Others are recommending more market-based incentives. Libertarian author Jerry Taylor of the Niskanen Institute, for instance, makes a case for scrapping the Plan and replacing it with a national (broadly applied) carbon tax that accounts for the costs carbon emissions present to our health and environment. Some states, like California and those in the northeast, have embraced a different sort of “carbon pricing” in the form of a “cap-and-trade” system. In the Northeast, the Regional Greenhouse Gas Initiative has promoted energy-efficiency measures, helping consumers save $460 million on energy bills and creating more than 14,000 new jobs in the past three years.
Many states have developed policies that incentivize innovation in solar and wind energy technology. Research by the Pew Charitable Trusts in January of this year showed that Ohio’s renewable energy goal attracted $1.3 billion in private clean energy investment from 2009 to 2013, with almost three times that predicted over the following decade (investment that is now uncertain because the state legislature placed a moratorium on implementing the goal). Financial innovations can also make a difference. A newly announced “property-assessed clean energy” program, for example, provides innovative homeowner financing for energy efficiency and renewable energy investments.
The Climate of Innovation
One report on a startup company in Cambridge, Massachusetts, offers a great example of the possibilities of new technologies. DropWise Technologies Corp. is developing a coating that can be applied to steam turbines in gas, coal and other power-generating plants. The coating makes the steam condensation process far more efficient, letting the plants burn much less fuel to generate the same amount of power. The developers at DropWise think that if the technology catches on, it has the potential to significantly reduce carbon emissions, comparable even to widespread adoption of renewable energy. Dozens of companies like Dropwise are poised to help the electric power industry innovate its way to cleaner energy.
Such advances add to the growing mix of ways existing power sources are becoming more energy efficient and increasing the economic viability of a variety of energy sources. People are also looking at better ways to store energy through smart batteries and deliver power more efficiently through the grid, like they’re doing at the Electric Reliability Council of Texas.
Precisely because of these innovations, this is an exciting time for business, according to the Advanced Energy Economy Institute. This national association of business leaders thinks that the Clean Power Plan, with its flexibility, “will spark an industry response that will make available a wide array of cost-effective compliance options” and “will drive further investment and deployment of advanced energy technologies and services, delivering emission reductions while also driving market growth, technology improvement and associated benefits ranging from grid modernization to job growth.”
The Cost of Inaction
Inaction on climate change is projected to be costly, as reported in a recent study by banking giant Citigroup. In modeling the effects on global gross domestic product from climate change in both an "action" scenario, where carbon emissions are curtailed and an "inaction" scenario, where emissions continued on their current trajectory unchanged, Citigroup found we would be losing $44 trillion in global GDP by 2060. The other path, Citi found, reducing carbon, does have costs, but these costs are dwarfed by those associated with inaction.
The path of action offers opportunities for capital investment that institutions like Citi are banking on. Citi recently announced it is investing $100 billion over the next 10 years to finance activities that reduce the impacts of climate change and create environmental solutions that benefit people and communities. Citi’s previous $50 billion goal was announced in 2007 and was met three years early in 2013.
For conservation organizations like The Nature Conservancy, who see climate change as a fundamental threat to our conservation mission and the communities in which we work, these innovations in the energy marketplace are exciting and critical. We will need a lot of ideas, and a climate of innovation, to protect the lands and waters on which all life depends.