Creating a Low-Carbon Economy

More Inconvenient Truths

Yesterday, the Obama Administration released a long awaited, definitive government report on the impact of climate change on the United States by region, economic sector and social outcome.  In what might be called an American version of the Stern report, prepared by 13 government agencies, it confirms the large existing body of scientific work on the reality of climate change and then specifically charts the impact on the United States today and far into the future.

Significantly, it argues that climate change has already impacted the US through heavy downpours, rising temperatures and sea levels, thawing permafrost, earlier snowmelt and alterations in river flows.  And change will accelerate in years to come.  Indeed, the report underscores that much of the impact of climate change will be via water.  In some areas, increased precipitation will stress water management resources, leading to flooding.  In others, it will lead to drought.  Changing water paterns will impact agriculture, coastal regions and public health.

If this report cannot drive home the point that the cost of climate change is far greater than the cost of a cap and market regime to address it, nothing may.  The real threat of climate change is that its mechanism for wreaking havoc is so broad: rain, rising rivers, drought and other changes in our overall habitat can seem too diffuse to pin on one cause.  This report shows that there is a cause, however, and it is greenhouse gases.

As the House prepares to debate the American Clean Energy and Security Act (ACES) next week it would do well recognize that the problems of climate change do indeed transcend regional or parochial boundaries and only the political courage to see the big picture, will enable America and the world to take the steps needed to solve this complex problem.


Passing Climate Change This Year

As I have been writing, the time has never been better to pass a climate change bill and if action does not take place this year, the prospects for passage are likely to decline.  Recognizing the threat of a bill passing, opponents have pulled out all the stops, while supporters are making a full court press to gain passage.  With a critical vote in the House coming as early next week, the stakes could not be higher.

Against this backdrop, yesterday, Al Gore's Alliance for Climate Protection released a new ad as part of its Repower America campaign to help rally support for the bill.

The ad shows a farmer talking about the need to do something about dependence on foreign oil.  He has a point.  It was President Nixon who first began to rail about dependence on foreign oil.  In the 40 years since, the problem has only grown worse.  And, of course, we now have to contend as well with the even more serious threat of global climate change. 

Here's the ad:

Ford and the American Carbon Consumer

Last week I attended a conference at the University of Michigan for college and graduate students from a variety of backgrounds to address energy sustainability through field trips, lectures, and debates.  The take-home message was that accelerating world population and living standards is creating enormous pressure on the global energy system, which exacerbates climate change, international conflict, and economic strain.  The only clear long-run solution is a transformational shift in energy use and technology.

Despite some of the fascinating technologies of the future that I saw throughout the conference - including a car powered by fuel cells, a solar cell lab, and cutting-edge green architecture - I was most impressed by my visit to a facility dating back to 1928:  The Ford Motor Company's River Rouge plant outside Detroit.  One might wonder why I, as someone deeply concerned with energy sustainability, was captivated by this colossal factory which contributes towards the million gas-guzzling Ford F150 pickup trucks sold each year.

Seeing the River Rouge factory brought the industrial concept of "efficiency" to life almost a century after Henry Ford invented the modern assembly line.  Doors and truck beds floated by on mechanical tracks along the ceiling, while trains of moving platforms carried truck cabs along the floor so that workers could easily hop on and off to install sunroofs, floor boards, and the like.  My guide pointed to the number "243" on a large screen: "See that?  That is how many trucks have been manufactured since 6 AM."  Looking at my watch, that was approaching one truck every minute.

I see Ford's state-of-the-art industrial processes as an opportunity.  Create similar plants for wind turbines and solar cells, and the price of renewables will become competitive.  Do the same for electric cars and meters for the Smart Grid, and we're talking about an energy revolution.  The key is to drive consumer behavior.  People demand Ford trucks (many of them, in fact), and decades of engineering breakthroughs have allowed Ford to provide these trucks at high quality and low price.  Change consumer behavior by creating a price on carbon, and Ford will respond.

There is an important distinction.  While regulating producer behavior has more limited effects (e.g. CAFE standards narrowly promote fuel efficiency), stimulating shifts in consumer behavior spurs comprehensive and outside-the-box changes by producers.  How might Ford react to consumers demanding low-carbon products?  Providing more hybrids is an obvious option, but imagine if Ford identified more profitable uses for its high-efficiency factories given rising demand for renewable energy.  By converting its plants, Ford could mass-produce the Model T of wind turbines.  Additionally, a carbon cost would have a considerable impact on Ford's energy-intensive industrial processes, leading Ford engineers to come up with new breakthroughs, this time in energy efficiency.

Ford is already responding to changing consumer behavior.  In my tour, Ford marketing people showed off the major renovation of the River Rouge factory to improve its environmental impact, which includes one of the largest green roofs in the world and fuel cells that use toxic paint emissions to create electricity.  A PR move?  Definitely.  But, if consumers care, Ford will do it - and at River Rouge, it's to the tune of $2 billion.

With all the political debate surrounding the climate change bill, it's easy to forget the simplicity of the underlying problem:  While no one pays to emit carbon, everybody will suffer the consequences.  Whether through a tax or a cap, put a price on carbon because consumers will react, and no force compares to the speed and power of American-style consumerism.  Industry, technology, and a complete transformation of the energy system will follow the money - just ask Henry Ford.

Thursday, June 18: Envisioning the Future of the Global Auto Industry with Shai Agassi

As the U.S. auto industry undergoes dramatic restructuring and the global auto sector retools for the future, new technologies, players, and energy challenges are remaking one of the key drivers of the global economy. Just how the industry reinvents itself and what role the United States will play in the auto industry of the future remain unknown, yet the consequences of this change may greatly determine future economic growth.
ShaiNDN is pleased to announce that on Thursday, June 18, Shai Agassi, Founder and CEO of Better Place, a Palo Alto based electric car start-up, will lead a discussion at NDN on the future of the global auto industry. He will discuss Better Place's business, the potential of electric vehicles, and the future of the global auto industry.

Better Place's vision of what may be possible for automobiles is transformative, offering an electric car with unprecedented new services, including the ability of consumers to trade electricity with the electricity grid. He has been featured on the cover of Wired magazine (right), Rolling Stone magazine recently named Agassi one of the 100 People Changing America, and his company is active in Israel, Australia, Denmark, the United States, Canada, and Japan. Agassi last spoke to NDN at the Moment of Transformation conference, held in March 2008.

Envisioning the Future of the Global Auto Industry with Shai Agassi
Thursday, June 18, 9:45 a.m.
NDN: 729 15th St. NW, First Floor
A live webcast will begin at 10 a.m. ET

RSVP  :  Watch webcast

NDN Backgrounder: Rebuilding the American Economy

This week, the White House release results of the "stress tests" and President Obama presented a vision for retraining the American workforce. NDN is pleased to present a number of recommended pieces on rebuilding the financial system, the American workforce, the housing market, and a number of other important items on America's economic future.

  • Short Sales and the Market Meltdown by Dr. Robert Shapiro, 5/7/2009 - Reflecting on a recent speaking engagement with SEC commissioners, Shapiro argues for additional regulation of short sales.
  • Obama: Upgrade Worker Skills Through Community Colleges by Jake Berliner, 5/5/2009 - In a recent interview, President Obama advocated using the nation's community colleges as a resource for worker IT training, an NDN proposal that Rep. John Larson introduced as legislation.
  • Should We Try to Save the Damaged Brands? by Simon Rosenberg, 4/30/2009 - Rosenberg asks if these mainstay, now troubled American brands - AIG, Chrysler, Citi, GM - can be saved by being propped up by the government or if their brands are permanently insolvent.
  • Carbonomics by Michael Moynihan, 4/2/2009 - Moynihan looks at the connection between pricing carbon and the future of the American automobile industry.
  • The Global Economic Crisis and Future Ambassadorial Appointments by Simon Rosenberg, 11/26/2008 - With the mammoth task of rebuilding international financial architecture and recovering from a global recession awaiting the new President, Rosenberg points out the the ambassadors to the G20 nations will be key members of the economic team.
  • A Stimulus for the Long Run by Simon Rosenberg and Dr. Robert Shapiro, 11/14/2008 – This important essay lays out the now widely agreed-upon argument that the upcoming economic stimulus package must include investments in the basic elements of growth for the next decade, including elements that create a low-carbon, energy-efficient economy.
  • Back to Basics: The Treasury Plan Won't Work by Dr. Robert Shapiro, 9/24/2008 - As the financial crisis unfolded and the Bush Administration offered its response, Shapiro argued that, while major action was needed, the Treasury's plan would be ineffective.
  • Keep People in Their Homes by Simon Rosenberg and Dr. Robert Shapiro, 9/23/2008 – At the beginning of the financial collapse, NDN offered this narrative-shaping essay and campaign on the economic need to stabilize the housing market.

NDN Backgrounder: What Future for the American Auto Industry?

As Sam told us in his morning round-up, Chrysler is to undergo a "surgical bankruptcy" process that will leave the United Auto Workers with a controlling stake in the company, with Fiat and the US Government as junior partners. In addition, as Dr. Rob Shapiro discussed Tuesday on Fox News, the federal government and the Auto Workers now own 89 percent of GM and on his 100th day in office, President Obama said that he wanted the federal government out of the auto business as quickly as possible. NDN has been following the automakers and their search for a profitable future for quite a while, so enjoy this backgrounder on the American auto industry.

  • Here in the Real World They're Shutting Detroit Down by Morely Winograd and Mike Hais, 4/30/2009 - NDN Fellow Winograd and Hais pont out that GM's problems come at a time when the inherent tension between the investor class and the country's manufacturing sector have never been greater.
  • Should We Try to Save the Damaged Brands? by Simon Rosenberg, 4/30/2009 - Rosenberg asks if these mainstay, now troubled American brands - AIG, Chrysler, Citi, GM - can be saved by being propped up by the government or if their brands are permanently insolvent.
  • Carbonomics by Michael Moynihan, 4/2/2009 - Moynihan looks at the connection between pricing carbon and the future of the American automobile industry.
  • Sympathy for the Car Guys by Michael Moynihan, 12/5/2008 - Moynihan compares Capitol Hill's treatment of Wall Street CEOs to that the auto makers received.
  • With recent news that Congress and the Obama Adminsitration are interested in a "Cash for Clunkers" proposal, enjoy this video from a Green Project event on August 1, 2008 during which Jack Hidary speaks about this idea.

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