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  • One Shot Left

    If it is now too late to prevent runaway climate change, the Bush team must carry much of the blame. His wilful trashing of the Middle Climate – the interlude of benign temperatures which allowed human civilisation to flourish – makes the mass murder he engineered in Iraq only the second of his crimes against humanity. Bush has waged his war on science with the same obtuse determination with which he has waged his war on terror.

    Is it too late? To say so is to make it true. To suggest that there is nothing that can now be done is to ensure that nothing is done. But even a resolute optimist like me finds hope ever harder to summon. A new summary of the science published since last year’s Intergovernmental Panel report suggests that – almost a century ahead of schedule – the critical climate processes might have begun(2).

    Just a year ago the Intergovernmental Panel warned that the Arctic’s “late-summer sea ice is projected to disappear almost completely towards the end of the 21st century … in some models.”(3) But, as the new report by the Public Interest Research Centre (PIRC) shows, climate scientists are now predicting the end of late-summer sea ice within three to seven years. The trajectory of current melting plummets through the graphs like a meteorite falling to earth.

    Forget the sodding polar bears: this is about all of us. As the ice disappears, the region becomes darker, which means that it absorbs more heat. A recent paper published in Geophysical Research Letters shows that the extra warming caused by disappearing sea ice penetrates 1500km inland, covering almost the entire region of continuous permafrost(4). Arctic permafrost contains twice as much carbon as the entire global atmosphere(5). It remains safe for as long as the ground stays frozen. But the melting has begun. Methane gushers are now gassing out of some places with such force that they keep the water open in Arctic lakes, through the winter(6).

    The effects of melting permafrost are not incorporated into any global climate models. Runaway warming in the Arctic alone could flip the entire planet into a new climatic state. The Middle Climate could collapse faster and sooner than the grimmest forecasts proposed.

    Barack Obama’s speech to the US climate summit last week was an astonishing development(7). It shows that, in this respect at least, there really is a prospect of profound political change in America. But while he described a workable plan for dealing with the problem perceived by the Earth Summit of 1992, the measures he proposes are now hopelessly out of date. The science has moved on. The events the Earth Summit and the Kyoto process were supposed to have prevented are already beginning. Thanks to the wrecking tactics of Bush the elder, Clinton (and Gore) and Bush the younger, steady, sensible programmes of the kind that Obama proposes are now irrelevant. As the PIRC report suggests, the years of sabotage and procrastination have left us with only one remaining shot: a crash programme of total energy replacement.

    A paper by the Tyndall Centre for Climate Change Research shows that if we are to give ourselves a roughly even chance(8,9) of preventing more than two degrees of warming, global emissions from energy must peak by 2015 and decline by between six and eight per cent per year from 2020 to 2040, leading to a complete decarbonisation of the global economy soon after 2050(10). Even this programme would work only if some optimistic assumptions about the response of the biosphere hold true. Delivering a high chance of preventing two degrees of warming would mean cutting global emissions by over 8% a year.

    Is this possible? Is this acceptable? The Tyndall paper points out that annual emission reductions greater than one per cent have “been associated only with economic recession or upheaval.” When the Soviet Union collapsed, they fell by some 5% a year. But you can answer these questions only by considering the alternatives. The trajectory both Barack Obama and Gordon Brown have proposed – an 80% cut by 2050 – means reducing emissions by an average of 2% a year. This programme, the figures in the Tyndall paper suggest, is likely to commit the world to at least four or five degrees of warming(11), which means the likely collapse of human civilisation across much of the planet. Is this acceptable?

    The costs of a total energy replacement and conservation plan would be astronomical, the speed improbable. But the governments of the rich nations have already deployed a scheme like this for another purpose. A survey by the broadcasting network CNBC suggests that the US federal government has now spent $4.2 trillion in response to the financial crisis, more than the total spending on World War Two when adjusted for inflation(12). Do we want to be remembered as the generation that saved the banks and let the biosphere collapse?

    This approach is challenged by the American thinker Sharon Astyk. In an interesting new essay, she points out that replacing the world’s energy infrastructure involves “an enormous front-load of fossil fuels”, which are required to manufacture wind turbines, electric cars, new grid connections, insulation and all the rest(13). This could push us past the climate tipping point. Instead, she proposes, we must ask people “to make short term, radical sacrifices”, cutting our energy consumption by 50%, with little technological assistance, in five years. There are two problems: the first is that all previous attempts show that relying on voluntary abstinence does not work. The second is that a 10% annual cut in energy consumption while the infrastructure remains mostly unchanged means a 10% annual cut in total consumption: a deeper depression than the modern world has ever experienced. No political system – even an absolute monarchy – could survive an economic collapse on this scale.

    She is right about the risks of a technological green new deal, but these are risks we have to take. Astyk’s proposals travel far into the realm of wishful thinking. Even the technological solution I favour inhabits the distant margins of possibility.

    Can we do it? Search me. Reviewing the new evidence, I have to admit that we might have left it too late. But there is another question I can answer more easily. Can we afford not to try? No we can’t.

  • Beyond the recession

    Structured finance is a term that designates a sector of finance where risk is transferred via complex legal and corporate entities. It’s not as confusing as it sounds. Take a mortgage-backed security (MBS), for example. The mortgage is issued by a bank (the loan originator) which then sells the mortgage to a brokerage where it is chopped up into tranches (pieces of the loan) and sold in a pool of mortgages to investors that are looking for a rate that is greater than Treasurys or similar investments. The process of transforming debt (“the mortgage”) into a security is called securitization. At one time, the MBS was a reasonably safe investment because the housing market was stable and there were relatively few foreclosures. Thus, the chance of losing one’s investment was quite small.

    In the early years of the Bush administration, Wall Street took advantage of the gigantic flow of capital coming into the country ($700 billion per year via the current account deficit) by creating more and more MBSs and selling them to foreign banks, hedge funds and insurance companies. It was real gold rush. Because the banks were merely the mortgage originators, they didn’t believe their own money was at risk, so they gradually lowered lending standards and issued millions of loans to unqualified applicants who had no job, no collateral and a bad credit history. Securitization was such a hit, that by 2005, nearly 80 percent of all mortgages were securitized and the traditional criteria for getting a mortgage was abandoned altogether. Subprimes, Alt-As and ARMs flourished, while the “30 year fixed” went the way of the Dodo. Lenders were no longer constrained by “creditworthiness”; anyone with a pulse and a pen could get approved. The mortgages were then shipped off to Wall Street where they were sold to credulous investors.

    The disaggregation of risk–spreading the risk to many investors via securitization–was as much of a factor in the creation of “the largest equity bubble in history”, as the banks lax lending standards or Greenspan’s low interest rates. By spreading risk throughout the system, securitization keeps interest rates artificially low because the real risks are not properly priced. The low interest rates, in turn, stimulate speculation which results in equity bubbles. Eventually, credit expansion leads to crisis when borrowers can no longer make the interest payments on their loans and defaults spiral out of control. This forces massive deleveraging and the fire-sale of assets in illiquid markets. As assets lose value, prices fall and the economy enters a deflationary cycle.

    There are many types of of structured instruments including asset-backed securities (ABS), mortgage-backed securities (MBS), collateralized debt obligations (CDOs) and collateralized loan obligations (CLOs) all of which provide a revenue stream from loans that were chopped into tranches and turned into securities. There are many problems with these complex securities, the biggest of which is that there is no way to unravel the individual pools of loans to isolate the bad paper. That’s why subprime mortgages had such a destructive affect on the secondary market, because–even though subprimes only defaulted at a rate of roughly 5 percent–MBS sales slumped nearly 90 percent. Why? Former Secretary of the Treasury Paul O’Neill explained it like this: “It’s like you have 8 bottles of water and just one of them has arsenic in it. It becomes impossible to sell any of the other bottles because no one knows which one contains the poison.”

    Exactly right. So why weren’t these structured debt-instruments “stress tested” before the markets were reworked and the financial system became so dependent on them?

    Greed. Because the real purpose of these exotic investments is not to provide true value to the buyer, but to maximize profits for the seller by increasing leverage. That is the real purpose of MBS, CDOs and all the other bizarre-sounding derivatives; higher profits with less capital. It’s a scam. Here’s how it works: A mortgage applicant buys a house for $400,000 and puts 10 percent down. His mortgage is sold to Wall Street, chopped into pieces, and stitched together in a pool of similar loans. Now the brokerage can use the debt as if it were an asset, borrowing at ratios of 20 or 30 to 1 to fatten the bottom line. When Fannie Mae and Freddie Mac were taken into conservatorship by the government, they were leveraged at an eye-popping 100 to 1. This shows that nearly an infinite amount of debt can be precariously balanced atop a paltry amount of capital. This explains why the $4 trillion aggregate value of the 5 big investment banks and the $1.7 trillion value of the hedge funds is now vanishing more quickly than it was created. Once the mighty gears of structured finance shift into reverse, deleveraging begins with a vengeance pulling trillions into a credit vacuum.

    It all started when two Bear Stearns hedge funds defaulted in July 2006 and there were no offers for their MBS and other structured investments. Panic quickly spread to every corner of Wall Street as the alchemists of modern finance began to see that their worst nightmare might be realized, that trillions of dollars of Frankenstein investments could be worth nothing at all.

    Since the Bear Stearns funds fiasco, there have been huge explosions in the financial markets. Fannie Mae, Freddie Mac, Wachovia, Washington Mutual, Indybank, AIG, Lehman Bros and other industry giants have either gone under or been forced into shotgun weddings by the FDIC. The stock market has plunged over 40 percent and suffered wild gyrations not seen since the 1930s. The entire Wall Street landscape has changed completely. Investment banking is no longer a viable business model; the Big 5 have either vanished or transformed themselves into holding companies to escape short sellers. The hedge funds have been deleveraging with a ferocity that has sent sent stocks and commodities crashing. In one day last week, the stock market plunged 300 points in the morning only to bounce back 550 points a few hours later; a whopping 850 point-spread in one trading day! No one but a madman would dabble in this market. Cautious investors have pulled up stakes and moved to the safety of Treasurys. Meanwhile, the financial tsunami is roaring through the real economy where consumer confidence has plummeted, unemployment is soaring and retail sales have fallen to historic lows. The downdraft from the financial markets has flattened Main Street and set the stage for a humongous $500 billion stimulus package to be delivered in the first few months of the Obama administration. The meltdown appears to be playing out much like Henry Paulson anticipated. According to Bloomberg News : “Shortly after leaving Wall Street as Goldman Sachs’ CEO, Henry Paulson was at Camp David warning the president and his staff of “over-the-counter derivatives as an example of financial innovation that could, under certain circumstances, blow up in Wall Street’s face and affect the whole economy.” (PAUL B. FARRELL, “30 reasons for Great Depression 2 by 2011”, MarketWatch)

    So far, the Federal Reserve has provided nearly $2 trillion through its lending facilities just to keep the financial system upright. The Treasury is currently distributing $700 billion to key banks and other financial institutions that are perceived to be “too big to fail”. In truth, the “too big to fail” mantra is a just public relations hoax to conceal the web of counterparty deals that make it impossible for one institution to fail without dominoing through the rest of the system and wreaking havoc. That’s why AIG is still on life-support with regular injections of taxpayer money; because it had roughly $4 trillion of credit default swaps (structured “hedges” that are not traded on a regulated exchange) for which AIG does not have sufficient capital reserves. In other words, the taxpayer is now paying the debts of an insurance company that didn’t set aside the money to pay its claims. (As yet, No SEC indictments for securities fraud) In fact, the Fed and Treasury are now providing a backstop for the entire structured finance system which is frozen solid and shows no sign of thawing any time soon.

    This is not a normal recession, which is a downturn in the business cycle and “a period of reduced economic activity” usually brought on by a mismatch between supply and demand. (that ends in two quarters of negative growth) The present situation is much more grave; it is the utter destruction of a system that was developed fairly recently and has proven to be thoroughly dysfunctional. It cannot withstand the effects of tighter credit or adverse market conditions. This is not a cyclical downturn; the structured finance system has collapsed leaving behind a multi-trillion dollar capital hole that is bringing the broader economy to its knees.

    One by one, we have seen the structured instruments fail; mortgage-backed securities (MBS), collateralized debt obligations (CDOs), credit default swaps (CDS), commercial paper (CP), auction rate securities. Now we are seeing investors boycott anything related to structured investments. This is from Mish’s Global Economic Trend Analysis:

    “There were NO sales of bonds backed by credit-card payments in October, the first time since 1993, when the asset-backed securities market was in its infancy. Yields on top-rated credit card bonds relative to benchmark interest rates reached a record high of 525 basis points more than the London interbank offered rate, or Libor, last week, according to Bank of America Corp. data.”

    Wall Street has turned off the faucet for securitized investments. That market is toast. The only reason that Libor and the other gauges of interbank lending have normalized is because the Fed guaranteed money markets and commercial paper. It has nothing to do with trust between the banks themselves. There is no trust. Even so, the banks are not capable of making up for the vast amount of credit which was produced by the now-defunct investment banks and hedge funds which are constrained by losses of nearly $3.5 trillion; half of their total value. In the best case scenario, bank credit will only shrink 15 or 20 percent, which will put the US on track for a deep “18 month to 2 year” recession rather than another Great Depression.

    Paulson’s attempt to divert $30 billion to non-bank financial institutions to revive loan securitization when there is no appetite among investors for such structured junk is pure folly. More troubling, is that neither Paulson nor Bernanke have a Plan B; an alternate scheme for rebuilding the financial markets on a solid, sustainable foundation rather than low interest rates and pools of debt. Everything they have done so far, suggests that they are focused on one thing alone; inflating another equity bubble. “Inflate or die”, as the saying goes; and Bernanke intends to achieve this objective using the same tools that brought us to the brink of catastrophe. Here’s a clip from a recent speech by Bernanke which shows his determination to prop up the broken system:

    “The ability of financial intermediaries to sell the mortgages they originate into the broader capital market by means of the securitization process serves two important purposes: First, it provides originators much wider sources of funding than they could obtain through conventional sources, such as retail deposits; second, it substantially reduces the originator’s exposure to interest rate, credit, prepayment, and other risks associated with holding mortgages to maturity, thereby reducing the overall costs of providing mortgage credit.”

    Sorry, Ben, the funding has dried up and the banks have shown no interest in going back to the days of conventional “30-year fixed” mortgages. It’s a dead letter. The Fed and Treasury need to stop looking for ways to reflate the bubble and work to restore confidence in the markets by increasing regulation and reducing the amount of leverage that’s allowable to 12 to 1. After all, it’s no coincidence that AIG, Fannie and Freddie, Lehman Bros, General Motors, General Electric have all fallen off a cliff at the very same time. They are all victims of the same low interest, easy money finance swindle which allowed them to roll over huge amounts of short-term debt at artificially low cost. When Bear blew up; lending tightened, demand weakened, and credit was flushed from the system at an unprecedented pace. Borrowing short for long-term investments is not feasible when credit becomes scarce, but it’s not because the banks aren’t lending. That’s just another myth that keeps the public from seeing what’s really going on. As Jon Hilsenrath points out in his Wall Street Journal article, “Banks Keep Lending, but that isn’t easing the crisis”, that is not the case:

    “Banks actually are lending at record levels. Their commercial and industrial loans, at $1.6 trillion in early November, were up 15% from a year earlier and grew at a 25% annual rate during the past three months, according to weekly Federal Reserve data. Home-equity loans, at $578 billion, were up 21% from a year ago and grew at a 48% annual rate in three months….The numbers point to one of the great challenges of the crisis. The credit crunch is surely real, but it is complex and not easily managed. Banks are lending, but they’re also under serious strain as they act as backstops to a larger problem — the breakdown of securities markets..The worst of the credit crisis is being felt not in banks but in financial markets…”

    The banks are not to blame. There is a generalized contraction of credit in the non-bank financial system where structured finance has blown up and taken half of Wall Street with it. It’s the end of an era. Here’s how economist Henry C. K. Liu sums it up in his “Open Letter to World Leaders attending the November 15 White House Summit on Financial Markets and the World Economy”:

    “Neoliberal economists in the last three decades have denied the possibility of a replay of the worldwide destructiveness of the Great Depression that followed the collapse of the speculative bubble created by unfettered US financial markets of the ‘Roaring Twenties’. They fooled themselves into thinking that false prosperity built on debt could be sustainable with monetary indulgence. Now history is repeating itself, this time with a new, more lethal virus that has infested deregulated global financial markets with ‘innovative’ debt securitization, structured finance and maverick banking operations flooded with excess liquidity released by accommodative central banks. A massive structure of phantom wealth was built on the quicksand of debt manipulation. This debt bubble finally imploded in July 2007 and is now threatening to bring down the entire global financial system to cause an economic meltdown unless enlightened political leadership adopts coordinated corrective measures on a global scale.”

    Rome is burning. It’s time to stop tinkering with a failed system and move on to “Plan B” before it’s too late.

     

  • Copenhagen could be postponed while US gets climate act together.

    The incoming administration of the US will not have sufficient time to get backing for a coherent position at the Copenhagen conference on Climate Change, and will postpone the landmark agreement for a year, according to director of the International Emissions Trading Association, Edwin Aalders. Speaking at a conference in Sydney, Australia, on November 18, Aalders said that the US delegation to the conference in Bali last year found itself making promises to the international community that did not have the backing of the White House or Congress. Aadlers predicts that the Danish government will deal with the problem by simply postponing the conference.

  • Australia lags Germany in solar

    The scheme would cost the federal Government $16.2 billion over the next 20 years if it were available to businesses and residents. It would cost less than half of that – $6.5 billion – if only householders were included.

    The feed-in tariff would allow people to recoup the costs of their investment in solar panels within 10 years.

    The report says an emissions trading scheme and mandatory renewable energy target were expected to be insufficient on their own to drive significant growth in the industry.

    Feed-in tariffs have sparked rapid growth in solar industries overseas. In Germany, which implemented a gross feed-in tariff in 2000, solar installations have grown on average by 72 per cent over the past five years, and the industry has generated about 42,600 jobs.

    The report predicts that some of the costs would be offset by a saving of $610 million by deferring new investments in electricity generation capacity.

    The take-up of solar energy would help to reduce electricity demanded from the grid during peak periods.

    Access Economics director Steve Brown said the research revealed there was potential for a strong solar photovoltaic industry in Australia, especially given Australia had the highest solar radiation levels in the world.

    “We’ve seen overseas that the uptake of solar does respond to policy settings,” Mr Brown said.

    He said it was up to policy-makers and the industry to balance the costs and benefits of the scheme.

    The solar industry and environmental groups have pushed strongly for a national feed-in tariff scheme, saying it would encourage the take-up of renewable energy and reduce greenhouse emissions.

    Earlier this month, a federal parliamentary committee recommended that a national scheme be developed in consultation with the states.

    It followed an agreement between Kevin Rudd and the states to consider options for a harmonised approach.

    Many jurisdictions have already pushed ahead with their own schemes.

    The ACT recently became the first Australian jurisdiction to announce the introduction of a gross feed-in tariff scheme. Householders and businesses that installed renewable energy systems, including solar panels or micro-wind turbines, would be paid for all the energy they produced at nearly four times the current cost of electricity.

    Victoria, Queensland and South Australia have also introduced feed-in tariff schemes, but people are paid only for the excess energy they feed back into the system.

    In South Australia and Queensland, the scheme is open to residents and small businesses, while Victoria’s scheme is open only to householders.


  • Iceland leads geothermal push

    One generation ago, Icelanders didn’t have the luxury of passively thinking about their energy use. The isolated island country imported all of its coal and oil for heat and electricity, putting it in a very vulnerable position. But now the country gets 99 percent of its electricity and 78 percent of its primary energy from hydro and geothermal resources. While many Icelanders have watched this dramatic evolution of the country’s energy landscape, there are just as many young citizens who have grown up not understanding Iceland’s formerly delicate position.

    “I’m not from the generation that grew up with anything else but [geothermal and hydro],” says the 31-year old Palsson. “It’s ubiquitous, it’s everywhere and we know about it. But I think we also take it for granted. Still, we are proud of what we have done.”

    Now Iceland has the opportunity to share that pride with other countries. And leaders in the industry are more than happy to share their knowledge.

    “We have much to offer in know-how and technological support,” says Iceland’s President Ólafur Ragnar Grímsson, speaking on the Inside Renewable Energy podcast. “It is important for us to continue to establish relationships with countries that are serious about geothermal. As a leader, Iceland can help in many areas.”

    This spirit of cooperation is part of the Icelandic culture, says Albert Albertsson, Deputy CEO of Hitaveita Sudurnesja, the owner and operator of two large geothermal plants in the country. If world leaders are going to get serious about combating climate change — a problem that is already visibly altering the weather and glacial landscape of the country — Icelanders believe it’s important to export the lessons they have learned over the last 70 years. (Image, right: The Strokkur geyser blows its top, illustrating Iceland’s very active geology.)

    “We work very openly. All our research and development is open to the international society — so in that way we contribute a lot to understand better how we can harness this extremely valuable resource,” says Albertsson.
    One important lesson to learn from Iceland, says President Grímsson, is to think about utilizing geothermal in multiple ways — not just for heat and electricity. The Icelandic government and geothermal businesses have worked very hard to use the resource to create as many value streams as possible.

    “We go beyond just energy. We use it to promote tourism, we use it for health and wellness, we use it for heavy industries and we also use it for educational purposes. This more interactive, holistic approach is much different than we see elsewhere,” says Grimsson.

    These additional value streams will be more important for Iceland as the country begins a potentially long, painful recession due to the global credit crunch. That makes a renewed focus on the domestic geothermal industry and an aggressive approach to exporting Icelandic knowledge that much more important, says Pálsson.

    “One of the things that keeps us positive is our access to energy — the fact that we can do so much with it and the fact that we know so much about it. I definitely believe that we should be exporting our knowledge all over the world,” he says.

    With the door closing on Iceland’s economy, perhaps geothermal energy will allow Icelanders to keep the window of opportunity open and keep the country moving during these tough times.

  • DOE defines forward plan for energy

    Population growth and increasing levels of per capita consumption will drive increasing global energy demand in the 21st century. While not preordained, this increase will be large even if the citizens of other countries do not achieve U.S. per capita levels of consumption. Important components of this increase will be in transportation, the fastest growing global energy consumer today (more than 90% of transportation is currently fueled by petroleum-derived fuels) and electrification, which increased dramatically in the 20th century and will increase in the 21st century as well. An important driver of this continued electrification will be the substitution of electricity for liquid transportation fuels.

    Today’s world is powered largely by fossil fuels (coal, oil, natural gas) and this will continue well into the 21st century, given large reserves and devoted infrastructure. Nevertheless, fossil fuel resources are finite and their use will eventually have to be restricted. Cost increases and volatility, already occurring, are likely to limit fossil fuel use before resource restrictions become dominant and increasing geographic concentration of supplies in other countries raises serious national security concerns. In addition, the world’s current energy delivery infrastructure is highly vulnerable to natural disasters, terrorist attacks and other breakdowns and energy imports constitute a major drain on U.S. financial resources and allow other countries to exert undue influence on our foreign policy and freedom of action.

    Fossil fuel combustion releases CO2 into the atmosphere (unless captured and sequestered), which mixes globally with a long atmospheric lifetime. Most climate scientists believe that increasing CO2 concentrations alter earth’s energy balance with the sun, contributing to global warming.

    Nuclear power, a non-CO2 emitting energy source, has significant future potential, but its wqidespread deployment faces several critical issues: cost, power plant safety, radioactive waste storage and weapons nonproliferation.

    Globally, energy is not in short supply — e.g., the sun pours 6 million quads of radiation annually into our atmosphere (global energy use: 460 quads).

    There is considerable energy under our feet, in the form of hot water and rock heated by radioactive decay in the earth’s core. What is in short supply is inexpensive energy that people are willing to pay for.

    Renewable energy (solar, wind, biomass, geothermal, ocean) has significant potential for replacing our current fossil fuel based energy system. The transition will take time but we must quickly get on this path.

    Accepting the above, I would recommend the following elements for a national energy policy:

    • Using the bully pulpit, educate the public about energy realities and implications for energy, economic and environmental security.

    • Work with the Congress to establish energy efficiency as the cornerstone of national energy policy.

    • Work with the Congress to provide an economic environment that supports investments in energy efficiency, including appropriate performance standards and incentives. This includes setting a long-term, steadily increasing, predictable price on carbon emissions (in coordination with other countries) that will unleash innovation and create new jobs.

    • Consider setting a floor under oil prices, to insure that energy investments are not undermined by falling prices, and using resulting revenues to address equity and other needs.

    • Work with the Congress to find an acceptable answer to domestic radioactive waste storage, and with other nations to address nuclear power plant safety issues and establish an international regime for ensuring nonproliferation. This includes examination of non-traditional nuclear fuel cycles.

    • Establish a national policy for net metering, to allow individuals and companies to sell electricity to the grid and thus remove an important barrier to widespread deployment of renewable energy systems.

    • Provide incentives to encourage the manufacture and deployment of renewable energy systems that are sufficiently long for markets to develop adequately but are time-limited with a non-disruptive phaseout.

    • Aggressively support establishment of a smart national electrical grid, to enable more efficient use of electricity nationally, to facilitate the use of renewable electricity anywhere in the country, and to mitigate, with increased use of energy storage, the effects of solar and wind energy intermittency.

    • Support an aggressive effort on carbon capture and sequestration, to ascertain quickly its feasibility to allow continued use of our extensive coal resources.

    • Remove incentives for fossil fuels that are historical tax code legacies that distort energy markets and slow the transition to a new, renewables-based, energy system.

    I look forward to a stimulating debate, one which has been too long in coming.