A Green Stimulus for the People
In order to ensure the short- and long-term health of the economy and the environment, the government must renew the promise of the nation's electrical system. Dating back to the early twentieth century, our power system is increasingly unstable and unprepared to handle greater consumer demand or inputs of green power. The cost of power outages has risen to as much as $180 billion a year, while the energy wasted during transmission has doubled since the 1970s. Moreover, in a partially deregulated market, the price and quantity of electricity is kept hidden from consumers through an archaic purchasing system that gives them no control and leaves lower-income customers subsidizing high-quantity users. This antiquated grid and patchwork system of regulation means wasted power and money. Energy that could reduce our carbon footprint by a fifth is lost at industrial and farm sites around the country. America cannot limit carbon emissions without reinventing the grid, and that investment is also a chance to correct the basic unfairness of the system.
The first priority is to let people control how much power they buy, when and at what price by integrating every house into a "smart grid." Smart grids, which should really be called value grids, allow customers to see the price and origin of their electric power throughout the day and give them the means to reduce usage when rates are high. Pilot programs in Boulder, Colorado, and Washington's Olympic Peninsula have found that installing a $100 "smart meter" allows homeowners to save between 10 and 40 percent on electricity. Giving them the ability to reduce usage during peak periods also cuts down on power outages and can eliminate the need to build expensive "peak" power plants. A RAND study estimates that we could save as much as $130 billion by installing smart meters in all homes.
To understand the potential of the smart grid, we need to look at Franklin Roosevelt's waffle iron campaign. In the late 1920s, when he was governor of New York, Roosevelt led a drive for cheaper, nationalized power generation so every family could have appliances like waffle irons. Later he extended a version of this promise across the country with New Deal programs like the Tennessee Valley Authority and rural electrification drives. The dream of hot homemade waffles in the morning sounds quaint now. Didn't Roosevelt know about frozen toaster waffles? Of course not--the toasters, microwaves, home freezers and food chemistry that created ready-to-eat waffles spilled from that electrical plug installed in every home.
Similarly, installing smart meters could change the way households use electricity--enabling them to reduce waste and expect more of their appliances. Plug-in vehicles are already being tested for their ability to support a smart grid. Someday you may be able to charge your car with cheap, clean wind power at night, drive to work and lease your battery to your utility company while you're there. This innovation alone could dramatically reduce carbon emissions, create new ways to earn money and shake up the relationships among automakers, oil companies and utilities.
The key to making the smart grid happen is recognizing that it's not for "smart" people, green people or elites; it's a basic right. FDR's promise was that everyone, rich or poor, should have access to electricity. Obama can promise that everyone will be able to know the price--in dollars and carbon--of the electricity they use and to control their use for their benefit.
The second priority is broadening the definition of green power to include low-carbon power recycled from industry, farms and sewage--call it gray power. Like green power, energy from waste reduces emissions, but it also supports existing jobs in industrial zones and farm states. McKinsey Global Institute estimates that industry could make $50 billion a year in profits simply by turning lost heat, gases and pressure into electricity. A study by Lawrence Berkeley National Laboratory estimates that harvesting these profits could cut US greenhouse gas emissions by a fifth. Gray power creates jobs. It also protects existing jobs by shoring up the sagging balance sheets of older plants.
Power from manure and sewage is another opportunity that's ignored. In 2005 only about eighty farms captured bio-gas from their manure. The EPA estimates that 7,000 farms could turn their manure pools into fuel and money. This would prevent greenhouse gas emissions from the manure and reduce water pollution. Landfills and sewers offer further possibilities along the same lines.
Why aren't we recycling these energy sources already? Unlike solar, most of the technology is at least a generation old and relatively cheap. But onerous regulations, standby charges and discriminatory pricing keep some small-scale generators off the grid. A business culture that favors investing in energy production rather than energy efficiency, combined with subsidies for energy use, further prevents companies from exploiting opportunities within their own walls. Making national connection standards and regulations that favor distributed generation--green and gray--will encourage the rapid growth of renewable energy and an entrepreneurial power sector.
The final step in the stimulus plan should let the public do what utilities won't: build a national backbone grid to move power from one end of the country to the other. To extend the promise of steady, sustainable power to future generations, investing in a common carrier backbone is essential. A national grid will allow power to be wheeled between states, evening out prices and breaking down regional monopolies. If we're to integrate renewable power into the grid, it's a necessity. Established utilities invest very little capital in infrastructure; the project would make a great public investment. The payback for grid investments is $3 to $7 for every dollar invested, according to University of Minnesota professor Massoud Amin.
Building a national grid addresses another unseen problem: when the government enacts greenhouse gas legislation, the cost will not fall on everyone equally. Recent studies, including one from Oak Ridge National Laboratory, suggest that putting a price on carbon through a tax or cap-and-trade system will fall unfairly on poor, rural residents and people in the South and Midwest who depend on coal-fired power. Because the deregulation of the electrical industry occurred in a patchwork across the country--and only about a third of it is deregulated--the costs of a national greenhouse gas policy would vary widely depending on regulation in any given area. Building a national grid will enable a fairer greenhouse gas policy. Without these changes the burden of avoiding climate change will fall unfairly on some Americans through no fault of their own.
For Obama's economic stimulus and green agenda to succeed, energy must be democratized, conceived as a shared responsibility and right. This is not just a program of green jobs that can be plugged into the economy like kinetic Legos, or subsidies sprinkled from on high, but a full re-envisioning of energy and our relationship to it. Decades of cheap power have encouraged complacency, waste and squandered opportunities for innovation. (The electrical industry famously spends as much on research as the dog food industry.) Presented with this opportunity to let Americans take charge of their energy use, Obama must not fall back on the same old politics of power and subsidies.