Has US Surrendered on Comprehensive Energy Policy?

Sitting on a panel in Washington, DC on innovating in the emerging climate economy yesterday, Professor Anant Sundaram of the Tuck School of Business at Dartmouth College gloomily forecast that the US will not have a comprehensive energy policy even in the next ten years. Sitting on the same panel, Eric Spiegel, President and CEO of the Siemens Corporation was less pessimistic, but still did not think it was possible to pass an energy policy at the national level until after the next presidential election.

So how is it going to be possible to reach the 80% clean energy for our energy needs by 2035, the goal President Obama has set for the country? The lifeless body of a national renewable energy standard is a sad reminder of how difficult it will be to show even modest progress on developing national energy policies. The attempt to recast energy policy as a job creations measure has not gained much traction in Washington.

Phil Guidice, Energy Undersecretary of the Commonwealth of Massachusetts, also on the panel, described how renewable energy standards passed in roughly 30 states are “low cost” and “working.” I was hoping that Guidice, who is soon leaving his post, might comment on the Evergreen Solar decision to close its plant in Massachusetts in favor of manufacturing in China–so much for the $58 million incentive package that Massachusetts gave to Evergreen Solar and so much for the 800 jobs that were lost when Evergreen Solar closed its facility in Massachusetts. 

On a side note for those who have not heard, even this last ditch effort by Evergreen Solar to recalibrate its manufacturing in China may not be enough to save it from the dustbin of history. As reported last week in the Boston Globe, Evergreen Solar has warned that it is low on funds and in danger of going out of business: “In a securities filing today Evergreen said there is ‘substantial doubt’ about its ability to ‘continue as a going concern’ over the next 12 months, in part because it had ‘significant’ cancellations for its products. It also said the market for solar products was worsening.” Those who were pinning their hopes of getting an energy policy on the backs of new job creation in the US may be sorely disappointed. The Chinese domination of the solar panel market continues unabated.

Spiegel at Siemens remarked that his company is creating jobs in the US with new factories for wind turbines and the like, but that infrastructure constraints are a serious challenge.  As we continue to try to innovate in the US, the infrastructure will continue to loom as a major problem.  According to Spiegel, in the US, we have an “old and aging infrastructure” and a recent survey gave the US a “D” on infrastructure.

Spiegel was saying what is painfully obvious. We will have spent somewhere around $3 trillion dollars to prosecute two wars, while China and other countries have spent their money on infrastructure upgrades. While the governments in these countries have created a stable environment to grow their energy sector, we have fits and starts of activity before we seemingly lose interest. According to Sundaram, the rest of the world is moving on and the opportunity left on the table is immense.

Spiegel commented that for companies to invest, they need policies in place, “not just short-term tax credits.” Without policies, the only way to go is to bring down the cost of technology, and at least there, that is where the US excels. The largest student club at MIT is the Energy Club. But before we fall behind further “we need to get going.” Siemens will soon be releasing its Green Cities Index to hold cities throughout the US accountable for their green policies. The Dow Jones Sustainability Index already tracks the financial performance of the leading sustainability-driven companies worldwide.  These metrics may not be perfect, but they are a good starting point to determine who is doing what in clean energy and sustainability.

Sundaram predicted that eventually the US will follow the European Union and there is “no doubt that there will be a price on carbon.” He cited a study that there may have been a positive effect on GDP from the cap and trade policy in Europe. According to Sundaram, “China and India will shame the US into cap and trade.” With the global appetite for energy to burgeon over the coming years, a national policy on energy couldn’t come too soon.

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