Today’s guest column comes from Reed Hundt and Blair Levin, authors of a new ebook called The Politics of Abundance: How Technology Can Fix the Budget, Revive the American Dream, and Establish Obama’s Legacy, available at www.politicsofabundance.com and via Amazon and iTunes. Reed Hundt was chair of the Federal Communications Commission and Blair Levin was his chief of staff from 1993 through 1997, when the government’s telecom policies helped spur the Internet boom; they see similar opportunities now in broadband and energy. Hundt is now the CEO of the Coalition for Green Capital, a non-profit that designs financing support for energy projects. Blair (who is a friend) is CEO of Gig U, a non-profit engaged in broadband projects. They’ve got some good and (relatively) simple ideas for spurring the green economy.
Based on existing trends in global warming and life expectancy, every American at or under age 65 is likely to live long enough to see the world devastated by floods, droughts, storms, starvation, extinction of species, and other iterations of the apocalypse.
Despite occasional eruptions of denial in some quarters, most business and government leaders in the United States and virtually all in other nations agree that greenhouse gases, spewing from smokestacks and exhaust pipes, are warming the planet to the point where these apocalyptic outcomes are probable.
The great news is that in the first term of the Obama Administration federal and state governments showed clearly how any country can halt these murderous emissions, and at the same time stimulate sustainable economic growth.
By insisting that ARRA, the recovery spending act passed in February 2009, provide tax credits used for building a new energy system, President Obama helped the wind and solar electricity generation industry double their share of the market in less than four years.
Then the Administration re-organized and increased research and funding of sustainable energy technologies. As a result, innovators are delivering Moore’s Law (price-performance doubling every couple of years) results in batteries, grid efficiency, and other areas.
California has put into place laws that cap emissions, require rapid market share shift to renewables, and encourage investment in distributed rooftop solar. So far the economic impact is good and popular opinion supportive.
Connecticut created a state green bank that can provide low-cost capital for renewables and efficiency investment. As a result, clean electricity can be provided to consumers at below the current and projected prices for non-sustainable electricity generation, and the money contributed by the state green ban to jumpstart private projects will be paid back over time.
Most states have passed laws requiring a shift of major market share to renewable generation sources. These renewable standards permit utilities to phase out dangerous emissions-intense generation rapidly, while bringing new investment into local economies.
Technological breakthroughs have led to the discovery of vast resources of natural gas deep inside American soil. The electricity generation industry can switch from using coal to natural gas and deliver electricity cheaper, with much reduced emissions. Within the second term of the Obama Administration natural gas generation can increase its already large share of the market by fifty percent – without any new government funding.
For all these reasons, the potential to move rapidly to a new platform of power creation and use reminds US of 1994 – when breakthroughs in digital mobile communications, fiber optics, microprocessors, and information digitization all combined to make possible the Internet-driven boom. In the glorious salad days of the Internet, 1995 to 2000, GDP growth averaged 4 percent a year. Every income quintile saw increased wages. The debt-to-GDP ratio fell dramatically and the annual budget went from chronic deficit to huge surplus.
These changes stemmed primarily from private investment. About a trillion dollars rebuilt the communications platforms on which all American economic and social activity is now conducted. But in those years the government needed to – and did – adopt regulatory and tax policies that encouraged investment in these new networks.
Similarly, if Congress right away will adopt a handful of key regulatory and tax policies, at least another trillion dollars of private investment will rebuild the power platform of the United States, just in time to give America a large-scale sustainable platform for long term economic growth. That move in turn would permit American firms to export sustainable technologies to a waiting world. The World Bank could increase to the level of hundreds of billions of dollars its financing of sustainable electricity generation in the developing world. Advances in electric vehicles can permit automobiles to increase the standard of living in poor countries without increasing their emissions. A global trade deal can be fashioned around a common market of sustainable energy solutions.
Congress can open the doors to massive investment in a new power platform, producing abundance for everyone, if it passes three laws:
First, it should pass a modest tax on carbon-intensive emissions from power plants. Utilities should not be able to pass the tax on to consumers. Instead, to avoid it, they should move more rapidly to renewable generation and natural gas generation.
Second, as it did with communications in a 1996 law, Congress should pass a law requiring all state regulatory commissions to increase the opportunity and incentive for electric utilities to invest in energy efficiency, renewable generation, and electric transportation.
Third, Congress should charter a national “electromagnetic wave bank” that provides long-term financing at low rates for investments in renewable power, energy efficiency, and electric transportation. That bank should borrow at long term, preternaturally low rates now available to the Department of Treasury and pass the funds to state green banks, such as Connecticut’s, to use under certain pre-set models that guarantee pay-back.
These steps are no longer experimental. Examples of their efficacy abound. They would reduce the federal deficit. They would create new jobs. There is, however, not a moment to lose.