Archive for September, 2012
Last week, the nonpartisan Congressional Budget Office (CBO) released a report analyzing the effectiveness of the Electric Vehicle tax credit and the results aren’t good. It concludes that the tax credit is unlikely to make electric cars affordable relative to conventional gas cars. But this finding shouldn’t be unexpected. America isn’t going to realize a completely electric transportation sector by subsidizing costly and low-performance first generation electric cars. Rather, America will switch to electric vehicles en masse once there are cheap and viable electric vehicle options to choose from, which requires significant innovation.
The tax credit provides a $7,500 credit to consumers that purchase an electric vehicle. On paper that seems like a significant incentive. But as the CBO summary of the report notes, plug-in hybrid electric vehicles and battery electric vehicles (also known as all-electric cars) require a tax credit of more than $12,000 at the very least “to have roughly the same lifetime costs as a comparable conventional or traditional hybrid vehicle…Consequently the credits will result in little or no reduction in the total gasoline use and greenhouse gas emissions of the nation’s vehicle fleet over the next
Cross-posted from the National Journal Energy Experts Blog.
Natural gas is now tied with coal as the United States’ top source of electricity. It’s a milestone that caps a historic upheaval in the energy industry. Natural gas did what renewable energy has been trying to do on and off for almost four decades. And it did so by winning the race to cost and performance competitiveness: natural gas is cheaper and of equal performance to coal and renewable energy is simply not. For climate and renewable advocates, the rise of natural gas should be more than just the next fossil fuel boogeyman or a short-term cut in greenhouse gases – it should play the role as model for making renewable energy the dominant source of electricity in America (and the world).
Natural gas is just the latest in a long history of the government supporting and investing in breakthrough technologies. Sustained federal government support since the 1970s has proven essential to the industry being able to tap into shale gas with new drilling techniques and technologies. The Breakthrough Institute, a non-partisan think tank, released a study on this very
A BCG report out today claims the United States is on course to regain its status as a global industrial powerhouse, arguing that several forces—including lower U.S. energy costs, rising labor costs in competitor nations, and idle port capacity—will empower the United States to boost goods exports by up to $130 billion by 2012, creating 5 million jobs in the process. But as ITIF explains in Worse Than the Great Depression: What Experts Are Missing About American Manufacturing Decline, in the last decade the United States lost one-third of its manufacturing jobs (5.7 million—a rate of loss worse than during the Great Depression) and 11 percent of its manufacturing output due to structural weaknesses that won’t simply be rectified by market adjustments.
Chinese manufacturing wage costs are still a small fraction of the United States’, and the hollowing out of the U.S. industrial base over the past decade has meant that the United States simply cannot manufacture a range of high-tech products (from LCD screens to electrophoretic displays to polycrystalline solar panels), explaining why the United States still runs a trade deficit in advanced technology products approaching $100 billion
Last month, Boeing launched its 2012 ecoDemonstrator Program, a flying test bed for new aviation innovations that increase fuel efficiency, reduce noise, and incorporate advanced materials to reduce flight travel’s environmental footprint. The project is a collaboration between Boeing, American Airlines, and the FAA’s Continuous Lower Energy, Emissions and Noise (CLEEN) program, and represents a forward-thinking public investment aimed at accelerating the development of low-carbon airline technologies. The ecoDemonstrator recently completed its first round of flight tests in Montana, during which the plane was flown using a ten percent biofuels mixture.
The ecoDemonstrator showcases five main technologies for the future of commercial flight on an American Airlines 737-800 model:
- Adaptive trailing wing edges improve airflow during take-offs and landings, consequently increasing fuel efficiency and acting as the plane’s “feathers.”
Last week, ITIF released a side-by-side comparison of President Obama’s and Governor Romney’s technology and innovation policies. As with nearly all policy areas, on energy innovation, we see common goals but often dramatic divergence on how to achieve them.
At a very high level, there is some agreement between the candidates on climate and energy policy making. Specifically, there seems to be a broad level of agreement between the two candidates on the efficacy of implementing “no regrets” climate policies. In a recent side-by-side comparison of science policy issues on ScienceDebate.org, a website run by a coalition of premier science organizations, Governor Romney defines this approach as, “steps that will lead to lower emissions, but that will benefit America regardless of whether the risks of global warming materialize and regardless of whether other nations take effective action.” Similarly, the Intergovernmental Panel on Climate Change defines no-regrets climate policies as “greenhouse gas emissions reduction options that have negative net costs, because they generate direct or indirect benefits that are large enough to offset the costs of implementing the options.” And a report co-authored by ITIF, Climate Pragmatism, outlines fostering innovation
Noah Smith wrote an opinion piece this week at The Atlantic entitled “The End of Global Warming: How to Save the Earth in 2 Easy Steps” that starts by accurately laying out some hard truths for climate policy advocates, but then wildly veers off course.
The piece begins strongly by highlighting the difficulties of implementing an effective global carbon tax. A key condition carbon pricing must meet for it to be an effective global climate policy is that all countries must implement the policy, not just a select few. If not, industries (and their emissions) will simply move to countries that don’t have similar carbon pricing policies. And as industries and their emissions move around, countries with a carbon price lose economic competitiveness, jobs, and economic growth. It’s easy to foresee a situation where a country that implements a carbon tax must either rescind the tax, make it less stringent, or exempt industry from the tax to reduce economic harm. In all cases, the carbon tax fails to drastically reduce emissions as much as needed, if at all.
Smith also recognizes the importance of government support for clean energy innovation.
As required by the Sequestration Transparency Act, the White House released details about how the $120 billion in budget cuts would be applied if Congress does not stop the sequestration plan agreed to as part of the Budget Control Act. As the White House’s document makes clear, these budget cuts would have a dramatic impact on the budget of defense and non-defense programs, including many projects important for technology R&D, modernizing government, spurring clean energy innovation, and developing digital platforms. Many of these cuts will have a substantial impact on specific policy initiatives. For example, these cuts include $86 million in cuts to DHS’s information security program and $8 million in cuts to the Public Safety Trust Fund. It also includes $400 million in cuts to basic energy research as well as $23 million to high-risk, high-reward clean energy R&D at ARPA-E.
In terms of information technology (IT), these cuts include:
- National Institute of Standards and Technology (NIST) – $62 million
“There is no more important subject to the future of this society than innovation. There is nothing that can solve our problems in the way strong economic growth can solve our problems.” That is how The New York Times Washington Bureau Chief David Leonhardt framed the discussion at today’s Washington launch of the new book Innovation Economics: The Race for Global Advantage. From strides in curing childhood leukemia to our rivalry with China, innovation-based economic growth is critical, he observed.
With innovation so critical to tackling problems and so elemental to economic growth, it is dismaying the United States has slipped as an innovation leader in the last decade or so. But we have. The stubbornly-high unemployment and unimpressive growth are symptoms of a structural problem that is resisting cures. ITIF Senior Analyst and co-author Stephen Ezell likened it to having a weakened heart and expecting it will be healthy again with the occasional injection or pill.
In fact, we allowed the heart muscle to weaken because we began to pull back what had worked in the past. In the mid-1960s, the U.S. government alone invested more in scientific
Speaking of subsidies, there’s another really good example in the today of the conflict between the old and new subsidy models. The Rural Cellular Association, the small carriers’ lobbying group, pressed their case for handset subsidies at an event on the Hill today. They’re formed a new front group called The Interoperability Alliance. If they have their way, handsets will become larger, slower, more expensive, and heavier for the 70% of Americans who have the poor taste to buy cellular service from the two largest carriers:
The alliance wants to pressure the FCC to adopt rules that would mandate a single technology in the 700 MHz band of radio spectrum. AT&T’s cell towers use a different technology in the frequency band, meaning their network is not interoperable with many devices.
As we explained in an FCC filing and our recent report on spectrum policy, the “interoperability” that the group seeks has three actual effects:
- It makes the low-cost spectrum licenses that RCA members bought for the lower 700 MHz band more valuable.
A raft of stories in the press today focus on the limited deployment of Google’s fiber network in Kansas City. The Kansas City Star highlights the plight of students at schools with high Internet content and slow connections:
[The Central Academy of Excellence,] with its overwhelmed Internet connection, sits in a neighborhood lagging well behind the pre-registrations Google requires to light up its cutting-edge Web access.
“It’s not fair,” said Mona Price, Central’s dean of instruction. “It’s not fair to the kids in urban settings who are trying to get an education.”
Many of the schools, libraries and poorest neighborhoods given first shot at drawing Google’s ultra-fast Internet service look in danger of missing out on Kansas City’s digital revolution.