NEWS

Don’t rely on Congress to fund low-carbon technologies, experts say

05/27/2008

Lisa Haidostian, ClimateWire reporter

A leading member of the Environmental Protection Agency’s independent financial advisory board warned this week that Congress cannot be relied upon to fund the technology vital to fighting climate change.

"When the government dabbles in business, it generally gets burned," said Michael Curley, who sits on EPA’s Environmental Financial Advisory Board.

Speaking to the agency’s annual science forum on climate technology, Curley said that depending on the whims of congressional appropriators to dole out federal dollars is a "real bad idea."

"Venture capital and finance requires certainty," he said. "So relying on a congressional appropriation: If you got to do it, you got to do it, but you’re shooting yourself in the foot."

Tony Kreindler, a spokesman for the Environmental Defense Fund, agreed. He dismissed the idea of government subsidies in favor of a cap-and-trade system like the one proposed in sweeping climate legislation sponsored by Sens. Joseph Lieberman (I-Conn.) and John Warner (R-Va.) slated to hit the Senate floor as early as June 2.

"The cap-and-trade bill creates a multi-billion private investment in new technology," he said. "From our perspective, that’s the best way to capture it."

Kreindler said that the amount of investment created by such a system would be "exponentially more" than government subsidies could produce.

"Congress or other bureaucrats are not the people who should be picking winners or losers in the marketplace," he said. "We think the market itself should do that."

Kreindler also argued that while the Bush administration boasts of U.S. investments in clean technology, emissions are continuing to rise. For the country’s clean technology investment to be considered successful, Kreindler said, emissions must start to go down.

Lieberman-Warner bill creates a dedicated funding stream for technology

He also noted that the most efficient and effective technologies are developed by the private sector rather than the government.

"The private sector is where the innovation and investment is going to come from, and you’re not going to get that innovation and investment unless you give an incentive," he said. That monetary push would come from emissions trading.

Rick Duke, director of the Natural Resource Defense Council’s Center for Market Innovation, echoed the idea that a financial incentive is needed to rev up investment.

"It’s very risky for the first movers because they can’t be 100 percent sure that the technology will work. They have to invest in figuring it out for the first time," Duke said. "This all represents a lot of investment and a lot of risk, and unless there’s some support, you’d rather be a follower than a leader."

The Lieberman-Warner bill, he said, provides those "kick-start incentives" for companies to pour money into emerging clean technologies. And, he said, the money comes from a sustained revenue source that is not subject to the whims of congressional appropriators.

Speaking of the flaws in congressional appropriations, Duke explained that when Congress debates whether to renew a tax credit, for example, "support’s flipped on and off" and the market is thrown off-balance.

"It really disrupts the industry’s efforts to scale up the operations because they don’t know whether the market will still be there," he said. "In general, it would be best to have commercialization support for emerging clean energy like renewables insulated from this direct congressional control."

National bank for environmental technology a ‘cool idea’

EPA board member Curley also advocated placing a small surcharge on every freight container that enters the nation’s ports. Taxing freight trucks, which may leave engines idling for hours and are "just belching pollution all over the place," would create another dedicated revenue source that could reap billions for cleaning air pollution, he said.

Curley said creating a national bank for environmental technology would be a "cool idea." He suggested that the institution be modeled after Sallie Mae or Freddie Mac, government-sponsored enterprise agencies that offer specialized loan services.

The issue, Curley said, is timing. Because the investments don’t take off immediately and there isn’t already a profit stream, there is usually a lag time of about four years before borrowers can start paying back loans.

"This technology is not commercial—that’s why you’re there—and so there’s no possible source of a repayment anywhere near the time you make the loan," he said. "There’s a disjuncture in time between the time you make the loan and the time that the company has anywhere near enough money to start paying you interest."