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That's where government can help. There may be nothing like free enterprise to unleash innovation, but there's nothing like government to put a whip hand to the process. A firm carbon price will accelerate creativity by making alternatives that much more economical. If Washington better allocated its own research-and-development dollars—as it did in the storied Apollo days—it could accelerate things even more. Currently, the Federal Government budgets about $5 billion per year for research and tax incentives for renewables and energy efficiency. With a federal budget of $2.9 trillion in 2008 and the Iraq war alone burning through an estimated $12 billion per month, there is clearly money to be spent if we decide to reprioritize. A plan floated by Democrats to eliminate $18 billion worth of tax breaks for the oil industry and use the money to support research into renewable fuels would be a smart place to start.
There's no shortage of ways to spend whatever money is made available. Photovoltaic solar panels have made significant improvements, but they are still five to 10 years away from achieving economic parity with fossil fuels—at least at current rates of development. More promising are solar thermal power plants, like the one inaugurated this spring in the deserts of Nevada by Spanish clean-energy giant Acciona. The installation—a 300-acre array of 182,000 mirrors, each aligned to catch and concentrate the sun's energy—heats a synthetic oil that runs in a pipeline and produces steam, which drives turbines to generate electricity. Mirrors and turbines are comparatively cheap, and they're hardly the stuff of high technology. The trick is scaling up and pricing down.
Wind power, the most mature renewable technology, is growing fast, but we need to find a way to store electricity when the breeze isn't blowing. Then there are more fringe alternatives like tidal power, geothermal energy and even nuclear fusion—any of which could take off with enough luck and money.
While Washington should flood the zone with research funding, it should refrain from trying to pick a winner. The great biofuel scam—in which government support for corn ethanol choked the market with a fuel that simply creates other problems, such as deforestation and food price spikes—shows that straightforward subsidies can easily be perverted for political reasons. But a national renewable portfolio standard, which would mandate that a certain percentage of the nation's electricity supply must come from renewable sources, can force utilities to adopt alternatives on a wider scale, going with the technologies that are producing the best results. For that to happen, though, the government has to stop providing the fossil-fuel industry with billions of dollars in subsidies, which boost the sector's built-in advantage even more. "How can the oil industry need a dollar in the days of $100 crude oil?" says John Berger, CEO of Standard Renewable Energy.
Finally, there are micropolicies, like tax credits, that can make solar power and green building more economical on a house-by-house basis. Such credits have helped the wind and solar industries grow out of infancy, but the laws establishing them periodically expire if they're not renewed. The solar investment credit, which was part of the 2005 energy bill, provides a 30% tax credit for the purchase of solar power but will cease to exist at the end of the year if it can't move out of the legislative gridlock that is blocking its renewal. Fortunately, Congress seems ready to extend it. "If it expires, it will take out all the good work that's been done on the state and commercial level," says Julie Blunden, vice president of public policy at SunPower, a leading solar manufacturer and installer. "We could watch our business essentially evaporate by the end of the year."
The Long War
If we took all the steps outlined here—a national cap-and-trade system with teeth, coupled with tougher energy-efficiency mandates and significant new public and private investment in green technologies—where would that get us? We'd be a little poorer—a sustained battle against climate change will hit our wallets hard, absorbing perhaps 2% to 3% of gdp a year for some time, according to energy expert Henry Lee at Harvard's Kennedy School of Government, though unchecked warming could end global prosperity. But think of it as an investment: that money, if matched by action internationally, can reduce emissions radically over the next half-century, contain warming and lead us to a postcarbon world.
Ultimately, global warming is not a battle that will be fought fiscal year by fiscal year; it's a fight that will occupy us for generations. Our policies have to operate on the same time frame, even if our politics run on election cycles. We've learned from think tanks and war colleges that the outcome of any crisis is usually determined by one dominant global player that has the innovators who can churn out the technology, the financiers who can back it and the diplomatic clout to pull the rest of the planet along. That player, of course, exists, and it is, of course, us. The U.S. has enjoyed an awfully good run since the middle of the 20th century, a sudden ascendancy that no nation before or since has matched. We could give it up in the early years of the 21st, or we could recognize—as we have before—when a leader is needed and step into that breach ourselves. Going green: What could be redder, whiter and bluer than that?
—with reporting by Kristin Kloberdanz/Modesto, Calif., and Massimo Calabresi, Mark Thompson and Adam Zagorin/Washington