by Bob Shively, Enerdynamics President and Lead Facilitator

“Private firms have the primary responsibility for the development and adoption of technology in this country, but federal and state governments play an important role in enhancing civilian technology development and adoption through their economic, regulatory, and trade policies, their support for research and development, and their own procurement of technology.” National Academy of Sciences[1]

“We are driven to the conclusion that activist and aggressive policy choices are necessary to drive reductions in the consumption of fossil fuels and greenhouse gas emissions.”

Covert, Greenstone, and Knittel[2]

Climate change concerns have driven a significant technological evolution in the energy industry including development of wind energy, solar energy, energy storage, and advanced electric distribution systems often called the smart grid. Another recent key technological development — hydraulic fracturing that allows for the economic development of shale gas— also has received generally favorable support from both the Bush and Obama administrations, at least in part for gas’ ability to quickly reduce greenhouse gas emissions by replacing coal generation. 

In the U.S., such developments have been assisted by favorable government policies including federal R&D investment, tax credits, state-level renewable portfolio standards, and federal support for natural gas development. No doubt about it, there is serious business opportunity in battling climate change. But now that federal-level climate change action seems stalled in the U.S. with the Supreme Court’s stay of the Clean Power Plan, it is possible that other countries will overtake the U.S. in developing technologies that will ultimately create wealth from combating climate change. Here are some key developments in some other countries around the globe:

Canada

• The four largest provinces have implemented either carbon taxes or cap-and-trade programs, and the federal government is developing federal-level policy.
• Any new coal unit must incorporate carbon capture and storage or keep carbon emissions limits at the level of a new natural gas combined-cycle unit.
• In 2014, Saskatchewan opened the world’s first commercial-scale carbon capture and storage power plant.

China

• China is implementing national carbon cap-and-trade by 2017 and government policy designed to reduce coal consumption.
• A five-year plan with a focus on the environment is in the implementation stage.
• Extensive government support exists for development of energy efficiency, new nuclear including SMR (small nuclear reactor), renewables, and carbon capture and storage.
• China has become the world’s largest manufacturer of solar photovoltaic technology and is the largest market for clean energy investment.

Germany

• Almost 33% of the country’s generation in 2015 was from renewable.
• There are significant subsidies for renewable energy and currently strong government support for off-shore wind.
• Germany is moving forward with plans for construction of high-voltage direct current transmission lines to move renewable energy.
• It is closing all nuclear units but still struggling with use of lignite coal.

United Kingdom

• Current law is for the U.K. to reduce carbon emissions by 80% by 2050.
• Government has stated it will pass a new law in 2016 mandating net zero carbon emissions by a currently unspecified future date.
• Government subsidies for renewables (although renewable subsidies have recently been cut), nuclear, carbon capture and storage. The government also strongly supports new natural gas infrastructure.

It is indeed possible that state-level actions, initiatives by U.S.-based corporations, and federal tax policy extending production tax credits will keep the U.S. in the forefront of technology development[3] in response to climate change. However, as evidenced by recent developments overseas, the reality exists that another country or countries may take the lead while the U.S. stalls due to political stagnation in Washington.

Footnotes:

[1] The National Academy of Sciences, Preparing for the 21^st Century: Technology and the Nations Future available at http://www.nas.edu/21st/technology/technology.html

[2] The Journal of Economic Perspectives, Winter 2016, Will We Ever Stop Using Fossil Fuels?, Thomas Covert, Michael Greenstone, and Christopher R. Knittel

[3] See for instance: Rocky Mountain Institute: Ten Things More Important Than the Clean Power Plan in Limiting Carbon Emissions in the U.S., at http://blog.rmi.org/blog_2016_02_11_10_things_more_important_than_the_clean_power_plan