Forget About the Deficit - Invest in the Green Economy Now!

By Jerome E. Roos, Breakthrough Fellow.

This is a guest post from the Breakthrough Generation blog. Breakthrough Generation is the young leaders' initiative of the Breakthrough Institute, a public policy think tank. Founded in 2007, Breakthrough Generation has fostered the development of young thought leaders capable of fully grappling with the scale and complexity of today's greatest challenges and advancing large-scale solutions over the near and long term. To read more writings from this year's 2010 Breakthrough Fellows, head to http://breakthroughgen.org

Europe has lost its mind. Just two years after the financial crisis pushed the global economy to the brink of collapse, we appear to have forgotten all historical lessons about the importance of stimulating aggregate demand in the face of an economic slowdown. All over the continent, deficit hawks have built their nests in the ivory towers of government, trapping the world's largest economy back into the shackles of the neoliberal straitjacket.

If we are to truly deal with the two overwhelming crises of our time - climate change and economic meltdown - we need to realize where these crises overlap and where their solutions could reinforce one another. History teaches us that the world did not emerge from the Great Depression until it mobilized for World War II and built the War Economy. Today, we need mobilization on a similar scale to build a Green Economy and avert the worst consequences of climate change. In the process, we can create millions of jobs and forestall a global depression.

As the Greek debt crisis has recently illustrated, global speculators still hold just as much sway over currency and bond markets as investment bankers until recently held over financial markets. The musical chairs of global capital nearly forced the Eurozone to its knees earlier this year, triggering a backlash of primordial fear among European populations that economic apocalypse was imminent.

Ironically, nationalists, conservatives and free-market fundamentalists - that's right, the folks responsible for causing the crisis in the first place! - were amply rewarded by utterly confused electorates for their misleadingly simple solution to our economic ills: deficit reduction at a pace faster than advocated by even the most hardcore hawks in the U.S.

While it seemed to some that Thatcher's soul had died with the collapse of Lehman Brothers back in 2008, her macro-economic ghost has apparently come back to haunt our continent with a vengeance in 2010. "Balance the budget!" appears to be the most intellectually profound phrase coming out of the watering mouths of self-proclaimed economists like art-history student David Cameron of the UK, history student Mark Rutte of the Netherlands, and physics student Angela Merkel of Germany.

Now that our world is gradually coming undone at the seams, such executive incompetence is no longer just a source of amusement; it has become a threat to our collective well-being. Is this really the most creative solution we can come up with to solve the crises we are facing? With global temperatures rising higher every year and unemployment reaching levels not seen since the 1930s, is this really the mantra that will save global capitalism from itself?

Leading economists like Columbia's Nobel Laureate Joe Stiglitz, Princeton's Nobel Laureate Paul Krugman, and Harvard's Dani Rodrik strongly disagree. These experts argue that we need growth before we can balance our budgets, and in order to revive growth, we need to first stimulate aggregate demand by making serious public investments in infrastructure and industry.

In an op-ed piece warning us of the oncoming Third Depression, Krugman argues that:

... this [coming] depression will be primarily a failure of policy. Around the world -- most recently at last weekend's deeply discouraging G-20 meeting -- governments are obsessing about inflation when the real threat is deflation, preaching the need for belt-tightening when the real problem is inadequate spending.

In my home country of the Netherlands, we seem to have grown more terrified of short-term debt than long-term inundation as a result of climate change. But Joseph Stiglitz already pointed out several months ago that the conservative narrative on the problem of short-term debt is utterly misleading:

Faster growth and returns on public investment yield higher tax revenues, and a 5 to 6% return is more than enough to offset temporary increases in the national debt. A social cost-benefit analysis (taking into account impacts other than on the budget) makes such expenditures, even when debt-financed, even more attractive.

Dani Rodrik agrees, arguing that:

... Europe needs a short-term growth strategy to supplement its financial-support package and its plans for fiscal consolidation.

Such a short-term growth strategy should revolve around a visionary project for public investment in green infrastructure, like the replacement of our aging micro-grids with a much more efficient continental super-grid, the wholesale retrofitting of public buildings, the creation of a standardized plug-in recharging infrastructure, and more public-private collaborations on massive solar voltaic and wind projects. Such short-term public investments have the potential to create millions of jobs and kick-start the transformation to the Green Economy before the longer-term investments in R&D of breakthrough technologies kick in.

It is time for Europe's hopelessly childish leaders to stop being bossed around by global speculators and start building the economy that will lead our continent into a new era. To actually get there, we first have to stop worrying about the imaginary climate for investors and start mobilizing to protect the physical climate for our people. This way we might just kill two birds with one stone.

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NYTimes Gets "Lessons from Kyoto" Right

A new info-graphic from the New York Times, released today as UN climate talks begin in Copenhagen, looks at the "Lessons from Kyoto," the global treaty that's ongoing fate will be the focus of UN climate negotiations beginning today in Copenhagen, Denmark.

The graphic gets the lessons pretty much dead-on, including how little actual progress any nations have made towards meeting their Kyoto “obligations.” As the Times notes, "The legacy of the Kyoto Protocol is mixed." Of the 36 wealthy nations who agreed under the 1997 treaty to cut their emissions by an average of 5% below historic 1990 levels, just 18 are on track to meet their targets, almost all of them in Europe.

As the graphic illustrates, the bulk of these "successful" nations are former members of the Soviet bloc, and almost all saw deep economic declines after the fall of the Soviet Union, which conveniently occurred after the 1990 emissions baseline year used in the Kyoto treaty. Deindustrializing Eastern bloc nations, including East Germany, saw big cuts in their emissions and made compliance with the Kyoto protocol easy. Better yet, for these nations, exceeding their Kyoto "obligations" left them with excess credits under the treaty framework that they could sell to other nations struggling to cut their own emissions.

As the Times notes, 19 other nations subject to the Kyoto treaty are not on track to meet their emissions targets. Most have seen emissions grow with little hope of complying with Kyoto due to surges in economic growth and activity, including Canada (where emissions shot up through development of the Alberta tar sands for heavy oil extraction), Spain and Portugal (who's economies boomed over the last decade) and even green-minded Ireland and New Zealand (who's growing economies drove emissions up roughly 20% above 1990 levels).

The United States, meanwhile, never ratified the Kyoto Protocol, yet saw emissions grow at a slower rate than many Kyoto countries, including each of those mentioned above.

Emissions have soared in rapidly developing China and India. Major developing nations were not subject to any requirements to cut emissions or drive clean development under the Kyoto treaty framework.

Essentially, as the Times info-graphic clearly illustrates, the "Lessons from Kyoto" are clear: economic trajectories, and little else, determined emissions outcomes under the targets and timetables focused Kyoto Protocol.

Without a proactive and massive shared global effort to sever economic growth from emissions by accelerating clean technology innovation and deployment, the Copenhagen summit now underway shouldn't be expected to produce a dramatically different outcome than it's Kyoto predecessor, despite likely "participation" from the U.S. and big developing nations like China this time around.

Check out the full, interactive info-graphic at the New York Times here. All graphics in this post from NYTimes. Originally posted at the Breakthrough Institute

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EU Set To Enter Clean Energy Race with $73 billion for R&D

By Yael Borofsky and Jesse Jenkins, originally at the Breakthrough Institute

Europe is planning to stage a grand entrance into the clean energy race by investing approximately $73 billion in clean energy research, according to Reuters, which has obtained an early draft of the European Commission's Strategic Energy Technology Plan (SET Plan) scheduled for release Wednesday.

Until now, the race to lead the world in clean energy technology has largely involved competition between the United States, East Asia's "clean tech tigers"- China, Japan, and South Korea - and up-and-coming challenger, India. With the U.S. wavering for the better part of a year on how best to enact climate and energy legislation, the Breakthrough Institute and others have called on the U.S. to include large-scale investments in clean energy technology if it wants to remain a world leader in innovation and corner what could be a market worth trillions.

But it seems that Europe has beaten the U.S. to the punch. If the draft is any indication, the EU will triple funding in energy research in order to bring suite of clean energy technologies to market and achieve its 80% reduction in greenhouse gas target by 2050. Europe at least, has realized the urgency of the clean energy race and that investment in clean energy innovation is the only way to compete. As an EU official told Reuters:

"We know that low-carbon technology will one day become cost-competitive with fossil fuels, and the question then is whether the EU will be an importer or an exporter of that technology...We have to be in pole position."

Although it is not possible to verify the exact details of the plan until the report is released on Wednesday (stay tuned for future coverage), the draft is a reliable indication of the types of investments Europe has in store, including EU16 billion (US$23.5 billion) for solar power, EU6 billion (US$8.8 billion) for wind power, EU7 billion (US$10.3 billion) for nuclear, and EU13 billion (US$19 billion)for carbon capture and storage technology, all over the next ten years.

Despite the fact that Joseph Romm of ClimateProgress insists that pending climate legislation is equivalent to Europe's massive planned outlay of government spending and is "the only way for the U.S. to win the clean energy race," analysis of the House-passed ACES demonstrates that the bill is not up to the task.

While Europe is poised to triple clean energy research spending to EU8 billion, or US$11.7 billion, ACES would invest just $1.1 billion annually (at $15/ton of CO2) in clean energy research and development, boosting U.S. energy research budgets by just 20% to just over $6 billion annually. With economies roughly the same size, the EU would outspend the U.S. nearly 2 to 1 in clean energy R&D if both the proposed SET Plan and the House-passed ACES bill become law. Judging by the graphic below, that doesn't exactly look like a great way to win the clean energy race, Mr. Romm.

Of course, to keep the proper context for these two plans, we must not forget the East Asian clean tech tigers. Japan has proposed $30 billion in low-carbon energy research spending over the next five years. South Korea intends to spend $46 billion over the same time period--a full one percent of national GDP each year -- to expand the nation's market share in a suite of clean technologies. And China, probably the greatest challenger to U.S. or EU clean energy leadership, is expected to invest $44-$66 billion annually over the next decade to modernize its energy system and become a world leader in clean energy.

As the U.S. Senate works out the specifics of the Kerry-Boxer bill released last week, we cannot afford to quickly dismiss the forthcoming EU Strategic Energy Technology Plan as yet another reason to simply pass the House's ACES bill. With both Asia and Europe committing the resources necessary to surge ahead of the U.S. in the clean energy race, the Senate cannot afford to let the opportunity to adequately fund clean energy innovation and reinstate the U.S as world leaders in innovation pass by. If the Senate fails - as the House unfortunately did - the U.S. will quickly find itself outspent and out-innovated by China, Japan, South Korea, and now, the European Union.

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US Must Not Blow Its Chance as Foreign Investments Bring Wind Jobs Ashore

Originally posted at The Breakthrough Institute

It's strange to hear of "insourcing"--the transfer of manufacturing jobs into the United States instead of out--but that's exactly what's happening with Denmark's wind giant Vestas, according to a New York Times article yesterday.

According to the report, a combination of global recession and domestic stimulus spending on clean energy is adding up to a boon for the American clean energy manufacturing industry.

In Europe, Vestas has seen several nations slow down their rates of added wind capacity, and flagging government support combined with financial difficulties has impeded the construction of new projects. By contrast, the United States built 8,500 megawatts of wind capacity in 2008 to Britain's 500, and demand for turbine technology is high. So for opportunities in a more robust wind market, Vestas has begun to look across the Atlantic.

The New York Times reports:

"Vestas is rapidly expanding its production base in the United States, where it says it has created more than 1,200 skilled jobs. The company expects that number to climb to more than 4,000 by the end of 2010, if President Obama's Recovery and Reinvestment Plan is carried out. Vestas believes that the Obama-led push to more renewables will stimulate demand and re-establish the United States as the world's largest market for wind turbines. It hopes Congress will pass a national renewable energy standard that will stabilize the U.S. market in the long run."

That's a key point. The US wind market has been historically unstable, due to a periodically lapsing production tax credit and other forms of inconsistent government backing. The American Recovery and Reinvestment Act (ARRA) this year created a market boom by delivering $65 billion for clean energy, efficiency retrofits and similar investments, including $2.3 billion in tax credits for clean energy manufacturers and a three-year extension of the production tax credit for wind power.

However, the clean energy investments begun in ARRA are temporary. Clean energy manufacturing incentives are short-term and even the production tax credit, finally extended for more than one year at a time, will expire in 2012. If the US doesn't build on ARRA's clean energy down payment with a substantial, sustained policy of government support for the wind industry and other emerging clean technologies, demand for renewable energy is likely to collapse--and foreign firms like Vestas will quickly stop opening doors within US borders.

In the NYT report, a Vestas representative was quite clear that nations must have strong and continued support for clean energy industries in order to attract the company's investment.

"A key prerequisite is having long-term, stable national schemes that provide the industry with the necessary opportunities to plan and invest in employees, technology and production facilities," he said.

So far, the United States is in danger of lacking such a long-term strategy to grow clean energy industries after the stimulus investments expire in 2012. The American Clean Energy and Security Act (ACES) would invest just about $10 billion a year in clean energy, defined broadly--less than a third of the annual level established by Obama's stimulus plan. The good news is that manufacturing-friendly measures like Senator Sherrod Brown's proposed IMPACT bill--which would establish a $30 billion loan fund for clean energy manufacturers--look likely to make up a part of the climate bill currently before Congress. But the US must take a similarly strategic approach to nurturing all sectors of the clean energy industry in order to continue earning foreign investment and gaining manufacturing jobs.

Meanwhile, major wind manufacturers like Vestas and Germany's Siemens have also taken notice of the promising wind market in China.

"In China, Vestas has five factories in Tianjin, a sales office in Beijing, a new factory in Hohhot and a procurement office in Shanghai and is currently building additional facilities in Xuzhou. It wants the turbines it sells in China to be 100 percent Chinese-made. Siemens is also expanding in China, building a new $85 million plant that will open next year in Shanghai with 400 workers.

'China could soon become the largest wind energy market in the world. We are rigorously advancing the internationalization of our manufacturing network for wind turbines to optimally meet the needs of our customers,' said Wolfgang Dehen, CEO of the Siemens Energy Sector, in a statement."

Unlike the United States, China is poised to provide foreign wind companies with strong assurance of continued growth in the wind market, in the form of a $440-660 billion clean energy investment package set to be released this year. That could spell trouble if the United States fails to make similar investments in its clean energy industries--inevitably, manufacturers seeking the best market conditions will close facilities and shift valuable jobs from American to Chinese shores.

For now, Vestas has signaled confidence in the US wind market. According to the report,

"With the Obama administration promising big investments in green energy, wind turbine producers see the United States as the key to the industry's future."

Indeed, Obama's substantial stimulus funding has laid the foundation for booming American markets in wind and other clean energy sectors, and foreign technology producers are taking notice. The challenge is to ensure that the U.S. remains on top of the wind market, and also opens other domestic clean energy markets to capitalize on the inflow of money and jobs from abroad. The United States can do this by enacting a stable, long-term national strategy that invests at least $30 billion per year in the development and deployment of clean energy technologies, and by passing measures like Brown's IMPACT bill to support American clean energy manufacturing.

Without this strategy, we risk losing the forward momentum of ARRA investments, and we forfeit the chance to secure the prosperous clean energy economy so recently set in motion.

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Playing the Expectations Game as Copenhagen Looms

Originally posted at the Breakthrough Institute blog

It appears that there is an effort underway (whether coordinated or just coincident) from the Obama Administration, Intergovernmental Panel on Climate Change (IPCC) and United Nations to place a reality check on expectations for United States climate policy progress in advance of the international climate negotiations in Copenhagen this December.

Yesterday, IPCC chairman Rajendra Pachauri told UK newspapers that Barack Obama would have a "revolution on his hands" if he tried to implement binding cuts in emissions on the scale that the IPCC's scientific consensus recommends.

"He [Obama] is not going to say by 2020 I'm going to reduce emissions by 30 per cent," Pachauri said. "He'll have a revolution on his hands. He has to do it step by step."

Pachauri's word's echo those of U.S. special climate envoy, Todd Stern, who recently stated that the 25-40% emissions cuts called for by the IPCC are "beyond the realm of the feasible" in the U.S. Congress. Stern called for a focus on "the art of the possible," saying "we need to be guided both by science and by common sense."

Now, UN climate czar, Yvo de Boer tells Bryan Walsh in a TIME interview that he doesn't expect cap and trade from the U.S. before Copenhagen either.



Here's the key excerpt from Walsh's interview with de Boer (emph. added):

"[Walsh:] The conventional wisdom is that, with everything else on the government's plate, we're unlikely to see carbon cap and trade legislation passed in Congress before the Copenhagen summit at the end of the year. How important is it that something is in place by then?

[De Boer:] I'd agree that legislation is not going to be passed by Copenhagen, but it will be well advanced by then. The international community is keenly interested in seeing what steps America is making at home to get its emissions under control, but it also wants to see what the Administration says it will do. If the Administration in Copenhagen commits to a target that is good enough for the international community, that will work. It's up to the U.S. see how the target will be implemented nationally."

This I would say is good news. The UN's climate point person is essentially telling Obama that victory doesn't necessarily equal passing cap and trade before Copenhagen. De Boer seems to be trying to (subtly but critically) redefine expectations and reset the goal posts for Obama, giving him room to maneuver.

De Boer is basically saying that it would be enough for Barack Obama to say the U.S. is aiming for a reduction of some target by some point, but the international community is going to give Obama some flexibility about what policies he wants to use to get there. Obama could even presumably say, "We're doing a national renewable electricity standard, efficiency standards and investments, and investment in clean energy technology development and deployment to get there and drop cap and trade" (for now, or forever).

It seems there is a growing recognition that the widespread expectation that Obama would deliver a comprehensive climate bill before Copenhagen has set an impossible deadline for the American President. Now, key members of both the Administration and the international community are seemingly trying to temper expectations and open up some critical space for Obama to maneuver in.

On expectations for the Copenhagen meeting itself, here's the excerpt:

"Is Copenhagen still an "all or nothing" deadline? Or is there still wiggle room if the world fails to agree on a new treaty?

You have to do it in Copenhagen. There is tremendous political momentum internationally to come to an agreement, and if you let that slip the momentum and enthusiasm will gradually dissipate and things will become more difficult. But having said that, I'm not under the illusion that every final little detail of how the agreement will work in practice will be finalized in Copenhagen. A certain amount of engineering has to be done."

When asked if the global economic crisis will present a challenge for international climate efforts, de Boer says "don't think the enthusiasm has been dented. ... But clearly this is a difficult time to mobilize the financial resources for international cooperation, and that poses a challenge."


Montreal Protocol or Global Marshall Plan?

Finally, Walsh asks an excellent pointed question about the role of technology innovation and asks if the global transition to a new, low-carbon energy infrastructure should really be the primary focus, rather than commitments to emissions targets and timetables. De Boer unfortunately responds with rather conventional thinking about the role of regulation and carbon pricing in driving innovation, without even touching the potential of an international technology development effort to rapidly accelerate our transition to a low-carbon energy economy.

There are those who say that climate change is primarily a question of technology -- that we need to change the way we use energy, and only research and development will do that, not UN mandates. Why is the UNFCCC process important?

It's important because you have to drive change. Automakers will only begin to look for low emissions technology if they think the government is likely to regulate toward low emissions technology. There has to be a sense of urgency out there. We still live in a world where the cost of pollution is not yet part of the price, where you can as a factory emit unlimited greenhouse gases, without having to pay for the environmental consequences. Unless we begin to change that, there is no incentive to switch to more renewable energy and energy efficiency. Technology doesn't happen by itself.

You're right Mr. do Boer, technology doesn't happen by itself. Nor does it happen without an active, engaged government role, making major public investments to drive innovation and the commercialization and widespread deployment of new technologies.

De Boer and the rest of the leaders in the international climate talks should be reading up on the history of technology innovation and the relative roles of regulation and investment before they meet again at Copenhagen. And they should put aside the Montreal Protocol on CFCs and instead look for more relevant models of international technology, industry and economic partnerships. At it's root, the international climate and energy challenge is more about a new kind of sustainable global development partnership than it is about coming together to control something as trivial as an ozone-depleting refrigeration chemical, after all.

We should be looking to initiatives like the Marshall Plan and the European Coal and Steel Partnership for more relevant models of international cooperation. These initiatives saw nations who were killing each other in the battlefields of World War II just a few years prior come together to make major common investments in their collective future, leading to decades of sustained peace and shared economic prosperity. After looking at examples like these, de Boer would likely have a different answer to Walsh's excellent question.

After all, underneath all of the debates about targets and timetables lies the critical challenge of replacing the entire global energy infrastructure with a low-carbon energy system, all while increasing global energy supplies to power development in the Chinas, Indias and Brazils of the world. In short, our climate targets all rest on the success of a global effort to make clean energy cheap. It's still unclear if a discussion about how to accomplish that critical objective will even be on the table at Copenhagen. Stay tuned...

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UK Auctions First Carbon Permits; Government Hoarding Revenue

Cross-posted from the Breakthrough Institute

The UK Government auctioned the first four million allowances to emit greenhouse gases under their portion of the European Union's Emissions Trading System this week, raising £54m ($80.9m). However, the government is drawing fire for failing to earmark the auction revenues to investments in clean energy and energy efficiency that could further cut emissions and help reduce the costs of compliance with the cap and trade program. Instead of reinvesting the revenues in clean energy ventures, the government is reportedly planning to add revenues to the general budget.

The Financial Times has details on the auction:

"The first auction of carbon dioxide permits netted the government £54m ($80.9m) on Wednesday as bidders fought for the right to emit greenhouse gases.

Almost 4m permits were sold in an auction that was four times over-subscribed. Previously, all of the emissions permits allocated to UK businesses under the European Union's trading scheme were given out free.

The government has pledged to auction another 80m permits in the next four years, which is likely to bring in revenues of more than £1bn. The identities of bidders were not disclosed, but electricity producers were expected to be the main buyers as they had their free allocation of permits cut by 30 per cent.

...

The free allocation of permits in the first phase of the scheme, from 2005 to 2008, enabled power companies in the UK and other countries to make windfall profits by raising electricity prices to cover the notional cost of having to buy permits, despite receiving them free. The government said on Wednesday the auctions should not result in further electricity price increases, as the cost of permits had already been factored in.

The UK is pushing for power generators to have to pay for all of their carbon permits in the third phase of the EU scheme, from 2013, arguing that electricity producers tend to be well-insulated from international competition."

However, the UK government apparently isn't planning to spend the money raised by the auction on clean energy investments and is instead putting the funds into the general coffer, the UK Guardian reports:

"The UK government was under fire today for "undermining" the European Union's fight against climate change by auctioning off carbon allowances for the first time and not earmarking the cash for "green" projects.

Around four million permits are being distributed today under a new phase of the European Union's (EU) emissions trading scheme (ETS) with expected receipts of up to £60m going to the Treasury for general spending purposes.

"The policy of the UK government on this issue undermines the very purpose of the EU ETS... Auctioning undermines this flexible mechanism as it takes money away from those who can do something about climate change, the emitters, and it gives it to those who can't, the politicians," said James Emanuel at emissions trading broker, CantorCO2e.

The Institute for Public Policy Research (IPPR) said ministers should change their mind and use the cash specifically for projects such as improving energy efficiency of homes, investing in low-carbon technologies and helping poorer countries cope with climate change.

"This is a great opportunity to help poorer households make their homes both cheaper to heat and warmer, and create jobs through investment in new green technologies," said Lisa Harker, IPPR co-director.

Keith Allott, head of climate change at WWF-UK, agreed saying the review by Lord Stern into the economics of climate change had shown that tackling the problem made sense financially. "This battle can't be won if we don't find the money to invest in solutions and kick-start new green industries," explained Allott."

More on the EU ETS price and auction format later in the article:

"The price of emission allowances have plunged by nearly 30% since September to around €16.50, partly because there are fears that the auction will flood the market and partly because a recession will cut industrial output and reduce pollution worldwide.

The ETS scheme implements an overall cap on the amount of emissions countries can produce, allocates carbon allowances to companies and then allows them to buy or sell the permits to cover shortfalls or profit from cutting their emissions.

Phase II of the scheme, which covers energy generators and heavy industry and aims to cut emissions by encouraging the market to produce carbon reductions at least cost, allows for up to 10% of permits to be auctioned.

In the UK, 7%, or 85 million, permits are being auctioned over five years of the scheme to 2012. The main target of the auction is energy companies which have lost 30% of their free allowances."

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Electrify America: Volkswagen's New Plug-In Hybrid is Hot!

By Alisha Fowler, Breakthrough Generation Fellow

This post is part of our week-long Special Issue exploring ways to sever the link between transportation and oil by electrifying transportation. Stay tuned for more...

Last week, Volkswagen announced it will roll out a demonstration test fleet of 20 plug-in hybrids by 2010, with plans for mass production soon after. The most exciting part about their announcement is that this electric-diesel beauty will debut in a familiar form: the fast, fun, one might even say flirty, VW Golf.

Finally! Function AND fashion. Now that is something that I feel most consumers can really get behind, and a tactic we must employ in order to create scalable solutions for our energy challenge.

VW says it will debut 20 plug-in hybrids in 2010. They will be outfitted with VW's new drivetrain, the Twin Drive, in a Golf fitted with a 122-horsepower diesel engine and an 82-horsepower electric motor. VW says the car will use lithium-ion batteries and have an all-electric range of 31 miles, after which the diesel engine will kick in. Americans currently make 3.4 vehicle trips per day, many of them less than one mile. For around-town errands, this electric power will suffice and take a huge bite out of total transportation emissions -- and trips to the gas station!

The German government, so enamored with VW’s plan, is also offering the company $23.5 million to help make this electric dream a reality by 2010. Germany's environmental minister, Sigmar Gabriel, says there could be 1 million hybrids on the road in Germany by 2020 and 10 million a decade after that.

VW also recently signed a deal with Sanyo to develop improved lithium-ion batteries, which hopefully means they will not have to be replaced every few years at a relatively high cost to consumers. Sanyo plans to begin production of the batteries next year and says it will spend $769 million on the effort during the next seven years.

I feel that Volkswagen’s efforts are very exciting and they will reward handsomely both in terms of consumer buy-in and emissions reductions. Producing an attractive plug-in hybrid vehicle, one that at least resembles the other cars on the road, is an incredible way to appeal to a broad base of consumers. Not everyone deeply cares about reducing their emissions, but everyone does want to cut down on costs at the pump. And they usually want to look good doing it. We must foster the production of both highly functioning and attractive consumer goods as we look to break our addiction to oil and transform our energy system.

The head of Volkswagen, Martin Winterkorn, says gas and diesel engines will be around for a long time to come, but "the future belongs to all-electric cars." I hope he’s right, and that they come in forms that will appeal to the typical American consumer.

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EU Adopts Firm Goals - 20% of Energy from Renewables and 20% Reduction in Greenhouse Gas Emissions by 2020

Goals must now be adopted in legal framework by member nations

[From Renewable Energy Access.com:]

Energy policy and climate protection topped the agenda at the Spring European Council in Brussels last week where European Union (EU) heads of state and government officials committed to set a binding target for 20% of the EU's total energy supply to come from renewables by 2020.

Currently only 6.5% of the EU's energy is sourced from renewables.

The EU, already a leader in renewable energy technology commanding 60% of the world's wind power market, also set a binding minimum target of 10% for the share of biofuels in overall transport petrol and diesel consumption by 2020. According to Angela Merkel, German Chancellor and president of the EU Council, the goals are ambitious and credible.

"Adopting an energy action plan will give the initial spark for a third technological revolution. We'll be going down completely new roads as far as technology and innovation are concerned," said Merkel, adding the targets steps will put the EU in a position to make it clear to the international community that Europe is playing a pioneering role.

In addition, the 27 Member States that make up the EU set a firm target of cutting 20% of the EU's greenhouse gas emissions by 2020 as part of the post-Kyoto arrangements. Furthermore, the heads of state said the EU will be willing to raise the goal up to 30% if other countries, including the U.S., China and India, made commitments in the same direction.

"European leaders have provided a powerful response to the looming climate and energy crisis, and the call from European citizens for more renewable energy. With today's decision, followed by effective implementation in the near future, Europe now has a real opportunity to change its energy supply structure towards a much larger share of indigenous, renewable resources, reduced import dependence and less exposure to unpredictable fuel prices," said Christian Kjaer, CEO of EWEA, after the Spring Summit ended on Friday.

A suitable legal framework now needs to be rapidly adopted in order to reach the 20% target, along with clear guidelines to market participants for the future direction of renewable electricity in Europe.

The EU appears to be doing their part to reduce the threat of global warming. But they can't do it alone! It is absolutely crucial that the United States joins the EU in setting similar reduction goals (20% by 2020 or 25% by 2025) that put us on the path towards an ultimate reduction of 80% or more by 2050.

As the Economist writes:

"Like the Stern report, the agreement is clearly meant to stand as a rebuke, and a prod, to other nations, particularly America, that have not tackled the problem of anthropogenic global warming. With countries like China and India rapidly industrialising and providing ever-more carbon-intensive consumer goods like cars to their citizens, the rich world will have to trim its carbon footprint substantially if there is to be much hope of slowing the pace of warming.

It remains to be seen how effective an example Europe will set. So far, the EU’s ambitious plans for emissions cuts have underwhelmed in execution. ...

There is one thing that would make it easier for Europe to stick to its ambitious targets—federal legislation in America. California and Europe are travelling hand-in-hand along their green path; but federal-level legislation would be more effective in dampening the volume of complaints in Europe. And if America does not act, Europe will undoubtedly, at some point, give up on greenery."

The EU leaders were smart to say that they would be willing to adopt more aggressive reduction targets if other nations, such as the United States, China and India, adopt similar targets. Rather than do nothing while they wait for other nations to act - as the United States has done under the Bush Administration's leadership, citing the fact that developing nations like China and India are not included in the Kyoto Protocol as reason enough not to do anything to reduce our own emissions - the EU has taken an alternative path, setting out to reduce it's emissions a reasonable amount while publicly stating that they are willing to go further if they do not have to go it alone.

A reasonable policy, and I hope that it provides further pressure on Congress to take action on climate change (although I'm skeptical how much affect the actions of the EU have on U.S. Senators and Representatives). I'm glad that the EU has continued to lead by example in the face of inexcusable inaction from the United States. 'Leaders of the free world' we certainly are not ... at least when it comes to tackling climate change.

[Image source: University of Twente (the Netherlands)]

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