Sean Casten, Recycled Energy Development
August 24, 2009 | 12 Comments
The U.S. House of Representatives has finally passed climate change legislation, but the national debate on this issue continues to be based on a false assumption: that any major reforms will inevitably take decades to make a serious dent in greenhouse gas pollution.
To wit, the new legislation advanced by Edward Markey (D-MA) and Henry Waxman (D-CA) envisions a time frame of more than a decade to achieve just a 17% reduction in our country’s greenhouse gas emissions — far below what climate scientists say is necessary. And many critics say even this modest target is too ambitious.
Sure, scattered voices say we can achieve change at a faster clip. Al Gore, for instance, seeks a lightning-quick ramp-up of renewable energy. But most decision makers on Capitol Hill have dismissed such goals as fantasy, at least for the time being.
But who’s really living in fantasyland? Historically speaking, our nation has undertaken numerous reforms of our energy system that have spurred dramatic and rapid change.
Consider the 1992 Energy Policy Act. Before this bill passed, only a limited number of players — mostly regulated electric utilities that enjoyed guaranteed profits — had the right to sell power. Entrepreneurs with innovative, efficient ways of generating electricity were legally shut out. Not surprisingly, then, hardly any such entrepreneurs emerged.
The Energy Policy Act reformed this closed system, allowing more companies to sell power. And the results were staggering. The bill took a few years to go into full effect because of a spate of lawsuits from those who feared competition, but by 1998, the federal government and courts had ruled in favor of competition. The market exploded.
Within 10 years, unregulated entrepreneurs built nearly 200 gigawatts of power capacity, twice that of all the nation’s nuclear reactors. Having taken utilities a century to build our electric grid, independent generators took just one decade to increase it by a quarter — and that after a modest regulatory change. Simply remarkable.
New England regulators recently fostered even faster change in the energy market. ISO New England — which helps ensure the availability of electricity in Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont — decided about two years ago to allow entrepreneurs to get paid for decreasing production during peak hours, like on a hot summer day when the energy system is under great strain. Such a program had been in effect previously for big utilities, but now, smaller players were allowed to get in the game.
Already, small power producers in New England have brought forth nearly three gigawatts of energy savings, the equivalent output of three nuclear reactors. With a small change in incentives that opened the market to competition, the energy system quickly began operating a lot more efficiently. And we’ll doubtless see even more of an impact in the years to come.
In both of these examples — neither of which, incidentally, burdened taxpayers — energy companies showed how adaptable they are. If the rules change, they’ll change, too. They might not be looking forward to it. But they’ll do it. That’s how the system works.
So it’s strange that our climate debate remains mired in a swamp of diminished expectations. Policymakers seem to think they have to treat energy companies with kid gloves — as if demanding big changes will somehow be too much for them to bear and result in a devastating blow to our economy. But this view simply doesn’t square with history. With even minor reforms, enormous changes can occur.
Just imagine what could happen if we had the guts to face up to the challenge at hand and passed some bold legislation to fight climate change. We just might change the way our nation makes power.
Sean Casten is the president and CEO of Recycled Energy Development.