In the wake of the BP oil spill, some captains of industry have begun calling for government leadership to spur a clean-energy revolution. In June billionaire software mogul Bill Gates visited Washington and encouraged lawmakers to pony up public subsidies to triple clean-tech R&D funding from $5 billion to $16 billion annually. Gates explained to the Washington Post that much of what is touted as free-market innovation was born of government subsidies: "The Internet and the microprocessor, which were very fundamental to Microsoft being able to take the magic of software and having the PC explode, were among many of the elements that came through government research and development." And on his website Gates wrote, "When it comes to developing new sources of energy, and ways to store that energy, I believe the federal government needs to play a more active role than it does today."
Gates’s acknowledgment of the need for government intervention is welcome, but he and many others are stuck on "innovation." The fixation on new "game-changing" technology is omnipresent. Think of the metaphors we use: a green Manhattan Project or a clean-tech Apollo Program. It recalls Tocqueville’s observation that "the American lives in a land of wonders, in which everything around him is in constant movement, and every movement seems an advance. Consequently, in his mind the idea of newness is closely linked with that of improvement."
Yet according to clean-tech experts, innovation is now less important than rapid large-scale implementation. In other words, developing a clean-energy economy is not about new gadgets but rather about new policies.
An overemphasis on breakthrough inventions can obscure the fact that most of the energy technologies we need already exist. You know what they are: wind farms, concentrated solar power plants, geothermal and tidal power, all feeding an efficient smart grid that, in turn, powers electric vehicles and radically more energy-efficient buildings.
But the so-called "price gap" is holding back clean tech: it is too expensive, while fossil fuels are far too cheap. The simple fact is that capitalist economies will switch to clean energy on a large scale only when it is cheaper than fossil fuels. The fastest way to close the price gap is to build large clean-tech markets that allow for economies of scale. So, what is the fastest way to build those markets? More research grants? More tax credits? More clumsy pilot programs?
No. The fastest, simplest way to do it is to reorient government procurement away from fossil fuel energy, toward clean energy and technology—to use the government’s vast spending power to create a market for green energy. After all, the government didn’t just fund the invention of the microprocessor; it was also the first major consumer of the device.
Call it the Big Green Buy. The advantage of this strategy is that it is something Obama can do right now, without waiting for Congressional approval to act. As such, it amounts to a real test of his will to make progress in the fight against climate change.
Consider this: altogether federal, state and local government constitute more than 38 percent of our GDP. Allow that to sink in for a moment. The federal government will spend $3.6 trillion this year. In more concrete terms, Uncle Sam owns or leases more than 430,000 buildings (mostly large office buildings) and 650,000 vehicles. The federal government is the world’s largest consumer of energy and vehicles, and the nation’s largest greenhouse gas emitter. Add state and local government activity, and all those numbers grow by about a third again.