By Bill Moore
Posted: 23 Apr 2010
When U.S. Senator Ben Nelson walked into the Terminal A waiting lounge at Washington's Reagan National Airport yesterday, I couldn't resist the opportunity to buttonhole him.
Nelson, who technically is a Democrat and from my home state of Nebraska, is best known for the loathed "Cornhusker Kickback," a controversial provision in the healthcare bill that would have given "Nebraska 100 percent federal funding of the Medicaid expansion indefinitely into the future," according to Wikipedia.
Since I had just left the Creating Climate Wealth Summit an hour earlier, I decided to see what his position is on cap and trade. The consensus of the attendees at the Summit put on by the Carbon War Room, whose CEO is my friend Jigar Shah, was that we need to place a value on carbon in order to provide the necessary incentives for the investment community and industry to shift into high gear for the development of a 'green economy.' Just the night before, Secretary of Commerce Gary Locke had told a gathering of NGOs, environmentalists, venture capitalist, and entrepreneurs at the 40th Anniversary gala dinner for Earth Day, that the Obama Administration was about to propose a Cap and Trade system that set a price on carbon. That announcement was met with a wave of enthusiastic applause.
During the two days of intensive workshops at the Summit, in which I was privileged to participate, we debated the merits of various strategies, including a gasoline tax and gas guzzler fee, the former endorsed by oil companies, but considered political suicide in Congress. Nelson agreed that a tax on gasoline would have no support in the U.S. Congress. Any member proposing such a measure could kiss their political career goodnight, including Senator Nelson, whose last-minute support for health insurance reform earned him a lot of enemies back home. His tired eyes and demeanor suggested it was taking its toll on him.
So what about Cap & Trade? Here he was a bit more amenable, but only if it was gradually phased in over twenty-five years. His concern was that if we immediately applied a "tax", it would harm states like Nebraska that heavily rely on coal in a state with some of the lowest electric power rates in the nation. He talked about "widows" not being able to pay their electric power bills if rates suddenly shot up.
"I've had this discussion with Senator (John) Kerry," Nelson told me. "Cap &Trade may be good for Massachusetts, but not for Nebraska. We have to find a way to apply it equitably," he continued.
Just about this time, a Milwaukee-bound passenger, who had overheard our conversation, jumped in and agreed with Nelson, saying, that he was in the manufacturing business and one of his customers was Caterpillar. He was afraid that if we took unilateral action as a nation to price carbon, which they are already doing in Europe, by the way, it would just drive more jobs and industry overseas. "The carbon would just shift to China," he said. Then he asked me to take his picture with the Senator, which I did. Mr. Nelson might have won at least one vote yesterday. Too bad it's in Wisconsin.
Now, I suppose there's a certain logic to both the Milwaukee manufacturer and Senator Nelson's perspective, if you assume that neither China nor India have any plans to mitigate their own carbon emissions, which may not be entirely accurate, at least in China's case. Yes, they rely heavily on coal, but they are also heavily committed to both nuclear power and renewable energy from wind and solar, largely for two reasons: the health of their people and their economy. Chinese cities are some of the most heavily polluted on the planet. According to a 2007 New York Times article, "Only 1 percent of the country’s 560 million city dwellers breathe air considered safe by the European Union." Writes Joseph Kahn and Jim Yardley…
Public health is reeling. Pollution has made cancer China’s leading cause of death, the Ministry of Health says. Ambient air pollution alone is blamed for hundreds of thousands of deaths each year. Nearly 500 million people lack access to safe drinking water.China is where Victorian-era Britain was at the peak of its industrial revolution, a grimy, unhealthy place to live, and the Chinese government knows it. But in that eye-burning, lung-scarring dilemma they also smell opportunity: a world-class renewable energy industry that not only cleans up their environment, but also the world's. In 2009, China invested US$34.6 billion in renewable energy investments, nearly double that of the United States, which invested US$18.6 billion. The United States just barely leads China in the deployment of renewable energy with 53.4 Gigawatts to 52.5 for China, according to Pews statistics as reported by the Guardian newspaper in the UK.
As Secretary Locke pointed out during his speech, which shortly will be available here on EV World, if America doesn't get serious about recapturing the technological lead in 'green energy' we will be forced to buy it from China and India. Meanwhile, back in my home state of Nebraska, where the Senator and I were about to fly, two of the biggest corporations in the state make much of their profit from coal; the Keiwit Company from mining it and Union Pacific Railroad from hauling it. While the state's overall contribution of CO2 from the burning of coal to produce electric power is relatively small compared to states with much larger populations, it still is significant. On average, Nebraskan's use 16% more electric power annually, per capita, than the national average. In a state that is ranked in the top 10 for wind energy production potential, we are number 22 in actual installed wind generation capacity. We are ranked 24th in the nation in energy efficiency. In 2007, the state spewed some 43.87 million metric tons of CO2 into the planet's gossamer thin atmosphere; 20.12 of it from electric power production. Alabama, by comparison, produced a total of 145 MMT; 84 of it from electric power related. It gets a lot hotter and stickier longer in Alabama than in Nebraska.
Where the Chinese see both necessity and opportunity, Nebraska's political leadership has, at least up until this year, taken a go-it-slow, don't-rock-the-utility-monopoly-boat attitude. General Wesley Clark spoke at the Creating Climate Change Summit on Thursday and talked about the attitude of politicians in Arkansas, who cautioned him that utilities ran the state and they didn't cotton to competition from upstart wind and solar farm developers, which his investment banking firm backs. His comments could just as easily have applied to my state, at least that's the opinion of at least two renewable energy project developers who are acquaintances of mine. When Senator Nelson expressed his concern about "widows" not being able to pay their electric power bills in a state where we pay just 6.5¢ a kilowatt hour, I had to wonder if it was the widows he was worried about or our public power companies who probably contribute far more to his re-election campaign than do those poor widows.
When I interviewed Paul Gipe, a well-respected renewable energy expert and wind power author, he pointed out that people in Europe enjoy pretty much the same level of comfort and convenience that we do in America while paying electric utility rates multiple times higher than we do here in Nebraska. The reason is they waste far less of their energy: they are much smarter about how they use it.
Senator Nelson's 25-year phase-in of Cap & Trade would also seem reasonable except that we probably don't have 25 years. The UK Peak Oil Task Force, of which Richard Branson is a member earlier this year forecast oil production constrains starting to be felt mid-decade. Toyota is figuring it will happen starting around 2017. The Kuwaitis are saying 2014. And now the U.S. military Joint Services Command is warning oil shortages beginning to occur by 2015. Electric power production in America relies little on oil anymore, a lesson we learned more than 30 years ago. It's our transportation system that is vulnerable to shortages, including the railroads that transport all that coal and the equipment that strip mines it in Wyoming and West Virginia.
As the cost of transportation and all the other commodities we make from oil start to climb, it is going to have a ripple effect through the entire economy. We are going to have to find other sources of energy to power our vehicles, including biofuels, which Nebraska has in abundance, natural gas, and electricity. This presents us with a choice: we either go down the coal path, the nuclear power path or the renewable energy path. The first destines us to emulate China. The second bequeaths on untold generation dangerous radioactive wastes. The last requires vast tracts of land and resources to produce, store and distribute electricity produced from wind and solar energy, but the "fuel" is clean, free and forever.
If we pursue the third path, the only question is, will we buy those solar panels, wind turbines, power lines, battery banks, and electric cars from American companies employing American workers, or will we buy them from China and India? While I favor employing and empowering the poor in both countries, I don't care to do so at the expense of my own countrymen. Besides, the markets in all three countries are big enough to satisfy each. After all, the world is a big place, and more than a billion people have never seen an electron of energy, much less lights and electric cars.
But back to the question of Cap & Trade. China doesn't have a national Cap & Trade system. What they do have is a heavy-handed, top-down political bureaucracy that isn't dependent on getting re-elected every two, four, or six years. Their leadership sees a problem and its opportunity with a clarity to be envied; unlike our seemingly mired-in-mud (or is it quicksand?) system driven by short term expediency. Cap & Trade equals the playing field among energy providers here in America by making them pay to pollute and rewarding them if they don't. That, if it is to be believed, will incentivize both producers and consumers to use energy more efficiently, creating new technologies and job opportunities. Senator Nelson and I -- as well as you -- are faced with a decision. We either accept the politburo approach that pushes decision making from the top down or we use the market to pull them from the bottom up. For 150 years we've let industry dump their waste into our waters, on our land, and into our air. We've built a highly successful economy out of it, but now we're starting to reach a critical tipping point in how much of that pollution -- and carbon -- the system can absorb. Cap & Trade is one approach to solving the problem. It's probably the least heavy-handed. It also may be -- if Senator Nelson has his way -- the least responsive, given the crisis we may start to face within the next five years.
Besides in 25 years, Senator Nelson probably won't have to worry about re-election or his 'widows.'
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