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Tuesday, June 30, 2009

Brookings Institution: Senate Must Strengthen Clean Energy Funding in ACES

By Johanna Peace, Breakthrough Fellow

The American Clean Energy and Security Act (ACES) that passed by a margin of 219-212 in the House on Friday needs a major makeover in the Senate in order to redress its critically insufficient provisions for funding clean energy R&D, according to Mark Muro, policy director at the Brookings Institution's Metropolitan Policy Program.

In a Brookings article criticizing the climate bill, Muro argues:

"While a $20 to $30 billion a year R&D outlay would be optimal, Waxman-Markey would invest just 1.5 percent of the 40-year revenue stream of the cap-and-trade system in the R&D efforts of ARPA-E and the innovation hubs--which comes to just $1.4 billion a year or so at accepted permit price forecasts... The bottom line: Reps. Waxman and Markey did well to install several crucial innovation provisions in the House bill, but the political trades that were required to pass it have left far too little revenue behind for the most crucial use of cap-trade money--investments to catalyze a radically cleaner energy future."
Muro's points reaffirm Breakthrough Institute's analysis, which has shown how ACES invests far more cap and trade revenue in polluting industries and foreign offsets than it does in building new clean energy industries in the U.S.

Muro mentions that some ACES provisions -- such as the funding it would direct toward ARPA-E and the eight regional "Energy Innovation Hubs" it would establish -- constitute a modest start toward the kind of public investment that will promote the development and commercialization of clean energy technologies. Breakthrough Institute, too, has pointed to some of the same provisions as promising -- but only if they are adequately funded.

But they're not. Important as their mere presence may be, these tiny "slivers of the 40-year revenue stream" of the ACES cap and trade system remain a "paltry" fraction of the public investment the United States will need to propel a transition to a prosperous, clean energy economy.

As Muro writes, all of this translates into a "major task" for the Senate as it begins to confront the woefully inadequate climate bill handed to it by the House:
"By applying to the cause a long-term revenue stream, the Senate should significantly strengthen Waxman-Markey's clean energy R&D provisions, principally by investing significantly more in them. To be sure nothing will be easy here. Not only is the Senate far less "fired up" on balance to act aggressively on climate. Also, the Senate is addressing climate and energy in a more fragmented way, with Sen. Boxer's liberal-leaning Environment and Public Works Committee developing a greenhouse gas and cap-and-trade regime while Sen. Bingaman's more centrist Energy and Natural Resources Committee advances renewable energy, efficiency standards, and smart grid proposals in a regular bill.

In that splintered context, it's going to require difficult negotiations to get a Senate bill and then to reconcile it with ACES. And yet, it does not seem fanciful to suggest that heavy investment in energy innovation and economic transformation could offer the best route forward. Such investments need to emerge as the needed point of consensus between the greenest of the greens and stalwart defenders of the nation's economic competitiveness, first in the Senate and then in both Houses. Only through that convergence will the nation gain a truly transformative energy and climate bill that moves the nation soundly toward clean energy economy."

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