(This is the third and final article in a series about the Smart Grid and Green Technology)

President Obama gave the following speech at the Climate Change Conference in Copenhagen on Friday, December 18th


“I came here today not to talk, but to act.” – President Obama

In this speech and through the subsequent Copenhagen Accord, President Obama has committed to leading the U.S. in addressing climate change on a national and global scale.  And his formula for addressing climate change seems simple enough: mitigation, transparency, financing.  But as World Wildlife Fund President and CEO Carter Roberts commented, “The ultimate test of his leadership will be engaging the Senate and delivering action in Congress.”

President Obama’s leadership and fiscal support for addressing climate change as a nation will undoubtedly accelerate renewable energy projects and make a compelling business case for starting others.  However, national, state and local legislation is needed to quickly incentivize and sustain a renewable energy economy.

Executive Leadership and Resource Allocation

President Obama has allocated more than $80 billion of the American Recovery and Reinvestment Act to clean energy provisions, with the goal of doubling the U.S. generation of renewable energy such as wind and solar within three years.  Included in that sum, $3.4 billion of the Recovery Act is slated to support 100 projects with the construction of the Smart Grid, which was matched by industry donations for a total of over $8 billion.

For a comprehensive list of U.S. executive domestic and international leadership in the realm of clean energy, click here.

Additionally, clean energy companies get a 30% tax credit on their investment to encourage the expansion of the renewable energy market in the U.S., as opposed to overseas, where 90% of all clean energy manufacturing now takes place[1].

But this is not enough.  Money from the stimulus package is seed money for transforming our country’s energy infrastructure and consumption.  The federal government alone does not have the capacity or the resources to change our energy system and habits on its own.  But federal legislation has the power to open up federal, state and local regulations so that the market can start building upon this start.

Federal Energy Legislation and Regulation

After a five-week pause in the Senate to review the costs of clean energy legislation, the Environmental Protection Agency (EPA) declared on December 7th that greenhouse gas (GHG) pollution threatens the health and welfare of current and future generations.  This statement by the EPA comes in response to the 2007 U.S. Supreme Court decision that GHGs fit within the Clean Air Act definition of air pollutants.  Although this finding does not entail any immediate regulation, it does set the stage for both future regulation and legislation on emissions and climate change.

The American Clean Energy and Security Act of 2009—which is the proposed renewable energy, energy efficiency and carbon cap-and-trade legislation for GHG emissions reduction—narrowly passed through the House of Representatives in June and currently sits on the Senate floor.  The delay in the Senate, both by healthcare reform and by critics, has pushed the vote for a climate change bill into 2010.

The issue of climate change legislation, of course, is not black and white.  It does not boil down to this bill or nothing.  Perhaps a cap-and-trade system of government-issued carbon credits is not the best way to address climate change in the U.S.  Why not a simple, easy to enforce tax on carbon emissions?  Big picture questions are critical at this juncture because legislative action could create a template for years to come.

Regardless of whether the Senate passes a climate change bill, EPA regulations have already begun moving forward.  Starting in early 2010, the EPA’s regulations targeting emissions from new motor vehicles and stationary sources such as factories will take effect. 

Automakers will know by March how fuel-efficient their vehicles must be—according to EPA and Department of Transportation standards for GHG emissions—over the lifetime of vehicles made during 2012-2016.  Additionally, U.S. stationary sources and suppliers that emit over 25,000 tons of greenhouse gases per year will be required to monitor and report their emissions to the EPA on an annual basis.  This data collection from the U.S.’s biggest emitters will likely provide valuable information for future regulation and legislation.

While the EPA forges ahead with emission regulations, members of Congress and even President Obama have stated their preference for legislation on climate change, emissions and energy issues.  Alone, EPA regulations could be vulnerable to litigation from business interests, many of whom argue that new environmental rules would damage the economy, despite evidence to the contrary.

Rules and laws are both necessary to incentivize, support and enforce a renewable energy economy.  EPA findings and regulations can set the groundwork and stand in for legislation until Congress finalizes a climate change bill.  Regulations by the EPA have also spurred action and reaction in Congress.  In response to the EPA’s December 7th announcement that GHGs endanger public health, officials from Louisiana, South Carolina and Texas have sent letters to the EPA claiming that GHGs should be handled by Congress.  Perhaps the added pressure to deal with climate change before the EPA does will motivate the Senate to make progress. 

EPA Administrator Lisa Jackson informed the Senate panel in November that the agency would work to limit the greenhouse gases that are not covered by legislation.  In regard to the EPA’s finding, Jackson stated, “It can give business absolute certainty that we are on the road to clean energy, that the investments they want to make … will be profitable ones, because they know that this country is on the road.” 

Climate change and energy legislation passed by Congress and signed by the president will give industry and business even more certainty about what rules they will be required to follow and what they should invest in as a result.

State and Local Action

Even without federal legislation to address renewable energy requirements and GHG emissions, states across the U.S. are acting.   According to the Pew Center on Global Climate Change, 31 states have committed to acquiring a percentage of their state’s energy portfolio from renewable or alternative sources by a given date, and 5 have made a renewable or alternative energy goal.  While these standards range in ambition and qualifying energy sources differ, the increased use of renewable or alternative energy nationally can reduce GHG emissions significantly.

In order to meet their renewable energy goals, state regulators are working with local utilities to start renewable energy initiatives and to build the appropriate facilities needed.

The Business Case

Legislation could help industry and business in all sectors by adopting standards so that employers know what to expect in terms of future legislation and regulation.  Additionally, legislators of all levels could lift inter-state constraints to make the energy sector and the Smart Grid an open-access marketplace.

The Smart Grid and its renewable energy plug-ins are a hotbed for innovation and job creation.  With the right market drivers in place, competition in the energy and technology sectors would rapidly transform our current carbon economy into the renewable energy economy that is essential for a more sustainable future.

Bringing it Home

The task at hand is to transform our economy into one that generates clean, renewable energy to mitigate the effects of climate change and to supply jobs, profits and a boom in innovation.  The good news is that this seemingly insurmountable task is actually within our capabilities.  We are surrounded by unlimited, free energy and we already have the know-how and even the technology to create a renewable energy economy.

Of course, the creation of a renewable energy economy cannot solely rely on legislation and market-drivers.  This societal transformation depends upon all of us.  And to get there, we must work together.

No act is too small.  Change your light bulbs to CFLs and lower your thermostat to decrease energy use.  Look for Energy Star and other energy-efficient appliances when you need to buy a new one.  Ask your energy provider about renewable energy options.  Carpool and try other alternatives to driving.  Tell your congressional representatives what you want in terms of energy, emissions and climate change legislation.

[1] “Green Gift.” Fortune Small Business (April 2009): 50-52.