The best way to go green: carbon taxes, cap-and-trade -- and white paint.
IF THE NATION IS GOING GREEN, THEN CONGRESS AND THE administration should go for a jolting, life-altering transition in a logical, cost-effective manner. However, the evidence so far is that logic will play second fiddle to fashion.
Scientist-businessman Arnold Leitner points to tax subsidies for hybrid cars and photovoltaic systems as being especially inefficient applications of tax dollars to alter consumer behavior.
"Right now, the entire environmental discussion is driven by the affluent do-gooder who want to save the planet," he says. "The result is a complete misallocation of our tax money."
Government programs supporting weatherization and white paint make sense, he says; they'd provide more bang for the buck in helping utilities meet peak demand than would support for expensive, relatively inefficient photovoltaic systems.
And funding light-rail systems powered by clean energy is also going to have greater impact than giving tax breaks to people who buy hybrids, which still require gasoline.
Leitner, who was reared in Germany, holds a doctoral degree in physics from the University of Colorado and runs a highly innovative alternative-energy outfit called SkyFuel.
LEITNER ASSERTS THAT APPLYING WHITE paint to the roofs of commercial buildings in warm and sunny places like Los Angeles would cut their air-conditioning costs by 15% to 20%.
"We now consume twice as much energy in this country as we have to, because we are wasteful and not smart," he says. He also recommends widespread use of roof-top solar hot water systems to significantly cut electric demand.
If it sounds as though Leitner has an axe to grind against photovoltaics (PV), he does and he doesn't.
He spent his early years as a physicist trying to develop PV film -- until government funding for the program was cut. He went on to research superconductors, elements that conduct electricity with little resistance. Now his company, based in New Mexico, may eventually go public; it competes against the PV industry for business and tax dollars.
Leitner is now hawking a technology called parabolic-trough solar collection. The trough system generates electric power by using highly reflective, mirrorlike polymer-based film to concentrate sunlight and heat a conducting fluid above 700 degrees Fahrenheit. The fluid, in turn, makes the steam that drives a plant's generators. Enough of that superheated water can be stored by a utility in an insulated container the size of an oil tank to produce electricity 24/7. By contrast, PV converts sunlight into power and has more limited storage capacity, so it is used in smaller applications.
Like photovoltaic power and other forms of green energy, Leitner's industry could not exist without government subsidies such as tax breaks and research credits. (He says that trough systems require a subsidy of 50 cents per kilowatt, versus $3 per kilowatt for PV). It is impossible in today's marketplace for renewable energy to compete against coal, as long as the cost for putting emissions into the atmosphere is free, Leitner adds.
SO HOW DOES THE GOVERNMENT GET its citizens to go green?
"If you want to change behavior, then you only get there when it hurts," he says. This means setting a floor price for carbon -- a base cost of doing business that shows the real cost of using carbon in the various things we do. The tax might have to be high enough to raise the cost of a barrel of oil back over $150. Last time oil hit that mark, gasoline shot up to $4-a-gallon (or higher in many regions) and commuters abandoned their cars for public transportation.
Leitner also says the government must avoid establishing a "renewable-energy portfolio" dictating the percent of power than must come from various sources like solar and wind. "Let the market respond to the price signal," he urges Congress.
Leitner favors a regime that would have a cap-and-trade system for registered, fixed-place emitters and a simple carbon tax for the rest of us.
The public will not stand for such a tax if it does not perceive that it's getting something in return. He suggests using the proceeds to fund "sacred programs" like benefits for veterans, something no future politician in his right mind would consider rolling back.
Leitner sees a payoff for our children and grandchildren. Although the start-up costs for solar-trough and wind power are high, longer term, the cost of producing energy in these systems is practically free, he says. He points to the big dams built by the U.S. in the 1930s. They were paid off long ago, but are still operating and producing power at nearly zero cost.
E-mail: jim.mctague@barrons.com
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