Practical Energy Solutions

The White House Jobs Council recently released its year-end report outlining a plan to strengthen the United States’ economic future. While the tax and regulatory reform proposals are bound to cause disagreements, the Council developed pragmatic recommendations regarding energy’s role in improving the economy. The report recognizes the state of politics and low-carbon energy deployment, while highlighting the economic opportunities—including energy savings, leading emerging technology markets, and enhanced energy security—made possible by transitioning to a low-carbon economy. The Council’s energy recommendations include:

1. Optimize the use of all of our natural resources while protecting public health and the environment.

The report calls for expanded development and streamlined permitting on federal lands for both fossil fuel and renewable energy power generation.

While the increased use of domestic fossil fuels may upset clean energy advocates, these recommendations reflect practical solutions. Until renewable energy is cost competitive with fossil fuels—whether through legislation, market changes, or technological advancements—fossil fuels will play a significant role in U.S. energy supply. While the future impacts of climate change are being shaped by today’s energy consumption, one must be realistic about the roll-out of renewable energy technologies. Low-carbon energy sources, including renewables and nuclear power, currently make up only 17 percent of energy consumption in the United States. Under today’s policies, the Energy Information Administration (EIA) projects increased energy use, including the use of fossil fuels, across all sectors through 2035. Renewable energy is only projected to grow 4 percent, as a percentage of total consumption, from 2010 to 2035. Policies, such as a clean energy standard, could increase the amount of energy obtained from low-carbon sources, but as the EIA projections suggest, it will be some time before low-carbon energy consumption matches that of fossil fuels.

While politics may have dissuaded the Council from mentioning climate change, the report recognizes that reducing carbon emissions is key to a smart energy policy, citing the importance of “transitioning to a low-carbon energy future” (see p28 of the report). For example, the recommendation to support responsible natural gas development would provide the United States a bridge to the low-carbon energy future. In the meantime, increased domestic oil production can be less carbon intensive through efforts like enhanced oil recovery, and coal burning can follow suit with the development and deployment of cleaner technologies, including carbon capture and storage.

Streamlining permits and continued support of the renewable energy production tax credits diversifies the country’s energy portfolio. This increases investment in the United States, and decreases dependence on potentially unreliable foreign energy sources, reducing exposure to price fluctuations. Developing clean energy technologies also provides a significant opportunity to lead clean energy markets, as cumulative investments in these technologies could reach $2.3 trillion worldwide by the end of this decade.

2. Support efficiency measures in electricity and transportation.

Electricity and transportation are the two largest energy-consuming sectors. The report supports building and end-use efficiency, citing the $4 billion the Better Buildings Challenge received in private and public funding commitments as a positive step. Regarding transportation, the report hails the new CAFE standards (54.5 miles per gallon gasoline equivalent by 2025) and calls for increased government support of alternative fuel technologies, for example via government procurement.

Electricity is responsible for 33 percent of greenhouse gas emissions in the United States. In residential buildings, improving end-use efficiency (energy efficient appliances, and heating, ventilation and air conditioning) with readily available technology has significant cost- and carbon-saving potential, while full energy retrofits save homeowners money on energy costs, increase home value, and support construction jobs. Similar opportunities exist in commercial and industrial sector electricity use.

Transportation, accounting for 27 percent of greenhouse gas emissions, also provides important opportunities to improve energy efficiency. The Council notes that the CAFE standards developed with 13 major automakers in 2011 could save consumers $8,000 in fuel costs per vehicle relative to 2010 standards and reduce daily oil use by 2.2 million barrels by 2025, equal to one quarter of foreign oil imports. In addition, the report highlights that growth in electric, natural gas, and other alternative fuel vehicles could lead to the country becoming a net exporter of petroleum.

3. Drive energy innovation and investment from basic invention to industry scale-up.

The Council recognizes the role of energy research and development (R&D) to meet “America’s future energy demands without increasing harmful emissions” (p31). The report recommends government support of public and private sector R&D by making the R&D tax credit permanent, continued support of the renewable energy production tax credits, doubling or tripling federal government spending on energy R&D, and providing support for clean energy startups to bridge the market from early adopters to mainstream consumers (also referred to as the valley of death).

It is essential for the government to invest in energy R&D, such as through the Advanced Research Projects Agency – Energy, while encouraging private companies to do the same. Innovation is necessary to advance new learning curves and ensure that the United States is a leader in the growing clean energy markets.

Without comprehensive climate change legislation in sight, the Council’s energy recommendations offer a pragmatic path toward a low-carbon economy. The report’s recommendations reconcile the practicality of addressing economic and energy needs in the near term, with the great economic opportunities in a low-carbon energy future.

Sam Wurzelmann is a Solutions Fellow at C2ES.