How to achieve energy independence? Invest, baby, invest

By Jeff Bridges

The Colorado Independent

September 17, 2008

 

As reported in the Colorado Independent today, the Natural Resources Defense Council (NRDC) thinks 32,000 jobs would come to Colorado through a $100 billion government investment in the “greenvolution” (I made that word up, not NRDC, though it does get 338 hits on Google). With all the renewable research already taking place in Colorado I think that number could go way higher, but more importantly an investment in new energy technology would put America on track for continued economic dominance in this next major world industry.

 

During a recent conversation between two of my favorite authors/analysts, Thomas Friedman and Fareed Zakaria, neither of them held back when describing the expected scale of this new industry. They agreed that the new energy economy will be “enormous, it’s actually going to dwarf all the others,” calling it “the next great global industry.” The way Friedman put it, whichever nation takes the lead will “enjoy more national security, more economic security, more economic growth, a healthier population, and greater global respect, for that matter, as well.”

From their discussion:

 

Friedman: What I said to young Chinese most recently when I was just in China is this: Every time I come to China, young Chinese say to me, “Mr. Friedman, your country grew dirty for 150 years. Now it’s our turn.” And I say to them, “Yes, you’re absolutely right, it’s your turn. Grow as dirty as you want. Take your time. Because I think we probably just need about five years to invent all the new clean power technologies you’re going to need as you choke to death, and we’re going to come and sell them to you. And we’re going to clean your clock in the next great global industry. So please, take your time. If you want to give us a five-year lead in the next great global industry, I will take five. If you want to give us ten, that would be even better.

 

But neither Friedman nor Zakaria believe America currently has the mechanisms in place to dominate this industry. I’m usually all for the free market doing its thing, but sometimes we need a political push to overcome entrenched interests. As Zakaria and Friedman put it:

 

Zakaria: The rhetoric we hear is that the market should produce new energy technologies. But the problem is, the use of current forms of energy has an existing infrastructure with very powerful interests that has ensured that the government tilt the playing field in their favor, with subsidies, tax breaks, infrastructure spending, etc. This is one area where the Europeans have actually been very far-sighted and have pushed their economies toward the future.

 

Friedman: I would say that’s exactly right. It’s the Europeans — and the Japanese as well — who’ve done it and they’ve done it because of the government mechanisms you’ve highlighted. They have understood that, if you just say the market alone will deliver the green revolution we need, basically three things happen and none of them are good: First, the market will drive up the price to whatever level demand dictates. We saw oil hit $145 a barrel, and when that happens the oil-producing countries capture most of the profit, 90% of it. So, some of the worst regimes in the world enjoy the biggest benefits from the market run-up.

The second thing that happens is that the legacy oil, gas and coal companies get the other ten percent of the profit — so companies which have no interest in changing the system get stronger. And the third thing that happens is something that doesn’t happen: because you’re letting the market alone shape the prices, the market price can go up and down very quickly. So, those who want to invest in the alternatives really have to worry that if they make big investments, the market price for oil may fall back on them before their industry has had a chance to move down the learning curve and make renewable energies competitive with oil.

 

…Bush and Cheney may say the oil market is “free,” but that is a joke. It’s dominated by the world’s biggest cartel, OPEC, and America’s biggest energy companies, and they’ve shaped this market to serve their interests. Unless government comes in and reshapes it, we’re never going to launch this industry. Which is one of the reasons I argue in the book, “Change your leaders, not your light bulbs.” Because leaders write rules, rules shape markets, markets give you scale.

 

From what I’ve read, it looks like the NRDC plan would go a long way towards answering the criticisms above and putting America at the head of the new energy economy. So how would our state benefit? At a Colorado Conservation Voters luncheon last week (full disclosure, I’m on the board) Governor Ritter said that when he traveled to Spain recently and bragged that Colorado has the best renewable energy research and development in the world, they replied, “Yeah, we know.”

 

So even without strong support from the federal government Colorado leads the world in creating new energy technologies. Imagine where we’d be with a President who actually made this a priority!

 

For less than what we spend on just a year in Iraq, Americans could eliminate our dependence on foreign oil and build the technologies the rest of the world will use for generations to come. As Governor Ritter likes to say, our children will consume energy in a very different way than we do today. Colorado and our country can choose to lead this revolution, or we can get left behind.

 

Whoever wins the White House, I hope they take a good long look at the NRDC proposal and put boosting America’s new energy economy at the top of their priority list.