RealClearPolitics Energy Summit

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Director Ronen discusses the role government can play in promoting renewable energy at the RealClearPolitics Energy Summit on May 21, 2013.

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  • -Thank you, I’m Amit Ronen, director of the Solar Institute at George Washington University.-And my five minutes will be discussing the role government can play in promoting renewable energy.
  • -Renewable energy currently supplies 9 percent of America’s energy needs. With over half of that amountcoming from hydropower and wood. -As a share of electricity production, renewables accounted for about 13 percent of U.S. generation last year.
  • -Thanks to technological advances and significant public investment, renewables are really taking off. -In last three years, wind and solar capacity in America has doubled.But of course that is from a relatively small base. -And that growth is expected to continue, even according to EIA’s conservative modeling.
  • -Costs for renewables continue to decline.-And in some applications they enjoy parity with current fossil fuel prices. In the last three years: -Big solar installations have seen the biggest decrease, and will likely reach their long-term goal of a $1 per watt installed a few years sooner than expected.
  • -Also in the last three years:-Wind power costs have also dropped and account for a big chunk of the record high 17 Gigawatts of new nameplate renewables capacity added last year.
  • Future growthpotential is thought to be significant. A Pew study estimated that under current policies, cumulative investments in clean power projects will reach $1.7 trillion over the next decade.And strong supportive policies within the G-20would leverage an additional half a trillion in worldwide investment.
  • In January a Bloomberg report found that, quote “A revolution is transforming how Americans produce, consume, and even think about energy. Traditional sources are in decline, while natural gas, renewables, and energy efficiency are on the rise. These changes, which show no sign of abating, have far-reaching implications for U.S. economic and national security interests.” end quote.
  • And in a notable study, the Energy Department found that it was possible to supply 20 percent of our nation’s electricity needs with just wind by 2030.And that’swith virtually the same level of investment as alternatives. Of course, many thorny transmission issues would need to be addressed.
  • Government has picked and promotedALL of the sources of energy we use today. Here’s a graphic from a research report on energy incentives that THE GW Solar Institute issued last Fall.
  • As you can see, over the last 60 years taxpayers heavily subsidized certain energy sources over others. Of course there are different ways to calculate these figures, but the larger point is that government has played a vital role in making America’s energy system what it is today.
  • So what should government be doing today? Accelerating renewable energy deployment is in the public interest because:-Renewables allow people to produce their own electricity.-They are domestic resources, -Unlike fossil fuels, renewable costs will continue to decline-Renewables are safer for the environment.
  • One essential thing government can and is doing is supporting energy R&D.The Obama Administration is requesting a large increase in EERE’s funding, but Congress is unlikely to go along. ARPA-E, which enjoys more bipartisan support, will probably do a little better.
  • But some leaders, like the American Energy Innovation Council, believes that we should be doing much more. The Council is made up of a who’s-who of pioneering CEO’s who understand the business value of government R&D. And why government alone is uniquely suited to support energy R&D in particular.
  • Their recommendations include:Increasing annual investments in clean energy R&D to $16 billion per year. That’s eleven billion more than we are spending today. Centers of excellence. And, quote “complementary energy policies to drive market adoption of new technologies.”
  • So what kind of complementary policies work?Clean energy tax incentives have been absolutely critical.Loan guarantees, with notable and unfortunate exceptions, have leveraged over 10 dollars of private-sector investment for every one federal dollar.
  • And efficiency standards have been extremely effective in lowering national energy use. Standards for fuel economy will save the average vehicle owner $8,000 in foregone fuel costs.But federal renewable electricity standards are pretty much off the table now.
  • But given rapidly changing energy markets, our current fiscal situation, and Congressional gridlock, it may be time to rethink these policies. There is a emerging consensus to try and reform energy incentive programs to make the more predictable and technology neutral.
  • Those sorts of reforms would facilitate a much more competitive energy marketplace. But most economists would agree that will only really happen if we monetize externalities. The National Academies of Science, for example, estimated that just the non-climate damages from air pollution from coal-fired power plants costs society 3.2 cents per kilowatt-hour.
  • Climate change is a whole other ball of wax, and will result in trillions of dollars in economic dislocations. Even the first signs of global warming – more extreme weather, droughts, intensified fires, even things like ocean water that is too acidic for shellfish farming-- is already costing tens of billions a year that is not paid for at the pump or on your electricity bill. That’s why a market-based, consumer-friendly price on carbon is first best policy that government can use to make our energy system cleaner, more diverse, and more competitive.
  • Thank you.
  • RealClearPolitics Energy Summit

    1. 1. Energy and Government: Renewables Amit Ronen Director, GW Solar Institute Professor, Trachtenberg School of Public Policy, George Washington University
    2. 2. Renewables are still less than 10% of America’s energy mix
    3. 3. But Renewables Are Growing Fast Renewables capacity virtually doubled to 85.7 gigawatts (not including large hydro) In the last three years:
    4. 4. Renewable Costs Have Plummeted In the last three years: Levelized cost for large- scale solar went from $0.31 to $0.14/kWh
    5. 5. Renewable Costs Have Plummeted In the last three years: Levelized cost for large- scale wind went from $0.09 to $0.08/kWh
    6. 6. Future Growth Potential is Significant
    7. 7. Future Growth Potential is Significant
    8. 8. Future Growth Potential is Significant
    9. 9. No major energy technology has achieved the necessary cost reductions and scale without sustained government support But Sustained and Predictable Public Investment is Still Needed
    10. 10. No major energy technology has achieved the necessary cost reductions and scale without sustained government support But Sustained and Predictable Public Investment is Still Needed
    11. 11. Empower Ratepayers So What Can Government Be Doing? First should it be doing anything? National SecurityNational Security Declining, Predictable Costs Protect the Environment Mitigate Climate Change
    12. 12. So What Should Government Be Doing? R&D to Spur Innovation DOE’s FY 2014 budget request for the Office of Energy Efficiency and Renewable Energy (EERE) is $2.8 billion, an increase of over 50% from the previous two years. FY 2014 budget request includes $379 million for the Advanced Research Projects Agency–Energy (ARPA-E), an increase of about 35%.
    13. 13. So What Should Government Be Doing? R&D to Spur Innovation
    14. 14. So What Should Government Be Doing? R&D to Spur Innovation • Create centers of excellence in energy innovation • Increase annual investments in clean energy RD&D to $16 billion per year • Call for complementary energy policies to drive market adoption of new technologies
    15. 15. So What Should Government Be Doing? Provide Incentives to Nascent Technologies • Clean energy tax incentives • Loan guarantees
    16. 16. So What Should Government Be Doing? Provide Incentives to Nascent Technologies • Clean energy tax incentives • Loan guarantees • Standards
    17. 17. So What Should Government Be Doing? Provide Incentives to Nascent Technologies • Clean energy tax incentives • Loan guarantees • Standards Need to reform energy tax incentive programs to make them: • More predictable • More technology neutral • More level playing field
    18. 18. So What Should Government Be Doing? Provide Competitive Marketplace Energy markets will only be competitive if prices reflect all costs National Academies of Science estimated damages from non-climate air pollution from coal-fired power plants to be 3.2 cents per kWh Need to reform energy tax incentive programs to make them: • More predictable • More technology neutral • More level playing field
    19. 19. So What Should Government Be Doing? Provide Competitive Marketplace Energy markets will only be competitive if prices reflect all costs
    20. 20. Thank you Amit Ronen Director, GW Solar Institute Professor, Trachtenberg School of Public Policy, George Washington University

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