Distributed Generation of Energy Policy – State by State

US DOE Energy All Stars Seminars

US DOE Energy All Stars Seminars

I had the opportunity to attend the US Department of Energy’s inaugural lecture series “Energy AllStars, What’s Our Energy Future” in Washington DC on January 19. Dr. Steven Chu, outgoing Secretary of DOE gave another one of his adroit and compelling presentations, which started with a comparison of how technology solved an environmental problem caused by transportation in the late 1800’s – namely that major American urban centers like New York and Detroit were being fouled with 3 – 4 million pounds of horse manure and 40,000 gallons of urine per day by horse drawn carriages. A technology transition—the rise of the automobile—solved this problem in less than 30 years. He went on to show how the dire issues facing us as a result of climate change and its cost to insurance companies and taxpayers presents another technological and economic solution transition opportunity: this time with clean energy and energy efficiency. Dr. Chu’s presentation is one that the President Obama should give to the nation.

As compelling as Secretary Chu’s presentation was, the one that followed, by the energic and former Governor Jennifer Granholm of Michigan, really got my attention. She outlined her experience of being powerless, despite valiant efforts, to stop manufacturing flight from Michigan and the resulting collapse of the middle class. But the Governor then outlined her Clean Energy Jobs Race to the Top proposition that is modeled on the highly successful Department of Education’s Race to the Top program. This program leveraged $4.5B in American Reconstruction & Reinvestment Act (aka stimulus package) funding by making competitive grants to state governments that instituted education reform and showed progress in many categories of improved education statistics. It’s a successful program that has received bipartisan accolades.

Govenor Granholm has winning plan?!

Govenor Granholm may have a winning plan . . . . .

As Governor Granholm outlined, the beauty of this program is that it becomes non-partisan – who would say no to funds that are being offered on a structured basis that provides real value to each state?  It respects the states and federalism while it builds on the leadership already demonstrated by many states on climate change, clean energy, and energy efficiency.

Her Clean Energy Jobs Race to the Top program would be on an opt-in basis working with a funding level similar to the Department of Education program. The price for entry would be to establish both demand side and supply side strategies. These include enacting a state level clean energy standard of something like 80% by 2035, establishing innovation centers via industry and education partnerships, and producing technology and clean energy that is indigenous to each region. Each state would do an analysis of its strengths and weaknesses and hone in on a strategy that would leverage their region’s unique capabilities. The overall goal is to show how many jobs can be created.

With the government stimulus program over, the question is how to fund a program like this given the current sad state of Capitol Hill. Governor Granholm posited 2 ideas that would be difficult but could be achieved. One is to leverage philanthropic foundations such at the Bill & Melinda Gates Foundation, Google and others, where they provide capital that can then be matched by other private and government sources. The second, and I think the most interesting, is to repatriate some of the large amount of corporate money now offshored in tax havens with a program that would have low tax basis for investing in the program, resulting in enormous business opportunities that would benefit all of US industry.

Clearly there are many questions and challenges to this proposition but the basic framework she provided is clever, could have legs and create massive change with little money spent. To paraphrase the Governor, “Truly, we have an obligation as a nation to fix the problem of the hollowing out the middle class and to achieve energy independence by creating clean energy jobs.”

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