Climate Change

Media Round-Up: Green Project Director Michael Moynihan at COMPETE Coalition Forum

Yesterday, Michael Moynihan spoke alongside energy experts Bill Massey, Dan Munson, and Kurt Yeager at an event hosted by the COMPETE Coalition. Here are a couple of the accounts of the event from trade press:

From Restructuring Today:

Compete Coalition conference reminded why innovation is key 

The current system of power industry regulation is ill-suited for driving innovation in the very significant ways needed to address climate change, experts said at a Compete Coalition event yesterday in Washington. Innovation in the industry has been declining, notwithstanding the work at EPRI, with low R&D budgets and little incentive to try new things, said think tank NDN's Green Project Director Michael Moynihan.

Moynihan's report titled "Electricity 2.0" advocates opening up the grid or "network" to two-way communication between customers and suppliers.

More here (subscription required).

From Electric Power Daily:

Experts decry antiquated nature of grid, regulations 

The current regulatory structure "has created the grid it was designed to create" but is extremely ill-suited to meet the needs of a 21st century electric industry, an official with a Washington think tank said Wednesday.

US consumers can "buy flowers from Ecuador but can't get electricity, moving at the speed of light, from one coast to the other," Michael Moynihan, director of NDN's Green Project, said at a panel discussion hosted by the Compete Coalition.

With a structure that offers no incentive to conduct innovative research and development, or even to deploy innovations by others, the electric utility industry cannot be expected to lead the way to a clean energy future, he asserted. Moynihan avoided laying blame entirely at the feet of the power industry, observing that "we absolutely do not have the policies in place" to encourage innovation; to the 

contrary, they work against it.

Sharing the view that industry is not to blame, Dick Munson, senior vice president at Recycled Energy Development, agreed it is a policy problem. "Without competition, we are going to limit ourselves to expensive and dirty power," he asserted. The current regulatory regime "is byzantine at best."

But that does not mean there is no role for government, Munson continued. "Government needs to set the goals for where we are headed," and open up the markets to "a flood of innovators and entrepreneurs," he said.

Decrying a "bipartisan habit" on Capitol Hill of trying to pick winners, Munson suggested Congress should "set the standards and let the market figure out how to get there." And whatever the standards, added Kurt Yeager, executive director of the Galvin Electricity Initiative, the government must hold all companies to them.

One thing that is desperately needed is a standard for putting power onto the electric grid, Moynihan said. While there is a standard outlet for a consumer to plug into to draw electricity from the system, there is no standard inlet for getting power onto the system, he continued.

"That is precisely what you have in the organized markets," said William Massey, counsel for Compete. Competitive markets provide a standard "plug-and-play" feature and will "enable the innovation" advocated by the panelists, he added.

"A poorly designed market will perform poorly," Massey said, while a well-designed competitive market that encourages innovation can perform "exceedingly well."

A centralized organization, be it a utility or regulatory body, cannot do what the competitive market can, Moynihan agreed. You are "not going to get the diversity of ideas."

He recalled that AT&T's idea for advancing the old black rotary phone was to introduce the Princess phone. It was only after the telecommunications industry was pried open to competition that real innovation began. Likewise, a major obstacle faced by new technology in the electric industry is the "absence of the correct regulatory framework," Moynihan said.

More here (subscription required).

For more on Electricity 2.0, please visit www.ndn.org/electricity20

Green Project Director Michael Moynihan to Speak in DC on March 24 on America’s Clean Energy Future

NDN Green Project Director and Electricity 2.0 author Michael Moynihan will speak on March 24 at noon at the National Press Club at an event entitled "Clean Energy, Smart Grid, and Energy Efficiency: Competitive Electricity Markets and the Path to America’s Clean Energy Future." The event will include leading experts in the clean energy and electricity fields.

The Compete Coalition, the sponsors of the event, issued the following release:

WHAT: Panel discussion exploring the intersection of competitive electricity markets and innovative clean energy, smart grid, energy efficiency, and demand response technologies. 

Unique characteristics of organized electricity markets, such as transparent price signals, well-functioning forward markets, and large geographic scope encourage innovative energy solutions to meet America’s economic and environmental needs. These findings were reflected in the recent “Electricity 2.0” report by NDN and the New Policy Institute, which found that competition in electricity markets is needed to stimulate innovations such as smart grid and clean energy technologies.

WHO: Bill Massey, former Commissioner, Federal Energy Regulatory Commission

Michael Moynihan, Green Project Director, NDN

Dick Munson, Senior Vice President, Recycled Energy Development

Kurt Yeager, Executive Director, Galvin Electricity Initiative

WHERE: Zenger Room, National Press Club, 529 14th Street NW, Washington, D.C.

WHEN: Wednesday, March 24th, 2010, 12:00 p.m. to 1:00 p.m. 

The Tremendous Cost of Oil Dependence

The good people at the Truman National Security Project are out with a new study today on the costs to American security of reliance on oil. Truman COO and Iraq veteran Jon Powers' op-ed on Huffington Post previews the study and includes a telling quote from former CIA Director James Woolsey:

Except for our own Civil War, this [the war on terror] is the only war that we have fought where we are paying for both sides. We pay Saudi Arabia $160 billion for its oil, and $3 or $4 billion of that goes to the Wahhabis, who teach children to hate. We are paying for these terrorists with our SUVs.

From an economic perspective, the reliance on oil is also tremendously costly. This graph (via calculatedrisk) illustrates that more than half of America's trade deficit now consists of imported oil:

Electricity 2.0 Featured in SF Chronicle, Paper Release Today

UPDATE: Michael Moynihan's new policy paper, Electricity 2.0: Unlocking the Power of the Open Energy Network, is now available online. 

This morning, readers of the San Francisco Chronicle opened to page A-10 and saw this op-ed from NDN Green Project Director Michael Moynihan:

To get clean energy, upgrade to Electricity 2.0

While clean energy has captured the imagination of everyone from Silicon Valley venture capitalists to President Obama, it has yet to fulfill its job-creation promise. Non-hydro renewable power accounts for just 3.5 percent of electricity in the United States, compared with 28 percent in Denmark, a leader in the transition to renewable energy. In a study released today, I examine why progress has been so slow in the electricity industry - the network at the center of the wider energy network. The answer turns out to be that our highly regulated system, uniquely complex by global standards, is blocking progress.

Put simply, only by upgrading from Electricity 1.0 - the closed, highly regulated network created a century ago - to Electricity 2.0 - an open, distributed network - can America unlock the potential of clean technology and experience a renewable energy revolution.

It is often said that an inadequate electric grid is slowing the rollout of clean renewable energy. But why is the grid inadequate? Because the regulatory regime of Electricity 1.0 guarantees the current state of affairs. While the industry research consortium, Electric Power Research Institute, has done an outstanding job in improving the reliability of the network, utilities do virtually no research and development. Laws bar them from trying new business models, innovating and taking risks. This bias against innovation prevents utilities from purchasing technologies developed by others. Thus, entrepreneurs find the gates of the network closed. It should not be surprising that a highly regulated industry cannot lead a revolution.

So, how can America upgrade to Electricity 2.0? As with telecom reform, Electricity 2.0 will require nothing less than a Big Bang that includes federal legislation as well as close cooperation with the states to harmonize rules of the road. Partial reform, such as has taken place in Texas and California, is a start, but it is not enough. What's needed is an entirely new plug-and-play architecture that opens the grid to everyone, making connection the norm not the exception.

Read the full piece.

For more on Moynihan's compelling vision for Electricity 2.0, join NDN at 12pm today for a presentation of the paper. Copies of the paper, entitled "Electricity 2.0: Unlocking the Power of the Open Energy Network," will be available for distribution. 

Electricity 2.0: Unlocking the Power of the Open Energy Network
Thursday, February 4, 12 p.m.
NDN: 729 15th St. NW, 1st Floor
RSVP 

If you are unable to join us in person, a live webcast will begin at 12:15 p.m. ET.

This Thursday - Electricity 2.0: Unlocking the Power of the Open Energy Network

ElectricityClean energy has captured the imagination of people from Silicon Valley, who invested $5.4 billion in the sector last year, to President Obama, who highlighted it in his State of the Union Address. However, it has yet to fulfill its economic promise and displace legacy fuels in America’s electricity sector, especially when compared with the significant progress made in other countries. Today, non-hydro renewables account for just 3.5% of electricity in the US.

This Thursday, NDN and New Policy Institute Green Project Director Michael Moynihan will release a study examining the electricity industry – the network at the center of the wider energy system – to understand why progress has been so slow. He argues that the answer lies in the outdated and complex structure of Electricity 1.0, a closed, highly regulated network created a century ago, fundamentally incompatible with clean technology and renewable power. 

Moynihan will argue that America must upgrade to Electricity 2.0, an open, distributed network, or there will be no clean energy revolution, no explosion of wealth, and no creation of millions of jobs. But if we do make this shift, America can unlock the potential of clean technology and experience a renewable revolution.  

On Thursday at 12pm, Moynihan, a former Senior Advisor on E-Commerce to Treasury Secretaries Summers and Rubin, will describe the transformative power of Electricity 2.0 and will outline the steps America needs to take to achieve this vision. Copies of the paper will be available for distribution, and lunch will be served. If you are unable to join us in person, the event will be live webcast beginning at 12:15pm, and copies of the paper will be posted on the NDN and New Policy Institute websites later in the afternoon. 

Electricity 2.0: Unlocking the Power of the Open Energy Network
Thursday, February 4, 12 p.m.
NDN: 729 15th St. NW, 1st Floor
A live webcast will begin at 12:15 p.m. ET
RSVP  :  Watch Webcast

I look forward to seeing you on Thursday for this important presentation. 

For more on this topic, please see:

Removing Roadblocks to the Growth of Renewables by Michael Moynihan, August 17, 2009

NDN Green Project Releases Major New Paper on Clean Technology and the Nation's Electricity System

NDN and the New Policy Institute are pleased to announce the release of a major new paper on clean technology and the nation’s electricity system by NDN Green Project Director Michael Moynihan. A former Senior Advisor on Electronic Commerce to Treasury Secretaries Rubin and Summers, Moynihan will lay out a compelling vision on breaking down barriers to a low-carbon economy.

An op-ed by Moynihan on this subject in today's San Francisco Chronicle is available here.

The paper release will occur at 12pm on Thursday, February 4 at NDN.

This event will be live webcast.  The webcast will begin at 12:15 pm.  Watch the webcast here.

 

Location

NDN Event Space
729 15th St. NW First Floor
Washington, DC 20005
United States

A Funny Thing Happened on the Way to a Climate Agreement: Rounding-Up Copenhagen

In addition to Michael Moynihan’s must read analysis of the UNFCC COP-15 in Copenhagen, here’s a round-up of some analysis of the climate summit:

Climate Conference Ends in Discord by Fiona Harvey, Ed Crooks and Andrew Ward, FT

The Copenhagen climate conference ended on Saturday without unanimous agreement as the world’s biggest economies backed a limited accord that leaders said would form the basis for a future deal to tackle global warming.

Ban Ki-moon, UN secretary-general, acknowledged that the outcome was “not everything we hoped for” but described it as an “essential beginning” as he brought a close to two weeks of fractious negotiations in the Danish capital.

Talks had continued through Friday night into Saturday morning in a bid to reach consensus on a tentative agreement struck between the US, China and other big emerging economies on cuts in greenhouse gas emissions and financing to help developing countries cope with climate change.

But several developing countries, led by Venezuela and Bolivia, refused to endorse the deal, ensuring that the conference would end without an official agreement. Instead, all 193 countries agreed to “take note of the Copenhagen Accord” without committing to accept it.

What Hath Copenhagen Wrought? A Preliminary Assessment of the Copenhagen Accord by Robert Stavins, Harvard University 

It is unquestionably the case that the Accord represents the best agreement that could be achieved in Copenhagen, given the political forces at play.  Indeed, were it not for the spirited – and as I suggested above, quite remarkable – direct intervention by President Obama, together with the other key national leaders, there would have been no real outcome from the Copenhagen negotiations.  

Examining the Copenhagen Accord by Michael A Levi, Council on Foreign Relations

The Copenhagen Accord, agreed to on Saturday, is neither earth-shattering nor a failure. It avoids an international political mess that appeared likely as late as Friday afternoon. It falls short of expectations mainly because expectations had been ratcheted up far beyond what was realistic. It is a meaningful step forward, but its ultimate value remains to be determined.

Attention should now turn to elaborating the transparency measures contained in the text, and to implementing ambitious and intelligent domestic emissions-cutting efforts in the major emitting countries. It would be unwise to place significant hopes on converting the deal into a legally-binding pact soon.

The most interesting point to me, though, is what the process in Copenhagen means for Europe. Europe, unquestionably the leading region of the world in addressing climate change, was rendered virtually diplomatically irrelevant by the United States and a group of emerging economies:

An Air of Frustration for Europe at Climate Talks by James Kanter, The New York Times

Mr. Reinfeldt said President Barack Obama had been “very constructive” at the talks, creating a basis for the accord by smoothing over the dispute with China over an international monitoring system for emissions.

Still, the Swedish leader hinted that the Europeans had been caught badly off guard.

Mr. Reinfeldt said he had gotten his first signals that a deal had been struck while still engrossed in meetings.

“We had very tough negotiations two and a half hours after I read on my mobile telephone that we were already done,” he said.

 

Scoping Out Plan B for Climate Change

Beyond the public’s view, major players in the climate change debate are reassessing their options.  In fact, as the prospects of Congress approving a cap-and-trade system fade, discussion is shifting to “Plan B.”

One reason is that the version of cap-and-trade which just barely passed the House of Representatives a few months ago, the Waxman-Markey bill, made so many concessions to polluting interests that its support among environmentalists has eroded badly.   Here’s one indicator of just how weak the bill is:  When it passed the House, bond ratings for coal companies improved – a remarkable development given that coal-generated electricity is the single largest source of greenhouse gas (GHG) emissions.   In the Senate, progressives are said to be determined to oppose any legislation that ends up as weak as Waxman-Markey.   And the moderates and conservatives who make up a majority of the Senate remain wary of climate-change engineering in a cap-and-trade form, since it would both raise energy prices for average Americans and make those prices more volatile for business.   The upshot is that the prospects of corralling 60 votes for the Kerry-Boxer cap-and-trade bill in the Senate have faded to nearly zero.  

In truth, the support for a cap-and-trade system always has been limited largely to a handful of sources. There are two large environmental groups – the Natural Resources Defense Council (NRDC) and the Environmental Defense Fund (EDF) – wedded to the notion of dressing up a regulatory cap on emissions with market-based trading in the emissions permits, and the Wall Street institutions eager to get a piece of all that trading and the speculation and derivatives it would throw off.  In addition, a few large energy companies with major business lines in trading energy futures have been active supporters, as have some other companies confident they can exact the kinds of special exemptions for themselves that ultimately hobbled Waxman-Markey.   Even that limited base has been shrinking:  Wall Street support has become a big negative in the current political context, and there are reports that in the wake of Waxman-Markey, NRDC is now internally divided over the basic strategy.

With the fate of cap-and-trade in the Senate pretty much sealed – in effect, cap-and-trade’s third successive rejection by the Senate -- the debate behind the scenes is moving to the alternatives.   The two leading options are direct EPA regulation of GHG emissions or a revenue-neutral carbon tax.  The courts recently held that EPA already has the authority to regulate GHG emissions, and the eclipse of cap-and-trade will shine a new spotlight on this approach.  The alternative is one which a good share of the environmental community, most economists, and climate-change leaders like Al Gore have all supported:  Apply a tax to energy based on its carbon content, and recycle the revenues as cuts in payroll or other taxes.  Given how economically costly direct regulation can be – and the uncertainties about what such regulation would look like under the next conservative president, compared to our present liberal one -- its prospect could quickly expand support for a carbon tax program.  That approach also has the virtue of a successful record:  While Europe’s cap-and-trade system has yet to reduce European GHG emissions, Sweden’s 15-year experiment with carbon-based taxes cut the country’s emissions sharply even as its economy grew 50 percent larger. 

For its supporters, a carbon tax is simple, transparent, and produces a steady price for carbon which businesses can use to plan large investments in developing and adopting more climate-friendly fuels and technologies.  To its opponents, it’s just another tax.  That objection should be at least partly neutralized by recycling the revenues through other tax cuts – if the debate remains reasonable.  In the end, environmental and business leaders, and ultimately the White House, will have to defend a carbon-based tax against the forces of politics as usual, which in this time seem dominated by the power of entrenched interests and the partisan politics of just-say-no-to-everything.  If we can’t manage that, we may well lose the best chance in a generation to take serious action to defend he climate our children and grandchildren will inherit. 

Bipartisan Action on Climate Change Is Exciting, As Long As It's Also Multilateral

Over the weekend, Senators John Kerry and Lindsey Graham penned a joint op-ed in the New York Times that has made those of us who care about action on climate change pretty happy. The prospects of Republican support extending beyond the Snow-Collins duo to John McCain's best friend in the Senate this early in the process is exciting, to say the least. And the compromise that Graham wants isn't too far-fetched.

There is, however, one piece of the op-ed that has made many who understand that combating climate change is a multilateral challenge nervous:

Fourth, we cannot sacrifice another job to competitors overseas. China and India are among the many countries investing heavily in clean-energy technologies that will produce millions of jobs. There is no reason we should surrender our marketplace to countries that do not accept environmental standards. For this reason, we should consider a border tax on items produced in countries that avoid these standards. This is consistent with our obligations under the World Trade Organization and creates strong incentives for other countries to adopt tough environmental protections.

I agree that we can't sacrifice jobs to overseas competitors. Competitiveness is one of the best reasons to pass climate legislation that spurs innovation and deployment of a whole generation of low-carbon technologies domestically. That said, climate change is a pressing global challenge that inherently requires unprecedented levels of global cooperation, but the proposed punitive trade policies are expressly unilateral mechanisms. This is a policy mismatch that will not help us solve this challenge. 

If we want the developing world – from which the vast majority of emissions growth is expected in the coming decades – to be on board with creating a solution to climate change and to buy our climate-friendly goods, slapping a tariff on them right away is not the way to make friends and influence people. And it's not as if the United States has been leading on climate issues – Imagine the American response if Europeans had imposed these tariffs. I don't want to begin to imagine the retaliation that other nations may decide upon; what do we do if China and India – who already have high barriers to climate friendly technologies – decide that they're not quite high enough, especially for American goods?

Additionally, it's crucial to note that climate legislation already allots (as opposed to auctions) permits to energy intensive industries. Tariffs amount to a double correction. Here's leading international economist Jagdish Bhagwati at a recent NDN-New Policy Institute event speaking about the tariffs and the WTO compliance of a cap and trade regime:

Some important people are wary of or opposed to these tariffs: The head Intergovernmental Panel on Climate Change, Rajendra Pachauri, thinks they're a bad idea:

"This is a dangerous thing, and I think people in Congress must understand this," said Pachauri, who spoke with the AP after he addressed the National Press Club. "Please don't use this weapon. I'm afraid that those that have been pushing these provisions probably don’t realize that all of this can cause a major negative reaction," Pachauri added. "The United States has always stood for a free market system. … Legislation to move away from that principle is clearly counterproductive."

As does President Obama

At a time when the economy worldwide is still deep in recession and we've seen a significant drop in global trade, I think we have to be very careful about sending any protectionist signals out there. There were a number of provisions that were already in place, prior to this last provision you talked about, to provide transitional assistance to heavy manufacturers. A lot of the offsets were outdated to those industries. I think we're going to have to do a careful analysis to determine whether the prospects of tariffs are necessary, given all the other stuff that was done and had been negotiated on behalf of energy-intensive industries.

So certainly it is a legitimate concern on the part of American businesses that they are not disadvantaged vis-a-vis their global competitors. Now, keep in mind, European industries are looking at an even more ambitious approach than we are. And they obviously have confidence that they can compete internationally under a regime that controls carbons. I think the Chinese are starting to move in the direction of recognizing that the future requires them to take a clean energy approach. In fact, in some ways they're already ahead of us -- on fuel efficiency standards, for example, they've moved beyond where we've moved on this.

There are going to be a series of negotiations around this and I am very mindful of wanting to make sure that there's a level playing field internationally. I think there may be other ways of doing it than with a tariff approach.

I'm excited that the chances for getting climate change legislation through the Senate have grown, I just don't want to see them destroy the chances for multilateral climate action. Both are important for American competitiveness, jobs, and the creation of a low-carbon economy.

Recap: Insights into the Future of Clean Transportation

Yesterday, NDN hosted three experts in the automobile industry to discuss the future of clean transportation. NDN Green Project Director Michael Moynihan moderated this wide-ranging and well attended discussion, the video of which can be found below.

Kim Hill, the Associate Director of Research at the Center for Automotive Research and the Director of the Sustainable Transportation and Communities Group, spoke about a recent study he conducted on the economic impact ATT’s shift to a more efficient vehicle fleet. The short version: the conversion to CNG and hybrid vehicles saved fuel and money and created jobs. The detailed study can be found here.

Mike Granoff, the Head of Oil Independence Policies for Better Place, the first service provider for electric cars, building infrastructure, software and the user interfaces to make electric cars available for mass adoption, spoke about the Better Place vision and business model and updated us on Better Place's progress. During the session, he mentioned the video of the battery swap station at work, which can be found here on the Better Place website

Finally, Dr. Kathryn Clay, the Director of Research for the Alliance of Automobile Manufacturers spoke about the industry's efforts to innovate to cut greenhouse gas emissions and the regulatory environment around those efforts. More on the Auto Alliance can be found here.

Here's the video of the full session:

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