Posted on May 15, 2019 by Rich Powell
Below is my testimony before the House Ways and Means Committee on the economic and health consequences of climate change on May 15, 2019.
Good morning Chairman Neal, Republican Leader Brady, and members of the committee. I lead ClearPath. We develop and advance conservative policies that accelerate clean energy innovation. An important note: we are an independent organization that does not receive funding from industry or others with vested interest in our policy positions.
Thank you for this opportunity at this important hearing. Climate change is an urgent challenge that merits significant action at every level of government and the private sector.
Its economic and health impacts are clearly rising: for example, the National Oceanic and Atmospheric Administration finds that the five-year running average of damage of weather events has risen five fold over the past 20 years from $20B / year to $100B / year.
As this Committee considers its part in U.S. climate policies, your solutions should be ambitious, technology-inclusive, politically realistic, and substantively pragmatic.
Too often, climate policy is oversimplified to false choices: renewables versus fossils, economy versus environment, immediate reductions at home versus inaction. The reality is this: solutions must make the clean energy transition cheaper and faster while preserving economic growth and reflecting the global nature of the challenge.
For example, the expected emissions growth by 2050 from developing Asian countries alone would offset a complete decarbonization of the U.S. economy.
In addition to all of China’s domestic coal, their Belt and Road Initiative is building 100 GW of coal plants without carbon controls in 23 countries, like Vietnam and Indonesia.
We have a choice – bet that the Chinese and their partners shut down their coal at the cost of growth; or develop, demonstrate, and deploy affordable carbon capture technologies abroad.
We need an aggressive innovation policy to make clean energy cheap. In the near term, divisive policies to make traditional energy more expensive will only aid deployment of existing technologies, not facilitate breakthroughs relevant for the developing world.
Effective policies to make clean energy cheaper include both pushes and pulls – they invest in basic and applied R&D, demonstrate technologies in public private partnerships, and accelerate early deployment. This early deployment enables the all important “learning by doing” which has driven the huge cost declines in natural gas, wind, and solar.
Federal tax incentives have effectively deployed numerous clean technologies – such as the unconventional gas credit that scaled up shale gas.
And as you all know well, these policies enjoy bipartisan appeal. In just the past 2 Congresses,
Moving forward, the climate challenge calls for new policy designs.
Today’s technology-specific approaches virtually all phase out over the next 8 years. Those incentives have become ill-suited to stimulating the breakthrough innovation we need. This committee should take advantage of the bipartisan consensus around deploying new technologies.
For example, Representatives Reed and LaHood have proposed the Energy Sector Innovation Credit or ESIC. This technology-neutral approach would leverage market signals, help the most promising technologies, and phasedown as each technology proves commercial viability. ESIC limits market distortions unlike existing production tax credits. Its qualification criteria require step-change performance across all generation sources — it does not pick winners and losers.
A recent report sponsored by Bill Gates’ Breakthrough Energy Coalition, and authored by Daniel Yergin’s IHS Markit and former Energy Secretary Ernest Moniz’s Energy Futures Initiative highlights federal tax policy as a key enabler for clean innovation. Moniz and Yergin specifically recognize the Reed-Lahood ESIC concept.
Some preliminary analysis — conducted by premiere energy-economic modelers OnLocation — projects the Reed-Lahood proposal to result in gigaton scale CO2 emission reductions by 2040, just with contributions from a group of known clean technologies near to demonstration — small modular reactors like NuScale, innovative carbon capture technology like NETPower, floating offshore wind, and energy storage. ESIC will surely cut emissions far more by scaling up all the technologies we cannot even foresee today.
Many other innovative financing ideas warrant consideration. Bipartisan members support legislation to establish clean technology bonds, expand eligibility for master limited partnerships, and even leverage private activity bonds for innovative projects. We must now together decipher what suite of policies yield the greatest bang for the buck in reducing global emissions.
A serious debate on climate solutions must include a dose of political and technical realism. I’m here to tell you firsthand that it’s alright to be conservative and agree that climate change is an urgent problem to address today, not tomorrow. ClearPath is eager to assist the Committee in advancing stronger policies that commercialize the cutting-edge clean energy technologies needed to reduce global emissions as quickly and cheaply as possible.
Thank you again for this opportunity.I look forward to the discussion.
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