Policy Matters

Policy shapes demand. Policy drives investment. Policy equalizes distorted markets misshapen by information failures, inadequate environmental or labor protections, and historic subsidies. Often there is no substitute for public action.

The evidence is everywhere. We have seen policies that reduce the risk and cost of nuclear power create a market for new plants, and subsidies for oil companies drive new exploration. Today we have the experience of wind turbines springing up in the twenty-three states (and Washington, D.C.) where renewable portfolio standards (RPSs) have been put in place. The Chippewa Valley Wind Farm is a tangible testament to the power of the RPS. According to rural development expert David Morris, over half of new wind energy investments can be attributed directly to those state policies.1 An RPS is a great equalizer.

At the same time wind power has been blowing with gale force, the interest in biofuels has been exploding, driven largely by the enactment of tax incentives and a federal requirement for the production of 7.5 billion gallons of biofuels by 2012 in the Energy Policy Act of 2005. The floodgates of new financing opened once the future market was certain. Policy will play just as important a role in the transition to next-generation biofuels made from cellulose and dedicated energy crops.

Around the country, we have also seen the explosive growth of green building and energy efficiency driven by the adoption of new efficient building codes and requirements for public buildings to meet LEED standards. As states and cities recognize that more than two-

thirds of all electricity use and 38 percent of global warming emissions are the result of inefficient energy use in buildings, some localities have adopted strong energy-efficiency standards.2

We know we can also ensure that economic growth associated with clean energy can be captured right at home by providing incentives for industries to do their manufacturing domestically, as Washington State (under Governor Christine Gregoire's leadership) is doing to attract new solar manufacturing, and Japan has done to corner the world solar market. We must not allow a repeat of the recent solar story, in which Americans invented the technology and the Japanese and Germans commercialized it through smart policy incentives.

We can also use policy to ensure not only that we create jobs, but that those jobs create high-quality wages and benefits and the gains are shared broadly. Community benefits agreements link economic subsidies to local hiring to ensure that job gains reach the people who need them most. Support for training, skills certification, and apprenticeship programs create career ladders for workers leading to stable jobs with family-supporting benefits, and ensuring the right to organize a union helps guarantee those gains for the long term. We should be concerned with job quality as well as job creation.

It is not only government policies that matter, however. Increasingly, the rules set forward by institutional investors and in corporate governance are driving clean-energy investment. The California Public Employees' Retirement System (CalPERS), thanks to the leadership of then state treasurer Phil Angelides and CalPERS board chair and labor leader Sean Harrigan, became a pioneer in the use of pension funds to build a clean-energy economy. CalPERS created the Green Wave program, which has invested over a billion dollars in clean technology, retrofitting real estate portfolio holdings and establishing a screen for investments that directs funds toward businesses that are responsibly managing carbon emissions.3 Both CalPERS and groups like Ceres, under the leadership of Mindy Lubber, have broken new ground in using shareholder activism to push companies to consider the financial risks associated with their climate impacts, thereby helping to accelerate investment in clean technology as a rapidly growing sector of the economy.

Source: National Science Foundation, Federal R&D Funding by Budget Function, Fiscal Years 2001-03.

Federal spending on research and development in energy has decreased in the last three decades, while R&D in defense has skyrocketed. We are failing to invest in real security through clean energy. (Daniel Kammen, UC Berkeley, and Andrew Pratt, Center for American Progress.)

Source: National Science Foundation, Federal R&D Funding by Budget Function, Fiscal Years 2001-03.

Federal spending on research and development in energy has decreased in the last three decades, while R&D in defense has skyrocketed. We are failing to invest in real security through clean energy. (Daniel Kammen, UC Berkeley, and Andrew Pratt, Center for American Progress.)

In Pennsylvania, Tom Croft and the Heartland Labor Capital Network have pooled tens of millions of dollars in labor pension funds to invest in clean energy and manufacturing projects to rebuild a hard-hit region of the state. Croft joined Pennsylvania governor Ed Rendell, who convened a North American deal-flow network, bringing together twelve pension funds with combined assets of between $20 billion and $25 billion to promote in-state investments that retained manufacturing and supported worker- and environment-friendly companies, while meeting their fiduciary responsibilities to build their bottom lines.4 At the same time, private equity firms like KPS have been investing in turning around domestic steel mills while also investing in energy efficiency and providing workers with a share in the ownership. The AFL-CIO Housing Investment Trust has a billion-dollar project for reconstruction in New Orleans that is investing in green manufacture of building materials. These efforts show that corporate governance setting the rules for institutional investors to be socially responsible is emerging not only as a way of doing good work, but also as a way of building real prosperity for both investors and communities.

In spite of these exciting trends in states and the investment community, as of this moment our national policies remain a mess. A failure of federal leadership has resulted in a stagnating fuel economy. The trade deficit is out of control in part because of our massive oil imports. Family gas bills soar, while bills to require oil savings and retool American plants to produce more efficient vehicles languish in Congress.

The leadership we have seen across the economy and across levels of government—from the over 500 mayors who joined the U.S. Mayors Climate Protection Agreement to regional coalitions of governors joining in compacts to create carbon markets—is exciting. But there is no substitute for federal policy. Both the size of the challenge and the need for consistent policies across the nation cry out for federal investment and sound regulation in the public interest.

Time is running out. The nation's leading climate scientist, James Hansen, says, "I think we have a very brief window of opportunity to deal with climate change ... no longer than a decade, at the most."5

The question, then, is this: What are we going to do about it?

Renewable Energy 101

Renewable Energy 101

Renewable energy is energy that is generated from sunlight, rain, tides, geothermal heat and wind. These sources are naturally and constantly replenished, which is why they are deemed as renewable. The usage of renewable energy sources is very important when considering the sustainability of the existing energy usage of the world. While there is currently an abundance of non-renewable energy sources, such as nuclear fuels, these energy sources are depleting. In addition to being a non-renewable supply, the non-renewable energy sources release emissions into the air, which has an adverse effect on the environment.

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