Exactly what non-defense spending initiatives by the US government have brought us benefits instead of unintended consequences? Defense spending over 2 world wars developed the technology that made air travel safe and widely available. Defense spending brought us the digital computer. Private markets brought us the electric grids and telcom networks. What are the public initiative equivalents? I can't think of any.
I mention this only to note that policy initiatives are likely to produce more negative unintended consequences than positive outcomes, think ethanol. These incentives have increased food prices and reduced the lives of auto engines. Just leave things to the market. If there is a way to reduce cost, the market will find it.
Policy wonks, the guys who think they are smart enough to fine tune economic outcomes, always want a policy. Google should invest its own money (as I think it is doing) in technologies it thinks will make it money in the long run, not because of the green outcomes, but because of the $green$ outcomes. The rest will take care of itself.
Remember, part of the reason the internal combustion engine was embraced was people considered it cleaner and more sanitary than horses.
I don’t know about you, but I’m kind of inclined to sit up and listen to someone who self-describes himself as a “green energy czar” no matter how pretentious I think the title. So, that’s why I’m perched in front of my notebook computer late on a Tuesday night, reading Google.org Green Energy Czar Bill Weihl’s commentary about his organization’s new research covering why new clean energy is worth the investment. Actually the blog is signed by both Weihl and Charles Baron, from the Google.org Clean Energy Team. Google has invested plenty of money in this area — nearly $1 billion — so it had better be sure that there is a payoff.
The data that Google uses was crunched with the McKinsey Low Carbon Economics tool, which calculates the potential economic impact of certain technologies based on both policy and innovation. The research that the Google energy team has created and analyzed focuses on potential long-term economic impacts for the United States ASSUMING certain breakthroughs (policy and technology) for technologies including wind, geothermal, energy storage, and electric vehicles. The Google team is studying two primary time frames: 2030 and 2050.
The resulting 28-page report, called “The Impact of Clean Energy,” models three different scenarios for each sort of green technology being considered: a business as usual situation; a “Clean Policy” world in which existing or proposed federal policies are passed, including the Clean Energy Standard (calling for a certain portfolio of renewables), the Corporate Average Fuel Economy (CAFE) regulations, and others; and a world in which the power sector is levied a $30/ton price on carbon. The complete methodology is extensive and full of disclaimers, so make sure you read it!
Here are some report highlights:
- Regardless of the political policy scenario, clean energy innovation will have a positive impact on the U.S. economy. I’ll give you the most likely (given the current political climate) and least positive scenario, which is the business as usual one. By 2030, the data suggest that clean energy technologies will have added $155 billion in gross domestic product (GDP) and created 1.1 million net new jobs. The average household will be saving $942 per year in energy costs, U.S. oil consumption would decrease by 1.1 billion barrels (more than the entire production of Canada in 2009), and greenhouse gas (GHG) emissions will ease by 13 percent.
- The battery’s the thing, part 1. Well, at least one of my gut instincts has been confirmed. The Google research finds that battery technology innovation will be one of the key factors in clean energy innovation. That’s because they will be really important for the cost-performance scenarios related to electric vehicles and hybrid vehicles. Google’s assumptions about energy densities and battery costs would allow for electric vehicles with a more than 300-mile range and a pricetag less than internal combustion vehicles. If that happens, the various electric vehicle technologies could achieve a 90 percent annual sales market share by 2030. The report notes: “Electrifying transportation, even in scenarios where coal remained the dominant source of electricity, still reduced total transportation emissions (from all energy sources including electricity) by 9 percent, despite increasing electricity consumption by 13 percent.”
- The battery’s the thing, part 2: Energy storage will likewise be critical for improving quality and reliability of the electric grid. Especially in the case of renewable technologies including wind and solar, because the intermittent nature of the electricity they create won’t mirror actual supply and demand. Google’s energy team writes: “Storage can alleviate this constraint by charging at times when renewable sources are strongest and then discharging when other demand is available. When storage and power breakthroughs were combined, we estimated that storage enabled an additional 35 percent renewables generation by 2050.”
- Delay could be costly: In case U.S. businesses and lawmakers are inclined to want to sit around and talk about this some more before you actually do anything, Google’s data figures that that if we were to delay clean energy innovation by, say, five years, the aggregate costs to the economy could be $2.3 trillion to $2.2 trillion to the economy between 2010 and 2050.
- Innovation + policy is the right formula: Google’s research suggests that it is the combination of policies, such as a carbon price on the power sector, PLUS innovation that is the right formula for growth through clean energy innovation. Considering a scenario in which carbon taxes were adopted by no clean energy innovation was encouraged, some good things would happen by 2030: GDP would grow by $53 billion and 558,000 jobs could be added, while GHG emissions dropped by 9 percent. But consumer energy bills would actually rise. The report’s conclusion: “Breakthroughs on their own did not create as much value as when combined with policy.”
