Green Tech

House Democrats on Thursday revealed details of a massive legislative effort they said would inject new life into a flagging U.S. economy, thanks to a combination of $825 billion in tax cuts and new government spending.

The sprawling, 258-page draft bill includes $32 billion in electric power upgrades, sometimes known as "smart grid" technology, $6 billion for expanded broadband Internet access, and $20 billion for health care information technology.

"The economy is in a crisis not seen since the Great Depression," said letter published Thursday by Rep. David Obey, a Wisconsin Democrat who heads the House Appropriations Committee. "Credit is frozen, consumer purchasing power is in decline, in the last four months the country has lost 2 million jobs and we are expected to lose another 3 (million) to 5 million in the next year."

The House leadership has said it would like to hold a floor vote on the package by January 28 and send it to President-elect Barack Obama by mid-February. One potential obstacle is negotiations with the Senate, which is likely to have its own priorities.

The energy-related sections of what is tentatively called the American Recovery and Reinvestment Act of 2009 include $11 billion for research and development related to the "Smart Grid Investment Program;" $8 billion in loans guarantees for renewable energy generation; $2 billion for loan guarantees to high-capacity battery makers; and $200 million for a grant program for electric vehicles.

Some other portions, excerpted from the summary prepared by Rep. Obey's office:

* Energy Efficiency and Renewable Energy Research: $2 billion for energy efficiency and renewable energy research, development, demonstration, and deployment activities to foster energy independence, reduce carbon emissions, and cut utility bills. Funds are awarded on a competitive basis to universities, companies, and national laboratories.
* Home Weatherization: $6.2 billion to help low-income families reduce their energy costs by weatherizing their homes and make our country more energy efficient.
* Cleaning Fossil Energy: $2.4 billion for carbon capture and sequestration technology demonstration projects. This funding will provide valuable information necessary to reduce the amount of carbon dioxide emitted into the atmosphere from industrial facilities and fossil fuel power plants.
* Alternative Buses and Trucks: $400 million to help state and local governments purchase efficient alternative fuel vehicles to reduce fuel costs and carbon emissions.

In terms of wireless and broadband, the legislation would require the National Telecommunications and Information Administration (part of the Commerce Department) to create a grant program for "nonrecurring" costs of broadband deployment in rural, suburban, and urban areas--meaning, basically, anywhere in the country. NTIA is supposed to prioritize "unserved" and "underserved" areas, two terms that have no actual meaning until the Federal Communications Commission eventually comes up with one.

State governments may apply for grants by submitting reports listing which of their areas have unserved wireless voice, underserved "advanced wireless broadband," unserved basic broadband, and underserved "advanced broadband service." NTIA will dole out separate funds for wireless deployment and broadband deployment.

"Advanced broadband service" is defined as at least 45 megabits per second downstream and 15 megabits per second upstream; "advanced wireless broadband" is 3 mb/sec downstream and 1 mb/sec upstream.

Whether this so-called stimulus will have any positive effect on the economy is uncertain, though, because the U.S. Treasury will pay for it by running up the national debt significantly and future generations of taxpayers will be expected to pay it back.

The bailout's cost so far has ballooned to $8.5 trillion, not counting the $5.2 trillion in Fannie and Freddie guarantees, although the Treasury should eventually recover some or even much of this amount. If deficit spending were a sure way to stimulate the economy, the Treasury could simply borrow, say, $100 trillion -- and the economic malaise of the last few months would evaporate.

A recent article by Greg Mankiw, a professor of economics at Harvard and former adviser to President Bush, surveys recent research and concludes that each dollar of government spending increases economic activity by only 1.4 dollars, while (according to Obama's top economics adviser) a dollar of tax cuts raises the GDP by about $3. And Tyler Cowen of George Mason University suggests that "we are being asked to spend (untold) hundreds of billion dollars" even though the evidence it will have a positive impact "is inconclusive."

WASHINGTON--When politicians are doling out trillions of tax dollars in bailouts and so-called stimulus spending, nobody should be surprised if the line of businesses queuing for cash snakes all the way around the Capitol building. The latest idea: more spending on smart grids.

The idea of a smart grid is an alluring one: A far more intelligent electric power system that takes advantage of technological developments to deliver power in a more optimal, energy-efficient way. A household dishwasher could decide to turn on when prices are low at off-peak times, and plug-in electric cars could feed power back into the grid when necessary.

To make the case that a smart grid is deserving of some serious federal largesse, utility companies and their business partners organized an event here on Thursday that drew hundreds of congressional staffers and random political lurkers (the free sandwiches probably helped). The companies demonstrated "smart" thermostats and smart phone applications to monitor energy usage--and then delivered the punch line: significant checks from the U.S. Treasury are necessary to make all this happen.

Given that electric companies make money from energy consumption, they need some government encouragement to adopt smart grid technologies, they said.

Congressman Jay Inslee (D-Wash.) gave his support Thursday for using stimulus money to invest in smart grid technology.

(Credit: Jay Inslee's congressional Web site)

The federal government should provide "the right incentives to allow the utilities to do the right thing," said Bob Gilligan, vice president of transmission and development for GE Energy.

It is expected, business representatives said, that Congress will soon authorize using taxpayer funds for smart grid technology, if not through the upcoming stimulus package, then in either an energy bill or a separate climate change bill.

Rep. Jay Inslee (D-Wash.), who belongs to the House Select Committee on Energy Independence and Global Warming, the Energy and Commerce Committee, and the Natural Resources Committee, was on hand to endorse the spending allocation.

"We know this is driven principally by private enterprise and private inventors, but Uncle Sam needs to belly up to the bar and be the spark plug for this revolution," Inslee said. "We know the world demands clean energy technology. The world is going to go to the door of the country that will develop these new technologies."

Along with increasing loan guarantee programs and research and development funding for such technologies, the federal government could take steps to incentivize the use of smart grids by decoupling utility revenues from the amount of electricity sold, Inslee said. The development of a smart grid system could also be dovetailed with a renewable energy portfolio standard, he said.

"We should not allow this economic crisis to be wasted," Inslee said. "We intend to use this stimulus package to promote investment in these technologies."

Tax vehicles such as investment tax credits would be cleanest way to spur smart grid use, said Dan Delurey, executive director for the Demand Response and Smart Grid Coalition, a trade association.

"The smart grid does qualify for stimulus," he said. "It's infrastructure, and it's shovel ready. There will be R&D, but there are technologies out there that will be deployed now."

Better business models and policy frameworks are needed, the business representatives said, before the country can embrace renewable energies like wind and solar, which are not especially useful on a calm day or when the sun isn't shining. The energy produced by those sources, they said, needs to be integrated into a smart grid that can use other sources of power when necessary.

Furthermore, smart grids can let customers know when energy from environment-friendly sources is available.

"We have the opportunity to put into the hands of Americans the means to save our economy money and address a grave threat" such as climate change, said Dan Abbasi, senior director for the investment firm MissionPoint Capital Partners. (Abbasi's company has invested in companies including Trilliant Networks, which sells "intelligent network solutions that power the Smart Grid," and stands to make a handsome profit from Uncle Sam's generosity.)

Smart grid implementation could also result in installation jobs in every congressional district in the country, he said.

The benefits of the smart grid are spread to all energy participants, not just utilities, said Trilliant CEO Bill Vogel.

However, "like the Internet, the government needs to have some influence and then back out to get something started correctly," he said of the smart grid.

"Through innovation and standards, it is the gift that keeps on giving," he said.

CNET's Declan McCullagh contributed to this report

NOTE: This is a transcript of a segment of 60 Minutes that aired Sunday.

President-elect Obama is 30 days from office. For a window on his future, turn west for a moment, to a chief executive who is already up to his neck in the nation's troubles.

This month, Gov. Arnold Schwarzenegger warned of financial Armageddon, as California faced a potential $40 billion deficit that threatened jobs, roads, schools, and public safety. At the same time, he's pushing some of the world's toughest environmental laws to make California a leader on climate change.

The governor agreed to take 60 Minutes along during his most challenging times. How does he deal with it all? Well, what would you expect a former action hero to say?

* * * * * * * * * * * * * * * * * * * * * * *

"The more difficult it gets, the more joy I find in it. Because it's just great to figure out all of the ways of bringing people together and shaping policy. But to get it done, to get there, is always a long process. But when you get it done, it's very satisfying," Gov. Schwarzenegger told correspondent Scott Pelley.

Maybe it was acting. When 60 Minutes met Schwarzenegger at the state Capitol in Sacramento, he had just declared a state of emergency. His budget plan touched off a political firestorm, which in California would, of course, be accompanied by a real one.

Schwarzenegger and Pelley visited one Los Angeles neighborhood burned to ashes just weeks before--evidence to Schwarzenegger that even in these times, the greatest threat is climate change. "It all happened so fast, they couldn't save one single one of those homes. Over 500 homes here were destroyed within hours," Schwarzenegger explained, as they walked through charred remains.

"You know, there's been a lot of research that suggests that there are more fires, and there are hotter fires, because the fire season has been extended by climate change," Pelley remarked.

"Well, we have been doing some research in that, and we have seen the changes. We don't have a fire season anymore. It starts in the beginning of the year and goes all year around, and so it has created, of course, big challenges," the governor said.

Asked what he tells someone who says climate change is theoretical and questions the harm, Schwarzenegger told Pelley, "I always say, well, there were people that were debating over if the world is a globe. They thought for a long time it was flat. And there are still people who think that it's flat. And there are people that still live in the Stone Age."

... Read more

Republican vice presidential candidate Sarah Palin on Wednesday called for more domestic oil and natural gas drilling, pulling the McCain ticket further from the clean-tech industry.

In her acceptance speech at the Republican National Convention, Palin touted her accomplishments in laying more pipelines and creating more competition among oil companies as governor of Alaska.

Alaska governor Sarah Palin

If elected, she said that a McCain-Palin administration would tap more oil and gas from Alaska, while investing in nuclear energy and so-called clean coal, where pollution is stored underground at coal power plants.

"We Americans need to produce more of our own oil and gas. And take it from a gal who knows the North Slope of Alaska: we've got lots of both.

Our opponents say, again and again, that drilling will not solve all of America's energy problems - as if we all didn't know that already.

But the fact that drilling won't solve every problem is no excuse to do nothing at all," she said.

McCain, too, has called for more domestic oil and gas production but has opposed drilling in Alaska's North Slope. He advocates a massive increase in nuclear power, with the goal of building 45 new reactors by 2030.

In policies generally favored by the clean-energy industry, McCain supports national cap-and-trade carbon emissions regulations and tax credits for people who purchase fuel-efficient cars. Both McCain and Palin promised investments in renewable sources of energy--solar, wind, and geothermal.

The two presidential candidates' energy policies fall along philosophical lines, with Sen. John McCain calling to scale back government ethanol policy and Sen. Barack Obama promising expanded support for renewable energy, according to an analysis published Wednesday.

After examining voting records and public statements, research firm New Energy Finance concluded that there are significant differences between the energy stances of Democratic candidate Obama and Republican candidate McCain.

A McCain White House would favor free-market economics and rein in the role of federal government policy on energy. Obama, meanwhile, would seek a more active role for government in promoting the clean energy industry.

"The fiscally conservative, small government-minded McCain has long eschewed subsidies, earmarks, and heavy regulation, and his energy policy is no exception," according to the report. "By contrast, liberal Obama prefers to have the federal government take a more direct role in the U.S. energy sector."

A summary of the presidential candidates' energy policies, with Barack Obama favoring support of the clean energy industry and John McCain calling for less government assistance. Click to enlarge.

(Credit: New Energy Finance)

McCain is opposed to existing federal government ethanol production targets and has said that he would eliminate a tariff on Brazilian ethanol, a move which would expose U.S. producers to more competition.

He also advocates expanded domestic oil drilling and a massive increase in nuclear power plant construction, with the goal of building 45 new reactors by 2030.

In sharp contrast to McCain, Obama's voting record has been solidly behind the renewable energy industry. A Senate effort last year to extend an investment tax credit around solar and wind energy projects failed to pass by one vote; McCain did not vote.

Obama has voted for the investment tax credit, set to lapse at the end of this year, and favors a renewable portfolio standard (RPS), which would mandate that utilities generate 25 percent clean energy by 2025.

Obama supports the continued ethanol mandate and has called for more aggressive fuel-efficiency standards. Obama has not ruled out further expansion of nuclear power but his support is pending new technology development for storage of nuclear wastes, according to New Energy Finance.

Where both candidates align is on the question of regulating greenhouse gas emissions, with both advocating a cap-and-trade system although different methods for auctioning off polluting rights.

Both have proposed expanded research into so-called clean coal technology for storing carbon dioxide emissions from coal plants underground. And both favor tax breaks for fuel-efficient cars.

Regardless of the outcome, U.S. citizens can expect energy and environment to be a center-stage issue during the fall presidential campaign, although paying for any policies once in office will be a challenge.

New Energy Finance applauds various aspects of both candidates policies but argues that McCain's is "incorrect" in believing that the clean energy industry is mature enough to thrive with relatively little government assistance.

Meanwhile, Obama has garnered the support of a number of clean-tech investors because of his policies; high-profile clean energy venture capitalist Nancy Floyd spoke at the Democratic National Convention and endorsed Obama.

New Energy Finance CEO Michael Liebreich summarized their policies this way:

"We expect either a President Obama or a President McCain to pursue more vigorous policies on clean energy and emission reductions than President Bush has done for the last eight years. Obama is arguably being more imaginative, but he is also taking more of a centrally planned approach. McCain's regional approach, and in particular his insistence on tariff reductions, has much to recommend it. But neither candidate has yet put forward a fully comprehensive plan, and we are hoping to see them developing their policies more completely--particularly towards the encouragement of renewable power generation and energy efficiency--during the final few weeks of the campaign."

Companies seeking to install utility-scale solar plants on federal land in the sunny Southwest found one barrier removed on Wednesday.

The federal Bureau of Land Management reversed an earlier decision to turn away new applications for solar energy projects on public lands until May 2010.

The agency is scrutinizing the potential ecological impact of solar farms in California, Nevada, Arizona, Colorado, New Mexico, and Utah.

It had announced that it would stop reviewing new proposals, but would continue to process some 125 plans it had already received. Public rejection to that plan reportedly influenced Wednesday's decision.

"By continuing to accept and process new applications for solar energy projects, we will aggressively help meet growing interest in renewable energy sources, while ensuring environmental protections," agency Director James Caswell said in a statement.

Solar plants don't exist on public land. However, even projects designed to be near protected areas, such as a proposed California project from OptiSolar, must comply with government reviews to prevent harm to wildlife.

The bureau manages 258 million surface acres, mostly in western states.

Presumed Republican presidential nominee John McCain on Monday proposed a $300 million prize to develop a car battery that will "leapfrog" today's plug-in hybrids.

In an energy policy speech at Fresno State University in California, McCain also called for an overhaul to existing policies that favor domestic ethanol production--one of the biggest differences he has with his expected opponent, Senator Barack Obama.

Senator and presidential hopeful John McCain

(Credit: McCain's Senate site)

McCain said that, if elected, his administration would issue a Clean Car Challenge that would give give a $5,000 tax credit to people who purchase "zero-emissions cars."

There would be a sliding scale so that vehicles, regardless of type, with lower carbon dioxide emissions will have larger tax credits.

His $300 million car battery prize is meant to spur creativity among automakers to make energy-efficient products.

"This is one dollar for every man, woman, and child in the U.S.--a small price to pay for helping to break the back of our oil dependency--and should deliver a power source at 30 percent of the current costs," he said.

Diverging ethanol plans
In the same speech, McCain repeated his opposition to policies that encourage corn-ethanol and said the U.S. should eliminate a tariff on ethanol from Brazil because it hinders free trade.

He said he would provide incentives to automakers to manufacture flex-fuel vehicles that can run on ethanol or gasoline. He said Brazil, which gets about half of its auto fuel from sugar cane ethanol, has shown that a country can change its fuel mix in just a few years.

"Instead of playing favorites, our government should level the playing field for all alcohol fuels that break the monopoly of gasoline, lowering both gasoline prices and carbon emissions. And this can be done with a simple federal standard to hasten the conversion of all new vehicles in America to flex-fuel technology--allowing drivers to use alcohol fuels instead of gas in their cars," he said.

By contrast, Senator Obama is in favor of continued supportive ethanol policies.

The New York Times on Monday detailed the Illinois senator's close ties to ethanol, including maintaining Tom Daschle, the former Senate majority leader who now serves on the boards of three ethanol companies, as an adviser.

Domestically producing ethanol "ultimately helps our national security, because right now we're sending billions of dollars to some of the most hostile nations on earth," the Times quoted Obama saying during a campaign stop last August.

Smoke cigars, do a partial load of laundry, drink bottled water, and feel no shame. That's what a campaign against a carbon trading bill is urging.

The latest parody of the proliferation of "green" social-networking sites and eco-friendly events comes via "Carbon Belch Day," a campaign from the conservative Grassfire.org alliance that encourages people to pollute as much as possible on June 12.

This carbon calculator encourages ecologically uncouth behavior.

(Credit: Grassfire.org)

So far, more than 140,000 people have signed a petition against "climate alarmism," according to Ron De Jong, spokesman for Grassfire.org. If the effort attracts half a million people, it would lead to the release of 105 million pounds of carbon a week from this Thursday.

The effort is strong on shock value, yet weak on social networking and Web 2.0 tools, other than its "belch" calculator. There are no real-world events planned, so expect no sea of SUVs clogging freeways, other than the usual weekday bottlenecks.

The point, instead, is a political campaign to get people to oppose the Lieberman-Warner Climate Security Act, which would establish a corporate carbon cap-and-trade system, but is already threatened by a promised White House veto.

"Somehow, this bogus idea of environmental indulgences has become accepted as a real and valid way to deal with our carbon guilt," De Jong wrote in an e-mail.

Other popular Grassfire petitions include "Secure our borders" and "Save marriage." Group founder Steve Elliott holds a master's degree in public policy from Regent University, founded by televangelist Pat Robertson, which counts many graduates in prominent government positions in Washington, D.C.

The campaign may be a crude attention-getting ploy to which I can be accused of pandering. But its effort seems doomed, swimming against the mainstream tide. Conventional wisdom has shifted to embrace global warming as a near scientific certainty, and, like it or not, popular culture celebrates all things "green."

Even if Lieberman-Warner flops, many experts in the clean-tech sector anticipate a boost as carbon markets expand in the United States, perhaps following the European model, especially as a new administration takes the helm in Washington. Attendees of clean-technology conferences regularly mention the coming carbon markets with the same certainty used to describe melting ice caps.

As carbon trading scales up, however, the next challenge will come as the public grapples with an abstract subject and demands accountability. Personal carbon footprint calculators and offsetting services are hard enough to navigate.

And motivation aside, the "belch" campaign shares a point with which many environmentalists would agree: that promoting fear of climate change could be counterproductive.

Remember the tagline of Al Gore's An Inconvenient Truth? It was supposed to be "The most terrifying movie you'll ever see." A Time magazine cover last spring warned, "Be Afraid, Be Very Afraid."

Apocalyptic headlines and images of drowning polar bears sell, but they make people less motivated to "green" their daily habits, according to Michael Shellenberger, author and co-founder of the progressive Breakthrough Institute.

A study commissioned in 2000 by CNN founder Ted Turner found that the more people learned of the dire consequences of global warming, the less they felt they could do anything about it.

"And people were more likely to say they would buy an SUV to help them through the erratic weather to come rather than support increased CAFE standards," Shellenberger noted at a conference earlier in May.

Shellenberger: Most are wrong about how to stall global warming.

(Credit: Elsa Wenzel/CNET Networks)

PALO ALTO, Calif.--Al Gore is wrong about how to stave off ecological catastrophe. So is President George W. Bush. But don't look to Europe or clean-tech entrepreneurs to save the planet either; neither regulations nor free market capitalism alone will prevent the fast and furious acceleration of global warming.

That's according to Michael Shellenberger, who with Ted Nordhaus in 2004 proclaimed the "Death of Environmentalism" in a notorious essay that infuriated people of nearly every political stripe and argued that the tactics of mainstream "green" groups were off the mark.

Shellenberger and Nordhaus run the Breakthrough Institute, a progressive research group. In October they published Break Through, which urges the public and private sectors to invest every effort to boost the clean-energy sector.

"We do have to get rid of the mythology of Silicon Valley a little bit here. How did it start? "Well, it all started in Bill Hewlett's garage. The reality is HP wouldn't exist if they hadn't gotten a Pentagon contract for their radios."

Speaking at the Energy Crossroads conference at Stanford University Thursday, Shellenberger cited recent figures from Australian economist Peter Sheehan suggesting that greenhouse gas emissions must level off or begin to decline as soon as 2020. That's a much more ambitious goal than that of the Intergovernmental Panel on Climate Change, which pegged 2050 as the time frame in which global emissions need to be under control.

To achieve the goal of the Nobel Prize-winning IPCC, every year the world would need the equivalent of 30 new nuclear plants; 17,000 wind turbines; 400 biomass plants, two Three Gorges-sized hydroelectric dams, and 42 coal or natural gas plants that capture and store carbon, according to the International Energy Agency.

Sheehan says those developments need to happen, but at a faster pace, saying emissions grew more than 3 percent between 2000 and 2005, not by 1.6 percent as the IPCC estimated.

The carbon pollution set to rise from China, India, and other developing nations within the next several decades is likely to dwarf improvements made by the developed world, Shellenberger noted. For instance, energy use in China in 2006 was 15 percent higher than its government projected for 2010.

And don't give Europe too much credit for being clean and green. Its emissions rose 1 percent per year between 2000 and 2005, double the speed of those in the United States. Plus, Europe's greenhouse gases jumped a staggering 10 percent between 1990 and 2005, not counting Britain and Germany, where cleaner forms of energy emerged through reasons unrelated to ecological policies.

Making clean energy cheap is key, Shellenberger said.

"You might pay more for that iPhone because it's a great piece of technology, but most people aren't going to pay more for energy that comes from clean sources."

What's the right idea? A trillion-dollar, decade-long investment in a clean-energy portfolio by the world's leading economies, according to Shellenberger.

Among the encouraging signs, in his view: Google.org's campaign to make clean energy cheaper than coal; newfound attention from Congress to support "green" jobs; the call in December by Nobel-winning scientists to create a $30 billion per year "Manhattan Project" for clean energy.

That's a pretty short list if Shellenberger is right about the world needing grand schemes within a tiny window of time.