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Addressing climate change requires innovations in technology and policy

April 15, 2019
Precourt Institute

By Mark Golden

To address climate change, the federal government should play a bigger role not only in  research and development in energy technologies but also innovation in policy, a diverse set of experts including Stanford University’s Arun Majumdar told a receptive U.S. Senate Committee on Energy & Natural Resources at a hearing Thursday morning.

Energy research targets should include, according to Majumdar, large-scale energy storage at one tenth the cost of today’s lithium-ion batteries, small modular nuclear reactors at half the construction cost of today’s reactors, using renewable electricity to produce hydrogen at the same cost as that from natural gas, affordably capturing carbon dioxide for making useful products, as well as low-carbon steel, concrete, construction and agriculture. Toward these ends, Majumdar and others have advocated a tripling of the budget of the Department of Energy’s Advanced Research Projects Agency-Energy to $ 1 billion and also increasing the budgets and effectiveness of the Applied Energy Offices and Basic Energy Sciences in the Department of Energy.

To nurture and mature such technology, federal, state and local governments along with the private sector could create partnerships to develop new and upgraded infrastructure to deliver low-carbon reliable and affordable energy services to all Americans, said Majumdar, who cited the Rural Electrification Act that Congress passed in 1936.

“The diversity of energy needs that our 50 states offer is our strength because they can become the laboratories not just of democracy, but of the low-carbon industrial revolution as well,” he said in his opening remarks.

One infrastructure project the initiative could take on is modernizing the electric grid to integrate large supplies of intermittent renewables, energy storage, consumers’ ability to lower demand automatically when supplies are low, and many other things the current grid wasn’t intended to do. Other infrastructure projects could include energy efficiency upgrades to homes and buildings, as well as electrification of public transit, automobiles and rail transport, Majumdar said.

Support for particular energy technology areas and specific policies varied among participants. Most, though, agreed that the development of successful solutions could provide a boon to U.S. exports and jobs, participants agreed.

“It’s a $10 trillion per year export market opportunity,” said Majumdar, co-director of Stanford’s Precourt Institute for Energy. “The rest of the world is looking for technology.”

Portfolio approach

Sen. Lisa Murkowski (R-Alaska), chair of the committee, telegraphed the consensus support for a portfolio approach in her opening remarks. “The transition to cleaner resources will take some time. There is no overnight, magic wand solution,” she said. “We simply don’t have unlimited amounts of taxpayer dollars. We can’t simply replace markets with mandates.”

While the committee will take real steps to promote clean energy, Murkowski said, it will also fully protect energy security and keep energy costs affordable.

Her counterpart, ranking member Joe Manchin (D-W.Va.), vouched for “a practical plan to address climate change that doesn’t take technologies off the table or leave workers and communities stranded.”

Not stranding the coal miners of West Virginia and other states requires “a moon shot to get carbon capture technologies to commercialization,” said Manchin.

Carbon capture, use and storage technologies, if they became affordable, would allow low-carbon use of fossil fuels to continue. Sen. Lamar Alexander (R-Tenn.) described CCS as the “holy grail” of climate solutions, especially if the CO2 is used to make products and carbon-neutral fuels. He asked Majumdar what it will take for the United States to not only deploy CCS but export the technology globally.

“Carbon capture is right in it, but today it costs about $60 per ton of COfor coal-fired power plants. That needs to come down to about $30 a ton,” Mujumdar answered. “It needs more research and new technologies to be created.”

Carbon tax and markets

Most of the senators and witnesses expressed support for a carbon tax or cap-and-trade program, as a fair way to meet climate objectives within free markets.

“Most people I talk with in the energy industry agree with economists that a carbon price is probably the best way to promote clean energy,” said Sarah Ladislaw, director of the Energy & National Security Program at the Center for Strategic & International Studies.

NRG Energy’s deputy general counsel Abraham Silverman mostly pleaded for an end to state utility regulators favoring the incumbent, regulated electric utilities, which he said happens in every state except Texas. NRG—a large independent power producer—is often blocked from selling to companies and homeowners who want to buy from independent suppliers, he explained.

“Imagine a competitive, technology-inclusive, market where renewable energy, nuclear, carbon capture, or battery storage projects win because they provide the greenest attributes at the lowest price, and not because they have the biggest lobbying budgets,” said Silverman.

However, cautioned Majumdar, markets do not always work.

“Where markets work, a price on carbon is the best approach,” he said. “But there are places in the energy sector where you have market failures, and then you need some sensible regulation. Energy efficiency is an example, which is why we have appliance and fuel efficiency standards and building codes.”

The hearing’s participants agreed that the federal government has a role in researching new technologies. Most said that it could help in the early stages of commercialization, too, when startups face financing challenges and are just beginning to see costs decline as they gain production experience.

“New technologies need a first market,” said Majumdar. “The federal government is the biggest consumer of energy, so it could do this for clean energy.”