Re: R&D, there is surprisingly little need, even while there is much that R&D could accomodate. Per the above, so long as our electric & environmental regulations remain biased against energy efficiency and low-cost energy supply, the proverbial “better mousetrap” isn’t a productive use of our time. That’s not to say that better mousetraps couldn’t exist – only that until we fix the regulatory barriers, they won’t get deployed.

The silver lining to this cloud is that there are lots of technologies out there that are already robust and well-proven which can dramatically lower energy costs and GHG emissions… and will be deployed as soon as we take away the regulatory barriers. So our first order of business ought to be to tear down that legislated dam and let the flood of existing technologies come into the market. Once that’s done, there are lots of interesting technologies we could use. Corrosion-resistant heat exchangers. Field-tested organic rankine cycles. Stirling engines. I could go on – but the much more important point to note is how many plain old heat recovery generators + steam turbines with patents that expired 50 years ago could be deployed today and save money but for regulatory obstacles.

Good question, of the great-big-meaty variety! Very simply though, I’d posit two regulatory reforms that we need:

1. At the Federal Level, overhaul the Clean Air Act to remove it’s barriers to energy efficiency. As I noted here, the CAA actually mandates higher CO2 emissions in the name of pollution prevention. To be fair, it has lowered emissions of other species (NOx, SOx, etc.) and we ought not seek to roll back those gains – but by focusing only on end-of-pipe controls and calculating emissions on an input basis (e.g., burning less fuel reduces the amount of pollution you are allowed to produce), it unwittingly directs pollution control resources away from efficiency, and therefore away from the most cost-effective means of pollution control. As we begin to contemplate GHG regulation, it is critical to fix this conflict at the heart of the CAA. And even if we never get GHG regulation passed, we still ought to reform the CAA, as there’s no good reason to maintain a law that drives up the cost of energy and increases CO2 emissions.

2. At the state-level, reform the electric regulatory paradigm. Utility monopolies are all established, protected and maintained under state regulation, so you cannot fix with federal legislation. However, since they all set utility rates based on capital recovery calculations (and treat operating costs as pass-throughs), they give regulated utilities a bias towards capital-intensive projects with no incentive to minimize their fuel cost. The depressing, albeit predictable result is that fuel-conversion efficiency in the electric sector is the same today as it was in 1957. Every project we have ever done has at least doubled that efficiency, so it’s not a case of technologies not being available, nor is it a case of utility executives being bad business people. But so long as we regulate electricity in a way that utilities have no incentive to lower their costs, we will get utility behavior that drives up the costs and CO2 emissions associated with power generation. As H.L. Mencken said of democracy, “it gives the people what they want, and it gives it to them long and hard.” So too with utility regulation, except that I’m not aware that any of us want what we’re getting.

Do you also need more research and development? And should Washington provide that funding? Or are sufficient technologies available now?

The question basically comes down to what the purpose of our GHG policy is. If it is to reduce GHG emissions, than additionality considerations are… additional. And frankly, in opposition to maximizing GHG reduction, since all wallets are finite. Consider, for purposes of comparison, two projects to reduce GHG emissions. One costs $300/ton of GHG reduced and the other generates $30 of profit per ton of GHG reduced. If you’ve only got $900 bucks, what would you rather do: invest it in the first project, within which you can reduce 3 tons before you’re out of cash, or in the second project within which you can not only reduce tons, but get paid for doing so? #1 exhausts resources, while #2 generates ever greater sums to reduce future GHG emissions. But additionality considerations only put money towards the first option… which means that it is actually slowing the rate of GHG reduction.

Sean