Energy Experts Weigh-in On Future of Climate Policy

Clean energy proponents may be frustrated by the slow pace of movement away from fossil fuels and other conventional energy sources—and history may frustrate them even more, said panel moderator David Sandalow, laying out the challenges. Sandalow is an inaugural fellow at Columbia University’s Center on Global Energy Policy and former Under Secretary of Energy (Acting) and Assistant Secretary for Policy & International Affairs at the U.S. DOE.

It took 100 years to move from wood to coal as the primary source of generating energy, Sandalow said. It took another century to move from coal to oil.

We’ve been “talking about wind and solar since the 1970s, but they provide less than six percent of the energy in our electric grid,” Sandalow informed his panel of experts.

The reasons for the slow pace are numerous, including the slow depreciation of capital assets, low investment in innovation, and political powerbrokers resistant to change or intent on protecting the status quo. But clean energy proponents have seen the so-called “shale gas revolution” and solar panel prices plunge by 80%, Sandalow noted.

“The interesting question is: are we entering an era in which we are going to see rapid change in energy systems?” he asked. “What is over the horizon?”

Rapid Need for Change

Panelist Fred Krupp, president of the Environmental Defense Fund, said it’s clear that today’s conventional energy sources are spoiling the planet. While there are many ways to reduce the carbon footprint, many of the methods are too expensive.

“An unaffordable cost won’t be politically sustainable,” Krupp said. “This change has to be really rapid and it has to be really fundamental. We can’t settle for slow, incremental change.”

Krupp also echoed earlier keynote by New York’s Energy Finance Chair Richard Kauffman’s call for markets to be the main drivers of change.  

“Markets have been the best way on the planet to organize activities,” he said. “We need to use markets.”

“You have a thicket of bureaucratic rules that impede markets and are not designed to stimulate innovation,” Krupp said. “They make a lot of sense for yesteryear, but right now it’s a thicket of rules that prevents new entrances and prevents competition and puts [up] road blocks in front of distributed generation”

Change needs to happen mostly at the state level, he said. One big change he pointed to happened in New York City, when a new law led to 2,700 of its biggest buildings being converted to cleaner fuels from burning dirty heating oil. This change led to dramatically improved air quality in NYC—the cleanest level seen in 50 years.

There’s also a need for further demand-side energy management incentives that increase energy efficiency retrofits, he said. Although Krupp sees a carbon tax as necessary to achieving long-term clean energy goals, it’s unlikely to be adopted in the U.S. this year or with the next congress, he said.

Technology Is Not the Problem

Consumers and their willingness to change or not are the real determinates of how fast clean energy takes hold, said Lawrence Jones, vice president, Utility Innovations & Infrastructure Resilience, Alstom Grid North America.

How utilities function and policies work have to change, but so does consumer behavior, he said. Yes, everyone wants clean energy and a strong electrical grid, but are most people willing to pay the price?

“Consumers themselves have to be prepared to accept changing their lifestyle,” Jones said.

Jones, who co-founded the Center for Sustainable Development in Africa, also urged that greater attention be paid to what is going on outside the U.S. Since clean energy is a global phenomenon, innovation can happen outside the U.S.

“Will [innovation] come from North America? Or from Africa, where they don’t have a legacy of regulatory infrastructure, where you can actually experiment much more aggressively with things like micro-grids, with things like how you fund these systems,” Jones said.

Moving Forward: Breaking Regulatory Silos, Green Banks and Infrastructure Banks

Utilities have a host of new concerns beyond the traditional consumer demands for safe and affordable power, said Lisa Frantzis, senior vice president for strategy and corporate development at AEE and managing director at Navigant Research.

“They care about resiliency, environmental sustainability, greater customer control, flexibility,” she said.

Over five to 10 years, expect to see more “integrated systems,” with smart grid, data, communications and advanced control technologies working in sync. One example of this includes developments in EV charging being integrated with solar PV and energy storage.

Performance-based models are generating plenty of industry attention, with the possibility of utilities becoming incentivized based on the value they provide to customers rather than on transmission.

But regulators and utilities need to sit together and think of new ways utilities can make money and revamp the regulatory framework to encourage competition, she said.

Jones added that there needs to be a focus on “systems thinking,” where regulators need to appreciate how rules impacting electricity can impact water and other services.

”Setting regulatory models in silos is not going to cut it in the future,” he said.

As “systems thinking” accelerates, there will be huge potential for microgrids and offgrid systems.  There will also be a need to better understand and analyze data, with the challenge being how to make sense of all the data we currently have, Jones said.

Gary Rahl, who leads Booz Allen Hamilton’s energy business, expects infrastructure banks and green banks to play a bigger role in infrastructure finance, and the potential of taxing offshore corporate profits to fund those banks.

Change in energy policies is inevitable, but those policies will need to allow for true innovation, Krupp said.

“Do those policies allow these technologies to be deployed or do they stifle them like the telephone technology (that) was stuck in rotary phones for many decades,” he said. “You have to open up markets or these great, gee-whiz things will not happen.”

Natural Gas and Biofuels in Transportation

Over the next five to 10 years, biofuels will garner more attention, with plenty of research and development occurring in this area now, Rahl said.

There’s also a huge near-term opportunity in using natural gas and biofuels as marine transportation fuels, where the infrastructure to support this is being developed first, before it moves onshore for cars and trucks.

But firms that use large trucks, including Ryder and FEDEX, have moved quickly to use natural gas in their fleets, she said. And the Southern California region will most likely lead the way in adopting natural gas transportation fuels.

However, the EDF’s Krupp expressed caution, pointing out the potential for climate damage from the further use of natural gas. He pointed to studies currently being conducted on the impact of methane leaks from natural gas transportation that can have an impact on the environment.

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