State Energy Policy Passing Faster Than Federal Legislation

Posted on July 5th, 2010 by

Marilyn Brown, Energy Policy Professor at Georgia Tech, compares the progress of federal and state energy incentives and regulations and provides a road map for developing additional legislation. She discusses that while states are moving faster to adopt incentives and regulations, the federal government is beginning to gain momentum by working to pass national legislation that will provide the right framework for the United States to become more responsible about energy consumption.

Full Transcription:

Ben Lack: Well, we’re here with Marilyn Brown, professor of Energy Policy here at Georgia Tech. Thanks so much for giving us some of your time.

Marilyn Brown: Thank you, Ben.

Ben Lack: What I want to talk to you about today is about energy policy, and let’s start talking about the federal side of policy. Could you give us your assessment on how good or bad the federal government is doing to push energy policy to where we ultimately want it to go?

Marilyn Brown: Well, interesting you should want to start with the federal government because actually most of the action these days is occurring in state legislatures. States are leading in terms of innovative policies for energy and for climate because the federal government has been at something of a standstill particularly as it pertains to setting climate goals, putting in place any kind of incentives for reducing carbon dioxide. A lots being debated and I’m hoping that they’ll be breaking through some of these log jams soon. There are good bills ready to be voted on, but there’s such a backlog.

Ben Lack: Sure. And to your point, the Home Star Bill is something that’s being discussed for quite a while now. The American Power Act was recently announced. Based on what’s in those bills, do you think that that’s a good start to where the federal government ultimately needs to go or is there something that we’re missing that we also need to be paying attention to?

Marilyn Brown: Well, I think the creation of incentives for encouraging Americans to retrofit their homes is great. In fact, there was a report that was issued a few months before the bill was introduced for Home Star. They talk about Recovery Through Retrofit. And we also wrote a report here at Georgia Tech called Making Homes Part of the Climate Solution, which preceded Recovery Through Retrofit. We think our fingerprints can be seen a little bit if you look closely. But we’re very supportive of the employment jobs benefits of incentivizing retrofit. Fifteen million Americans are out of work. Construction’s been so slow. I think a retrofit incentive program would help that a lot.

Ben Lack: Sure. And what about for climate change?

Marilyn Brown: And for climate change too. I mean, there’s no single part of the economy that will solve the climate dilemma. We have to work economy wide. So we need similar programs. You and I were just talking about this concept of a motor repay program or Cash for Crushers, like the Cash for Clunkers and like the appliance programs. In other words, let’s get industry into the action too. They need assistance. They have old motors. Motors represent the largest piece of equipment used in industry across the board. So many companies have old, inefficient product that they’ve just extended well beyond their intended life. And if we could do a turn and rebate program for motors, I think that would be helpful too. So no one single part of the economy is going to be able to turn this around. We need active and innovative approaches to policy in all variety of sectors of the economy.

Ben Lack: And you would agree that even though the government is taking the right steps that these steps are probably small steps or baby steps to getting us to where we are. I mean, there are other countries that are other there that are much more progressive in trying to tackle some of the same issues that the U.S. is encountering. What are the big roadblocks for why we’re not able to do this faster on a federal level?

Marilyn Brown: Well, we do tend to like to provide incentives as opposed to regulate. It’s always so hard to put in place stringent standards. Many of the other countries across the world are simply dictating that efficiency improvements or renewable obligations be increased. So we’re trying to work and often in a creative market way where we allow independent actors to make choices. So, for instance, rather than dictating a certain amount or type of renewable energy, we say you can trade as long as you reach a certain level of reduction of your CO2 or a certain level of commitment to renewable. So we like to see policies that are flexible and they’re market friendly. And that often means they’re going to take a little more time. They’re not quite as progressive.

Ben Lack: I would probably also say that in certain instances regulation has to be the course of action.

Marilyn Brown: I agree. So, for instance, in the home construction industry, nothing can substitute for better building codes. Because the builder of that home is not going to be the individual who occupies it. And his motives or her motives are not for the long-term energy integrity of that structure. So that where the market signals or out of wack, it’s very appropriate to have a regulatory intervention. That’s true with appliance standards too. For instance, today you can buy a plasma TV that’ll consume on the order of 400 or 500 watts per unit, and that’s replacing the old LCDs that were a hundred. And, of course, you can buy a much more efficient televisions in between, but we don’t regulate that. And, in fact, often we don’t even label our appliances which, of course, we should do across the board.

Ben Lack: Well, I know that you were saying earlier that the states are moving a lot faster than the federal government is. Talk to me as why that’s the case. I actually thought that’d be the other way around.

Marilyn Brown: Yeah, I’ve been looking at a couple of state policies. One of these is the Tax Lien Policy where you have a property tax that’s increased in order to provide the owner of a home financing to be able to purchase, for instance, solar voltaics or a retrofit. So they’re able to mortgage, to put into their mortgage base the cost of these improvements and pay off over a long period of time. Maybe fifteen, twenty years. What normally would have financing, you’ve got to do in a couple of years and it’s just impossible to acquire that capital. Well, that type of approach has been authorized by, I believe thirteen states to date. One of them is Georgia which just passed this authorizing bill so that cities can now pass municipal bonds to collect money to finance through mortgage, property taxation, these long-term financial instruments. So I think it’s a terrific way to go. And I also hope that that’ll be stretched to reach out to industry, to help them finance improvements because what’s in the better interest of municipalities and keeping their employment base strong. So they have a vested interest in trying to help companies in their towns to be more energy efficient. Now the federal government should step in and allow cities across the country to do this. They could authorize through federal legislation that any town anywhere could float these bonds for this purpose. And they could make a uniform market, and the market would operate so much more efficiently if it were done under federal guidelines.

Ben Lack: Is that something that’s realistic?

Marilyn Brown: Well, it has begun to be discussed, but it’s not in any legislation at the federal level to my knowledge to date.

Ben Lack: So it will take a little time before we might see that on the docket. What other types of initiatives are states pushing aside from looking at the tax incentives that might be happening a little bit faster than what the federal government might be working on?

Marilyn Brown: Well, another one that I like is called Output-based Emissions Standards, and this is, again, for the industrial sector and also for utilities. So when a county is out of compliance for air quality, it’s no longer able to have the ability to introduce new polluting industries. So almost everything any kind of manufacturing plant is going to pollute to some extent. Well, there’s a technology called Combined Heat and Power which uses the waste energy from a process like heating and boiling to then have a second use for the waste energy in the production of electricity. So that’s why they call it Combined Heat and Power where you have a boiler that’s making steam and the steam makes electricity. Heat is at the same time perhaps drying a pulp and paper plant or performing some other function. In the standard environmental laws in most states and the federal EPA, you are not given credit for having an efficient electricity production process at a CHP, Combined Heat and Power, plant. Rather they look to the fact that in that location you’re already not meeting a pollutant regulation. And so they prevent you from also generating electricity. So cities and states have adopted these exemptions. In the state of Texas and the city of Austin are both examples of ones that have done this. So now they’re able to get approval to produce electricity in the city of Austin which previously they weren’t allowed to do because of the pollution limits. And they have terrific examples of high efficiency complexes. I was at one in Austin a few years ago, one of the first. So it’s a million square foot IBM office complex which is cooled with a gas-turbine technology where the waste heat produces the electricity, all the electricity needed for that same office complex.

Ben Lack: That’s pretty cool.

Marilyn Brown: Right there on site. It is great.

Ben Lack: And does that produce all the electricity?

Marilyn Brown: That one turbine produces the cooling and the electricity needs for that million square foot complex. Now they are able to do that because the city passed the ordinances. The federal government could take a similar federal look and reform those clean air act requirements.

Ben Lack: So you’re that the states have a lot of other initiatives that they’re pushing a little bit faster than the federal government. But yet the federal government is still going in the right direction to trying to right the ship some. So I’m curious to know if you were a fortune teller, and you looked into the future five or maybe ten years from now, do you that at maybe some point or within this time-frame we’re going to be to hit a tipping point to where the federal government is able to act as swiftly as these states are? Or do you think that because there are so many issues that are really compounding this ultimately problem that it’s still going to be slow walking for quite a while?

Marilyn Brown: Well, that’s a really good question. I do think the federal government is going to make some strong legislative steps soon. But I also think we need to continue to encourage states and local jurisdictions to experiment with policy because it’s like a laboratory out there. They can do it so much more easily, and then the good ideas float up to the federal government. So it’s not all bad that we have experimentation going on. However, we do need to get some federal action swiftly and strongly in play soon.

Ben Lack: Sure. And this is more of a personal question. I’m curious to know as you’re doing your research on the different types of policies that are out there, I know that you’ve recently written a white paper on Energy Efficiency in the South. What other types of topics really kind of wet your appetite for things you want to research?

Marilyn Brown: Well, the federal government has made some good progress. I don’t want to be entirely critical because there are now new stringent fuel economy standards for cars that were passed recently. And we had new fuel standards which are mandating biofuels or advanced fuels replaced petroleum fuels. So reducing the CO2 content of our vehicles fleet. One thing that excites me in terms of the next step is electrification of transportation. So getting the research underway and minor advances are required. This is not a man-on-the-moon type operation. We should be able to do this. So I’m very excited. Of course, it does require if you electrify transportation the benefits are greatest if we also have low-carbon electricity production. So we need lots of renewables and nuclear or whatever we can do, carbon capture and sequestration so that the electricity that’s driving those cars and trucks is not polluting. I’m very excited about plug-in hybrid electric vehicles in particular.

Ben Lack: So my final question is probably the more personal about what you’re interested in and that’s why are you doing what you’re doing. What got you into this whole field and why have you made this really your career for looking into energy policy?

Marilyn Brown: Well, I’m a student of the 1970s when the Arab Oil Embargo to a stranglehold on the U.S. economy. And ever since that point, I’ve made it my topic of research. Seems as though every few years, there’s some new challenge to have to tackle. So it’s been able to keep my appetite wet for a long time, and I think long into the future.

Ben Lack: Cool. Well, Marilyn, thanks so much for giving us some of your time today. I really appreciate some of the insight that you’d shared with us today, and we will definitely be in touch. And I look forward to talking to you soon.

Marilyn Brown: Thank you for including me in your series. Thanks.

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