Center for the Study of the Presidency and Congress

Energy and climate remain on the 2010 Congressional agenda. However, the timing, final shape and methods used to implementation such legislation remain difficult to predict.  No matter what choices are made, policymakers need to avoid an “either-or” approach to meeting the energy needs of our $14 trillion economy.  Given the realities of energy supply, we must not demonize inexpensive fossil sources any more than we should overly lionize “green” substitutes that still are establishing their economic competitiveness.  Instead, U.S. policy should encourage producers and consumers to pursue energy-efficiency gains where possible while rebalancing our fuels portfolio.  This rebalancing requires that we match new applications that are technologically or financially constrained with existing energy-dense sources, just as we must flexibly apply existing energy sources and infrastructure to backstop emerging but intermittent new energy supplies.  For example, electric vehicles may immediately and without compromise satisfy urban commuters’ requirements but aircraft, trucks and earthmoving equipment likely will require a store of energy at least as energy-dense as petroleum for many years. Similarly, distributed power sources like solar rooftops may optimally power consumer appliances in “green homes” but, for the near-term at least, industrial producers likely will continue to depend on base-load electricity from central station power plants.

The hard work lies ahead in translating carbon prices into increased economic benefit, improved energy security and stricter environmental protection. New, clean energy infrastructure will require trillions of dollars of investments over the next twenty years--an extremely difficult, and delicate, task during the current recession.  Despite a growing thirst for greater market regulation in the wake of recent institutional failures, the only practical way for America to finance its cleaner environmental future is to harness the market system and the private investors who make it work.  That means a continuation of our centuries-old partnership between the public stewards of natural resources and the private entities that use them.  It also means educating energy users about the costs and trade-offs of an economic transformation that will require decades and trillions upon trillions of dollars.

This paper offers six policy recommendations aimed at financing the technologies required to transition to a cleaner energy infrastructure.