With my post 'running the numbers' on the Bloom Energy fuel cell - their "magic" Bloom Box - now hitting the Forbes.com 'most popular' and 'most emailed' posts lists (currently #4 and #6 on each list), I'm happy to welcome many new readers to WattHead.org - Energy News and Commentary. (The post has also topped the front page at Grist.org and theEnergyCollective.com, so welcome to readers from those esteemed sites as well).
For those new to WattHead, the site is now in its fifth year (6th Anniversary will be this August) and has over 1,000 posts in the archives providing news, original analysis and opinionated commentary written by myself as well as the more than two dozen sometimes contributors, a group that includes some of the brightest and most insightful young thinkers, writers and activists on the web.
For new readers, please dig into the archives, which you can peruse by date and by topic in the left hand column of this site. You'll find content ranging from clean technology reviews (like the Bloom Box post), climate and energy policy analysis, and opinionated commentary on a range of issues relating to the ongoing transition to a clean and prosperous energy future.
If you're interested in finding out more about who I am, my bio is available here, and more of my writing can be found at website of the Breakthrough Institute (where I direct the independent think tank's energy and climate policy program) and theEnergyCollective.com, where I'm a featured writer. You can follow my updates on Twitter @JesseJenkins and subscribe to WattHead.org posts on Facebook here and on RSS here.
Welcome, I hope you enjoy the site, and please leave any feedback in the comments here. Cheers,
Jesse Jenkins
Founder and Chief Editor - WattHead.org
Friday, February 26, 2010
Welcome Forbes.com Readers
Wednesday, February 24, 2010
The Economics of the Bloom Energy's "Breakthrough" Fuel Cell
With all the hype today around the release of the "breakthrough" Bloom Energy fuel cell (which has become known as the "Bloom box" and is referred to by Bloom as an "Energy Server"), it's good to find a couple of posts looking at some real details:
Todd Woody, writing for the NYTimes GreenInc blog, has some details on the design of the Bloom Box solid oxide fuel cells from his look inside the Bloom Energy facilities this week. And Lux Research has this post looking at the economics of the Bloom Box, which is a good read.
It appears that the unsubsidized price of the Bloom Box is about $7-8,000/kW so their 100 kW units cost $700,000-800,000 without subsidy. As a fuel cell, it also needs fuel to run, in this case natural gas or another source of methane (such as landfill gas or biogas from anaerobic digesters).
After federal subsidies for fuel cells (they can claim the same 30% investment tax credit that solar gets) and a $2,500 California rebate, and assuming $7/mmBTU price for natural gas, a 100 kW Bloom Box unit generates electricity at 8-10 cents/kWh. That compares favorable to commercial electricity rates in many parts of the country,(average about 11 cents/kWh across US with higher rates in several states, including California, New York and Hawaii) so there could be good market for the Bloom Box in distributed generation applications in a variety of places, assuming federal/state subsidies holds out.
Unsubsidized cost would be 13-14 cents/kWh, with about 9 cents/kWh from the capital costs of the Bloom box and 5 cents/kWh from natural gas costs, according to Luz Research. If natural gas prices rise or fall 50% (gas prices are often volatile), overall price would fluctuate from 11.5-12.5 cents/kWh to 20.5-21.5 cents/kWh. That unsubsidized price is still too high to compete in most markets with retail electricity without subsidy. However, this is the first generation, and if Bloom can bring prices down (and/or natural gas prices are stable/low), there could be a significant market for this fuel cell.
As far as climate benefits, supposedly it generates electricity at 50-55% conversion efficiency. CO2 emissions when running on natural gas would be just under 0.8 pounds/kWh, which compares favorably to electricity from central station coal-fired plants (2 lbs/kWh) or natural gas plants (roughly 1.3 lbs/kWh) and the national average for on-grid electricity (around 1.3-1.5 lbs/kWh). Clearly, though the Bloom Box is still not a zero emissions tech and would only cut emissions by roughly 50% relative to the national average, unless it runs on landfill gas or biogas or hydrogen from electrolysis fueled by zero-carbon electricity (which would be much more expensive as you have to add cost of electrolysis unit, higher cost electricity, and about 30% conversion losses in electrolysis).
It is also worth noting that the average emissions rate of grid electricity in some states is less than the Bloom Box's 0.8 lbs/kWh. According to EPA's eGrid database, that list of states includes Vermont, Idaho, Washington, Oregon, California and New Jersey. However, EPA does not account for imported electricity across state borders, which tends to increase the emissions rates of most of these states. California, for example, has an emissions rate of about 0.65 lbs/KWh according to eGrid - which is notably less than the Bloom Box's emissions rate running on natural gas - but more like 1.0 lbs/KWh when imports of mostly-coal-fired electricity from out of state is factored in (author's calculations). When imports are factored in, this author calculates that average emissions rates for on-grid electricity in Vermont, Washington and Oregon still fall below that of the Bloom fuel cell (but emissions rates vary within each state from utility to utility as well).
Solid oxide fuel cells have notoriously faced challenges with durability, since they operate at very high temperatures, which the Bloom box will also have to overcome to prove profitable. Todd Woddy writes:In seven months of [pilot test] operations, Bloom has replaced a few fuel-cell wafers, but the machines have otherwise operated without a problem, Ms. Skoczlas Cole [of Ebay] said.
The advantage of solid oxide fuel cells running so hot is that all that waste heat can potentially be put to good use. When co-generating heat and electricity, solid oxide fuel cells can reach combined efficiencies upwards of 85 percent, which is excellent, but no word yet whether or not the Bloom fuel cell will co-generate heat. At this point, it appears that it does not (
Bloom executives said the company spent years developing a proprietary seal made from low-cost materials to prevent cracks and leaks. They estimate that the Bloom boxes will have a 10-year lifespan and that the company will have to swap out the fuel-cell stacks twice during that time.
Mike Brown, an executive with UTC Power, a leading fuel-cell maker, said the fuel cells need to last at least four or five years for the technology to be competitive.particularly given it's use to power data centers and the like, which can't put the heat to very good use; cooling is more of an issue for data centers!). That's a shame, but perhaps another model of the product at some point in the future will be suited to co-generation applications (e.g. to provide process heat to industrial facilities or neighborhood district heating schemes). [Update: commenter Amazingdrx at Grist reminds me that waste heat can indeed be used to provide cooling using the common absorption refrigeration technique (which I should have recalled, since the entire campus at my alma mater, the University of Oregon - Go Ducks! - was cooled using absorption chillers run by our natural gas plant). So the waste heat from these fuel cell stacks should be used to cool the data centers they also power, increasing the efficiency and economics of the system...]
I also hear that it may require zirconium oxide as a membrane (can anyone confirm that?) and zirconium doesn't grow on trees, nor is it processed quickly, which may hamper production volumes.
So is the Bloom Box the solution to all the world's energy problems? Of course not. But could it finally move fuel cells for stationary power generation a big step forward? It looks like the chances are good. Only time, and the tests of the market, will tell...
It's worth noting though that with the idea initially funded through NASA's Mars program and initial product launch only enabled by public deployment incentives, the Bloom Energy fuel cell is another good example of how public investments in technology R&D and deployment can catalyze significant private sector investment, innovation and entrepreneurship to drive forward a new technology with potential for widespread application as costs come down.
It's COLD! It's SNOWING! So is climate change a hoax??
Guest post by Rebecca Anderson, ACE Team Scientist
We are getting slammed with winter this year... it’s been snowing all over the country, all the time! It’s cold!
So doesn't this mean this whole climate change thing is a hoax??
Reasonable question but... umm, no.
Although that’s what a lot of skeptics would like people to think, as Jon Stewart said last week on The Daily Show: “These snow storms still do bring joy to two types of people: Children… and global warming deniers.”
We all understand that the change in seasons every year doesn't mean climate change is a hoax. The onset of winter every year and the cold weather (and snow) that come with it are expected. That’s the difference between weather and climate afterall!
And yet, climate deniers are having a party shouting down climate change using our "intense winter" this year. Jon Stewart and Rachel Maddow made some really great analogies to help shine some light on these arguments (See their vids here and here.).
Saying one snowstorm disproves climate change is like:
- the fact that it's been steadily getting colder since last summer disproves climate change
- saying it's hot right now in Australia proves global warming
- (My personal favorite) when it rains in the desert means it's not the desert!
These are all excellent examples of weather that doesn't go along with a long-term trend. The long-term trends (like a desert being a desert) make complete sense to all of us and none of the above events change our beliefs! So why would it be any different with snowstorms in winter?? It's not.
Climate change could mean more intense snowstorms:
I can take it one step further: there's a good chance that these big snowstorms not only don't disprove climate change, but they could actually be explained and caused by climate change!
You need 2 things to get a big snowstorm:
1. Temperatures below freezing
2. Lots of moisture to make the snow
In a warming world, it's still going to get below freezing in much of the U.S. during the winter. But the closer you get to freezing, the warmer the air is and the more moisture it can hold. So warmer temperatures (as long as they're still below 32ºF) can actually mean a greater chance of getting a really big snowstorm.
One recent study found that 60-80% of snowstorms in the U.S. occur during warmer-than-normal years. (details) The study predicts that "a future with wetter and warmer winters... will bring more snowstorms than in 1901–2000." (read more here.)
Whether the "Snowmageddon" and "Snowpocalypse" storms were actually part of this trend is something we won't know for sure until we get a few more years into the future and can see if they were part a bigger trend or not. But, like Hurricane Katrina, they do fit the predicted pattern of more intense storms in a warmer world.
To read more about this, check out two posts on Joe Romm’s Climate Progress blog here and here.
Read more!Tuesday, February 23, 2010
Make Poverty History: Make Clean Energy Cheap
“If you gave me only one wish for the next 50 years,” declared the world’s wealthiest man during last week’s TED 2010 conference, “I can pick who is president, I can pick a vaccine... or I can pick that [an energy technology] at half the cost with no CO2 emissions gets invented, this is the wish I would pick. This is the one with the greatest impact.”
Bill Gates is right. And he is not just talking about the impact on climate change, which does of course present a major threat. He is also talking about one of the most critical global imperatives to make poverty history: making clean energy cheap.
“If you could pick just one thing to lower the price of to reduce poverty, by far you would pick energy,” said Gates in his introduction. Gates should know as well as any development expert, since the Bill & Melinda Gates Foundation – the world’s largest transparent private foundation – has invested billions of dollars in extreme poverty alleviation since 1994.
Nearly 1.6 billion of our fellow human beings have no access to electricity, and around 2.4 billion people – over one third of global population – meet their basic cooking and heating needs by burning biomass, such as wood, crop waste, and dung. “Without access to modern, commercial energy, poor countries can be trapped in a vicious circle of poverty, social instability and underdevelopment,” concludes the International Energy Agency.
The direct health consequences of using primitive solid fuels like biomass and coal are severe. According to the World Health Organization, solid fuel use causes 1.6 million excess deaths per year globally, especially among women and children -- the fourth largest risk factor in developing countries after malnutrition, waterborne disease, and unsafe sex, and the second greatest environmental cause of disease overall.
These numbers are staggering. Energy poverty is an extreme and dangerous condition, and its elimination must be one of the highest development priorities for the 21st century. Nobody on this planet should be forced to burn dung to feed their family and heat their home, and access to modern energy sources should be considered a basic human right.
The implication is that energy technology innovation today should be considered one of the world’s most important social and economic justice movements. The growing movement to make clean energy cheap, and to deliver that energy globally, has the potential to alleviate as much human suffering and injustice as some of the largest, concerted social movements in history.
Of course, driving down the price of clean energy technologies is also essential for reducing global carbon emissions. Until the price gap between low-carbon and high-carbon energy is bridged, poor and rich nations alike will continue relying upon coal and other fossil fuels to power their development. This would virtually assure climate destabilization.
The task is clear: to eliminate energy poverty and avoid climate catastrophe, we must unleash our forces of innovation – namely, scientists, engineers and entrepreneurs – to develop a portfolio of truly scalable clean energy technologies, bring these technologies to market, and ensure they are affordable enough to deploy throughout the world.
If you gave me only one wish, then, it would be for the United States to launch a major public-private project to make clean energy cheap (or as Google puts it, "renewable energy cheaper than coal"). This requires the development of a comprehensive, strategic roadmap for technology development and deployment, including the identification of specific technical hurdles and the various financial and human resources needed to overcome them. It will then require large-scale public-private investment in each stage of the energy innovation pipeline – from basic research and development, to applied R&D, demonstration, direct deployment, infrastructure, and education – eventually on the scale of $50-80 billion per year of federal investment.
The clean energy investments in the American Recovery and Reinvestment Act were an important first step. Congress should take the next step today with a bipartisan plan to increase the federal energy R&D budget to $15-30 billion per year, on par with the National Institutes of Health, and to develop a comprehensive federal energy education program. If these investments are funded by a modest carbon price, then all the better, but we can no longer make energy technology policy dependent on the carbon pricing agenda. Clean energy innovation is an economic, national security, and human development imperative, and these public investments should be made with or without cap and trade.
The United States was a driving force behind the worldwide expansion of prosperity and security in the 20th century. Today, a new American project to make clean energy cheap can alleviate untold human suffering and injustice, develop the world’s strongest clean energy industry, and help save the world from climate destabilization. In short, it may be our generation's single greatest opportunity to advance global prosperity in the 21st century and secure the lives of future generations. As Bill Gates put it, “This is the one with the greatest impact.”
Teryn Norris is Director of Americans for Energy Leadership, Public Policy major at Stanford University, and Senior Advisor at the Breakthrough Institute.
Monday, February 22, 2010
Thoughts on Framing Climate Change
By Leigh Ewbank. Cross posted from The Real Ewbank
The climate blog It’s Getting Hot in Here featured an excellent post on the framing of climate change at the weekend. Taj Schottland, a senior at the College of the Atlantic, has developed three frames for communicating climate change and associated policies to political conservatives. To appeal to conservative audiences, Schottland recommends:
- Replacing the term ‘climate change’ with ‘climate security’ to better explain the ways in which the changing climate adversely affects America’s economic health, national security and prosperity.
- Highlighting clean ‘energy advancement’ as a way to avoid the negative connotations associated with reducing emissions and by implication economic growth.
- Emphasising the objective of cap-and-trade policies to ‘harness the power of the market.’
Regardless of whether you agree with Schottland’s suggestions, it is encouraging to see that climate advocates are examining the ways in which climate change is framed. And perhaps more importantly, that they are developing new frames to communicate the impacts of the phenomenon to a wider audience. Given that the construction of one capture-all frame is virtually impossible, we need multiple frames to appeal to people across the political spectrum, and build the broad public support needed for government action.
How to frame policy responses effectively is another challenge for climate and renewable energy advocates. Take the Australian Government for example. It frames its climate change policy as a carbon pollution problem and has proposed a cap-and-trade scheme as the appropriate policy response. Unfortunately for the Government, the policy is poorly understood by the public and has failed to gain the support necessary to pass the Australian Senate.
I have presented ‘nation building’ as an alternative way to frame climate and energy policy in Australia.
The idea of nation building is not unique but Australians have a particular admiration for government projects that strengthen the nation. Investment in renewable energy and associated enabling infrastructure are central to our response to climate change and its ability to be framed in terms of nation building is a strategic leverage point. It is capable of winning a greater degree of public support than the complex market mechanism the Rudd Government—and many climate advocates—seek to implement. This approach demonstrates the potential to mitigate and adapt to our changing climate without the phenomenon being the central frame for policy responses.
An American version of the approach is most visible in the work of progressive think tank the Breakthrough Institute, New York Times columnist Thomas Friedman, and others who present a global ‘clean energy race’ as a national challenge worthy of national attention. This strategic lever is reminiscent of the USA/USSR ‘space race’ of the 1960s. The ‘race’ narrative guides action by drawing attention to the important role of public investment, and America’s ability to develop advanced technologies to overcome the Soviet challenge. The clean energy race appeals to those who want the United States strive towards greatness and have a keen sense of national competitiveness. Engaging in a clean energy race will require the US to invest in deploying clean energy and fully utilise its capacity for innovation.
Of course, the clean energy race is more than just an intelligent narrative. It is a reality. A recent report by the Breakthrough Institute and Information Technology and Innovation Foundation finds that the United States is lagging behind Japan, South Korea and China on several key measures of clean technology competitiveness. The potential for gaining public support and action from Congress is greater with the clean energy race narrative than policies centered on reducing carbon emissions.
Getting the United States to engage in the clean energy race is a win win in terms of climate change. It will ensure the increased innovation and deployment of clean energy, decarbonising our global economy and reducing the price of renewable energy for all.
Read more!Wednesday, February 17, 2010
Innovating to Zero: Gates Wants Clean, Cheap Energy Fast
Originally posted at the Breakthrough Institute
Bill Gates wants clean, cheap energy more than he wants to pick the next 50 years worth of presidents, even more than he wants a miracle vaccine. At least that's how he ranked his number one wish while describing climate change as the world's greatest challenge to a rapt audience at the TED conference last week.
Just weeks after lending his voice to a growing "innovation consensus" by writing on his blog, Gates Notes, that innovation, not just insulation, must be the focus if we are serious about "getting to zero," Gates' TED speech expanded on what we need to get there:
"We need energy miracles. The microprocessor and internet are miracles. This is a case where we have to drive and get the miracle in a short timeline."Gates emphasized the need for an energy miracle portfolio that includes carbon capture and storage and nuclear as well as wind and solar. According to CNN's coverage of the conference (watch the video below), Gates showed particular interest in the potential for nuclear waste reprocessing as a source of clean, cheap energy.
The Gates Foundation typically invests its resources in issues related to public health and poverty, not climate change and energy, which is why Gates' unprecedented speech could be a game changer for two important reasons.
The first is that Gates has come to realize that the reducing the carbon intensity of energy is the only feasible way to achieve a zero-carbon world. In an article about Gates' talk for AlterNet, Alex Steffen explains that Gates presented the following equation to explain how he arrived at this conclusion.
CO2 = Population x Services x Energy x CarbonSteffen dubs this the "Gates Climate Equation," though regular readers of this blog will also recognize it as a simplification of the Kaya Identity, which looks like this:
Carbon emissions = Population x Per capita wealth x Energy intensity of the economy x Carbon intensity of energyWhatever you call it, the conclusion is the same: in a world with increasing population that values greater economic growth, reducing carbon emissions means fueling development with clean energy that is cheaper than incumbent fossil fuels. As Gates has written, energy efficiency can help, but getting to zero carbon will require major innovation if we want abundant carbon-neutral energy.
The second reason why Gates' opinions are so poignant, is that he defines a clear need for investment in clean technology innovation, notably asserting that current technologies are not sufficient despite Al Gore, the main flag-bearer of the phrase, "We have all the technology we need," being in attendance.
According to Gates:
"All the batteries we make now could store less than 10 minutes of all the energy [in the world...So, in fact, we need a big breakthrough here. Something that's going to be of a factor of 100 better than what we have now."As a respected innovator and philanthropist, Gates' opinions may help drive home an aspect of the climate change/clean tech debate that is often underappreciated, or at least, easily overlooked: scale.
We have grappled with the scale of both the climate challenge and the energy challenge via our writing and admittedly, they both seem overwhelming. But while Gates acknowledges that the solutions are complicated - clean technology innovation and implementation will not be easy, especially in such a short time frame - the ultimate goal to overcome both challenges is clear: make clean energy cheap, and fast.
Tuesday, February 16, 2010
Remaking the Global Climate Framework
Originally published by The Stanford Daily
Two months ago, hundreds of world leaders and tens of thousands of activists gathered in Copenhagen to craft a new global treaty to replace the Kyoto Protocol in 2012. Green groups put on a spectacle – yes, Greenpeace even docked two of its famous boats nearby to “help in pushing the delegates” – and some observers declared it a make or break event in global climate history.
Today, there is strikingly little to show for the whole affair, momentum has slowed to a crawl and hardly anyone is discussing the aftermath. For good reason: the Copenhagen Accord is basically a voluntary agreement with obscure objectives, and its impact will be negligible. Michael Cutajar, the former chairman of the United Nations Framework Convention on Climate Change (UNFCCC) negotiation group, said that “Beyond the lack of clarity in its drafting, its main weakness is the lack of ambition and identifying responsibilities… Who should do what, and when, in order to limit warming to two degrees?”
What went wrong at Copenhagen? As I recently argued on BBC World View, the outcome was primarily the result of a flawed UNFCCC process and policy framework. The first and most obvious problem was imagining that 192 countries – some of which represent thousands of times more people than others – could produce a meaningful climate mitigation treaty. The UNFCCC process is kind of like the U.S. Senate (today one of the most dysfunctional national legislative bodies in the world) but at least four times as complicated.
There is growing consensus that global climate mitigation policy should be moved into a setting like the G-20 or Major Economies Forum on Energy & Climate (the members of which effectively constitute a super-majority of the world). David Victor, a former Stanford professor and leading international energy expert, recently put it this way: “With a deal this complicated and difficult, the fewer countries you need to reach an agreement, the better the chances are.”
The second overarching problem was the policy framework. For nearly two decades, the dominant national and global policy approach to climate change mitigation has depended on establishing strong, “legally binding” caps on carbon dioxide pollution, particularly through cap and trade and other measures aimed at making fossil fuels more expensive.
Today, the writing is on the wall: the Kyoto Protocol failed to achieve significant emissions reductions, even with a “legally-binding” agreement. As President Obama himself noted in his post-Copenhagen press conference, “Kyoto was legally binding and everybody still fell short anyway.” Copenhagen failed to produce a binding treaty, even with great pressure and expectations. If the world continues down this road -- an approach some experts have dubbed "magical climate thinking" -- negotiations will again fail to produce a meaningful outcome.
The time has come to remake the global climate policy framework to focus on global energy technology policy. Instead of debating emissions targets and timetables like accountants, we need the largest emitters to think like engineers and concentrate on identifying specific technical hurdles and mobilizing the resources to solve them. Most importantly, policymakers need to focus on the goal of “making clean energy cheap,” or as Google puts it, “renewable energy cheaper than coal.”
How much money will each major emitter put on the table to invest in development, deployment and infrastructure of low-carbon technology? What hurdles will those policies confront, and what is each country’s low-carbon technological roadmap? How will the policies be structured, and how can nations productively collaborate and compete on technological development? These are the kind of critical questions that should be negotiated.
Some advocates claim that if the U.S. Senate passes climate legislation similar to the American Clean Energy & Security Act (ACESA), the UNFCCC will achieve a breakthrough. But little evidence suggests that China, India and other countries will respond by implementing strong binding targets, or that signatories will even uphold their emissions targets. ACESA is weak technology policy at best, given that its clean energy investments represent only a small fraction of expert consensus, and not exactly the kind of example we want to set for the world.
The irony is that while the U.S. and Europe continue playing the accountants game of targets and timetables, Asian governments are the ones beginning to move forward with serious technology policies, investing massive amounts in clean-tech development and deployment – while the U.S. falls behind. This is motivated not by climate mitigation nor international law, of course, but economic competitiveness. We should leverage these efforts to motivate the policies we need in the U.S. and abroad, and to develop a new approach.
Ultimately, technology policy is the single most important lever the world has for overcoming this challenge. Our civilization possesses enormous capacities for invention and innovation – now we must develop a global climate policy framework that finally puts them to good use.
Penny Wise and Pound Foolish: Why Obama's Symbolic Spending Freeze May Grow the Deficit
With rising anxiety about mounting federal deficits, President Obama declared a freeze on all non-defense discretionary spending in his latest budget proposal. Heavy on symbolism and light on impact, the Administration's proposal attacks all of the areas of the government least responsible for the inexorable increase in federal deficits, while potentially starving key parts of the discretionary budget critical to America's economic prosperity.
Let's be clear: ballooning deficits do pose a real long-term threat to the United States' economic security. Under current forecasts, the accumulated deficit could total $20 trillion by 2020. That could hobble Uncle Sam with interest payments on the federal debt nearly as large as the projected total for all domestic discretionary spending. Efforts clearly must be taken to avoid such an unsustainable - and risky - financial future.
That said, curbing domestic spending is the wrong route to trim the deficit. The President's spending freeze applies to only a small fraction of the federal budget, while exempting both the mounting costs of two wars and the ever-rising bill for the nation's entitlement programs - Social Security, Medicare and Medicaid.
Together, defense spending and the three big entitlement programs account for roughly 60 percent of President Obama's $3.7 trillion FY2011 budget. Defense spending has soared 70 percent since 2001, in inflation-adjusted terms, reaching the highest level in post-World War II history. The Pentagon's $708 billion 2011 budget is now 23 percent higher than the peak of Regan-era Cold War military spending. At the same time, the steady rising costs of an aging population are projected to drive the price tag for entitlement programs alone to nearly half (46%) of the U.S. budget by 2020.
There is simply no route to a balanced budget without the hard work of serious entitlement reform, including efforts to control the rising costs of health care in America. Likewise, slashing domestic spending will do little to control the deficit without efforts to rein in defense spending, beginning with the responsible disengagement from the wars in Iraq and Afghanistan.
Without a growing economy, taming the deficit will prove impossible
Despite long-term deficit concerns, slashing federal spending or raising taxes in the short-term - e.g. while economic recovery is tenuous and unemployment still hovers near ten percent - would be tantamount to economic suicide. As long as the economy remains on shaky ground, real deficit-cutting efforts will effectively stay shackled; tax revenues will remain stagnant while efforts to trim spending or raise tax rates could send the economy tumbling back into recession. Thus, without a growing economy, taming the deficit will ultimately prove impossible.
As such, getting the budget back in the black has more to do with smart investments to ignite America's engines of economic growth than symbolic spending freezes. While Clinton-era deficit reduction efforts are often credited with taming the federal deficit in the 1990's, it was robust economic growth, largely driven by the long IT boom of the mid and late '90's, that did the lion's share of the work to turn deficits into the surpluses.
Along with real entitlement reform and winding down the wars, smart government investments in broad-based economic growth must therefore be the keystone of a three-part strategy to truly balance the federal budget.
Domestic spending freeze undermines critical investments in America's prosperity
That's where the pernicious potential of the new spending freeze becomes clear: the embrace of symbolic "restraint" on domestic spending could have a real impact on the Obama Administration's efforts to make critical investments in areas like infrastructure, education, and innovation, undermining precisely the efforts necessary to get America on the path to prosperity.
The IT boom that paved the way to America's return to fiscal health in the 1990's was in fact the result of precisely the kinds of federal investments that today's budgets threaten. For four decades after World War II, the federal government made enormous investments in research universities, national laboratories, communications and micro-processing technologies, and the necessary infrastructure to support the development and commercialization of information technologies that have transformed the American workplace, created entire new industries, and made the American economy the most productive in the world.
Yet even as these government investments were paying dividends and new technologies were in the process of remaking the American economy, the U.S. government was already in the process of weakening its commitment to the very innovation system that had made the IT revolution possible. In the 1980's, federal funding for education, infrastructure, and technology R&D was already on the decline, an overall trend that only continued through the Clinton and Bush years.
Thus, even as the economic boom associated with the IT revolution was eliminating deficits that at the beginning of the decade had appeared intractable, the U.S. government became complacent about precisely the kinds of public investments that catalyzed American innovation and prosperity. With the exception of bio-medical research, which saw big increases in the late 1990's and early 2000's, federal investment in America's innovation economy has stagnated over the last three decades. And without accelerated technological innovation and progress, America's prospects for real sustained economic growth are limited.
President Obama's first budget, and the stimulus passed by Congress last winter, offered some hope for a change in course. Spending on R&D, education, technology, and infrastructure was up. And to the President's credit, the proposed 2011 budget has preserved funding increases for many of these programs despite the proposed discretionary spending freeze. But if America hopes to catch the next technological wave and ride it to fiscal stability, it will have to invest much more in its innovation economy, returning to levels not seen since before 1980.
Case in point: investment needed to secure clean energy competitiveness
Energy is a case in point, although by no means an isolated one. While investing in clean energy, or any other particular sector of the economy, will not single-handedly cure America's economic ailments, new growth sectors with multi-trillion dollar potential don't grow on trees. Making investments now to catalyze competitive clean energy technologies and industries will pay big economic dividends down the line.
American policymakers would thus be foolish to ignore the economic potential of soaring global demand for clean energy in any serious strategy to get both the U.S. economy and the federal budget back on track.
Unfortunately for a cash-strapped America, in today's increasingly competitive global environment, securing market share and leading industries in the clean tech sector won't be possible on the cheap.
In his State of the Union, President Obama lamented, "There's no reason Europe or China should have the fastest trains, or the new factories that manufacture clean energy products."
On the one hand, President Obama is right; neither China nor the EU has some inherent competitive advantage in the clean tech field.
But the President is missing the very clear reason our Asian and European competitors are out-pacing the United States in clean tech: governments in Beijing, Tokyo, Seoul, and across the eurozone are all launching (or redoubling) comprehensive national clean energy strategies backed by big, long-term public investments to support each stage of the clean tech value chain.
Take China as an example, where both the Chinese central government and numerous provincial governments are together committing tens, if not hundreds of billions of dollars annually to secure competitive clean energy industries - and the jobs, tax revenues and export opportunities that go with them.
Carving out America's market share in the growing sector will similarly require both a focused national strategy and sustained public investment to support the key components of a competitive clean energy economy: robust clean energy innovation, manufacturing leadership, and strong and consistent market demand.
"I do not accept second place for the United States of America," President Obama boldly declared in his State of the Union. Yet when it comes to the race to harness clean energy growth, the United States will continue to languish in second place - or worse - as long as clean energy investment remains restrained by the Administration's spending freeze.
Real strategy to control the deficit requires long-term focus
In the end, there are no short-term, easy fixes to a problem as intractable as the soaring federal deficit. Nor will critical public investments in education, infrastructure, innovation, and competitive American industries pay huge dividends in the next budget cycle.
Rather, a real effort to put both the federal budget and the U.S. economy back on track will require an honest commitment to take up several hard tasks over the long-haul: bringing solvency to the nation's critical entitlement programs; reining in historically-high defense spending without imperiling the nation's security; and making a series of robust, sustained public investments that can put America back on the path to long-term, shared prosperity.
Jesse Jenkins is Director of Energy and Climate Policy at the Breakthrough Institute, and co-author of "Rising Tigers, Sleeping Giant," a major report on international clean tech competitiveness. Follow him on twitter @JesseJenkins
