Climate Change 2.0

The climate change debate has changed. As a recent New York Times piece by Andrew Revkin makes clear, it is dawning on many observers that mechanisms to slow emissions using cap and trade or other conservation mechanisms won't be enough. Nor are conventional biofuels such as corn based ethanol the answer. What is needed are true technology breakthroughs that dramatically reduce the carbon per unit of energy ratio. The emerging question is how to drive this innovation and deploy it across the economy.

Despite all the attention the climate change issue has garnered since the release of An Inconvenient Truth, real reductions in emissions have been elusive. While it would be a mistake to fault the European cap and trade system for failing to reduce emissions in Europe-the system was in a training phase until a few months ago and some sectors such as aviation will not be included for another two years--it has showcased the difficulty leaders face in setting low emissions targets. More troubling, however, may be the fact that few technologies have arisen so far with the ability to replace carbon-based fuels. Absent such technologies, strong caps would be likely to drive up the cost of numerous goods and services, effectively creating inflation. Conventional biofuels such as corn ethanol consume more energy than they produce according to several studies. Not until real game changing technologies provide alternatives to carbon-based energy will real progress happen.

What can change the game?

In the area of portable fuels, biofuels made from switchgrass and other inedible plants grown on scrubland, holds promise. At a time when food prices are soaring and many countries are hoarding rice, wheat and corn, it makes no sense to devote America's heartland loam-some of the richest land in the world--to the production of corn-based ethanol. However, technologies to convert hard-to-break-down grasses grown on scrubland to fuel do make sense.

In the area of power, renewable sources such as wind and sun might change the game. Here the problem is barriers to scaling production. Solar, for example, is currently stuck in a catch 22 where limited production is keeping costs high, slowing deployment. At a minimum the Solar Tax Credit must be made permanent. But more broadly, utilities must be prompted to purchase a larger share of power from renewable sources through renewable portfolio standards.

Finally, as more and more cars hit the road in China and India, electric cars must be part of the solution. We have written about game changing companies such as Project Better Place on this blog. Even the mass adoption of traditional hybrids technology such as that used in the Prius would make at best a dent in C02 emissions. A pure electric vehicle running on clean electric power, however, could change the game.

Both Democratic presidential candidates, Barack Obama and Hillary Clinton have proposed spending up to $150 billion on energy research and development. The key will be putting whatever money is ultimately allocated to good use to drive the development of new technologies.