Renewable Energy

Last week, I attended a panel on renewable energy. I found it interesting that government policy, a topic that was noticeably absent during Hunter Lovins’ address on natural capitalism, was a key theme during the panelists’ overview of the energy industry. For better or worse, government policy is a strong factor shaping the renewable energy industry. For example, the federal government currently offers tax credits for wind power. Each time the tax credit is renewed, investment in wind technology surges. However, when credits near expiration, investment plummets to nearly nothing. Given the focus on energy policy by both Barack Obama and John McCain in the upcoming election, I believe that our government’s influence on the development of alternative energy will only increase.

The following three panelists spoke during the two hour session:

• Will Coleman, Partner at Mohr Davidow Ventures and MBA/MS (ERG) from UC Berkeley
• Drew Isaacs, Adjunct Professor, and Co-Director of the Center for Energy and Environmental Innovation at Haas
• Steve Weissman, Associate Director of the California Center for Environmental Law and Policy, and Lecturer in Residence at the UC Berkeley School of Law

According to the panelists, current government policy is based almost entirely on the potential for job creation. However, for energy policy to be successful, our government needs to define all of our society’s goals for renewable energy, with job creation being just one of those goals. I believe our country’s objectives should include reducing the environmental impact of our growing energy needs and increasing independence from foreign oil. Once key goals are established, the panelists emphasized that government policy should to be aligned to those goals. Finally, success of each government policy must to be quantifiable so that policy can be updated strategically as needed.

Steve Weissman also mentioned something during his overview on the industry that struck me as critical for government policy. Different renewable energy technologies are poised for success in different geographic regions of our country. Here are some notes I jotted down from Professor Weissman’s graph of the country:

• Wind: Midwest
• Solar: Southwest
• Hydro: Northeast and Northwest
• Geothermal: Southwest
• Biomass: Northeast, Southeast, Midwest, Northwest

Based on this information, I believe that there will need to be a local focus to alternative energy policy. Any federal policy should keep the unique needs of each region in mind. Alternatively, states should be empowered to tailor their energy policy to their own geographic realities.

Finally, while government could be a powerful force in the successful establishment of renewable energy in the U.S. there is potential that government actions could be detrimental to the growth of this industry. I would have loved to hear the panelists talk more about the potential pitfalls of government policy. The farm bill is an example of failed government policy that entered my mind throughout the talk. The initial goals of this bill, no doubt, were good. I imagine that when it was created, the bill's purpose was to help protect farmers from price changes of commoditized farm products as a way to guarantee the nation’s food supply. However, as it was implemented, the bill heavily subsidizes corn. Because corn is subsidized, the market equilibrium price of corn and corn-derived products is lower than would otherwise occur. As a result, it is significantly cheaper to buy 2,000 calories worth of Doritos than the same calories worth of vegetables or other food alternatives. Our country pays an enormous price for this policy. Obesity has become an epidemic on which Americans spend $75 Billion a year, half of which is covered by tax payers. By subsidizing the unhealthiest of foods, couldn’t you say the farm bill has failed us? I would hate to see a similar fate for our national energy policy.