A “Middle America” climate strategy must include policies to bring clean energy to market

An op-ed this week in The Washington Post, “The Middle America climate strategy,” is correct in saying that we need an energy policy that doesn’t cost more. Unfortunately, Matthew Stepp’s definition of cost, and his prescription for getting to a low-carbon energy supply, are incomplete.

Our current energy policy is imposing enormous costs on our society; it’s just that these costs are hidden from view.

Our dependence on oil threatens our energy security by making us vulnerable to a world market over which we have little influence. Every day, we send billions of dollars overseas for oil imports and face the risk of oil price spikes that tend to send our economy into recession.

Greenhouse gas emissions from burning the coal, oil and gas on which our energy system largely depends are changing our climate. Increased risk of extreme weather, floods, droughts, forest fires and heat waves impose enormous human, environmental and economic cost. Even the most pessimistic estimates of the cost of clean energy are lower than the cost of continuing with the status quo.

Fossil fuels may appear cheaper than their clean energy competitors, but that’s just because their true cost is not reflected in their market price. Policies such as clean energy standards, cap and trade, and carbon taxes don’t actually make fossil fuels more expensive. They just make their costs more transparent, allowing low-emitting energy technologies to compete on a fair playing field.

Changing our energy mix will require not just the government investment in new energy research that Stepp recommends. Clean energy requires both a push and a pull – both investment in new technologies and increased demand for them in the marketplace. Research at C2ES and elsewhere has shown that combining push and pull policies is more economically efficient than deploying either policy on its own.

Also, many clean and efficient energy technologies don’t need breakthroughs, won’t actually cost that much, and might save money. They just need to be pulled into the marketplace. Policies like the new fuel economy and greenhouse gas standards for vehicles are doing just that, increasing demand for the dramatic efficiency improvements that are now feasible.  Similar opportunities exist in power production, buildings and industry. We just need policies to spur their adoption.

Stepp talks about the critical role that federal investment in natural gas extraction research, development and demonstration played in the shale gas revolution. This is indeed a success story that should be a model for federal clean energy investment. But private gas producers made enormous investments as well, and they did so because they were responding to the federal push as well as the market pull from the already well-established and growing gas market.

Natural gas is cleaner-burning than coal, but it still emits much more carbon than nuclear or renewable power. In the absence of policies that require the full cost of the producing and using natural gas to be reflected in its market price, natural gas will beat out its lower-emitting competitors.

That’s why renewable energy needs not only continued investment in research, development and demonstration but also deployment policies such as the federal wind production tax credit and state-level renewable electricity standards. Policies such as a federal clean energy standard that credits all low-emitting technologies (including nuclear power), a cap-and-trade program, or carbon tax would help much more.

Americans are paying for our current energy policy every day – when they fill up their car at the pump or empty their refrigerator because extreme weather cut off their power or take their child to the doctor for an asthma attack triggered by poor air quality.

Middle America needs more than government-funded research if we are to reach the goal of affordable, low-carbon energy choices.