“Right now in Beijing they are high-fiving each other”—Thomas Friedman, on Face the Nation 4/25/10

Politics aside, in recent months it has become clear that China is serious about reducing emissions and outcompeting the US in the clean energy economy. China’s auto-efficiency standards now require 36.7 miles per gallon, which is higher than the new US target that won’t even be met until 2016. In 2009 China surged to tie the US in total renewable-energy capacity and is expected to take the global lead in this category in the near future. China already stands alone as the world leader in wind and solar production. Last year, China announced a target to lower its carbon intensity, the amount of carbon dioxide emitted per unit of GDP, by 40-45% by 2020 compared to a 2005 baseline.

While the much-needed climate and energy bill stalled in the U.S. Senate this weekend, China’s leaders joined those from Brazil, India and South Africa in declaring that they won’t wait for America. They have already passed climate and energy laws and are starting to take over the U.S. market for renewable energy technologies.

The global race to lead the clean energy economy is on, and the U.S. is losing. And not just to China. Countries like Germany are also out-competing us. They are moving quickly, growing their economies and creating jobs. They are providing their businesses with the certainty to move forward aggressively, invest in R&D, and hire new workers in the clean energy sector. They are benefitting economically, diplomatically, AND environmentally. We can do that in the U.S. too. But it requires Senate leaders and the White House exercising leadership and ensuring comprehensive clean energy and climate legislation is voted on this spring.

We cannot afford to wait. Subsidizing fossil fuels and ignoring the environmental costs of those fuels will not stimulate the U.S. economy. Rather, it will lock us into the failed energy policies of the past – the very same policies that place our economy in the hands of unstable or openly hostile oil-exporting regimes, undermine U.S. economic competitiveness, and virtually ensure climate change reaches catastrophic proportions. Without immediate action on comprehensive legislation, America will be forced to spend billions to cope with more large fires in the West, more sea level rise, more oil spills, more extreme weather events and other impacts of climate change and dirty fuels. We will find it increasingly harder to address the global poverty crisis in the context of a changing climate. And, inaction on climate change will result in an enormous increase in the exposed assets that insurance companies are asked to cover – Allianz, the global insurance company, estimated that without immediate action on climate change, New York City alone could have almost $2 trillion in assets exposed to climate change impacts by mid-century.

That is a future that we cannot afford to leave to our children.

The Obama Administration is heading in the right direction on climate change, signaling that a cap and trade system is no longer the way to go. Instead, the focus should be on achievable measures to reduce emissions.

This tallies with the greater rating American voters now evidently give to jobs and growth over climate change and, increasingly, aligns with the emphasis China, India and other developing countries gave at Copenhagen on the necessity that environmental strategies musty support, not undermine economic growth.

At this point, the only major player at odds with this is the European Union. Despite protests from European business and workers, the EU continues to press on with a cap and trade strategy which will sap the its economic life.

Commissioner Hedegaard’s original prompt -- “Can the U.S. afford not to have ambitious legislation that paves the way for a more energy-efficient future?” -- misses the point.

Unfortunately, it is not only EU leaders and environmental officials who have lost touch with reality. As so often happens when things aren’t going well, there is an inclination among more radical activists to default to loopy, radical politics.

Take, for instance, last week’s First World Conference of the People on Climate Change. This event is the classical sort of anti-capitalist conference which in Europe is accompanied by fire bombings and street riots. Hosted by Bolivia President Morales, a Chavez ally, the summit has strong anti-American overtones as well. It’s disheartening that climate scientist James Hansen and 350.org founder Bill McKibben support movements such as this and make common cause with anti-growth and neo-Marxist radicals like India’s Vandana Shiva.

It also reveals that similar values are at work in organizations like Greenpeace and WWF, whose public patina is more mainstream. In the lead up to Copenhagen, these groups unveiled a grotesque global central plan of how the poor should be treated in their idealized, climate change-friendly view. In their Brave New ‘green’ World, enlightened UN officials and NGOs like themselves would shape poor countries as green societies by disbursing US$160 billion annually raised by taxing rich countries. Job creating industries for the poor like forestry and agriculture would be mothballed, and the displaced workers placed on a massive global green welfare drip.

Incredibly, not everyone saw how goofy this was. Preparation of this model was funded by Britain’s aid agency.

The point is simple: when contact with reality is lost, bad and costly environmental policy is the result. With jobs at stake and money short, no one, neither environmental activists nor politicians, are exempt from the obligation to account for what they do and how that impacts on the ability of others to build a good life.

Commissioner Hedegaard reminded us of the restrictions we all faced during the Arab oil embargo of the 1970's. This is a poignant reminder of the importance of developing our domestic energy resources and those of our allied democracies. Commissioner Hedegaard will surely concede that Denmark's done quite a bit of offshore drilling during the last three decades and has benefited thereby. The United States should follow that example.

Denmark's foot prints are not always, however, ones we can recommend others follow. Danish workers carry one of the highest tax burdens in the free world. When you include taxpayer subsidies for wind turbines, Danish families pay among the highest energy prices in Europe. According to the September 2009 study by the Danish Center for Political Studies (CEPOS), the intermittent nature of wind power has forced Denmark to export around half of its wind generated electricity to its neighbors at a loss and made up shortfalls by importing vast amounts of power from those same neighbors. The electricity Denmark exports saves no CO2 emissions as the power it replaces is generated by carbon neutral means. It's a good thing the perils of CO2 have been exaggerated.

Danish wind power will not alter the climate. If Denmark scrapped its wind turbines tomorrow its power grid would quickly adapt. Its taxpayers, however, would breathe a lot easier. If Denmark cut off its oil and gas, it would find itself in a dark age of a different variety than that endured by the brave Danes of the Viking era. Let's not go back.

The United States cannot afford to delay enacting responsible climate and energy legislation. Each year we delay action to reduce emissions and invest in technology to transition to a low-carbon economy, we run the risk of even greater cost to the economy and the environment.

Studies show that the cost of inaction is eye-popping. According to the International Energy Association’s 2009 World Energy Outlook, every year of delay beyond 2010 would add another $500 billion in investments needed to curb global carbon pollution. With the United States as the world’s second largest emitter, you can bet American businesses and consumers will have to shoulder a large share of these additional investments. Compare these figures to other studies released by the U.S. Environmental Protection Agency (EPA), the Energy Information Agency (EIA), and the Congressional Budget Office (CBO) which show that the estimated costs associated with addressing climate change range from $7 to $15 per month, per household. Indeed, the financial costs of delay are greater than the cost of action.

In addition to the financial risks we face as a result of stalemate, there are also tremendous opportunity costs to not being world leaders in the clean energy race. As it stands, other countries are surpassing America in developing the clean energy technology of the future. For example, South Korea has announced a long-term, economy-wide target for emissions and is already a global leader in the efficiency of its production of major heavy industrial sectors. China has taken bold action to reduce emissions and deploy renewable energy and energy efficiency on a grand scale. It is expected to surpass Germany as the world leader in investment in renewable sources as a percentage of its economy in 2010 and its vehicle efficiency standards are years ahead of the U.S. Additionally, China dedicated 40 percent of its economic stimulus package toward renewable energy, low carbon vehicles, high speed rail and other energy projects; the U.S. is spending roughly 10 percent of its recovery package on similar programs. These two countries have recognized the economic benefits of expanded energy efficiency and renewable energy and the global economic opportunity that exists to lead in these new markets.

Delay is no longer an option. It’s unclear what the Kerry-Graham-Lieberman bill will look like in its entirety, but the important thing is that we get started now. Capping emissions and putting a price on carbon will give American companies the regulatory certainty they need to make the substantial investments needed to transition to a low-carbon future, will expand markets for American clean energy products and protect the international competitiveness of energy-intensive and trade-sensitive industries in the U.S.

I think each region has a relatively clear choice: Either to create incentives for innovating in the direction of more energy-efficient and climate-friendly technologies - or risk to lose the competition for the markets of the future. Ask the various industry confederations. They know very well that the market for energy-efficient technologies will be one of the fastest growing markets for the coming decades.

Who will take the lion's share of these markets? Well I believe that those who move fastest and most ambitiously in the years to come will be best positioned. Meaning also that they will get the most jobs and the biggest exports – and that equals income. I am in no doubt that those who will do best in this field also have a good chance of taking the economic - and therefore also the political - leadership in the 21st Century.

At the same time, the more energy efficient our economies, the less energy we need to import into our economies from outside. This is a - strategic - side effect of immense importance as well.

We are many allies and friends of the US who really hope that you will dare to take the necessary and important decisions - also in this field. To hesitate now - and to be dragging one's feet because of fear of the needed investments now - could very well turn out to be extremely costly in the long run.

In light of the U.S. airlines’ strong fuel efficiency and emissions savings record and greenhouse gas (GHG) commitments going forward, there can be no question that the U.S. airlines are “for” sound energy management, energy-efficiency and reduction in emissions contributing to climate change. At the heart of our record of success and our future commitments is continuing investment in new and better technology. New aircraft, engines, alternative fuels, NextGen air traffic control and other technological upgrades have all been and/or will be part of the solution. The notion that we should apply any carbon tax, fee, charge, “linked fee” (combining the worst features of both taxes and carbon market pricing) or whatever other government charging scheme might come along to airline fuel, would completely undercut our ability to continue making those critical investments. It is exactly the wrong thing to do and would not only undermine our ongoing, successful efforts and commitments to reduce aviation GHG emissions, it would deal a crushing blow to the broader economy and the jobs we support.

We have a better – and greener – proposal.

The world’s airlines, airports, air navigation service providers, aircraft and engine manufacturers, as well as labor, are unified behind a global, sector-specific framework for addressing aviation GHG emissions. It includes stringent targets – a 1.5 percent annual average fuel and CO2 efficiency improvement through 2020, carbon-neutral growth beyond 2020 and a 50 percent reduction in CO2 emissions by 2050, relative to 2005 levels. In the U.S. alone these targets would save 17 billion metric tons of CO2 through 2050 – pretty amazing given that U.S. commercial airlines account for only 2 percent of the nation’s CO2 output. Imagine the emissions savings as the rest of our aviation partners implement this around the world.

To get there, we need real U.S. leadership – indeed, the very “ambitious legislation that paves the way for a more energy-efficient future” that you ask about should embrace this solution and help deliver a global aviation GHG plan by showing how it can work. That does not mean a one-size-fits-all approach to energy and climate change legislation, but rather one that truly embraces and enables a comprehensive, progressive, sector-specific proposal such as ours. Senators Kerry, Lieberman and Graham have a tremendous opportunity to help lead the way.

Fuel efficiency? The U.S. airlines are all for it – we improved ours 110 percent between 1978 and today, and our global-sectoral-approach proposal calls for more. Emissions savings? We’re on it. A carbon tax? No way.

I find Connie’s comment hard to follow! My logic is simple as pie. Firms with lower energy costs have a competitive edge, just as firms with lower financing costs or labor costs have a competitive edge. That goes for firms making solar panels and wind turbines. Pricing carbon would increase energy costs for Chinese firms. If you view China as a model, then China cannot be a reason to price carbon, because China adamantly refuses to price carbon!

Greater energy efficiency is a major component of improving the America’s energy security, which is why the Energy Institute has made energy efficiency one of the centerpieces of our comprehensive energy strategy.

Gains in energy intensity -- a measure of energy use per dollar of economic output -- over the past 30 years have offset the need for 50 quadrillion Btus today, or roughly one-half of United States’ total consumption. But while we have made significant gains, U.S. energy intensity is still significantly higher than that of other industrialized nations, including many of our economic competitors.

Still, we have to recognize that energy efficiency is just one of many areas where businesses can invest their money, so policy does matter. Energy efficiency measures generally require a substantial upfront investment in exchange for long-term energy savings. How rapidly these savings take place, however, will be determined by the turnover of capital stock, technological advances, growth of capital investment, and removal of numerous regulatory and structural barriers. The best way to do this is not through piecemeal individual regulations, but from a system-wide approach that promotes greater efficiency throughout the entire energy system, including residential and commercial buildings, appliances, and equipment.

One of the major challenges for greater energy efficiency is the fact that today’s regulatory environment does not reward efficiency. Utilities make money based on how many units of energy they sell—which means that selling less energy due to efficiency gains actually works against a utility’s interest. The Energy Institute has recommended decoupling energy sales from profit margins to make investing in energy efficiency profitable for utilities.

The Energy Institute has made several other proposals for improving energy efficiency, including the broad implementation of smart grid technology, additional tax incentives, and addressing building codes (see our latest paper here). While partisanship sometimes bogs Washington down, energy efficiency has the potential to bring everyone together for common sense solutions

Thank you all for your answers to my question. It seems that the variety of answers reflect the varieties of view points within the American political landscape :-)

I think one of the main differences between my - and Europe´s - view and some of you who are critical towards a cap and trade scheme and feed in tariffs is that I really believe that it matters whether or not we create the right incentives for investing in a more energy efficient future. Here we should not forget that science is warning us that the time factor is important. It actually matters when we start reducing emissions, in other words when we start producing our wealth and growth in a more energy-efficient and sustainable way. In order to speed up this development I think we need incentives - and so far I have seen no better tool than cap and trade. And yes, in Europe we had some difficulties when we started this system. But now we have learned the lesson, now it actually works and has put a price on carbon. That is the market working: If you pollute a lot it costs - if you pollute less you can profit from it. This was originally an American idea!

And let me make it clear: To say that the European Emissions Trading System is not working is a myth. Just like it is also a myth that we in the EU are not meeting our commitments. The truth is very different. The EU is on track to meet the emissions reduction target that we agreed in Kyoto. The ETS is delivering a substantial share of the reductions. And it does so at least cost. That is why European industry is positive about our market-based approach, and why they encourage us to give clearer signals in the market. That some EU Member States have seen their emissions rise is also in line with the efforts we made to share out the pain between richer and poorer Member States. That is a model that could serve in the U.S. too, to address the genuine concerns of the richer and poorer states of the Union.

Marlo Lewis claims that the reason why China is now global leader in solar and wind is that Beijing refuses to put a price on carbon. That logic is hard to follow. Maybe China decided in her own self-interest to create growth that is more energy efficient among other reasons because China realizes that a lot of co-benefits come with, for instance, renewables: You have to import less energy from abroad and you get a cleaner environment, for example improved air quality. In a world where we are set to be 9 billion people by the middle of this century I take it that even the biggest "climate sceptic" will have to admit that it seems rather a good idea to find more resource-efficient and sustainable ways of getting our growth.

Craig Rucker claims that had it not been for Denmark's oil in the North Sea we could not afford "such feel good luxuries" as renewables like wind. Wrong. Back in 1973 Denmark experienced two oil crises and the last one, when Saudi Arabia cut off oil deliveries, was so bad that it was necessary to prohibit driving private cars on Sundays. I remember this from my childhood. Can you imagine that? That was at a time where we were 99 % dependent on imported energy. Today Denmark is self-sufficient in energy, and has been for many years already. Oil and gas supplies from the North Sea are part of the explanation but definitely also the fact that today around 30 % of Denmark's electricity stems from wind energy. AND since putting up the first wind turbine back in the mid 70s Denmark has developed a world brand in wind technology. That means not only that the wind sector today creates thousands and thousands of jobs, often mainly in rural areas, but also that is one of our fastest growing export areas, earning billions for Denmark. The sector continued to grow its exports even in the crisis year 2009.

This is also the recipe for Europe: If we do it wisely, we can reduce emissions, enhance our energy security and independence AND create jobs and export possibilities.

NO, America cannot afford to give up on building a new clean energy manufacturing base by failing to pass the long term policies necessary to make that happen. The opportunity that we have already seen coming our way with new manufacturing facilities being built just in the wind industry as a result of such policies like the RES in place at the state level prove the point. Wind is already working for America. Comprehensive legislation including a strong RES means new jobs, including manufacturing jobs, more American energy that won’t run out ever, new pure renewable energy and more efficient use of that energy. How can we not embrace its benefits? Fortunately, we are halfway to success—both the House and Senate have started work on comprehensive legislation--and, with a little luck and much more determination, we can pass a bill this year. If we pass this bill this year, we will join the 37 other nations, including China, that have binding renewable electricity targets, and we can resume our global leadership, not only in wind energy installed, but in wind manufacturing jobs. The sooner we act, the more money we will save consumers, the more jobs we will create, and we will see cleaner air. Let’s get started

As we prepare to celebrate Earth Day’s 40th Anniversary this Thursday, it is encouraging to know that significant progress is being made towards passage of climate change legislation. The Kerry, Graham and Lieberman (KGL) bill that the trio hopes to roll out in just under a week looks like a step in the right direction, and gets the U.S. closer to a clean tech future. However, if we are serious about diminishing our reliance on fossil fuels and transitioning to an energy independent economy that enhances our national security, this bill needs to be the first in a series of many steps on a clear path toward a renewable future.

We need to continue the momentum of that first step with a march toward even stronger climate and clean energy milestones. For example, what is already happening at the state level, through policies like Renewable Portfolio Standards (RPS), needs to be replicated at the federal level. We need to push Congress to pass a bill that includes a national Renewable Electricity Standard (RES), with teeth, that will ideally set a goal of getting 25 percent of our electricity from renewable sources by 2025. A “25 by 25” RES with incremental targets along the way could support an additional 274,000 jobs nationwide, according to a recent study by Navigant Consulting. We also need to make a more committed investment in clean energy. The economies of China, India and Japan understand this and are on track to out-invest the U.S. by at least three-to-one in low-carbon energy technology. We cannot afford to continue to fall behind.

The U.S. has the chance to be a leader in the next energy race but we will miss this opportunity if we don’t take real and meaningful action now. We have the resources, demand and innovative spirit to transform this country into a renewable energy powerhouse. What we don’t have—and what needs to change right away—are the policies to get us there. As Congress, industry and the general public eagerly await the introduction of “KGL” next week, I hope that, despite our many differences about how to achieve a clean energy future, we will be unanimous at least about one thing: that the benefits of doing something far surpass the costs of doing nothing.

We need to be “a first mover, not a follower.” That’s what they say. But did you know “first mover” is a term from “game theory” which is the science we need. And game theory say’s “move first” is the wrong strategy for this game.

Everyone says “follow the science” but everyone is looking to the wrong science. Climate science tells us we should take action together, but the real problem is how to do that. Game theory is the science that speaks to cooperation, and it says we are approaching the problem backwards.

Game theory includes thousands of experiments, many on games much like the climate game, and these say “first mover” is an extremely weak strategy. Tit-for-tat is far stronger. Europe has started to figure this out with its new policy: “30% abatement if others cooperate and 20% if they don’t.” It’s time to get serious and learn about the climate game. Otherwise we will keep losing. Copenhagen was predictable and it was predicted by those who study international treaties and the game theory that drives them.

As everyone sees, U.S. policy is one move in the global climate game. That move cannot be evaluated if we don’t understand the “public-goods (PG) game.” The climate game is a PG game because emission abatement is a public good. It helps everyone. Which is good. But it’s also the root of the problem. The PG game is also known as a multi-player prisoners’ dilemma.

This has been studied intensively for fifty years. The main lesson is this. The dilemma tends to produce a lack of cooperation. But with two players, if they play over and over, they become more cooperative. However, with many players (even four) they tend to become less and less cooperative. That’s because the free-rider problem is worse with more players. Unfortunately we have 100 players.

Now the bad news. What we need to do is change the game. And we have. But we made it worse. We’ve done what’s nearly impossible and turned a multi-player prisoners’ dilemma into an even less cooperative game! We did that because climate negotiators pay no attention to the science of negotiation.

Cap and trade changes the public goods game in a way that makes it more polarizing. I’m not talking about the EU’s cap and trade market, or any national market where a government is setting the over-all cap. The cap-and-trade game is completely different in an international setting where there is no world government and each country negotiates its own “cap.”

Adding cap and trade to the public-goods game causes low-abatement countries to lower their emission targets and high-abatement countries to raise their emission targets. It encourages the EU to choose more abatement because they can buy cheaper carbon credits from the countries that choose to do less on their own. That makes the poor countries want to do less and ask the US and EU to do more. This polarization is a theorem of game theory and that theorem’s prediction came true in Copenhagen.

Fortunately there are many other ways to change the climate game, and some lead to cooperation. It’s time to pay attention to the science of cooperation, not just the science of climate. Our challenge is people not nature. There is a science of how people cooperate and why they often don’t.

The best place I've found to start reading is The Art of Strategy, chapter 3.

The short answer to this week’s question is a resounding “No.” The United States simply cannot afford inaction on the energy front any longer. Company after company – from Wal-Mart to the Dow Chemical Company to Grays Harbor Paper, a locally owned and operated company in Hoquiam, Wash. – knows that wringing energy waste out of the system is critical to remaining competitive.

“USA, Inc.,” cannot dominate the global economy if its costs to produce goods and services –increasingly affected by the cost of energy – are higher than those of its competitors. And we cannot lead the revolution to a global clean energy economy using yesterday’s technologies and fuels. We must lead or we surely will lose.

To put it bluntly: Without immediate action on comprehensive clean energy legislation that will create the right market circumstances in the United States and make energy efficiency our first and most valuable resource, we may be playing catch-up with China, India and others for a very long time.

When we act to make businesses, homes and transportation more energy efficient, we put money back into the pockets of consumers, businesses and governments. A recent McKinsey and Company report found that if the power of energy efficiency were to be unleashed, we would see gross savings of more than $1.2 trillion and a reduction in end-use energy consumption in 2020 of 9.1 quads – roughly 23 percent of projected non-transportation energy demand for that year.

That $1.2 trillion of savings would create jobs, free up purchasing power and generate tax revenues – all of which will help to lower the national debt and reduce our dependence on foreign sources of energy. At the same time, reducing energy use will also reduce the volume of pollutants emitted into the air. (Using energy efficiency to curb climate change, another critical need, is the icing on the cake.)

Our national lawmakers must get beyond their political differences and act now. The costs of inaction are simply too great to bear. They include Americans continuing to pay a disproportionate amount of their income for energy – costs that will far outweigh the cost of wise energy policies – thus enriching other countries at the expense of our economic and national security.

To delay clean energy legislation until a more politically opportune time is to delay the freedom and security that investing in energy efficiency can provide. We need homegrown energy now.

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“What’s the cost if Congress fails” to enact a cap-and-trade or carbon tax bill? The “cost” is actually a multitude of benefits:

-- The U.S. economy won’t be hit by virtual or outright energy taxes in the midst of the worst economic downturn since the Great Depression, improving prospects for a recovery.

-- Congress will not declare political warfare on coal, continuing America’s access to abundant, affordable base-load power.

-- Congress will not adopt carbon tariffs, avoiding an era of trade warfare between the United States and emerging industrial powerhouses such as China and India.

· The U.S. Government will lack a bully pulpit for pressuring poor countries to ban coal-based power, allowing them to escape from energy poverty.

This week’s question asserts that “the companies and nations that are the most energy efficient will prosper the most.” Energy efficiency can sometimes contribute to economic efficiency, but it is not a magic elixir for job and GDP growth. U.S. energy intensity (the amount of energy consumed per dollar) has declined by 1.9% annually since 1992, according to the U.S. Energy Information Administration (EIA). That translates into a hefty 42% improvement over the past 19 years. Yet the U.S. economy is in a recession. California has the most energy-efficient economy of any state in the Union, yet the Golden State is tottering into bankruptcy.

The EIA projects that under current policies, U.S. energy intensity will decline by another 40% from 2008 to 2035. This will occur whether Congress “fails” or not. Why then the angst about the state of America’s energy efficiency?

Energy secretary Steven Chu and others warn that if we do not put a price on carbon and drive investment into “clean technologies,” China will “eat our lunch.” But one reason China has emerged as a leading manufacturer of solar voltaic panels and wind turbines is that Beijing refuses to put a price on carbon. Chinese manufacturers, including “clean tech” manufacturers, gain a competitive advantage from their uncapped access to low-cost, coal-based power.

This week’s question seems to assume that energy efficiency always more than pays for itself and thus is a bargain at almost any price. But improving energy efficiency is only one possible investment that might improve a firm’s bottom line. Whether investing in energy efficiency represents the highest and best use of scarce resources depends on each firm’s particular circumstances. Outsiders – politicians, NGOs, and academic experts – are uniquely unqualified to make such particularized judgments.

The question also seems to equate greener with more efficient. Not so. Waxman-Markey includes incentives for carbon capture and storage (CCS), but the main reason CCS is uneconomical is that it makes coal-fired power plants less energy efficient. Boulder, Colorado is considering a plan to reduce the carbon footprint of the city’s housing stock. Critics point out that the program could cost landlords and tenants anywhere from $400 to $800 per ton of carbon dioxide (CO2) reduced. Such heroic sacrifices may be green, but they are not efficient.

Germany’s feeder tariff program is widely hailed as green. It subsidizes solar power at a rate of 59¢ per kWh, “more than eight times higher than the wholesale electricity price at the power exchange,” the Rheinisch-Westfälisches Institut (RWI) reported last year. Between 2000 and 2010, the program will transfer an estimated $73.2 billion to solar power producers. What do German consumers get in return? Despite the whopping subsidy, solar generates only 0.6% of the country’s electricity. That works out to carbon abatement cost of $1,050 for every ton of CO2 avoided, RWI calculates. That’s not efficient, to put it mildly.

One benefit if Congress “fails” to enact cap-and-trade is that Congress will be less likely to adopt tougher measures with even worse economic impacts. A recent Harvard University study finds that Waxman-Markey won’t wring enough carbon out of the transport sector and advises policymakers to supplement the economy-wide cap with new motor fuel taxes. Congress, the researchers contend, should raise gasoline prices to $7-$9 a gallon. This would indeed spur efforts to improve energy efficiency, but it would also cripple every small business that uses trucks for hauling, pickup, and delivery. Even if phased in over several years, $7-$9 gasoline might make the oil shocks of the ‘70s seem tame by comparison.

If politicians don’t raise energy prices today, America will face a “future where energy and resources will be still more expensive,” this week’s question warns. That’s a little like saying we should shoot ourselves in the foot now because somebody else may shoot us in the foot later. Waxman-Markey would raise fossil energy prices not just today but over the next 40 years. Would that not also bid up the price of alternative energies that compete with fossil? If the goal is to avoid a future of resource and energy scarcity, then politicians should not cap and tax the most affordable energies in today’s marketplace.

Let’s talk about the opportunity if Congress succeeds. In the year since President Obama took office, we’ve been on virtuous cycle, where actions by the administration and Congress have helped encourage actions and commitments by other major emitting nations. The European Union began this virtuous cycle with its own emission reduction commitment and a conditional offer to do more. Through the course of 2009, all of the other major economies – including China, India, Japan, the U.S., Brazil, South Africa, Mexico, and South Korea – stepped forward with commitments of their own.

The Copenhagen Accord reached in December provides for real cuts in heat-trapping carbon pollution by all of the world’s big emitters, establishes a transparent framework for evaluating countries’ performance, and will start an unprecedented flow of resources to help poor and vulnerable nations cope with climate impacts, protect their forests, and adopt clean energy technologies. More than 70 developed and developing countries responsible for 82 percent of world carbon pollution have stepped up under the Accord by formalizing those commitments. These actions alone will not be enough to prevent dangerous temperature increases and perilous climate impacts. But they are a real start.

We’ve seen a second virtuous cycle unfolding over the past year as well: a global competition for the clean energy markets of the 21^st century, and for the good jobs and high rewards that will go to the nations that are best positioned. Countries that used to hang back and point fingers are now racing one another to win those markets. China overtook the U.S. last year in clean energy investments according to study by the Pew Charitable Trust.

There’s no question that actions by the Obama administration and Congress have played a key role in feeding the virtuous cycle. It really matters that the Recovery Act that passed in early 2009 includes the largest clean energy investments in U.S. history. It really matters that the House passed comprehensive energy and climate legislation last year to reduce U.S. carbon pollution 17 percent by 2020 and 83 percent by 2050 – that action enabled the president to offer the U.S.’s contribution in Copenhagen. And it really matters that the administration has begun using its existing powers under the Clean Air Act – recognizing that carbon pollution endangers our health and welfare and issuing nationwide standards to cut vehicle emissions by 30 percent.

But all this is just prelude. What happens in the U.S. Senate in the coming weeks is absolutely critical. We need to complete the enactment of comprehensive energy and climate legislation that limits carbon pollution, spurs clean energy investment, and cuts our dependence on foreign oil. Senators Kerry, Graham, and Lieberman, as well as Senators Cantwell and Collins, are leading bipartisan efforts to pass that kind of legislation. The president is pressing for this legislation, and he is putting his administration’s shoulder to the wheel. It is critical to our economic health, our security, and the future of the planet.

The economic and environmental benefits of an ambitious clean energy and climate legislation are so significant that America cannot afford to delay its passage.

America will spend roughly $3 trillion dollars on energy infrastructure over the next 20 years. It’s our choice whether to spend that money smart: on clean, efficient technologies that cut emissions, create new jobs and new wealth for our society. Or spend it dumb: on more of the same 19^th century technologies that intensify climate change and put America further behind in the $200 billion annual global clean energy market.

The cost of choosing the smart path is modest. As Paul Krugman recently pointed out in the New York Times Magazine, there is broad agreement among environmental economists that a market-based approach to confronting climate change can achieve major results without hurting the economy. The Congressional Budget Office found that the House of Representatives’ climate bill would leave the American economy between 1.1 percent and 3.4 percent smaller in 2050 than it would be otherwise.

Meanwhile, the benefits of making the smart choice are enormous. There are humanitarian benefits: the United States can help prevent millions of people from suffering forced migrations, starvation, and flooding that will occur if climate change continues unchecked.

There are security benefits: according to a new study from Think Progress, clean energy and climate legislation would reduce Iran’s petrodollar receipts by $1.8 trillion through 2050--that’s an average of $100 million per day.

And there are economic benefits: economists at the University of California, for instance, have concluded that a clean energy and climate bill will generate nearly 2 million new jobs--jobs American workers desperately need right now.

To realize these rewards, we must pass a comprehensive clean energy and climate bill. It is the most effective way we have to unleash private investment in low-carbon technologies and put America on a path toward climate leadership.

Support is building for the bill in Congress, but we still need to work hard to help Senators understand that acting on an economic, environmental, and moral imperative is hardly an unaffordable luxury. Instead, it is one of the best investments America could make for our future.

Framing a question to ask whether the US can afford not to impose ambitious climate legislation reflects image trumping reality. This spin suggests America lags behind while the EU shows real leadership in reducing greenhouse gas emissions and developing new energy technologies. Yet, reality shows otherwise.

In the past decade, US has reduced its emission growth beneath than that of most EU countries that have pursued the obligations of the Kyoto Protocol. On top of that, US carbon intensity -- the measure of carbon emitted per unit of economic production -- has shown a steady and better than usual decline during the same period. Both measures, emissions growth and reductions in carbon intensity, indicate that the US is doing very well in striking a balance between addressing environmental and economic concerns. The Energy Policy acts of 2005 and 2007 had dozens of provisions which have the effect of increasing energy efficiency, promoting R&D, and reducing carbon intensity.

In contrast, the EU imposed its Emission Trading Program, which has proven a failure. Emissions have increased in most member countries, traders and manipulators have gotten rich, and energy costs have risen substantially. All the while, the US has largely relied on policies and measures, such as the recently announced CAFE program.

Aggressiveness is not free. There are tradeoffs that have to be made with any public policy. In this case, the trade-off is between emission reductions and economic growth, because the low and no-carbon energy technologies necessary to achieve these “green” goals without hampering economic growth are not yet commercially available. Indeed, some see their development as the technological challenge of the 22st century.

Consider recent experience. In the last two years, US emissions actually declined as a result a very serious recession. This gives some indication of what is actually required to make absolute emission reductions in the absence of new energy technologies. Continued economic stagnation as a means of reducing emissions would be politically and morally unacceptable.

If climate change is viewed as a long-term challenge -- one involving significant uncertainty -- it will be possible to make steady progress in developing new technologies, having nations with high emissions growth adopt these innovations, and also achieving levels of economic growth that represent real progress. The approach that should be followed should be modeled after Lewis and Clark’s strategy. They used existing knowledge to map their way while investing in the acquisition of new knowledge which was the basis of their route West and their discovery process. If, instead, we adopt rigid mandates and goals that reflect a presumption of knowledge and a lack of flexibility, the result will be failure, frustration, and unnecessary costs imposed on consumers and business.

Instead of mandates for unattainable reduction goals, Washington would be far better served to impose a modest carbon tax with an offset in the federal payroll tax. Capital investors would have a clear and transparent signal that carbon was going to become more scarce, while American workers would have an increase in their take-home pay. Whatever action is taken to accelerate the reduction in carbon intensity or carbon emissions, it will not be free. Actions have costs. The issue is which actions are the most cost-effective and transparent?

Commissioner Hedegaard's Denmark may have surrounded itself with wind turbines, but could not afford such feel good luxuries if it were not for the vast income and energy it derives from Danish North Sea oil and gas.

America and the world will be cleaner, greener and more prosperous with an abundant supply of energy. It was heartening to hear President Obama acknowledge this reality saying, “the bottom line is this: Given our energy needs, in order to sustain economic growth and produce jobs, and keep our businesses competitive, we are going to need to harness traditional sources of fuel.” Unfortunately, as the President took a step forward and finally permitted us to tap new areas of our offshore energy resources; he also took a step backward by closing off other areas that offered much potential. While we dither, other countries race to tap their oil and gas to sell to us. Russia is preparing to drill off the coast of Cuba, right outside our back porch.

We at CFACT hope President Obama and the Congress will make the full journey towards energy realism and concede that we can't run our country on subsidies and technologies that feel good, but don't meaningfully produce the energy needed to fuel our economy. So far the climate and energy proposals being floated in Congress have been all pain, no gain. Cap and trade, offsets, and subsidies will enrich a few carbon profiteers, but do nothing to secure our energy future, nor meaningfully affect our climate.

According to a recent Gallup poll, public belief in the global warming scare is at a low point -- and rightly so. Climategate and new revelations of politicized science have impacted public opinion and opened minds. More realistic assessments show that CO2 is neither a pollutant, nor the demon we've been led to believe. Anyone who tells you that restricting prosperity and redistributing wealth will alter the climate is selling something.

People live better and the environment is cleaner in free, prosperous societies. The people of the developing world are entitled to continue their advance into energy and economic self-sufficiency. How dare we propose to trap them in poverty and deny them the high standards of cleanliness, education, nutrition, healthcare, and energy we take for granted. Our prosperity is good for them -- as theirs is for us.

A sound energy policy will permit us to harness energy from areas both offshore and in Alaska. It will ensure the rapid expansion of nuclear energy. It will not force us to subsidize unproductive sources of power, but rather expand research and development toward discovering genuine alternative energy solutions. We need to decouple our energy policy away from the global warming issue, and instead focus instead on ensuring we have enough energy to meet our needs and thereby continue to be a source of innovation and prosperity for the rest of the world.

The biggest misunderstanding about the American political and legal system outside the United States, unfortunately shared by more than a few U.S. “big green” environmentalists and “mainstream” media representatives, is that Congress “must” act in order to combat global warming in America. This is false! President Obama’s E.P.A. and other cabinet secretaries ALREADY possess ample legal authority to “take action” against global warming. The CURRENT Clean Air Act, Clean Water Act, Endangered Species Act, National Environmental Policy Act, and other laws could do the job very well. In fact, it is the Clean Air Act that is now reducing the U.S. automobile fleet’s greenhouse pollutant emissions.

Would it be preferable if Congress acts? Probably. Maybe. But NOT if Congress literally blacks out the current laws that have the teeth to actually curb greenhouse pollutants. So, Europe, PLEASE don’t fall into the trap of demanding legislation when current administrative authority is already plentiful. Demand that the United States as a country take action. This is a hugely important distinction. Congress, in many ways, already acted … twenty, thirty and forty years ago with laws that are still effective and inspiring to others across the globe. Congress fails if it passes “climate” legislation that weakens current law.