New Hamilton Project Papers on Energy and Environment

The Hamilton Project • Press Release/Media Advisory • May 19, 2011

WASHINGTON, DC — Yesterday, at a forum in Washington, DC, The Hamilton Project released a new strategy paper outlining principles to help level the playing field for all energy sources — moving away from a system favoring energy sources with low prices at the pump but higher costs to society through health impacts and our ongoing reliance on foreign oil. The Project also released three new policy proposals to improve the regulations governing energy consumption and environmental quality, create a new clean energy standard, and improve the federal government’s efforts to deploy new energy technologies.

The papers, as well as audio and transcripts of the event, area available at: http://www.hamiltonproject.org/events/americas_energy_future_new_solutions_to_fuel_economic_growth_and_prosp/

The first panel, moderated by Hamilton Project Director Michael Greenstone, featured the authors of the new proposals: Joseph Aldy of the Harvard Kennedy School, John Deutch of the Massachusetts Institute of Technology, and Ted Gayer of the Brookings Institution.

“The criteria we use to choose our energy sources are largely made up of, or determined by, the prices we pay at the pump and the prices we face on our utility bills each month. But however, as much as we wish it were not the case, there are other (social) costs. And those other costs are not as obvious as they are at the pump or on the utility bill but they come in three basic varieties. The first is threats to our national security related to our consumption of petroleum. The second is that our energy sources compromise our health and well-being. And then the third is our energy choices lead to climate change.” —Michael Greenstone, Hamilton Project Director

A second panel of national leaders moderated by former Treasury Secretary Robert E. Rubin discussed future possibilities for climate change and energy policy in the United States. Duke Energy CEO Jim Rogers; Farallon Capital Management Founder Tom Steyer, Co-Chair of Californians for Clean Energy and Jobs; The Nature Conservancy President and CEO Mark Tercek; and former U.S. Senator John Warner (R-Va) participated in the discussion. The conversation touched on national security concerns, the role of states in energy policy, and the challenges at the federal level for moving forward with comprehensive energy and climate change legislation.

“So technology, to me, is the key. It’s the answer to solar, It’s the answer to renewables. At the end of the day, this debate would be pretty easy if they were all comparable, and if you could get the (energy) costs at the same level.” —Jim Rogers, Chairman, President and CEO of Duke Energy
“They have a slogan on (Fort) Bragg, every soldier, irrespective of rank, should think of energy conservation, energy savings, energy — how do we use it, how can we use less, and how can we use what we have more efficiently? And that’s taking charge, and it leaks out into the civilian communities.” —John Warner, former US Senator and Adviser, Pew Project on National Security, Energy and Climate

The event concluded with remarks from Senator Maria Cantwell (D-WA), who spoke on "Bipartisan Solutions to America’s Energy Challenges."

“The smart way is to figure out how we provide that true energy price discovery, not just the price at the pump or what’s on the electric bill. And the smart way to create that predictability in the rules of the road, I believe, is to have a gradual transition for America to that new energy paradigm, one that unleashes the level of private sector investment we hope to see for the future, but minimizes the risks. To me, that means we want to clearly lay out a path for the future so that investors know what’s coming.” —U.S. Senator Maria Cantwell (D-Wash)

A summary of the new Hamilton Project proposals is included below. For more information on the papers, or to speak with any of the authors, please contact Karen Anderson (kanderson@brookings.edu, 202-797-6023) or Kaitlyn Golden (kgolden@brookings.edu, 202-797-6082). Thank you.

New Hamilton Project Proposals

Promoting Clean Energy in the American Power Sector
By Joseph Aldy, Harvard Kennedy School

Despite bipartisan interest in advancing American energy policy, comprehensive energy and climate legislation fell short in 2009. The difficulty of coming to broad agreement highlights the need for a more targeted and incremental approach. One promising intermediate step would be a technology-neutral national clean energy standard that applies to the U.S. power sector. This paper proposes a standard that would lower carbon dioxide emissions, streamline the fragmented regulatory system that is currently in place, generate fiscal benefits, and help fund energy innovation. The National Clean Energy Standard would provide certainty about the economic returns to clean energy that would facilitate investment in new energy projects, lower the emission intensity of the power sector, and serve as an ambitious bridge to economy-wide energy and climate policy.

An Energy Technology Corporation Will Improve the Federal Government’s Efforts to Accelerate Energy Innovation
By John Deutch, Massachusetts Institute of Technology

Energy innovation is critical to solving many of the energy and environmental challenges we face today, from reducing the risks of climate change to lowering the costs of alternative energy sources. While there is no shortage of new ideas, a major obstacle stands in the way of implementation: proving that these ideas work and are worthy of expensive investment. The private sector under-invests in technology demonstration because of the expense and uncertainties involved; at the same time, previous demonstration programs carried out by the Department of Energy have met with mixed results. This paper proposes a series of best practices for government support of U.S. technology demonstration and a new institution, the Energy Technology Corporation, which would be responsible for managing and selecting technology demonstration projects.

A Better Approach to Environmental Regulation: Getting the Costs and Benefits Right
By Ted Gayer, The Brookings Institution

Cost-benefit analysis of environmental regulation plays a key role in determining how to achieve our environmental goals without imposing unnecessary costs on the economy. This paper proposes three reforms that address several problems that undermine the role played by cost-benefit analysis in environmental regulation. First, agencies should be required to use a checklist of good empirical practices and should promote decentralized evaluations of data and research. Second, absent compelling systematic evidence to the contrary, agencies should presume that consumers are best able to make their own energy-saving decisions, and should focus on regulations that address the harm that people impose on others. Third, a six-month early regulatory review process should be established for particularly important regulations to allow sufficient time for a thorough cost-benefit analysis and the incorporation of the results into the final regulations.

A Strategy for America’s Energy Future: Illuminating Energy’s Full Costs
By Michael Greenstone and Adam Looney, The Hamilton Project

In this paper, The Hamilton Project provides four principles for reforming America’s energy policies. First, a level playing field requires that the full costs of different energy sources be priced. Second, basic research, development, and demonstration are essential for energy innovation, but government funding is required for critical investments that the private sector does not have the incentives to undertake. Third, environmental regulations should be designed and implemented as efficiently as possible. Finally, climate change, as a problem of global scope, should be addressed on a global scale.

About Us: The Hamilton Project is an economic policy projected housed at the Brookings Institution that produces research and policy proposals on how to create a broad-based economic grown, by enhancing individual economic security, and by embracing a role for effective government in making needed public investments. Learn more at www.hamiltonproject.org.

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