As a potential catalyst for big and lasting changes in American public policy, the stimulus bill has three main sources of interest: Its provisions for energy; its provisions for health care; and its provisions for education. At every opportunity, the Obama Administration has reaffirmed its commitment to pursue transformational policies in each of these fields - and the president pointedly reiterated his intentions this week, even after he had endured intense criticism that his interest in such ambitious domestic policy-making had distracted him from the economic crisis.
In the eleven-page conclusion to Title IV, entitled “Energy Efficiency and Renewable Energy,” we at last reach one of Obama’s big priorities. If you have your copy at home, this would be a good time to open your hymnal and read along - at issue is the future of the political economy of energy in these United States.
Obama has called the $16.8 billion allocated to and through the Office of Energy Efficiency and Renewable Energy at the Department of Energy a “down payment” on plans to transform the American energy economy to combat climate change and reduce dependence on imported oil and gas. Ultimately, we won’t get from here to the next political economy of energy unless Congress enacts a cap-and-trade bill and other related tax and regulatory architecture to change the price incentives that surround carbon-heavy fossil fuels. But the policies funded in the stimulus bill do provide a meaningful start.
The bill’s investments are divided into four areas: Energy efficiency, which mainly involves weatherizing buildings and homes; electricity transmission; battery technology; and technologies that might clean up old school fossil fuels, particularly coal.
During the campaign, Obama did not talk a lot about energy efficiency, but later, in the midst of the economic crisis, as he and his advisers sought to develop a jobs-focused stimulus package, the energy efficiency wing of the green lobby clearly got his attention. Although it is not glamorous, and does not yield transformational visual images of wind turbines spinning on the prairies, weatherizing houses and office buildings - and fitting them with technology to allocate energy more efficiently - is the most cost effective means to reduce American consumption of non-renewable fuels. Efficiency retrofits also have the virtue of quickly creating construction jobs. The stimulus provides an eye-grabbing $8.2 billion in block grants and other funds to states to carry out such work. The Obama Administration has lately been cranking out press releases describing exactly how much each state will receive. If you go on the E.E.R.E. Web site you can click on a map and see the allocations for any state. Obama traveled to swing-state Wisconsin last week to do some weatherizing himself, and to call attention to the provision’s local benefits.
On battery technology, the law provides $2 billion for grants “for the manufacturing of advanced batteries and components…that are produced in the United States, including advanced lithium ion batteries, hybrid electrical systems, component manufacturers, and software designers.” Finding rapid breakthroughs in battery technology is an important policy goal because it will hasten the viability of electrified personal transportation (cars, and car-like vehicles) powered from an electricity grid that is itself fed by renewables. But even so, this is a less-than-convincing expenditure. Do we really need government grants to build a better battery? Every profit-seeking inventor with a garage or an industrial R&D lab in this country already understands that there’s gold in dem ‘dar lithium hills. I’m sure that some of them would like to be subsidized by the government. But what gap of innovation will these grants actually fill? What reason is there to think that the technologies selected by the Department of Energy will be superior to the ones already being developed at feverish pace in the private sector? I’m sure there must be a better argument for this $2 billion provision than I am able to imagine here; explanations welcome. Even so, I’ll bet an irreplaceable iPod battery that in the end, the breakthrough technologies will not flow from these grants.
Broadly speaking, the federal government should invest in the new green economy because climate change presents a global emergency and oil can be a degrading international entanglement, but the government should tailor its investments to those roles where the private sector cannot do the job at all, or cannot do it fast enough. Ultimately, the new green economy, if it is to emerge, will be a product mainly of private sector innovation, nursed into being over decades not by direct government investments, but by regulations and price incentives.
There is, however, one area in this realm where direct federal action is critically important. This involves building out and securing the reliability of a national electricity grid suitable for a large-scale ramp-up of renewable sources. This is a book-length subject with many nuances but one of its most important conceptual aspects is fairly easy to describe.
By an accident of history, utilities, like insurance companies, are regulated at the state level. But the problem of the electricity economy, if you are concerned about climate change, is now national. The reason is partly geographical. Large potential sources of solar power in the southwest are too far from the dense cities they would have to serve for private investments to be easily viable. Large wind sources in the Midwest, equally, are “stranded,” as they say in the oil and gas business, too far from their customers. A high school civics class, presented with this problem, would allocate to the federal government the role of solving this problem by building out a national transmission grid to connect urban customers with green power. This is roughly what the Obama Administration has in mind.
Also, because the sun does not shine all the time and the wind does not blow steadily, somebody has to work out how to prevent the intermittent qualities of renewable electricity from messing up the reliability of electric service up and down the lines. This, too, is a federal job.
There are large loan guarantees ($3.25 billion) in the stimulus bill to jump start some of this work at the Western Area Power Administration, and there are provisions aimed at the Federal Energy Regulatory Commission, which will have to handle some of the right-of-way and usurping regulatory issues - just as it does now for oil and gas pipelines.
Actually, the most interesting piece of policy development in the stimulus bill is not an expensive budget allocation, but rather the commissioning of a study - a serious effort to explore in depth how to create a greener national electric grid, one that would usher in the fourth great era of human energy development consumption. (First: Wood. Second: Coal. Third: Oil.) The document in question is referred to in the law as the “Renewable Electricity Transmission Study.” It directs the Secretary of Energy, who is the physicist Steven Chu, to develop “an analysis of the significant potential sources of renewable energy” that are stranded from customers “by lack of adequate transmission capacity.” It also asks for an “analysis of the reasons for failure to develop the adequate transmission capacity,” along with “recommendations for achieving adequate transmission capacity.” Bland words, but they are the heart of the matter.
If you are still reading this, you deserve a biodegradable coffee mug. There is much more to say about this subject, but I will leave it here and hope there are forthcoming sections of the bill that will allow us to return. Meanwhile, I will just have to save what I have learned about Title IV’s $3.4 billion provision aimed at “clean coal” for a long car ride with the children - after their iPod batteries have all drained out.
