Source: Stanford News | Mark Golden | May 11, 2016

To combat climate change, the next president should pave the way for cleaner energy, Stanford experts say. This will require pushing for fair taxation, public-private partnership on research and electric utility competition at the state level.

A panel of experts on climate change, energy and governance identified key climate and energy policies that the next U.S. president could either execute unilaterally or use to attract bipartisan support.

Panelists at the conference, “Setting the Climate Agenda for the Next U.S. President,” included veterans of the Obama, Bush, Clinton and Reagan administrations. They agreed that the next president will need to confront the reality of climate change, and employ strategies to reduce greenhouse gas emissions and pivot to a clean energy economy. The public meeting Friday culminated a series of workshops led by David J. Hayes, a consulting professor at the Stanford Woods Institute for the Environment and Stanford Law School, and former deputy secretary of the Department of the Interior for Presidents Clinton and Obama.

“Let’s try to create this as a nonpartisan issue – not bipartisan, but nonpartisan,” said George Shultz, head of the Hoover Institution’s task force on energy policy and former secretary of state in the Reagan administration. “This has a profound effect not only on us, but on our brothers and sisters around the world, so we should be able to make this a nonpartisan issue.”

Climate becomes a divisive issue when the federal government goes beyond paying for research to financially supporting specific companies, Shultz said. “Government has no good track record on being a venture capitalist,” insisted Shultz, who has long supported a federal tax on carbon dioxide emissions to replace all energy subsidies and tax benefits.

The research agenda related to climate and energy is broad and must be managed holistically, said Arun Majumdar, co-director of Stanford’s Precourt Institute for Energy and professor of mechanical engineering. Many questions need to be answered to decarbonize the world’s existing energy systems, and also to deliver clean electricity affordably to the more than one billion people in the world now living without electric service. Research questions involve not only technology, but also policy, economics and behavior, said Majumdar, who was the founding director of the U.S. Department of Energy’s Advanced Research Projects Agency-Energy.

“While we try to decarbonize energy and maintain economic growth, we have to think about adapting to climate change, because it’s already happening,” he said. “Look at Hurricane Sandy.”

From research to implementation

While universities and other research organizations prove the effectiveness of technologies and policies, private businesses must take over when it comes to the further development and investment needed for full commercialization, said Majumdar, echoing Shultz on the limits of government involvement.

However, Majumdar said a new public-private partnership is urgently needed so that research is not done in isolation from the real world of business. Such a partnership would “coherently enable innovations to accelerate the transition to a clean and resilient economy faster than climate change.”

People who oppose government support for individual companies often cite the failed solar panel start-up Solyndra, which went bankrupt after receiving a $535 million loan guaranteed by a Department of Energy program. But that program in total has been a success, said Dan Reicher, executive director of Stanford’s Steyer-Taylor Center for Energy Policy & Finance.

“Everybody talks about Solyndra instead of Tesla, which started with $400 million loan from the program, which it paid back in full 10 years early,” said Reicher. “One challenge for the next president will be to reinvigorate this loan guarantee program.”

Investing in clean energy

And the next president will need to do several other things to unleash the big dollars needed to transform the U.S. energy system, Reicher said. These include extending tax benefits now enjoyed by solar and wind power producers to other clean energy sources, like geothermal and biomass. The president should work to allow clean energy companies to use tax-advantaged financial structures, such as master limited partnerships and real estate investment trusts. MLPs have for decades provided capital for oil and gas production, but explicitly not to other energy sources.

The next president ought to focus on reducing the red tape to permitting and building long-distance transmission lines, said Steven Chu, former secretary of energy during President Barack Obama’s first term and now Stanford professor of physics, and of molecular and cellular physiology. The federal government controls long-distance transmission, which could help even out the unpredictability of solar and wind energy.

“It’s one of the key things we can do to bring low-cost clean energy to scale faster, but it now takes 11 years before a shovel goes in the ground,” Chu said. “I tried to get the permitting process down to 30 months and I still think it should be.”

At the state level, the federal government should try to get electric utility regulators to refocus their concerns from the regulated monopolies to customers by fostering competition and providing alternatives, said Andy Karsner, a lecturer at Stanford and former head of the DOE’s Office of Energy Efficiency & Renewable Energy under President George W. Bush.

“The future will happen anyway and companies will make money, but there will be a lot of dislocation,” Karsner said. “We have to move from regulators who are in symbiotic relationships with utilities to keep them around for the last throes of the regulated utility. Let them go the way of Eastman Kodak.”

To achieve its national goals the federal government should promote more competition in the electric industry, which for the most part has been governed by state governments, added Karsner. He admitted that the federal government has been reluctant to do this after its attempt to deregulate electricity in the 1990’s led to the western U.S. energy crisis of 2000-2001 and the emergency of Enron.

“Let’s update and modernize the state public utility commissions with national policy,” he said. “The 100-year-old model of making policy state by state by state has to come down, though the regulated utilities are trying to calcify that model.”

The conference was sponsored by the Stanford Woods Institute, Stanford Law School, the Precourt Institute for Energy, and the Stanford School of Earth, Energy & Environmental Sciences, with the support of the Hewlett Foundation.