• “Output standards” for emissions, so that regulators look at how much pollution is released per unit of energy generated, rather than the current rule of basing it on how much fuel is used.  This change would encourage efficiency rather than penalizing it.
• A “clean energy standard offer” for federal electricity purchases, so the government gives preferential treatment to clean, efficient energy options.
• A “regulatory modernization committee” to transform our energy system from a Hummer into a hybrid.

Check out more of my ideas for promoting energy efficiency through CHP and waste energy recovery.

Here at RED, we like to come up with good policy proposals that would allow the nation to mitigate climate change while slashing energy costs. But politics can throw a monkey wrench into the most finely reasoned policy argument. Read Sean’s take on the policy fixes needed to unleash clean energy.

Instead of pointing out the immense barriers to competition and recommending that we tear them down, he suggests that we throw more money at innovation while the current system, presumably, would remain in place. Wrong, wrong, wrong. That’s not going to work — Sean Casten explains why we need to change current energy regulations in a Grist blog.

The nature of the magazine publishing this piece bears reflection. The Nation, the journalistic standard-bearer of American progressivism, is extolling the virtues of energy recycling about two weeks after Chief Executive, one of the country’s ultimate capitalist publications, has done the same. Two publications with very different views of the world are coming to similar conclusions on one issue, at least: that by generating energy more efficiently, we can fight global warming while bolstering the economy.

These two magazines aren’t the only unlikely pairs to point out the benefits of this work. The moderate-liberal New Republic has highlighted the potential of energy recycling, as has the business-friendly Forbes. So have the libertarian Lynne Kiesling and the environmental lion Al Gore. So, indeed, have apolitical science outlets ranging from Nature to Orion to American Scientist.

I recite this list not simply to advertise good writing about the issues near and dear to my heart, though there is that. My point is that energy recycling is an issue that could transcend our nation’s partisan divide and provide a path forward on finally tackling climate change. It’s not the only solution. But it’s a big one. It’s what makes the RED team get up in the morning. And I believe it’s an idea whose time has come.

The Council estimated the 2005 damages at a whopping $120 billion, and that figure doesn’t include harm from climate change or mercury pollution.

Consider the burning of coal to make electricity.  The scientists found that the annual damage from the resulting sulfur dioxide, nitrogen oxides, and particulate matter totaled about $62 billion. If power generators “internalized” those costs, the average price of electricity would increase 3.2 cents per kilowatt-hour.  The climate-related monetary damages could add another 10 cents per kilowatt-hour.

Clean power doesn’t have those costs, but it must compete against traditional energy production that doesn’t pay its fair share. That’s why we need to change the way we regulate energy.

Two policy proposals are advanced. A Clean Energy Standard Offer Program (CESOP) would provide clean power at a discount, while output-based pollution credits would keep the government from selecting technology winners and allow clean-energy producers to benefit directly from polluter payments.

Consider, for instance, the rapid changes resulting from the Energy Policy Act and the Federal Energy Regulatory Commission’s subsequent Order 888. When unregulated entrepreneurs finally were allowed to generate power, they — in only ten years — built nearly 200,000 megawatts of electric capacity, twice that available from all the nation’s nuclear reactors. Put another way, it took us nearly a century to build the first 800,000 megawatts of our electric grid, but just a decade to increase it by another 200,000. These plants, moreover, were built mostly with private money, rather than by monopolies guaranteed a profit.

Consider also New England’s forward capacity market. When smaller players (and not just utilities) were finally incentivized to reduce electricity demand, this forward market brought forth — in just two years — nearly 3,000 megawatts of energy savings, more than 10 percent of New England’s largest peak demand. The massive improvement in grid reliability occurred without the need to consturct a single central power plant or the need for financial backstops from ratepayers.

Sean concludes, “Our optimism is much more likely to be limited by our ambition than any capital, technical, thermodynamic, or commercial constraint. Tackling climate change and changing the electricity system can be easier, cheaper, and faster than we think. Once we start.”

While the Climate Change bill is sure to ignite fierce and bloody battles on the Hill, it’s critical not to lose sight of the opportunity it presents. We have a chance to drive innovation and inspire entrepreneurs to move forward with bold plans that can simultaneously lower greenhouse emissions and energy bills.

Read the full article to learn more about how federal laws are currently discouraging simple, proven and available solutions to the greenhouse gas problem.

Hayward and the Journal seem to fear economic change.  Power plants, he argues, are long-lasting assets, “so a rapid switch to new technology will mean retiring assets before their useful life is over and diverting trillions in capital from other sectors.”  Yet do Hayward and the Journal lament the music-box factories made obsolescent by Steve Jobs’ tinkering?  According to Casten:  If old, dirty power plants are obsolete, “let ‘em die.  That’s how markets work.  And if they’ve been allowed to forestall obsolescence simply because they got a free pass on their environmental impacts … well then markets weren’t allowed to work.”

Sean also challenges Hayward’s assumption that you can’t reduce emissions without producing less energy.  Such a claim, says Sean, “requires the ratio of energy-in/energy-out to be forever fixed.  Says who?  Have we reached such degrees of societal perfection that we will never be able to increase our energy efficiency?  If so, someone please arrest the entire population of Denmark for so consistently and egregiously violating the laws of thermodynamics (they currently consume about half the fossil fuel of the U.S. per dollar of GDP).”