Tom Rand is an engineer, clean-tech adviser and author of “Kick the Fossil Fuel Habit: 10 Clean Technologies to Save Our World.” He spoke with SmartBrief about how investing in energy sources such as biofuels, solar thermal, photovoltaic, wind and geothermal can help create jobs in the U.S. An edited transcript of that conversation follows.
What do the federal government and private sector need to do grow these industries?
The first thing the federal government needs to do is create the market conditions in which alternative energy is valued — that would start with a price on carbon. Carbon emissions are currently a free externality. … This is a clear, well-defined market gap, and a price on carbon would begin to level the playing field for alternative energy. Also there are a number of direct subsidies for fossil-based energy production, such as refundable tax credits for offshore drilling. All of these direct subsidies should be eliminated.
Second, the federal government should invest heavily in research and development to develop next-generation alternative energy technologies.
Third, the market is unable to provide low-cost debt for next-generation technologies — commercial banks do not normally provide low rates on project finance until a technology has been in the market place at a commercial scale for 15 years or more. One way out is to leverage the government’s risk-rate to move funds from money markets or savings accounts into new infrastructure. I’ve outlined a strong case for a public-private partnership on Green Bonds. The details are at www.greenbonds.ca.
The private sector will respond to these market signals once they are in place and don’t need independent motivation.
The Internet and microchip came out of academic and military demand; the aerospace industry was seeded by the Defense Department; and even the automotive sector exploded once the interstate highway system was built. Clean tech is no different — it is a job-creating growth industry, but one that requires initial market conditions to be set by policy.
You say new energy technology can create jobs — how many, and what areas would see the biggest growth?
De-carboning our economy will be the biggest infrastructure build in human history and will involve tens of trillions of dollars over the next few decades. The jobs it creates are in all sectors since this is infrastructure — nuts and bolts, wires and power plants — not just software. So jobs will be across the board — engineers, plumbers, software technicians, manufacturing, research, etc.
Will a federal clean energy standard be passed this year? What will it look like?
I don’t hold out a lot of hope for Congress. Our best bet is that the Environmental Protection Agency will be able to move on carbon emissions with some aggression.
What are steps companies can take to shift to cleaner forms of energy?
The first step is efficiency — which is, by far, the lowest hanging fruit. I’ve built a hotel here in Toronto that uses 75% less energy than traditional buildings, including geothermal heating and cooling, solar thermal, good insulation, LED lighting and so on. Our payback is around five years, but by borrowing against the building, we are cash-flow positive on day one. Efficiencies can be found in any industrial process, any building, any organization. So start by lowering energy use, then look to see what sort of energy production your organizational infrastructure is capable of.