Supporting Green Technology as a Patriot (and wanna be capitalist)

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A wave of Green Technology innovation is sweeping the world – is the United States willing, and ready, to lead?

That was the question that Andrea Larson presented to the audience a couple hours ago at the Stanford Institute for Economic Policy Research. I was a bit disappointed in most of her comments – beginning with the fact that she chose dwell on “the ignorance” of those that don’t believe in Global Warming… please!

There is nothing less important about this issue than fighting to convince those that don’t believe in it (Peyton speaks about the argument well – I welcome you to join that ongoing discussion).

Simply put, my favorite class in business school was negotiation – and if your aim is deriving policy that you think is going to effectively push renewables and reduce emissions, why fight about your belief structure, change the frame! (ie, don’t be silly, just give those that don’t believe in climate change – or that too much carbon in the atmosphere will likely have some detrimental effects – the Woolsey argument and they’ll write the policy for you).

While Professor Larson’s talk was not all together that compelling* I had serious concerns with one point in particular, as a citizen of the United States and as a tax payer. She discussed the need to stimulate demand for sustainable products while also pushing for innovation, but she did not think products necessarily needed to be made in the US.

I pose the question to you all… should we be content to only stimulate demand for the use of clean tech without stimulating the demand to produce the products we need an could one day export? I think the opportunity exists, like never before, to use our combined 50 states worth of demand to achieve rapid adoption through economies of scale, stimulate job creation and subsequent innovation while becoming the World’s supplier of clean technology solutions.

Frankly, I’m very afraid about transferring the torch of geopolitical power from one group of energy providers OPEC Nations** and Russia to another group*** of thus far benign but potentially hostile nations, but I think the graver long term concern is that the US fails to produce something that can right its trade imbalance.

Nothing is more empowering than self reliance (I encourage you to read Emerson’s take if you are so inclined) and I’m very afraid that if we are not careful, we will stimulate other countries’ production capacity, and let them achieve the economies of scale and subsequent bargaining power.  My question to you all, can I claim to be some weird freakish hybrid free market capitalist if I want to explore using policy to stimulate these things twice – through an RPS and placing a cost on externalities (to stimulate local demand of sustainable technologies) and imposing some sort of a quota (that would stimulate local production of these products)?

As a tax payer investing heavily in renewables and clean tech (north of $90Bn) I think it makes sense for me to want to invest in the supply chain – because I can justify these as infrastructure investments, and I want to do that through tax incentives and quotas… to make sure that the ARRA stamp has a resounding multiplier effect on our economy.

Would Milton Friedman still talk to me? Am I being too patriotic? Am I a protectionist? Am I being anti global? Is the UN going to yell at me? Am I ignoring the maxims of comparative advantage? Will the WTO send me death threats?

* I was impressed with the rest of the event – particularly the “Trillion Dollar Question” discussion between Bradford Delong and Peter Klelow after lunch.

** Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela

*** China is in a position to dominate the supply chain of Solar

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  • http://www.cleantechies.com Ian

    What do you think? Is there something to be said for exploring the cast of strange bed-fellows:

    – Libertarians that need to be taxed to build self-sustaining infrastructure.

    – Labor that needs to realize that market based wages will insure competitiveness.

    – Environmentalists that give national security hawks fodder for justifying investing in fixing the source of the security problem, not bolstering our forces.

    – Fiscal conservatives that recognize that a cap and trade or carbon tax creates opportunities, and changes the playing field – and that US entrepreneurs typically ‘win’ on a dynamic battlefield.

    – Legislators from coal producing states recognizing that even with its great abundance, coal is not the answer – that there are more aesthetically, environmentally and cheaper (than CCCS) sustainable solutions to coal, and that they need to embraced quickly to provide jobs for their constituents.

    Thoughts?

  • http://peytonbowman.net Peyton

    Definitely some good thoughts there. Without being an economist I see the basic argument of homeland production vs that in the developing world. My question is can the US produce all the RE and EE products at a comparable price so that it makes sense for others to import or will they go for the Asian made products at a fraction of the cost? If Western Europe manufactures in China/India at a cost uncomparable to what is produced in the US, will there be a market to export to? Of course we can put tariffs on competitive imported goods so that we will only buy USA made in country to solve that. In a way I see it:

    Mfg in Asia (for example) = low cost –> high implementation –> low energy use and CO2 emissions –> less dependence on fossil fuels and lower environmental footprint. (in the short term)

    Mfg in USA or W.Europe = higher cost –> lower/slower implementation –> higher overall energy use and CO2 emissions (short term) –> more dependence on fossil fuels and larger environmental footprint. (in the short term but leveling off in the long run to the same level of implementation as the other)

    My mind goes back to the developed world being recently more service oriented and the developing world being more mfg oriented – however a counterargument is how long will this be the case..maybe this is the time for the US to step in and become leaders in manufacturing to balance the scales. The middle class isn’t going to be building dolls in the Far East much longer…where will the consulting industry be in 20 years?

    So thats a very simplistic viewpoint of what you are saying and I would enjoy a dialogue of how to invent, manufacture, implement, export and be the world provider of RE/EE products in the US. Many more if’s in the back of my mind…interesting topic.

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