Marin Forum

Two years ago as the United States was entering the economic crisis talk among experts and the political campaigns focused on the green economy as a source of American renewal. The United States would retool its economy and use clean technology to replace the loss of manufacturing jobs in the rust belt, and then it would export its new industry to the developing world. We would develop clean coal technology so we could sell it to China as they further invested in coal fired power plants. We would put people to work and bolster our economic situation vis-a-vis the Chinese.

Two years later and most likely we will soon be importing clean technologies. According to the New York Times, China has now become the leading producer in wind turbines and solar technology. By 2020 China is expected to build 50 new nuclear reactors while the rest of the world might build 15. Meanwhile, clean energy technology has expanded in the United States thanks to the federal stimulus bill, but the United States is still “sleeping” in the words of many Eurocrats. President Obama’s State of the Union address emphasized that if the United States did not embrace the green economy then it would continue to lose jobs overseas and cede its role as world economic powerhouse. Obama made it quite clear: America’s future lies in the green economy.

But efforts in the United States have stalled in the Senate. Germany and Spain have long been on the forefront of green technology and have invested accordingly. China has the advantage that its government still retains significant control over the economy and can mobilize resources for key projects. Does it truly care about environmental protection? The government has placed more emphasis on reducing pollution. For example two years ago it commissioned a study to gather information on pollution throughout the country. However, China’s main concern is its economy. Sustained economic growth is not possible while being completely dependent on foreign sources of energy. As China goes increasing urbanization, its energy demands will increase. Clean energy technology is a matter of national security.

Now is the time to get realistic in the United States. Two issues resonate well with the majority of voters: jobs and energy security (the stability of supply). Climate change is not the ticket to victory. Yes it is bad when the polar bears drown because the arctic ice sheets disappear, but Americans simply don’t care. Climategate has only made things worse. A recent poll shows that more Americans today do not believe in anthropogenic global warming (although more Americans view global warming as a serious threat to their family). Take two bills. Bill A invests X amount of money to create Y jobs in the green sector. Bill B invests X amount of money to reduce emissions by Y. Bill A will have wide bipartisan support while Bill B will will break apart on partisan lines. Both bills could have similar mechanics; in fact they could be part of the same bill: X amount of money is invested in green technology to create Y jobs which reduces emissions by Z.

The problem with cap-and-trade is that it has been labeled a job-killer. Will cap-and-trade kill some jobs? Yes, but in any market mechanism there are winners and losers. Will it destroy the economy? Not at all. Cap-and-trade is not a foreign concept. There already is a cap-and-trade mechanism in place for sulfur dioxide emissions in the Northeast (the acid rain program). The utilities adapted, and the program is widely praised. The Emissions Trading Scheme (the European cap-and-trade program) has had its ups and downs, but it is working.

But maybe we could develop a green economy without cap-and-trade or a carbon tax? Not likely. Tax credits or federal handouts may stimulate green technology sector growth but without the institutional development once the federal support dissipates the growth will stop. It works in China because China is able to mobilize resources on a level that are unimaginable in the United States. Green technology needs a market mechanism to sustain it. A price on carbon is absolutely necessary.

Senator Lindsey Graham is backing comprehensive energy and climate reform (and a price on carbon) because he recognizes that any meaningful energy policy that builds energy security requires a price to be placed on carbon. Under the current circumstances coal and oil are more competitive than renewables. The only way to develop domestic sources of energy is by making fossil fuels more expensive. A cap-and-trade system, cap-and-dividend, a carbon tax, or any other form of carbon pricing is the only way to develop the green economy thus creating jobs and reducing emissions. Even if global warming turns out to be a farce we will still have a net benefit of domestic job growth and increased energy independence. But the latter two are only possible with a price on carbon which means climate legislation.

Eventually renewables will reach grid parity with fossil fuels but we can’t wait. By then we will have been left behind by China and Europe. We are already behind in solar and wind technologies. Instead we need to make the political and monetary investments now. This is why the President is now focusing on carbon capture and storage technologies. The race isn’t close to be over, and there is still room in the solar and wind markets. However, without legislation that puts a price on carbon, the domestic green industry market will remain dormant. Without the green industry the United States will continue to lose jobs to the developing world and remain dependent on foreign sources of fuel.

It’s time to get real. Polar bears don’t win elections but jobs do. We need comprehensive energy and climate legislation since without it America will be a second-rate economy and we would only have ourselves to blame. All options need to be on the table: nuclear, natural gas, clean coal, and biofuels. Jobs, Jobs, Jobs. It is a win-win scenario. We will create the jobs to fuel America’s recovery and in the process we will combat global warming.

But in the meantime we are losing as China takes advantage of the green revolution. Its time to wake up.

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