. NHTSA and EPA are hard at work at a second round of standards for light duty vehicles, as well as the first-ever set of similar rules for medium and heavy duty trucks.

We now have the Congress, federal and state regulators, industry and public interest groups aligned on a policy framework that is meeting important national goals of reducing oil dependence and GHG emissions, providing regulatory consistency and certainty to the industry, and creating a climate favorable to investment and innovation.

The auto industry is responding successfully. The plug-in hybrid electric Chevy Volt won the 2011 Motor Trend Car of the Year, 2011 Green Car of the Year, and 2011 North American Car of the Year. It’s also selling well. But PHEVs are just part of the story. The Chevy Cruze and Hyundai Elantra are among the nine vehicles in the U.S. marketplace that get more than 40 miles per gallon. They were also among the 10 top-selling vehicles last month. Higher sales of fuel-efficient vehicles across the board contributed to strong sales and combined profits of nearly $5.9 billion for the three U.S. automakers in the first quarter of this year.

Higher gasoline prices are heightening consumer interest in these vehicles. But we cannot rely on oil prices alone to drive us to the next generation of vehicles. Oil prices are too volatile to motivate the sustained business investment we need. And the price we pay at the pump doesn’t reflect the true cost of oil to our country. Half of the 2010 U.S. trade deficit was from oil – that’s $256.9 billion we sent overseas last year alone. The U.S. EPA estimates that the energy security benefit of reducing oil dependence is on the order of $12 per barrel. And gasoline burning inflicts enormous damage on our air quality and climate. For example, the transportation sector is responsible for more than a quarter of U.S. GHG emissions and is a major contributor to smog.

The beauty of the fuel economy and GHG standards is that they are performance based. They set targets based on important public policy goals – i.e., oil savings and GHG reductions – but leave it to industry to find the best way to meet them. They don’t “pick winners.” They should remain the core of our public policy framework for transportation.

But our current set of vehicles and fuels may not be up to the job of meeting our long-term goals. In order to level the playing field with the incumbent technologies that have benefited from nearly a century of infrastructure development and fuel-vehicle optimization, we need to make some public investment to jumpstart alternative vehicles and fuels. This has to be done carefully. We need a savvy, adaptive strategy that ensures that any subsidies are only temporary, leverages public investment with private dollars, spawns experiments and learns from them, and rewards environmental and efficiency performance.

It is not clear whether hydrogen, natural gas, electricity, or biofuels are the long-term solution to our energy and environmental challenges. But we need to continue to keep the pressure on all of them through performance-based standards, research them all, subsidize limited deployment to see how they perform in the real world, and leave it to industry and consumers to determine their ultimate success in the marketplace.

Judi Greenwald is Vice President for Innovative Solutions

At the moment, our attention is riveted by the events unfolding at a nuclear power plant in Japan. Over the past year or so, major accidents have befallen just about all of our major sources of energy: from the Gulf oil spill, to the natural gas explosion in California, to the accidents in coal mines in Chile and West Virginia, and now to the partial meltdown of the Fukushima Dai-ichi nuclear reactor. We have been reminded that harnessing energy to meet human needs is essential, but that it entails risks. The risks of different energy sources differ in size and kind, but none of them are risk-free.

A new report, Post-Partisan Power, puts forth several interesting ideas for how the United States can accelerate technological progress to advance U.S. energy security and global climate protection. The authors are Steven F. Hayward of the American Enterprise Institute (AEI), Mark Muro of the Brookings Institution, and Ted Nordhaus and Michael Shellenberger of the Breakthrough Institute. The report has created a buzz, in part because of the “man bites dog” nature of the story – Brookings and AEI agree on something! And they are saying “post-partisan” out loud in these hyper-partisan times.

The authors recommend a number of initiatives that ought to be no-brainers – invest more in energy science and education, overhaul the energy innovation system by increasing funding for the new Advanced Research Projects Agency-Energy (ARPA-E) and developing regional energy innovation centers, reform energy subsidies, use military procurement and competitive deployment to drive innovation and price declines, and pay for all this through a very small carbon tax or electricity fee. The major critique of the report, best articulated by Harvard economist Rob Stavins, is that these recommended steps are necessary but not sufficient – i.e., it is all very well for the government to invest in these technologies, but we also need to create a market for them through a strong carbon price or serious greenhouse gas reduction requirements. 

The authors have responded that they didn’t mean to imply that their recommendations include all we need to solve our energy and climate problems. However, their subtitle, “How a limited and direct approach to energy innovation can deliver clean, cheap energy, economic productivity and national prosperity,” makes it sound an awful lot like they did. And their opening critique of “both sides of the debate” on climate and energy is dismissive of pricing in general and cap and trade in particular – noting, for example, cap and trade’s defeat in the Senate but not its victory in the House, and saying pricing has not succeeded in reducing emissions in Europe, when in fact it has. But let’s set that aside for the moment. 

The more intriguing question this report raises for me is why the energy and climate debate is so stuck and why even the modest proposals described in “Post-Partisan Power” face an uphill battle. 

The report’s authors lament our irrational energy subsidies and dysfunctional federal support system for energy innovation, and I agree substantively with their critique and their proposed fixes. But this irrationality and dysfunctionality have persisted for a long time. Each energy source has a powerful constituency for federal subsidies and tax breaks. And for each DOE lab in the current national network that does most of our federal energy research, powerful regional interests protect the status quo. 

Similarly, policy analysts have made an airtight case for decades that pricing policies are both effective and cost-effective at reducing emissions, but for the most part politicians and the public have resisted such policies. We seem to prefer our regulatory costs to be high and hidden rather than low and transparent.

What is going on? I’m not sure, but I can think of at least two partial answers. The first is our political system’s focus on the size of government rather than its efficacy. The “great debate” in this election is whether the government should be bigger or smaller, not whether government is effectively doing whatever tasks it is assigned. The key critique of cap and trade was that it was a tax and that it looked like too much government, when the debate should have been about its efficacy in reducing emissions and minimizing costs. We measure success or failure of federal action with respect to a particular energy source by the size of the budget or tax breaks devoted to it, not whether such action is effectively driving innovation or bringing down technology costs. Hayward et al. suggest we fix this through better program design, but that will not be easy. It requires a transformation of our nation’s political thinking at a very deep level. 

The second answer is specific to the energy system. It is an inconvenient truth that fossil fuels have some really attractive characteristics as energy sources. They are abundant, seemingly cheap (if one doesn’t take into account their environmental or energy security impacts, and of course the market price does not do so), and “energy-dense” (meaning they can produce a lot of energy per unit of volume and mass). They have also been used for a long time, and their use has co-evolved with extensive fuel distribution infrastructure and fuel-using equipment. Thus, shifting away from these fuels requires displacing a suite of interdependent incumbent technologies. 

This problem is really different, in kind and in scale, from any the U.S. government or the U.S. economy has wrestled with before. It is not like computer innovation, where a new set of technologies created new markets for new services; or airplanes, in which military procurement dominated an emerging market. To move away from the energy system we have, which meets our private needs very nicely, to one that may have lower social costs but higher private ones (at least for some transitional period), is going to be very difficult. Hayward et al. hope that we can eat our cake and have it, too, by finding new technologies that have both lower social costs and lower private costs. But substantially increasing government investment won’t guarantee this outcome – certainly not by itself. Rather the United States must make climate protection and national security a priority, and develop and implement a conscious, ambitious, and comprehensive national strategy with full public support. This is a daunting challenge.

Judi Greenwald is Vice President for Innovative Solutions

It will probably take some time to fully understand what went wrong in the Deepwater Horizon oil spill, and what ought to be done to make sure it doesn’t happen again. But at least one thing is already perfectly clear: recent technological advances in extracting oil in deep water offshore have been dramatic, whereas unfortunately the same cannot be said for technological advances in spill prevention and cleanup techniques.

Why is this the case?  Innovation is complicated, but we do know something about it.  In the private sector, the profit motive is a primary driver of innovation.  Because of the world’s seemingly insatiable demand for petroleum products (mainly gasoline and diesel), oil companies have invested hundreds of millions of dollars in offshore drilling technology (just one company, GE Oil & Gas, reported offshore oil and gas drilling-related R&D spending of $150 million from 2009-2011) in order to reap tens of billions in proceeds from fuel sales (for fiscal year 2009, MMS reported oil production worth $20.2 billion from the Gulf of Mexico federal outer continental shelf). According to the U.S. Energy Information Administration (EIA), oil production from federal offshore areas accounted for 29 percent of total domestic oil production in 2009. In 2009, ultra-deepwater offshore drilling (drilling in more than 5,000 feet of water) accounted for about a third of total federal offshore oil production, and ultra-deepwater production tripled from 2005 to 2009. Until recently there has been no comparable incentive for spill prevention and cleanup techniques:  the pre-Deepwater Horizon spill record had been excellent, lulling both regulators and oil companies into complacency. 

The free market by itself cannot motivate investment in spill prevention and cleanup technology, because spills themselves yield public damage, not private profits.  Our government, on behalf of the public interest, could have put rules in place that would have motivated the private sector to make such investments – such as requiring oil companies to actually demonstrate that spill prevention technology works as a condition for obtaining drilling rights. 

We have an analogous situation with respect to energy security and climate change.  The free market by itself is driving innovation, but in the wrong things: in energy investments that are warming the climate and making us ever more dependent on foreign oil.  We need our government to intervene on behalf of the public interest to motivate private investment and innovation in clean energy, through comprehensive energy and climate legislation. 

The catastrophe in the Gulf is still unfolding, and will ultimately provide many lessons relevant to our energy and environmental future.  But one lesson we can take to heart and act on right away is that there is a profound public interest in spurring innovation in clean and safe energy and that the private market on its own will not adequately provide it.  It is our job as the public to demand it, and it is our government’s job to use all the tools at its disposal – from regulations to incentives to penalties – to make it happen. 

Judi Greenwald is Vice President for Innovative Solutions

One of the major criticisms of cap and trade in general (and of some of the leading bills in Congress in particular) is that it’s too complicated.  In fact, of the things one can do to reduce greenhouse gas emissions, cap and trade is not only the most effective and cost-effective, it is also relatively simple.  Cap and trade simply means that the government sets an overall limit on greenhouse gas emissions, issues tradable allowances (permits to emit), and allows emitters the flexibility to decide how to reduce their emissions and whether to buy or sell these allowances.  Since greenhouse gases are emitted from thousands of different activities throughout the economy, setting up specific command-and-control regulations for each emitter would be extremely complicated, if not impossible.   As we learned from our experience with reducing acid rain, cap and trade programs are much easier to implement.  Some people assert that a carbon tax would be simpler, but they obviously don’t fill out tax forms and haven’t been lucky enough to pore over the thousands of pages of the U.S. tax code.  

There seems to be some confusion out there about weather vs. climate.  For example, a Virginia Republican Party video urged citizens to call their Congressmen and tell them how much global warming they got during the big snowstorm a couple of weeks ago. But that doesn’t really make any sense.  In simple terms, weather determines whether you need to take an umbrella with you today; climate determines whether you need to own an umbrella.  Weather determines whether you need your down coat today; climate determines whether you need to own a down coat.  Weather determines whether you turn on your air conditioning unit today; climate determines whether you own an air conditioner.  Weather determines whether the plants in your garden have a good day; climate determines what plants will likely thrive in your local environment. 

Climate is the long-term average of weather.  Weather changes all the time; climates are generally fairly stable, allowing us to make long-term decisions based on the notion that the future climate will be like the past.  One unusual weather event does not mean the climate is changing. But many unusual weather events could mean the climate is changing. And climate change will mean that on average, the weather we will have in the future will be different from what we had in the past.   That could even mean that record-breaking snowfall events happen more and more often in Virginia and Washington, D.C.