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1 Brooke R. Hea ton , Robert Bosch Fellow 2009-10 Transatlantic Leadership for Clean Energy Solutions
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Transatlantic Leadership for Clean Energy Solutions

Jan 18, 2015

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BrookeHeaton

This paper was produced as the final analytical report under the auspices of the Robert Bosch Fellowship Program 2009-2010.
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Page 1: Transatlantic Leadership for Clean Energy Solutions

1

Brooke R. Heaton, Robert Bosch Fellow 2009-10

Transatlantic Leadership

for Clean Energy Solutions

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About This Report

This report was written as a substantive analysis to fulfill the requirements of the Robert Bosch Foundation Fellowship.

The Bosch Foundation Fellowship Program is a distinguished transatlantic initiative that each year offers twenty

accomplished young Americans the opportunity to complete a high-level professional development program in

Germany. Over the course of a nine-month program, Bosch Fellows complete two work phases at leading German

institutions, both customized to each fellow’s professional expertise, and attend three seminars with key decision-

makers from the public and private sectors, taking place across Europe. Fellows are recruited from business

administration, journalism, law, public policy and closely related fields.

The issue of international cooperation on clean energy policy was the primary focus of my work experiences in Germany,

where I performed two work placements. The first of these placements was at the German Ministry for the

Environment in a division focusing on transatlantic cooperation on renewable energy and other efforts such as the

Major Economies Forum and International Renewable Energy Agency. The second of these placements was with the

First Solar Government Affairs office in Berlin. All opinions and contents within this report are the personal

responsibility of the author and do not necessarily reflect the views of the Robert Bosch Foundation.

Author Contact Information:

Brooke R. Heaton

[email protected]

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Contents

The Climate and Energy Dilemma ........................................................................................................................................... 5

Reversing Climate Challenge: A Titanic U-turn ....................................................................................................................... 8

Beyond Clean: Building Security, Independence and Growth with Low-carbon Energy ...................................................... 12

National Security ............................................................................................................................................................... 12

Price Stability .................................................................................................................................................................... 13

Environmental Quality ...................................................................................................................................................... 14

Economic Competitiveness ............................................................................................................................................... 15

Clean Energy Technologies: Harnessing limitless sources with innovation .......................................................................... 17

Energy Efficiency ............................................................................................................................................................... 18

Carbon Capture and Sequestration (CCS) ......................................................................................................................... 18

Solar Energy ...................................................................................................................................................................... 18

Wind Energy ...................................................................................................................................................................... 19

Biomass Energy ................................................................................................................................................................. 19

Hydrogen Energy ............................................................................................................................................................... 19

Geothermal Energy ........................................................................................................................................................... 20

Hydropower and Ocean Energy ........................................................................................................................................ 20

Smart Grid Systems ........................................................................................................................................................... 21

Electric Vehicles (EV) ......................................................................................................................................................... 22

District Heating and Cooling ............................................................................................................................................. 22

Energy and Climate Laws in the US and Europe: Divergent Paths ........................................................................................ 22

US Climate and Clean Energy Policies ............................................................................................................................... 23

National Policies and Programs for Clean Energy Technologies ....................................................................................... 23

US Regional Cooperation on Climate ................................................................................................................................ 24

States – Leading US Clean Energy Policies .................................................................................................................... 25

Local Governments – Sustainable Grassroots Efforts ................................................................................................... 26

EU Climate and Clean Energy Policies ............................................................................................................................... 27

Germany, Spain and Denmark – European Clean Energy Success Stories........................................................................ 29

Germany ........................................................................................................................................................................ 29

Spain .............................................................................................................................................................................. 32

Denmark ........................................................................................................................................................................ 33

International Climate and Clean Energy Efforts.................................................................................................................... 37

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UN ..................................................................................................................................................................................... 37

International Energy Agency (IEA) .................................................................................................................................... 38

International Renewable Energy Agency (IRENA) ............................................................................................................. 39

Group of 20 (G20) ............................................................................................................................................................. 40

Major Economies Forum ................................................................................................................................................... 41

Climate Technology Fund .................................................................................................................................................. 41

US-EU Summit ................................................................................................................................................................... 42

Transatlantic Energy Council ............................................................................................................................................. 43

Transatlantic Business Dialogue........................................................................................................................................ 44

Transatlantic Consumer Dialogue ..................................................................................................................................... 44

NGOs and Civil Society ...................................................................................................................................................... 45

NOTES .................................................................................................................................................................................... 51

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The recent surge of support for “green growth” and a “clean energy economy” in the United States offers a critical and

urgent opportunity to forge a robust transatlantic pact to end our fossil fuel addiction and promote long-term

economic growth through clean and sustainable energy. Although the malaise and disappointment of the COP15

climate summit in December 2009 casts a long shadow on current efforts to combat climate change (1)

, there remains

significant motivation in the transatlantic community to promote policies at national and state levels to rapidly

deploy renewable energy and energy efficiency technologies (2)

. From Southern California to Eastern Europe,

innovative businesses are taking advantage of fertile economic and political frameworks to develop solar, wind and

geothermal energy and to reduce energy consumption through efficiency and conservation (3)

. Though clean energy

firms have proven resilient in the challenging climate of the economic crisis (4)

, international cooperation efforts led by

the US and Europe must be redoubled and a range of collaborative initiatives to share experiences and best practices

must be pursued.

The Climate and Energy Dilemma

As the world’s population hurdles rapidly toward 9 billion inhabitants within the next century (5) nations face a

seemingly impossible task of caring for their citizens while scrambling for increasingly scarce resources. Chief

among these is the energy required to fuel an insatiable global appetite for higher standards of living, inflated

resource consumption, and fast-growing demand in emerging economies like India and China. Yet, the cost of

energy cannot be measured in dollars alone. For nearly two centuries, the fuels that drove industrialization

have slowly disrupted the earth’s climatic balance – a global “tragedy of the commons” that is warming our

planet’s atmosphere, threatening to flood coastal communities, starve rural populations, and permanently

change our oceans and ecosystems if action is not taken to reverse course (Figure 1) (6). Scientists warn that

there is a clear point of no return - 350 parts per million (ppm) of atmospheric C02, beyond which

environmental impacts would be devastating. Worryingly, we have already surpassed this point and are in

dire need to reverse course to avoid dangerous tipping points with irreversible and catastrophic impacts in our

way of life.

Despite over two decades of scientific consensus on the link between ‘greenhouse gases’ released by burning

oil, coal and other fossil fuels, and global climate change, no binding global treaty to regulate this destructive

trend is in force (7). The Kyoto Protocol, an international agreement concluded in 1997 set binding targets for

37 industrialized countries and the European Union, offering a major first step (8), however the United States

and emerging economies like China and India did not agree to its terms. As the Kyoto Protocol nears

expiration in 2012, it is more important than ever for the world’s most developed nations to offer bold and

unwavering leadership and consensus to transition the global economy to sustainable energy and curb the

earth’s rising temperatures. With new US leadership dedicated to joining a global agreement while

aggressively promoting a “clean energy economy” there is significant potential to reach this consensus (9).

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Figure 1: Global Mean Surface Temperature 1880-2010. In 2010, the Earth’s temperature was roughly 0.5 degrees Celsius above the long-term (1951–1980) average.

(Source: NASA figure adapted from Goddard Institute for Space Studies Surface Temperature Analysis)

The Obama Administration’s commitment to sign a post-Kyoto treaty and promote clean energy through

robust policy measures offers a welcomed change of pace from the denial and inertia of the George W. Bush

era when neither congress nor the President had the political will and wisdom to overhaul the nation’s fossil

fuel addiction (10) (11). Intimate links between the fossil fuel industry and the White House under the Bush

Administration were met with generous support for oil, natural gas and coal producers and a loosening of

federal regulation on practices like off-shore drilling (10) (12) (13). Though many of these links have been severed,

public opinion and congressional leadership on energy transformation are continually undermined by partisan

politics and dubious disinformation campaigns driven by the fossil fuel lobby (14). This lobby continues to

outspend environmental and clean energy groups ten to one (14). Though the election of Barack Obama and a

Democratic majority in congress opened a window of opportunity to work Europe on this transformation,

many obstacles remain. The Obama Administration continues to be shackled by the absence of congressional

legislation on energy and climate and, lacking a national bill with clear emission caps and renewable energy

targets, robust US-European cooperation faces some formidable obstacles (15).

Nevertheless, it is more critical than ever that the United States and Europe develop consensus by exchanging

knowledge and experiences on climate and energy issues while better coordinating policies and standards at

the local and federal levels. Comprising a market that is the world’s largest (16) and built on a foundation

industrial carbon-debt (17), the United States and Europe have a moral imperative to display leadership and

historical accountability by developing effective policies and practices to deploy clean energy technologies,

like wind, solar and geothermal energy. They also possess the resources to promote investment into energy

efficiency and conservation practices at a level need to truly change the global market.

In addition, the US and Europe must work together to develop a more unified position toward a global cap on

greenhouse gas emission through an international treaty that includes emerging economies and significant

assistance to developing nations. Though it is unlikely that a breakthrough will be reached at the Cancun

COP16 climate meeting in Cancun, Mexico this November (18), the US and Europe must continue to cooperate

to ensure that commitments made at the COP15 meeting in Copenhagen are realized and resolve the

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enduring political rifts on matters related to monitoring and verification of greenhouse gas emissions and

assistance to developing nations.

While political divisions garnered much attention following the COP15 summit, the rapid acceleration of the

clean energy market and clean energy installations has widely been overlooked. Despite wrangling between

the US, the EU and China over long-term limits on CO2 emissions (19), a host innovative start-ups and industrial

giants have begun to race for the lead in the lucrative market for renewable and efficient energy products.

From German manufacturing giants like Siemens to Silicon Valley newcomers like Bloom Energy, companies

around the world are developing innovative ways to generate and save energy while reaping rewards from

venture capital investors and public funds. In fact, as the global economic crisis went into full swing in 2008,

the clean energy sector continued its growth throughout the US and Europe as other sectors shrank. The US

clean energy sector remained resilient as companies set up shop in Texas, Iowa, Ohio and Michigan converting

once skeptical politicians to champions of green growth. Senior GOP leaders like Senator Charles Grassley of

Iowa, California Governor Arnold Schwarzenegger and South Dakota Congressman John Thune of have all

witnessed the rewards that can be reaped by investing in the natural and sustainable energy resources of their

states and are clear in their support for national climate and energy legislation.

Behind the dismal response to the COP15 meeting, the vibrant growth of the renewable energy sector in 2009

offers a refreshing contrast. Despite the strong headwinds of the economic crisis, more funding was invested

into renewable energy projects than in fossil fuels projects around the world in 2009 - this for the second year

in a row (3) (20). By 2009 more than 100 countries had established policy targets or incentives to deploy clean

energy compared with just 55 countries in 2005, a near doubling in just four years. Also in 2009 new

installations of wind solar power reached a record high with renewable power sources accounting for more

than half of new installed power capacity in the US and EU (3). Indeed, the strong acceleration in the clean

energy sector is highly encouraging and offers reassurance to communities looking for ways to build jobs and

businesses.

These positive trends will likely continue their current trajectory in the near-term; however they must be

bolstered and enhanced by targeted actions and programs if the world to commence a downward trajectory

toward 350 ppm of CO2. This will require far more than ‘business as usual’ efforts. Further action must be

taken to ensure that clean energy become the power the drives the future economy.

To ensure this, resources must be invested into international collaboration and cooperation on effective

policies, accelerated trade and facilitation of knowledge transfer between nations and markets. Scientists,

engineers, policymakers, business leaders, students and journalists all play a central role in this

transformation. Looking at current efforts led by international organizations, bilateral partnerships, NGOs and

global firms, a range of excellent ‘best practice’ examples stand out as models to be replicated. Inspired by

these practices, the US and Europe must lead the way through closer consultation, exchange of ideas, and

collaboration on plans for clean energy success.

Closer coordination will require focusing greater attention at all levels of governance and civil society. Key US

and European agencies can help steer these efforts by supporting the work of international organizations and

providing guidance to state and local leaders. NGOs can facilitate better exchange of data, ideas and expertise

while universities provide curricula and exchange programs that will better prepare the future leaders of the

clean energy transformation. Civil society forums can also help identify roadblocks to faster clean energy

deployment such as improved standards and permitting for clean energy installations, financial hurdles for

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consumers, better urban planning and transport systems and better labeling for green products. International

Organizations can also provide impetus to speed up this process by surveying the global market and policy

landscape and providing information to national officials and investors eager to find opportunities to invest in

the lucrative clean energy market. Through innovative concepts like farmer and engineer exchanges, “green”

study-abroad programs, “green public procurement”, renewable energy atlases, indices, and databases as well

as clean energy blogs, conferences, and tours, the transatlantic community can help broaden awareness and

appreciation of the value of renewable energy and promote growth in markets for clean tech goods and

services.

Reversing Climate Challenge: A Titanic U-turn

The global challenges presented by climate change are formidable. The International Panel on Climate Change

(IPCC)i, the scientific body of experts that releases regular evaluations on the impact of greenhouse gasesii on

the earth’s climate, has warned the international community in four reviews since 1990 that the earth’s

surface temperature has already increased between 0.3 and 0.6 °C since the late 19th century and could rise

by between 1.1 and 6.4 °C during the 21st century due to the “greenhouse effect” (21). Though CO2 and other

greenhouse gases are emitted by the earth’s natural systems, the IPCC has conclusively concluded that human

activities are the primary source of recent temperature increase and other climatic anomalies. They note that

a large part of this trend is caused by the disruption of the earth’s natural ‘carbon cycle’ whereby CO2 is

released and reabsorbed by so-called ‘carbon sinks’ such as rainforests. Eighty-five percent of these manmade

emissions are due to the burning of fossil fuels, while changes in land use and deforestation account for the

remaining 15% (22). Left unabated, these climate trends will accelerate, increasing the risk of abrupt and

irreversible impacts.

Recent reports from meteorological and climate scholars have remarked that current trends are already

nearing the ‘worse case’ scenarios outlined by the IPCC in their four reports (22). The scientists observed that

the earth’s temperature is increasing at a staggering rate, noting that eleven of the twelve years in the period

from 1995–2006 were among the twelve warmest years on record (since 1850) (21). Alarmingly, there is a

strong likelihood of immediate impacts and numerous climate anomalies can already be seen. A key worry is

the melting of the earth’s arctic ice sheets, which could cause sea levels to rise by 18 to 59 cm (21). The IPCC

also warns of more erratic climatic behavior, including frequent warm spells, heat waves, heavy rainfall, and

an increase in droughts, tropical cyclones, and extreme high tides. Additional changes will occur in the earth’s

i The Intergovernmental Panel on Climate Change is the leading body for the assessment of climate change, established by the United Nations

Environment Programme (UNEP) and the World Meteorological Organization (WMO) in 1988. It provides the world with a clear scientific view on

the current state of climate change and its potential environmental and socio-economic consequences. Thousands of scientists from all over the

world contribute to the work of the IPCC on a voluntary basis and a main activity of the IPCC is publishing special reports on topics relevant to the

implementation of the UN Framework Convention on Climate Change (UNFCCC). The IPCC bases its assessment mainly on peer reviewed and

published scientific literature. National and international responses to climate change generally regard the UN climate panel as authoritative. ii Greenhouse gases, including Water vapor (H2O), carbon dioxide (CO2), nitrous oxide (N2O), methane (CH4) and ozone (O3) effectively absorb

thermal infrared radiation, emitted by the Earth’s surface, by the atmosphere itself. Atmospheric radiation is emitted to all sides, including

downward to the Earth’s surface. Thus greenhouse gases trap heat within the surface-troposphere system through the “greenhouse effect”. An

increase in the concentration of greenhouse gases leads to an increased infrared opacity of the atmosphere, and therefore to an effective radiation

into space from a higher altitude at a lower temperature. This causes a radiative forcing that leads to an enhancement of the greenhouse effect,

the so-called enhanced greenhouse effect. (220)

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oceans as their temperature rises, resulting in changing ocean currents. In fact, the ocean has been absorbing

more than 80% of the heat added to the climate system leading to temperatures increased to depths of at

least 3000 m. Furthermore, the increased proportion of CO2 in the atmosphere is leading to ocean

acidification, a trend that, when combined with changing ocean currents can have profound impact on marine

nutrition, life-cycles and ecosystems. These trends will inevitably damage or destroy coral reefs and the many

species of marine life that inhabit or depend upon the ecosystem services of the reefs (22).

Figure 2: Climatic Stabilization scenario categories (colored bands) and their relationship to equilibrium global mean temperature change above

pre-industrial levels. In order to stabilize the concentration of GHGs in the atmosphere, emissions would need to peak and decline thereafter. The

lower the stabilization level, the more quickly this peak and decline would need to occur. (Source: IPCC AR4, WGIII, Summary for Policy Makers)

The chain of events and reactions that this dangerous process is beginning to trigger are startling and should

be of grave concern to citizens and policy makers. To stem this process, bold, concerted collective action must

be taken at all levels of society and government. There will inevitably be great sacrifices to be made if the

international community is to preserve and protect the natural resources and processes that make our current way of

living and working possible. Absence of robust action, significant economic consequences will be paid.

The good news is that many of the tools that will be needed to respond to these threats already exist. The

challenge is finding the political will needed to implement the changes necessary to bring newer and better

technologies. If society wants to avoid even more serious, and in most cases, irreversible impacts of climate

change, then there is very little time left and governments at all levels must begin devising plans and policies

that will contribute to a new global push to clean up our energy habits and develop new ways of consuming

and living that do not emit greenhouse gases. Doing so will require innovative plans that harness the power of

the market by incentivizing transitions to new energy systems and savings through efficiency.

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As figure 3 illustrates, there is significant room for improvement if the world is to flatten out its levels of CO2

to below 350 ppm. Carbon emissions from fossil fuel burning are projected to double in the next 50 years,

keeping the world on course to more than triple the atmosphere’s carbon dioxide concentration from its pre-

industrial level. This course would to lead to dangerous levels of global warming by the end of the century. If

emission rates are kept flat over the next 50 years (orange line) then the negative impacts of climate change

can be mitigated. The flat path, followed by emissions reductions later in the century would to limit CO2 rise to

less than a doubling and skirt the worst predicted consequences of climate change.

But flattening off CO2 for 50 years would require reducing our projected carbon output by roughly 7 billion

tons per year by 2054, preventing 175 billion tons of carbon from entering the atmosphere (yellow triangle).

Filling in this “stabilization triangle” while fulfilling global energy needs will require the world to find energy

technologies that emit little to no carbon and develop the capacity for carbon storage.

Responding to the call for innovative solutions to this global dilemma, a number of institutions and scholars

have proposed forward thinking and groundbreaking concepts. One such report that has garnered much

attention due to its depth and clarity is the McKinsey & Associates report “Pathways to a Low Carbon

Economy” (23). Providing policy makers an in-depth set of information on the efficacy of various actions to

lower greenhouse gas emission, the report offers a sober and meticulous inventory of potential changes that

can be made by national, state and local actors. This detailed how-to guide to build a low-carbon economy

weighs the significance and cost of each possible method of reducing emissions and the relative importance of

different regions and sectors. The report also provides important information for business leaders to help

them understand the implications of potential regulatory actions for companies and industries (23).

The report is clear that with appropriate action, greenhouse gas emissions could be lowered by over one-third

by 2030 from 1990 levels, in order to limit global warming to a 2 °C increase from pre-industrial levels. It

outlines over 200 greenhouse gas abatement opportunities across 10 economic sectors and 21 world regions

and concludes that the annual cost of reducing greenhouse gas emissions to 35-40% below 1990 levels by

Figure 3: The "Stabilization Triangle" produced by the Princeton University Carbon Mitigation Initiative. A

current path climbing upward from 1.9 Billion Tons of Carbon Emitted per year in 1954, to 14 Billion of Tons

by 2054 would tripling CO2 in the atmosphere. To avoid doubling CO2, a "flat Path" at 8 Billions of Tons

Carbon Emitted per year must be achieved by a combination of various adaptation strategies.

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2030 would be $260 to 450 billion – or less than 1 percent of forecasted global gross domestic product in

2030.

A highly encouraging aspect of the McKinsey report is that a great number of changes could come at no cost at

all and can, in fact, save money. As the global greenhouse gas abatement cost curve below shows, nearly 20

different sector changes would result in a net gain for businesses and consumers. From waste recycling to

utilizing hybrid cars and more efficient appliances, tackling global climate change will not always be expensive

(23). In fact, the first course of action, according to the McKinsey report is to focus efforts fast and furiously on

energy efficiency. By increasing the energy efficiency of vehicles, buildings, and industrial equipment while

shifting to low-carbon energy alternatives such as wind, nuclear, hydro, and carbon capture technologies,

consumers will be able to see some direct saving on their energy bills.

Accomplishing this ambitious plan laid out will not be easy. To do so, global consumers will need to

purchase42 million hybrid vehicle, land areas equivalent to the size of India will need to be reforested and

deforestation must be prevented on another 170 million hectares (23). Meeting these goals would also require

an increase in the world’s relative share of low-carbon electricity from 30% to 70%. If implemented the plan

would increase global carbon productivityiii from around 1.2% to 5-7%. While the plan does present a number

of questions about how to achieve these tasks, it does provide a general roadmap that can inform a broader

discussion by national leaders.

There are five areas on which we should focus. First, boosting energy efficiency could cut global energy

demand by 20-24 percent of projected 2020 demand. Second, to reduce emissions by one-fifth of current

levels by 2020, the carbon productivity of energy sources must increase by two-thirds. Third, additional

investment in R&D and incentives to boost innovation will be necessary. Fourth, companies and governments

iii Carbon productivity is the amount of GDP produced per unit of carbon equivalents (CO2e) emitted.

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can do more to educate consumers on "green" behavior. Fifth, forestation and avoided forestation offer the

largest abatement lever at 25 percent of the global total under €40 per ton. (24)

Beyond Clean: Building Security, Independence and Growth with Low-carbon Energy

Although the threat of global climate change and the resulting ecological, agricultural and economic damage

present ample reason to kick-start an accelerated move away from fossil fuels, it is not the only motive. A

host of other reasons could convince even the most hardened skeptics of climate change to champion a clean

energy transformation. Linkages between national security and energy supply, our growing foreign

dependence, instability of fuel prices and threats to national economic competitiveness all present convincing

motivations to speed up our national energy transformation. From cutting off the source of funding for

Islamic fundamentalist networks to improving human health and gaining an edge in the global race of the

clean tech market, there are many reasons to support policies promoting a clean energy transformation.

National Security

Even for those unconcerned or unconvinced of global warming’s impact on our fragile atmosphere, there is

irrefutable evidence that national fossil fuel addiction is increasingly dangerous and destructive. In a famous

essay drafted in the January 1999 addition of Foreign Affairs, US Senator Richard Lugar (R-IN) and former CIA

Director James Woolsey made the case that oil is a magnet for conflict. Noting that over two-thirds of the

world’s oil reserves lie in the Middle East, US dependence on oil makes it highly dependent on a number of

autocrats and dictators in the region. As a result, Lugar and Woolsey argued that US oil dependence continues

to prop up highly undemocratic regimes driven more by a desire to control valuable resources than to provide

for their citizens (25). In fact, the authors note, the US intervention in Iraq in 1990 was triggered by Saddam

Hussein’s attempt to seize oil resources from neighboring Kuwait, a maneuver that proved costly to the lives

of US servicemen. Lugar and Woolsey make the case that the US must aggressively pursue alternative sources

of liquid fuels in order to cut off this cycle of dependence that has required the US to maintain a military

presence in the region for decades (25).

Echoing these sentiments six years later, Thomas Friedman penned an essay in Foreign Affairs titled “The First

Law of Petropolitics” arguing that the pace of democratic reform in oil producing nations moves inversely with

the price of oil (26). As the global market pushes the price of oil upward, oil-rich petrolist states begin to repress

freedom of speech and the press, halt free and fair elections, and erode the independent judiciary, rule of law,

and independent political parties. As a result, the bottomless demand for oil in the United States means the

American’s are unintentionally but inevitable eroding the movement toward democratic reform in these

countries.

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Friedman returned to this argument with his 2008 book “Hot, Flat, and Crowded”. Picking up on the problem

of petropolitics, Friedman makes the case the current global struggle against Islamic fundamentalism is being

exacerbated by the flow of money from oil consuming states to oil producing states in the Middle East. As

leaders in countries like Saudi Arabia funnel cash from oil exports to support fundamentalist schools and

organizations throughout the Middle East, Americans and Europeans become targets for terrorist attacks. In

addition to strengthening the “most intolerant, anti-modern, anti-Western, anti-women's rights, and anti-

pluralistic strain of Islam”, Friedman argues, we are funding both sides of the war on terror. By enriching

conservative, Islamic governments in the Persian Gulf that share their windfalls with charities, mosques,

religious schools, and individuals in Saudi Arabia, the United Arab Emirates, Qatar, Dubai, Kuwait, and around

the Muslim world, American and European wealth is eventually passed on to anti-American terrorist groups,

suicide bombers, and preachers (27).

This rather unsustainable trend means that Americans and Europeans are financing their enemies' armies as

well as their own. While financing national armies and NATO operations in Afghanistan, Pakistan and Iraq with

tax dollars, the transatlantic community is indirectly financing al-Qaeda, Hamas, Hezbollah, and Islamic Jihad

with imported petroleum. In addition to being an environmental necessity, kicking the fossil fuel habit has

become a strategic imperative. By reducing global demand for oil and gas, the US and Europe can help

promote a more democratic, more stable and more peaceful future.

Price Stability

As commodities on the global market that are extracted, processed, transported and sold to consumers, fossil

fuels are highly vulnerable to price changes due to shifts in supply, transport and speculation in futures

markets. This vulnerability can have devastating impacts on consumers, leading to unaffordable prices for

consumers. While this may lead to some desired shifts in behavior to decrease fossil fuel consumption and to

use public transportation, these shifts are risky and destabilizing to national economies. Moving toward

cleaner, domestic energy sources would remove the great degree of uncertainty about energy cost and access

and would produce a stable and predictable price measure.

The incredible impact that prices instability can have on national economies was illustrated all too well by the

1973 OAPEC oil embargo. After years of cheap and stable oil imports by the US and European nationsiv, a

global crisis was unleashed in October 1973 when the members of Organization of Arab Petroleum Exporting

Countries proclaimed an oil embargo in response to the U.S. decision to re-supply the Israeli military during

the Yom Kippur war. Aiming to leverage influence over U.S. foreign policy in the Middle East, OAPEC members

demanded a peaceful resolution to the Arab-Israeli conflict that had been inflamed by Israeli occupation of the

Sinai Peninsula and Golan Heights.

Following a joint surprise attack by Egypt and Syria against the Israel occupied Sinai Peninsula, Israel

responded with a four-day counter-offensive. As a key ally in the Middle East, the US offered significant aid to

Israel and air-lift to replace Israeli military losses. These actions triggered a collective OAPEC response

iv From 1947-1967 the price of oil in U.S. dollars had risen by less than two percent per year. Until the Oil Shock, the price

remained fairly stable versus other currencies and commodities, but suddenly became extremely volatile thereafter. (227)

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including an embargo of all oil shipments to the United States, which they viewed as a “principal hostile

country”. The embargo was variously extended to Western Europe and Japan and the market price for oil rose

substantially, from $3 a barrel to $12 (Figure 4).

The increase in the global price led massive shortages in the U.S. and prices to levels previously thought

impossible. Customers experienced lines and empty pumps at the gas. By December 1973, the situation was

so desperate that US President Richard Nixon announced that the lights on the national Christmas tree would

not be turned on (28). The crisis shifted energy to the center of public attention and, combined with an ongoing

economic recession, led to a reassessment of America's strategic position in the world (28).

Figure 4: Oil prices from 1861–2007, showing a sharp increase in the 1973 and 1979 energy crises. The orange line is adjusted for inflation. Source: US Energy

Information Administration

For nearly a decade following the 1973 embargo, the price of oil climbed, putting excessive pressure on

consumers and leading to a national wake-up call. In the aftermath of the crisis, industrialized nations took

steps to define principles for international cooperation and to identify solutions for the major challenges that

confronted the global energy system. In November 1974, the International Energy Agency (IEA) was

established within the framework of the Organization of Economic Cooperation and Development with a

broad mandate to promote improved energy security through cooperation on energy policy between major

consuming nations (29). In addition to coordinating information and policy, the IEA nations established a

requirement of all members to maintain national oil reserves sufficient to sustain consumption for at least 60

days with no net oil imports, leading to national petroleum reserve systems (30).

As the experience of the 1973 embargo and subsequent oil shocks in 1979 and 2007 illustrate, there is great reason for

concern for nations that rely heavily upon imported fuel sources. In addition to the dangers presented to national

security outlined above, these fuels pose a significant threat to economic security. Moving away from dirty, imported

fuels to a system of domestically produced energy from clean, renewable sources will bolster national economic security

and provide a predictable means to drive future growth without risk of interruption.

Environmental Quality

Fossil fuels pose a danger not only to national and economic security, but also to the quality of human health.

Through the process of transporting, processing and burning fossil fuels, an array of damaging effects are

unleashed. From vast oil spills that impact local communities and waterways for decades to clouds of smog

Price Shocks

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hovering over urban centers to prolonged and even deadly sickness, our fossil fuel habits have a number of

hidden costs that are paid for by diminished quality of life.

As a result of burning fossil fuels like oil, coal, or natural gas, numerous toxins are released. These include

carbon monoxide, nitrogen oxides, sulfur oxides, and hydrocarbons. Inhaling these chemicals can significantly

damage human health and the accumulation of these particles in the air can significantly reduce on air, land,

and water quality. Nitrogen oxides and hydrocarbons can build-up in the atmosphere to form tropospheric

ozone, leading to permanent lung damage, smog, and even reduced cop yields (31). Inhaling the accumulated

exhaust from automobiles, power plants and other industrial sites can lead to a range of health problems such

as headaches, lung damage, bronchitis, pneumonia and heart disease. Inhaling these pollutants can also

impair the immune systems, leaving the body vulnerable to more health problems. In the US, the

transportation sector is responsible for close to half of all emissions of nitrogen oxides while power plants

produce most of the rest (31).

In addition to burning fuels, the process of producing and transporting them can also lead to significant

pollution and damage to waterways and land. Oil spills, like the massive leak from a BP offshore well that

spewed oil for months during the spring and summer of 2010, can leave waterways and their surrounding

shores uninhabitable for some time. Oil spills also lead to the loss of plant and animal life and can cause

disruptions to the local economies of coastal areas. They are also very costly. The BP catastrophe of 2010 has

been estimated to have cost over $30 billion, including cleanup costs and losses to local fisherman, shrimpers

and beaches (32).

Beyond the threat that coal poses to the lives of miners, thousands of whom have lost their lives from ‘black

lung’ (33) or collapsed mines (34), coal has many damaging impacts on the environment. The most extreme

environmental damage is caused by coal mining, especially strip mining. After mining is completed, lands

around the mine often remain barren. Materials other than coal can rise to the surface in the process and are

left as solid waste. When water washes through a coal mine a dilute acid is formed and can wash into nearby

rivers and streams. In washing the coal for later use more waste material is left. Finally, when coal is burned,

the remaining ash is left as a waste product (31).

Unfortunately, a history of lax or nonexistent regulations and weak oversight has meant that many of the

hidden environmental consequences of fossil fuels have gone unchecked. The expenses for the myriad of

health problems and environmental damage have gone unpaid, resulting in a massive market failure that has

to date, not been fully corrected. While environmental regulations are being increasingly put in place to

protect individuals from the damage caused by fossil fuels, their low cost and near-term abundance means

that they will be around for some time to come. Nevertheless, the advantage of clean energy technologies

over their dirtier peers offers a sobering reason to switch to cleaner and greener pastures.

Economic Competitiveness

In sheer economic terms, clean energy solutions make bottom line sense. From the cost of adjusting to the

effects of climate change to the potential to save consumers on their energy bills, to the need to create high-

skilled jobs in areas hit by the economic crisis, there is no shortage of economic motivators for a clean energy

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transformation. There are scores of success stories of bright, innovative ideas leading to smart new products

that can produce cheaper and cleaner energy and do it more efficiently. The global market for such products

is growing fierce so that policies that are put in place today will decide who dominates the market tomorrow.

As companies look for welcoming nations to set up their shops, the US and Europe will have to keep pace with

competitors in Asia who have embraced renewable energy technologies as the way of the future and are

willing to back this up with robust government support.

A key economic motivation to transition to cleaner and more efficient power supply is avoiding the economic

damage that may be wrought by climate change. The high price of preventing a global climate catastrophe

has been intricately detailed by Sir Nicholas Stern in his famous reportv in which he argues that strong, early

action on climate change considerably outweighs the costs of inaction. The Stern Review proposes that one

percent of global gross domestic product (GDP) must be invested in order to avoid the worst effects of climate

change, and that failure to do so could risk sinking global GDP to 20% lower than it otherwise might be (35).

This figure has most recently been increased to 2% percent of GDP due to the continued worsening of the

earth’s climatic balance and reticence from the world’s biggest green-house gas emitters to take action.

Another major economic incentive to change paths is the potential to spur ‘green growth’ with investment

into clean energy ventures. With global investment in renewable energy projects rapidly increasing,

communities are hoping to win over potential companies and firms by offering a

$162 billion. Investment only fell 6.6% from 2008 - small potatoes compared to the 19% decrease in the oil

and gas industry. Investment next year should reverse and make a huge leap forward. Global renewable

energy investment expectations for 2010 are $200 billion, up 25% from last year, according to Bloomberg New

Energy Finance. It's not a passionate movement to save the earth that's behind the clean energy market; its

market competition and job creation driving the clean energy race - and the United States is losing. Prices of

renewable technologies are decreasing, making them more competitive. If climate concern isn't enough

motivation to encourage use, economic and employment benefits will.

v The Stern Review on the Economics of Climate Change is a 700-page report released for the British government on October 30, 2006 by economist Nicholas Stern,

chair of the Grantham Research Institute on Climate Change and the Environment at the London School of Economics. The report discusses the effect of global

warming on the world economy. It is the largest and most widely known and discussed report of its kind and argues that climate change is the greatest and widest-

ranging market failure ever seen, presenting a unique challenge for economics

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Clean Energy Technologies: Harnessing limitless sources with innovation

A central problem with dependence on fossil fuels for national energy production is that the sources for fossil

fuels are finite and due to reach peak levels within a generation. Clean energy technologies offer relief from

this unsustainable scenario and lift national addictions to external resources by conserving resources and

harnessing the earth’s natural processes for virtually limitless supplies of energy. The benefits of doing so are

numerous. By focusing on domestic resources and domestic innovation, nations can help build job

opportunities for local communities and help relieve national transmission and distribution systems by

diversifying energy resources. By harnessing locally generated electricity, residents and businesses will

become less vulnerable to large-scale blackouts caused by overly stressed grids and utilities.

A range of energy production technologies being developed over the last century are reaching levels of

maturity that will soon make them competitive with traditional fuels. These energy sources, when combined

with techniques that help save energy by squeezing more out of each unit of input, will provide the recipe

necessary to level-out and decrease green-house gas emissions. These innovations will also provide a more

sustainable supply by making national resources autonomous from outside forces or market speculation.

Finally, focusing on and perfecting these technologies will provide a competitive edge to nations hoping to eke

out a niche in high quality goods and services in the increasingly competitive global market.

The clean energy economy of tomorrow will focus on a range of emerging and established technologies.

While some current energy resources such as nuclear fission and natural gas will be needed as bridging

technologies, the energy revolution will be driven by energy efficient measures, carbon capture and

sequestration, solar energy, wind energy, biomass energy, hydrogen energy, geothermal energy, hydropower

and ocean energy, smart grid systems, electric vehicles and community heating and cooling.

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Figure 5: Greenhouse Gas stabilization 'wedge' to 2050 utilzing a range of clean energy technologies

Energy Efficiency

Using less energy to provide the same level of energy service in various ways, from heating and cooling homes

to providing light for office buildings to getting more mileage out of a tank of gas. For example, insulating a

home allows a building to use less heating and cooling energy to achieve and maintain a comfortable

temperature and installing LED lights and/or skylights instead of incandescent lights can achieve the level of

illumination while using far less energy. Getting more out of each unit of energy input can help reduce global

greenhouse gas emissions by millions of tons per year. Many

reports estimate that energy efficiency measures will provide the

largest return on investment of all clean energy technology

measures.

Carbon Capture and Sequestration (CCS)

CCS is a broad term for technologies used to capture CO2 from

point sources, such as power plants and other industrial facilities,

compress it and transport it mainly by pipeline to suitable

locations where it can be injected it into deep subsurface

geological formations for indefinite isolation from the atmosphere. While CCS remains to be proven in large

scale commercial installations, it is widely seen to be a critical option in the portfolio of solutions available to

combat climate change, because it allows for significant reductions in CO2 emissions from currently available

and price-competitive fossil fuels (36). Like nuclear energy and lower-emission natural gas, CCS is likely be used

as a bridging technology until such point that renewable energy can cover 100% of consumer demand.

Solar Energy

Most renewable energy comes either directly or indirectly from the sun. Sunlight, or solar energy, can be used

directly for heating and lighting homes and other buildings, for generating electricity, and for hot water

heating, solar cooling, and a variety of commercial and industrial uses (37). Photovoltaic solar power is the

Figure 6: Global solar irradiance. Source: 3Trier Inc.

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energy created by converting solar energy into electricity using photovoltaic solar cells. Solar thermal energy is

the energy created by converting solar energy into heat. Concentrating solar power is a type of solar thermal

energy that is used to generate solar power electricity. This technology is aimed at large-scale energy

production. Because of this, as a homeowner, you won't use concentrated solar power directly, but could take

advantage of it through a green-pricing service offered by your regulated utility or an alternative energy

supplier. There are several solar applications a homeowner can use to take advantage of solar thermal

energy... Solar space heating Solar water heating Solar pool heating Solar thermal cooling.

Wind Energy

Wind energy uses ground or ocean mounted turbines to capture the wind currents driven by the earth’s

natural weather patterns. To generate electricity, wind rotates large blades on a turbine, which spin an

internal shaft connected to a generator. The generator produces electricity, the amount of which depends on

the size and scale of the turbine. Multiple wind turbine sizes are available from a few kilowatts to tens of

megawatts (MW). At the end of 2009, worldwide nameplate capacity of wind-powered generators was 159

gigawatts (GW). (38) Energy production was 340 TWh or about 2% of worldwide electricity usage (38) and is

growing rapidly, having doubled in the past three years. Several countries have achieved relatively high levels

of wind power penetration (with large governmental subsidies), such as 20% of stationary electricity

production in Denmark, 14% in Portugal and Spain, 11% in Republic of Ireland, and 8% in Germany in 2009 (39)

As of May 2009, 80 countries around the world are using wind power on a commercial basis. (38)

Biomass Energy

Biomass energy is fuel, heat, or electricity produced from organic materials such as plants, residues, and

waste. These organic materials span several sources, including agriculture, forestry, primary and secondary

mill residues, urban waste, landfill gases, wastewater treatment plants, and dedicated energy crops. Biomass

energy takes many forms and can have a wide variety of applications ranging including direct firing or co-firing

with fossil fuels for electricity to produce electricity, direct firing of boiler for heating or combined heat and

power (CHP). Biomass may also be converted into a gas or liquid to be burned as fuel, particularly in transport

(40).

Hydrogen Energy

Hydrogen is the most abundant element on the Earth. Though it does not occur naturally as a gas it can be

separated from other elements and be burned as a fuel or converted into electricity with pure water as its

only emission (37). Hydrogen has been proposed as a solution for transport fuel and as a fuel for large scale

power plants, utilizing Carbon Capture and Sequestration with hydrogen derived from coal or natural gas (41).

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Figure 7: Availability of Renewable Energy Compared to Current Energy Demand (German Federal Ministry for the Environment, 2007)

Geothermal Energy

Geothermal energy is produced from heat and hot water found within the earth. Geothermal energy can be

used to heat and cool air and water, as well as for electricity production. Geothermal resources can be at or

near the surface or miles deep in the earth. Geothermal systems move heat from these locations where it can

be used more efficiently for thermal or electrical energy applications. Geothermal systems include heat

pumps (GHPs) that use the ground, groundwater, or surface water as a heat source or heat sink as well as

direct-use applications that use hot water directly for space conditioning or process heat. Geothermal energy

may also be used to fuel utility scale power plants to generate electricity by leveraging heat from geothermal

resources to drive turbines (42).

Hydropower and Ocean Energy

Hydropower refers to various forms of renewable energy harnessed from the flow of water. Hydropower

dams generate electricity by harnessing the kinetic power of moving water with turbines. Oceanic forms of

energy include tidal power, tidal stream power and wave power. Tidal power harnesses the tides in a bay or

estuary with turbines that capture water entering and escaping the tidal barrage. Tidal stream generators

draw energy from currents in much the same way that wind generators do by capturing the flow of water with

turbines (43). Wave power harnesses power from ocean surface wave motion using floating devices or by

capturing the displaced by waves in hollow concrete structures. Using these three technologies, electricity can

be generated (44).

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Smart Grid Systems

Today’s electricity ‘grids’ – the network of electricity transmission stations and power lines that bring

electricity from power providers to consumers – were with technology that has been around for more than a

half-century – decades before the integrated circuit made things like laptops, iPhones and mp3s integral parts

of our lives. Whereas electronic and digital products have evolved greatly in sophistication and efficiency, the

power grid remains clumsy, inefficient and difficult to manage. With power producers unable to communicate

effectively with customers, it is difficult to introduce more effective way buying, selling and managing

electricity.

The ‘smart grid’ concept aims to solve this by harnessing the communicating power of information technology

with national electricity distribution. By installing smart meters capable of communicating with the source of

energy in their homes and business, consumers can better monitor their energy use against the price of

energy at any time of day. Smart grid technology does this by using uses information technologies to improve

how electricity travels from power plants to consumers and allowing them to interact with the grid. A smarter

grid will enable many benefits, including improved response to power demand, more intelligent management

of outages, better integration of renewable forms of energy, and the storage of electricity.

Up and down the electric power system, the Smart Grid will generate billions of data points from thousands of

system devices and hundreds of thousands of consumers. What makes this grid "smart" is the ability to sense,

monitor, and, in some cases, control (automatically or remotely) how the system operates or behaves under a

given set of conditions. In its most basic form, implementation of a smarter grid is adding intelligence to all

areas of the electric power system to optimize our use of electricity

.

Figure 8: Smart Grid: A Smart Power Grid incorporates information and communications technology into

every aspect of electricity generation, delivery and consumption in order to minimize environmental

impact, enhance markets, improve reliability and service, reduce costs and improve efficiency Source:

Electric Power Research Institute (http://www.smartgrid.epri.com/)

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Electric Vehicles (EV)

Electric vehicles are propelled by electric motors that derive power from rechargeable battery packs. Electric

vehicles offer a number of advantages over traditional internal combustion engines (ICEs). The motors in

electric vehicles are far more efficient than combustion engines as they convert over 75% of the chemical

energy from the batteries to power the wheels. Internal combustion engines (ICEs) convert a mere 20% of the

energy from gasoline. They also emit no exhaust from burning fuel. When powered with electricity from clean

energy sources. Importantly, electric vehicles do not rely on foreign oil and help reduce energy dependence.

Since electricity is a domestic energy source.

Currently, a number of barriers stand in the way of large-scale EV deployment, notably the significant battery

and driving range challenges. Most EVs can only go about 100–200 miles before recharging their batteries

while gasoline vehicles can go over 300 miles before refueling. Fully recharging the battery pack can take 4 to

8 hours and even a "quick charge" to 80% capacity can take 30 min. The batteries are also costly and bulky (45).

Future R&D and demonstration projects will be needed in order to help this technology become more mature.

For the moment, plug-in hybrid cars, which combine traditional combustion engines with battery back-up and

power generation are hitting the market and will help to increase fuel efficiency and save consumers at the

pump.

District Heating and Cooling

District Heating and Cooling (DHC) is an established technology that has proven to be a significant asset in

Greenhouse Gas (GHG)reduction. DHC involves the use of steam, hot water, or chilled water generated in a

centralized plant and transported to multiple other buildings, sometimes an entire town or community via an

underground pipeline system. DHC offers a highly reliable, efficient, cost-effective way to heat and cool

building without on-site boilers, furnaces, chillers, or air conditioners. (46). When combined with Combined

Heat and Power (CHP) technology to recapture heat that would otherwise be lost in the production of electric

power DHC can offer an ideal solution. DHC can also utilize biomass or biogas fuels and waste in order to

reduce carbon emissions and minimize resource depletion. Several countries such as Denmark are already

supplying urban centers with heat from waste burning CHP plants. (47).

Energy and Climate Laws in the US and Europe: Divergent Paths

Laws and policies promoting renewable energy and energy efficiency take very different shape and form in the

United States and European Union, with the US taking a decentralized ‘bottom up’ approach as the EU takes a

centralized ‘top down’ approach (48). This divergence is reflective of the different nature of governance

between the two polities as well as divergent political cultures, economic and legal institutions and resources.

While the US has generated far-reaching legislation on various environmental and energy matters, climate

change remains a highly controversial issue, leaving representatives in Congress vulnerable to a host of

interest groups vying for influence over the drafting of national legislation. American resistance toward non-

market based solutions as well as fears over the impact of increased costs for energy have hampered progress

on a national energy bill. In the EU, a unique system of ‘multi-layered governance’ allows for centralized

lawmaking on energy and climate matters that are implemented on the national level by member states.

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More ‘statist’ countries, like Germany or Denmark, have been able to implement highly centralized policies

that have had significant impacts on their national energy portfolios. While Europe has continued to ratchet

up its ambition at the supranational level, the US continues on a very federal path with individual states taking

the initiative with their own policies.

US Climate and Clean Energy Policies

While the US has been slow to develop far reaching legislation at the national level a great amount of activity

can be seen at the state and local level. Numerous states such as California, Iowa, Nevada, Vermont and New

York, have been tailoring their state laws in ways to encourage greater adoption of clean energy and energy

efficiency for a decade or more (49) (50). Furthermore, individual communities, such as Gainesville Florida, or San

Francisco are taking extra steps beyond state requirements to respond to residents’ concerns about climate

change and the need to reduce carbon emissions. Combined, these policies and programs create a complex

yet effective patchworkvi of action that is has led to dividends locally, investments in new businesses and

increased options for energy consumers (51).

National Policies and Programs for Clean Energy Technologies

Though individual states have served as the primary driver of US clean energy policies, the US federal

government offers significant incentives to businesses and individuals through federal tax credits, loan

guarantees, grants, funding for research and development and national standards for transportation. These

policies received a significant boost in 2009, as the Obama Administration and US Congress chose to boost

incentives for clean energy deployment through extensions of corporate tax credits and funding from the US

stimulus package. Through the American Recovery and Reinvestment Act over

A key piece of federal legislation that has helped boost recent investments into clean energy businesses and

increased solar, wind, geothermal biomass energy installations is the federal renewable electricity production

tax credit (PTC). The PTC is a per-kilowatt-hour tax credit for power generated by renewable energy

technologies that was originally introduced in 1992 and renewed and expanded numerous times, most

recently in February 2009. Under the PTC, companies that generate wind, solar, geothermal, and “closed-

loop”vii bio-energy are eligible for a 2.1 2.1-cent per kilowatt-hour (kWh) benefit for the first ten years of a

renewable energy facility's operation. Other technologies receive a reduced credit of 1.0 cent per kWh (52). In

2009, the credit was adapted in order to allow buyers of renewable energy technology to take a grant from

the US Treasury, in lieu of the tax credit. This change served to significantly boost the number of businesses

and individuals claiming the credit, as it allowed them to circumvent the rather shaky tax-credit equity market

that had dried up during the economic crisis. The PTC can be applied to federal tax liabilities dating from the

previous year and can be carried forward up to 20 years

Another significant federal incentive, the federal Business Energy Investment Tax Credit (ITC) is an incentive

that reduces federal income taxes for qualified tax-paying owners based on the amount investment in

renewable energy projects. This credit is earned once the renewable energy system is placed into service and

allows businesses and individuals to offset upfront investments in projects and provide an incentive to deploy

vi According to the Database of State Incentives for Renewables & Efficiency, there are over 2200 distinct state programs promoting clean energy technology. The

scope of this analysis does not permit an exhaustive discussion of these programs. vii

Not exposed to air.

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capital-intensive technologies, such as more costly solar photovoltaic systems and fuel cells. The ITC was

expanded significantly in 2009 and provides a premium credit to solar, geothermal and fuel cell technologies.

As with the PTC, the ITC can be applied to federal tax liabilities dating from the previous year and can be

carried forward up to 20 years (53).

Beyond federal tax credits to companies and individuals, the federal government provides significant support

to renewable energy investors with the U.S. Department of Energy (DOE) loan guarantee program. This

program is of significant importance, as it provides investor security to banks and other lenders by providing

federal backing for massive clean energy projects allaying fears of borrower default (54). Initiated in 2005, the

program allows the DOE to issue loan guarantees for projects employ in renewable energy and energy

efficiency technologies, plug-in hybrid vehicles and power transmission (54). The loan guarantee program has

been authorized to offer more than $10 billion in loan guarantees. These guarantee target the commercial

use of innovative technologies rather than energy research, development, or demonstration programs.

Manufacturing projects, stand-alone projects, and large-scale integration projects that combine renewable

energy, energy efficiency and transmission technologies are eligible for billions of dollars under the program.

In 2009, the program was allotted $8.5 billion in funding, with the stimulus bill (ARRA) expanding funding by

$2.5 billion (54).

In addition to the loan guarantee program, the DOE is a leading force in funding R&D on new and novel energy

and energy efficiency technologies. The lead division for this innovation is the Energy Efficiency and

Renewable Energy Program (EERE), which works to enhance energy efficiency and productivity and accelerate

clean technologies to the marketplace (55). From its headquarters in Washington, DC the EERE division oversees

deployment and diffusion projects across the country and works collaboratively other organizations as well as

DOE research labs to develop and implement codes, standards, rules and regulations for clean energy and

energy efficiency (55). EERE identifies market barriers interfering with the widespread adoption of these

technologies and helps formulate solutions. EERE also helps promote education and workforce development

to increase awareness about the benefits of clean energy and energy-efficient technologies. The American

Recovery and Reinvestment Act of 2009, or "Recovery Act," provides a significant boost to the projects at EERE

by awarding $16.8 billion to its programs and initiatives. This funding is now being released to research

centers, universities and clean tech countries across the nation.

US Regional Cooperation on Climate

Outside of actions by national and state leaders, regional coordination provides another important dimension

to the complex American energy and climate scene. Currently in US, three major regional initiatives have been

established to create a market-based ‘cap and trade’ system for carbon emissions from utilities. As advocates

of clean energy await the potential for a national ‘cap and trade’ system and federal requirements for

renewable energy in the power sector, these regional accords are making strong headway. Recognizing the

trans-boundary nature of greenhouse gas emissions and the shared responsibility states have for the quality of

their citizens’ health and environment, progressive states have opted to move ahead when national leaders

are deadlocked.

The first of these regional cooperative systems to be established was the Regional Greenhouse Gas Initiative

(RGGI), is a cooperative effort among the states of Connecticut, Delaware, Maine, Maryland, Massachusetts,

New Hampshire, New Jersey, New York, Rhode Island, and Vermont to cap and will reduce CO2 emissions from

electricity by 10 percent by 2018 (56). On the US west coast, the Western Climate Initiative or WCI is an initiative

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of US states and Canadian provinces along the western rim of North America aiming to reduce greenhouse gas

emissions by 15% from 2005 levels by 2020 (57). The first phase of this plan will be implemented on January 1,

2012, followed three years later by a broader cap on carbon emissions in 2015. Both the RGGI and WCI utilize

a system of CO2 allowances and auctions to trade these credits in a free-market based system. Like its coastal

peers, the Midwestern Greenhouse Gas Reduction Accord is a regional agreement by six governors of states in

the US Midwest and the Premier of one Manitoba to reduce greenhouse gas emissions. Established by the

Midwestern Governors Association, the Midwest Accord will establish greenhouse gas reduction targets and

time frames, develop a market-based and multi-sector cap-and-trade mechanism, establish a system to enable

tracking, management, and crediting for entities that reduce emissions (58) (59).

While the primary objective of these regional cooperation schemes is to reduce greenhouse gas gases, they

also play an important role in exchanging experiences and best practices on clean energy deployment in

individual states and in paving the path for a potential national ‘cap and trade’ bill. Through regular forums

and meetings, these regions are aiming to increase the effectiveness and impact of their policies. In May,

2010, these three regional initiatives joined forces through a cooperative effort to share experiences in the

design and implementation of regional cap-and-trade program and to inform federal decision makers

currently working on national climate change policy and explore the potential for further collaboration among

the programs in the future. Together the three regional programs encompass 23 U.S. states and four

Canadian Province, accounting for over half of the U.S. population and half of Canada’s greenhouse gas

emissions (60).

States – Leading US Clean Energy Policies

As legislators in Washington continue to debate various proposals for strict national green-house gas

emissions caps, individual states are already using the constitutional powers reserved to them to adopt

forward thinking and progressive clean energy laws. In fact, many states already have over three decades of

experience in tailoring such legislation and have increasingly added new and more effective elements to their

existing portfolio of laws. Through a combination of various legislative tools including renewable portfolio

standards (RPS)viii, business and personal tax credits and deductions and other programs, states are providing

incentives to consumers and requirements and guidelines to utilities in order to increase the share of clean

energy in their state energy portfolios. Combined with participation in the regional ‘cap-and-trade’ initiatives

outlined above, these state-level efforts

One of the most effective and common policy mechanisms utilized by states is the renewable portfolio

standard (RPS). An RPS is a market based mechanism for the American Wind Energy Association in 1996 that

obliges supply companies or consumers to purchase a specific amount of electricity from renewable energy

sources. The goal of the RPS is to minimize the costs of increasing renewable energy capacity through

competition to fulfill obligations. In order to facilitate this market mechanism, energy providers may purchase

certificates (renewable energy certificates), which may also be bought and sold freely on the market. By

purchasing such a certificate, a utility can certify that a portion of the electricity that it has produced or

purchased is from verified renewable energy sources. Funds from the purchase of such certificates can be

used by renewable energy producers to cover the higher cost of their production process. By increasing the

required portion of renewable over time -- the RPS can put the electricity industry on a path toward increasing

sustainability.

viii

RPS policies may also be described as ‘renewable electricity standard’ or a renewable energy quota or obligation mechanism.

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Currently, 29 states and the District of Columbia have RPS schemes. While not having strict requirements, a

further 7 states of goals. California, for instance has a RPS target of 33% renewable energy by 2020. Texas has

a goal of 5,880 megawatts of renewable energy capacity by 2015 and Minnesota has a target of 25% by 2025.

Some states, such as New Jersey, Massachusetts, and Maryland include more specific targets for certain

renewable energy sources, such as solar electricity, solar heating, wind and . Many states, such as Colorado,

Missouri, and Arizona offer additional credits for renewable energy produced within the state, rather than

purchased through renewable energy credit markets or for smaller scale projects that may otherwise face

difficulty financing their operation (61). Though various proposals for a national RPS have been raised in

congress, it has not been determined how such legislation might impact RPS models at the state level.

Another popular policy mechanism employed by states is the tax credit or tax deduction. These credits may

be offered to individuals (personal income tax credits and deductions) or to corporations as corporate tax

credits, deduction and exemptions. These credits aim to reduce the expense of purchasing and installing

renewable energy or energy efficiency systems and equipment. There is frequently a maximum limit on the

dollar amount of the credit or deduction. The credits may also be earned through the construction of energy

efficient, ‘green buildings’ and may also be used to support the manufacture of renewable energy systems or

equipment, or energy efficiency equipment (62).

Additional measures used by individual states in the US include ‘net metering’, efficiency standards for

buildings and transport, rebates, biofuel policies and public benefit funds. Net metering is a policy that

requires power providers to purchase excess electricity that is not used on-site by a renewable energy

producer, sometimes at a set premium rate per kilowatt hour. This policy is made possible through the use of

so-called ‘smart meters’ that are able to gauge power flowing from the electricity grid as well as back into it.

Efficiency standards for buildings and transport set a minimum level of efficiency for things like building

insulation and windows, heating and cooling systems and miles-per-gallon for cars. California, the largest

market for automobiles in the US, has been a model example in the field of transport efficiency, having set the

standards prior to a national policy. Biofuel policies offer premium pricing to producers of ethanol and

biodiesel in order to encourage motorists to burn cleaner fuels. In order to achieve a goal of replacing 10

percent of fuel needs with ethanol Minnesota instituted a producer payment program of 20¢/gallon for small,

in-state producers. Finally, public benefit funds (PBFs) offer financial support for renewable energy, energy

efficiency and low-income energy programs through a surcharge on electricity consumption. PBFs commonly

support rebate programs, loan programs, research and development, and energy education programs (63).

Local Governments – Sustainable Grassroots Efforts

As US States provide the political momentum for the America’s clean energy transformation, a number of local

communities have passed laws and ordinances that go a step further by providing for locally tailored rules,

programs and institutions to fight climate change and provide sustainable energy to their residents. Working

together with municipal utilities and local authorities, communities from California to Vermont are building on

top of efforts by state and national legislators by drafting local rules to encourage residents to invest in clean

energy and adopt low-carbon and sustainable consumer habits. These efforts are reaping important benefits

for clean energy companies as well as for the health and wellbeing of citizens.

Gainesville, Florida offers a unique example of a local community taking extra steps to harness the states

abundant solar resources. The city of Gainesville established a local ‘feed-in tariff’ program in early 2009 that

offers solar energy producers a premium rate for electric power derived from photovoltaic installations.

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Under the terms of the program, these electricity producers will receive a premium rate for each kilowatt hour

of energy between 26¢ and 32¢, depending on the size and location of the installation. Modeled after similar

programs in Europe (outlined below), solar energy producers receive this rate through a 20 year fixed contract

The Gainesville program was the first feed-in tariff in the United States and has already been fully subscribed

through 2016. (64).

San Francisco voters have also expressed their strong local support for solar energy by approving a proposition

to allow the city to issue $100 million in revenue bonds to finance enough renewable energy to supply about

25 percent of the city government's needs. With the program, San Francisco aims to become the largest single

producer of solar energy in the U.S. San Francisco voters have also allowed the city to issue other bonds for

renewable energy projects in the future without their approval at the ballot box. The goal is to have 10-12

megawatts of new solar energy and 30 megawatts of wind energy online in a year or two (65).

In 2004, Residents in Washington, DC took action to confront local air pollution and to encourage the use of

hybrid cars with a local law that makes it more expensive to own and drive vehicles consumer high-amounts of

gas. Under the new Act, owners of hybrid and other alternative fuel vehicles are not required to pay a local

excise tax and their vehicle registration fee is cut in half. To discourage use of heavy passenger vehicles, such

as SUVs, owners must pay an increased excise tax of 8% (up from 7%) and higher registration fee. Thus, an

owner whose SUV costs $60,000 would pay an excise tax of $4.800 (an increase of $600) while the owner of a

hybrid vehicle would pay nothing. By encouraging residents to purchase hybrid vehicles, Washington is

providing support and visibility to fuel efficient car models while protecting residents health (66).

Also aiming at more efficient, low-emission transport, communities in southern California launched a major

effort to promote plug-in hybrid cars. The regional initiative launched in December 2009 is helping to ease the

transition to electric vehicles by bringing together cities, utilities, automakers and others in the Southern

California region to actively to support and build the necessary infrastructure for the commercial launch of

electric vehicles. The collaborative includes: Southern California Edison, Los Angeles Department of Water and

Power, Southern California Public Power Authority, California Electric Transportation Coalition, Electric Power

Research Institute, South Coast AQMD, Nissan, GM, Ford, and the cities of Burbank, Los Angeles, Pasadena,

Santa Ana, and Santa Monica. (67) Recognizing the long-term benefits of plug-in hybrids as well as the

significant barriers presented to their deployment, Southern California is preparing for the future with needed

investments today. With current infrastructure heavily geared toward conventional, inefficient and polluting

combustion engine vehicles, this initiative will build a foundation for the rapid deployment of hybrid and fully

electric vehicles tomorrow.

EU Climate and Clean Energy Policies

These trends stand in contrast to the European Union where increasingly ambitious energy and climate

legislation originating at the EU level is being implemented by member states (48). In contrast to the US, the

European Union has not confronted significant barriers to legislating caps on carbon and establishing EU-wide

goals for clean energy as a percentage of its overall energy portfolio. With the EU Commission providing

guidance and initiating legislation, the European Council and European Parliament formulate the details of EU

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legislation on climate and energy. EU legislation on climate and energy is issued in the form directives that

provide guidelines and targets for EU member states to achieve or face the consequence of sanctionix.

Energy is not a new issue for EU policymakers. In fact, energy issues were central to the formation of the

European Community in 1951 when the European Coal and Steel Community (ECSC), the initial and less

elaborate incarnation of the EU was established. The ECSC played a key role in managing the coal and steel

production of France and Germany, thus aiming to prevent a repeat of the disastrous events of the Second

World War. With the 1973 oil crisis, the EU began to work more closely on the EU actively sought "to expand

the role of renewable in the EU energy mix". In 1973, the European Commission issued "Guidelines and

Priority Actions for Community Energy Policy," making note of the increasing world demand for energy and its

corresponding scarcity (68).

By the 1990s, with increasingly strong levels of European policy coordination, EU expansion and increasing

pressure to confront environmental issues related to energy, the EU the Commission released a Green Paper

entitled "Energy for the future: Renewable sources of energy", followed a year later with a White Paper urging

the formulation of a renewable energy directive (69). Following the Commissions initiation, a Directive of the

European Parliament and the Council on the promotion of electricity from renewable energy sources in the

internal electricity market was introduced and went into force in October 2001. The directive set the

requirement of all EU member states to increase the share of renewable electricity in their overall electricity

supply. The directive also set out targets for each Member amounting to a collective goal of 22 percent share

of renewable electricity sources by 2010. This requirement has been set for all new EU accession nations, and

applies now to all 27 EU nations.

The goals set out in the 2001 renewable energy sources directive have been further increased with the

approval of the 2009 EU Climate and Energy Package - a set of directives that outline new goals for renewable

energy, energy efficiency, and biofuels applicable to all 27 EU member states (70). This package outlines the so-

called “20-20-20 goals”: a 20% cut in emissions of greenhouse gases by 2020, compared with 1990 levels; a

20% increase in the share of renewables in the energy mix; and a 20% cut in energy consumption (71). These

ambitious goals are set out by a number of new directives.

These directives include a new EU Emissions Trading System (EU ETS) directive to reduce CO2 emissions from

energy intensive sectors. Taking effect in 2013 establishing, it will establish an EU wide cap on CO2 which will

decline each year to 2020 and beyond. The Renewables Directive, in addition to mandating an EU wide goal of

20% renewable energy, also sets every Member State a target of supplying 10% of transport fuel from

renewable sources by 2020. Finally, a Directive on the geological storage of CO2 outlines a regulatory

framework for the safe capture, transport and storage of carbon dioxide in the EU (70).

The new Renewable Energy Directive sets out a set of targets for individual countries - 'indicative trajectories',

- to ensure that each nation makes progress towards the 2020 targets. However these targets are not binding.

Each nation may decide upon its own 'mix' of renewables, allowing them to best harness their national

ix Adopted by the Council in conjunction with the European Parliament or by the Commission alone, a directive is addressed to the

Member States. Its main purpose is to align national legislation. A directive is binding on the Member States as to the result to be

achieved but leaves them the choice of the form and method they adopt to realise the Community objectives within the framework

of their internal legal order. If a directive has not been transposed into national legislation in a Member State, if it has been

transposed incompletely or if there is a delay in transposing it, citizens can directly invoke the directive in question before the

national courts (234).

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29

resources and domestic industry. Should a member state fail to meets its targets, they must take appropriate

measures of face infringement proceedings (72). Member states will be able to harness their own national

support schemes to those of other EU states and to import 'physical' renewable energy from third-country

sources, such as large solar farms in North Africa. As with the ETS, trading scheme allowing member states to

sell or trade excess renewables credits to another, based on statistical values, will be permitted. However

these so-called 'statistical transfers' may take place only if the member state has reached its interim

renewables targets.

In implementing the EU legislation to achieve the “20-20-20” goals, member states must find effective and

efficient policy mechanism at the national level to ensure results. Through a mix of government coordination,

financial incentives, low-interest loans and research grants, EU nations are aiming to quickly increase energy

savings and clean energy production. Leading the pack are countries Germany, Spain and Denmark where a

combination of ambitious national policies, a strong knowledge base and rich clean energy resources are

leading accelerating the clean energy share in their national energy portfolios.

Germany, Spain and Denmark – European Clean Energy Success Stories

Germany

As the world’s fifth largest economy, Germany is a dominant player in the global clean energy arena. Germany

has led global growth in wind and solar production by making use of its rich industrial infrastructure as well as

its strong history of high-skill, precision manufacturing. Driven by its highly effective Feed-In-Tariff law for

renewable energy, Germany has dramatically expanded its onshore wind energy capacity while investing

heavily in domestic solar energy installation. Despite a national solar energy resource on par with the US state

of Alaska, Germany has become the global leader in installed solar energy capacity with over 9.8 GW of

installed solar PV in 2009 - 47 percent of existing global solar PV capacity.

Like many nations, Germany was hit hard by the 1973 OPEC

embargo and sought ways to expand its domestic energy

supply. In addition to investments in nuclear energy

Germany initiated a research program wind turbine

development in 1974. Its large-scale wind plant project

(GROWIAN) produced what was then the largest wind

turbine ever before built. Experiments with new wind

technologies continued through the late 1970s and early 80s

before Germany decided to end the GROWIAN project in

1987 due to manufacturing and system integration problems

(73). Meanwhile, Germany constructed a number of nuclear

reactors throughout the 1970s and 1980s. This ended

abruptly with the nuclear catastrophe of Chernobyl when

public opinion and political leadership shifted swiftly against

nuclear energy, resulting in a halt to nuclear plant

construction with the ultimate aim to phase out its use by

2022.

Figure 9: Solar Resource: United States - Spain - Germany

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30

As a consequence, and due to the rising power of the German environmental movement and Green Party,

Germany once again aimed to rapidly expand renewable energy technologies. In 1991, Germany adopted a

federal Electricity Feed- In Law (StrEG) which has become the central national instrument for the promotion of

renewable energy in Germany. The law established a requirement for public utilities to purchase renewably-

generated power from wind, solar, hydro, biomass and landfill gas sources, on a yearly fixed rate basis, based

on the average revenue per kWh for energy. Specific rates were set for each type of technology depending on

plant size, with smaller plants receiving the higher subsidy level (74). The cost of this premium rate for

renewable energy producers is paid for by the electricity consumers, not by government funds, so the tariff is

not a subsidy in the conventional sense.

The Feed-In Law was successful in launching Germany’s wind power market throughout the 1990s, driving the

total national wind energy capacity to over 6 GW by 2000. The Feed-In law was complemented by other policy

instruments including nationally funded research programs and low interest loans subsidized by a domestic,

state-owned development bank, the Deutsche Ausgleichsbank. This provided badly needed funding for new

wind power development (74).

In 2000, the StrEG was updated and reformed with the introduction of the Renewable Energy Law (EEG). The

new EEG aimed to double Germany’s renewable energy capacity from 1997 levels by 2010 with the ultimate

goal to reach a minimum of 12.5% electricity from renewable sources. In contrast to the StrEG, the EEG’s tariff

rate was based, not on the average utility revenue per kWh sold, but on a set of fixed, regressive rates based

on technology and plant size. Low-cost renewable energy producers, such as wind farms, were compensated

at a lower rate than higher-cost producers, such as solar PV. The EEG also set a requirement for electric grid

operators to purchase power from local producers and set up a national equalization scheme to minimize

regional differences in electricity production so that all national regions share an equal share of costs (74).

Figure 10: Development of electricity generation from renewable energies in Germany since 1990

As a result of the EEG, Germany has managed to rapidly transform its energy sector and set itself on a path

toward 100% clean energy usage by 2050 (75). As illustrated by Figure 7, Germany has doubled its share of

renewable energy time and time again. Renewable energy now accounts for over 10 % of Germany’s total

energy consumption and over 16 % of gross electricity consumption (76). By 2008, Germany had already

overshot its goal of 12.5%, three years ahead of schedule (77). Due to such rapid growth in Germany’s clean

energy sector, over 340,000 people are employed directly or indirectly by clean energy companies in Germany

a doubling of clean energy jobs from 2004 (78).

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In the most recent revision of Germany’s Renewable Energy Law, the government set for a goal to have

renewable energies account for at least 30 % of electricity provision by 2020. The Germany government also

expanded the scope of its clean energy policies by adopting the the Act on the Promotion of Renewable

Energies in the Heat Sector (EEWärmeG) in January 2009. This law specifies that the renewable energies’

share of heat supply is to grow to 14 % by 2020. In addition a “Biomass Action Plan” aims to increase biofuels’

share of fuel use to 12%.

Thanks to Germany’s aggressive and effective clean energy promotion, renewable energy may become cost

competitive with conventional energy in Germany by 2020. While wind energy continues to dominate

Germany’s renewable electricity production, other renewable sources such as hydropower and biomass

continue to gain a larger market share.

Today, renewable energy supplies 6.5% of all Germany’s energy consumption (3), 8.8 % of final heat

consumption and 5.5 % of fuel demand. In 2009 20 billion euros were invested into renewable energy in

Germany with over 16 billion euros value added through the operation of renewable energy installations (76).

Because of its generous support measures, Germany has attracted significant foreign investment in solar PV

and is home to Q-cells, the world’s largest manufacturer of PV cells. Germany is also the European Union

leader in biofuel production and solar thermal heat is quickly gaining market share.

Of all renewable sources, biomass represents the greatest share providing

7.2% of all end consumer energy. Wind energy is the second largest

renewable source. In 2009, wind energy generated nearly 40,000 gigawatt

hours of energy accounting for over 6% percent of Germany’s final electric

power consumption. Hydropower was third among renewable energy

technologies producing 3.3 % of Germany’s electricity (76). Solar PV

installations provide a modest 1% of electricity, though it receives the most

public support of any renewable energy technology in Germany. In 2010,

Germany remains number one in the world in grid-connected installed PV

systems.

Thanks to the success of the Germany Renewable Energy Law, Germany has been able to meet its CO2

emissions reduction targets set out by the Kyoto Protocol. In 2008, Germany’s greenhouse gas emissions were

recorded at lowest levels since 1990, almost 12 million tons lower than 2008 and a drop of 1.2 percent.

Inspired by such progress Germany has become a major advocate of strong clean energy goals and targets at

the EU level and has also developed strong public diplomacy efforts to engage other nations. It supports a

network to promote the implementation of feed-in-tariff laws and engages local and state level stakeholders

in the United States with the Transatlantic Climate Bridge, a program launched by the Social Democratic

Foreign Minister Frank-Walter Steinmeier in 2008 (79).

In addition to the driving force of its Renewable Energy Law, a number of other measures have helped to

accelerate the rapid expansion of clean energy in Germany. In 2006, the Federal Ministry of Economics and

Technology, established its High-Tech Strategy in order to spark funding for innovation, setting aside $1.67

billion of clean tech investments for 2009 and 2010. The program has helped to build strategic alliances

between the public and private sector to create new and more efficient renewable energy technologies and

has helped encourage startups.

Figure 11: Solar PV Existing Capacity, Top

Six Countries 2009

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The German development bank, KfW, is a federal institution that has helped provides to $1.45 million of

equity financing to promising technology companies through its High-Tech Start-Ups Fund. Already the fund

has helped to support 177 budding technology companies. Further funding for clean technology companies is

provided by the ERP Innovation Program, another public-private partnership that supports innovative small- to

medium-sized businesses in research and development projects with loans up to $7.24 million secured by

theby KfW and the federal government. Through these and other mechanisms, Germany has been able to

leverage $14.5 billion in investment between 2006 and 2009 (80).

Spain

Like Germany, Spain has established itself on the international stage as clean energy leader. By investing in

innovation, manufacturing, deployment, and job retraining, Spain is aiming to harness its natural resources to

drive green growth (80). Historically dependent on imports to cover its energy needs, Spain also aims to achieve

a greater level of energy independence by harnessing rich wind and solar resources and by reducing waste

through efficiency and conservation measures. After establishing a national feed-in tariff for renewable

energy technologies in 1994, Spain has followed Germany’s lead by providing premium rates to encourage

private investments into clean energy solutions.

As in Germany, Spain’s renewable energy law provides premium tariff rates to producers of wind, hydro, solar

biomass, biogas and solar thermal electricity. Spain also provides low-interest loans that cover up to 80% of

the reference costs of renewable energy projects. A fuel tax exemption supports the rapid deployment of

biofuels and Spain’s Technical Buildings Code mandates that 30-70% of the domestic hot water needs be

covered by solar thermal energy, a requirement of all new buildings and renovations. (81) As of 2010, over 30 %

of Spain’s energy was derived from renewable power. Several Spanish regions are already aiming to cover

their energy needs with 100 percent renewable power. Two, Castilla y León and Galicia—are poised to reach

70% very soon.

As of 2010, Spain’s clean energy sector employs 200,000 people, including over 36,000 direct jobs in wind

energy, 31,300 direct jobs in solar PV and 3,500 direct jobs in solar thermal energy, an area of great promise

for Spain. (82). With continued support for clean energy development Spain aims to generate 20% of its energy

from renewable sources, reduce energy intensity by 20% and lower CO2 emissions by 10% from current levels

by 2020 (83)

With its large agricultural sector, biomass is a key renewable energy sources for Spain and the nation has set

out aggressive targets for the use of biofuels and bio-based heating and power. In 2008, Spain was the EU’s

third largest bioethanol producer in the in 2008, and the seventh largest biodiesel producer providing 1.9

percent of Spain’s transport energy needs were covered with biofuels.

Wind is Spain’s second largest clean energy sector, but one with great economic promise. Spain currently

ranks fourth in the world in wind energy installments, behind the United States, China and Germany (3). Since

the 1990s, deployment of wind energy has increased drastically in Spain, from 114 MW in 1995 to over 25 GW

of installed capacity in 2009. Over 16,546 MW of wind turbines were installed at the end of 2008 and another

1,500 MW in 2009. By harnessing the rich wind resources with strong government policies to support wind, a

number of wind manufacturing companies have emerged in Spain, including Iberdrola and Acciona. (80) Most

recently, Spain approved a map of locations along its 8,000 kilometers of coastline for potential offshore wind

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projects, offering major companies the opportunity to bid for their development. Proposed projects amount

to nearly 6 GW of additional capacity (84) .

Incredibly, in November 2010, due to strong wind gusts, Spain broke a record by generating 70% of its power

from clean sources, 40% from wind - illustrating the promising potential of clean energy to cover the energy

needs of a nation.

In addition to wind, Spain has become a powerhouse in solar energy. In 2008, Spain’s photovoltaic solar

installations surged with an addition of 2.5 GW of capacity, reflecting close to half of the world's total of

5.5GW. This brought Spain up to number two in the world for installed solar PV with 3.5 GW, second only to

Germany’s 5.3 GW. The surge was largely explained by a miscalculation of the solar feed-in tariff rate, and is

somewhat of a fluke (85). This led to explosive growth which could not be repeated due to significant caps that

were introduced in 2009.

Beyond its robust government support for renewable energy technologies, Spain is highly focused on energy

efficiency and conservation. The Spanish Energy Efficiency Strategy 2004-2012 reduced Spain’s energy

consumption per unit of GDP, or energy intensity, by more than 11.3 between 2005 and 2008—after a long

period with increased consumption.54

Investments into renewable energy have proven to be an economic engine for Spain. A 2009 report by the

Spanish Wind Power Association (AEE) estimates that 35% of Spain’s GDP was directly from the Wind Power

Sector and predicted that in 2010 it would represent 42% of the GDP based on current trends (84). In 2007, the

Spanish wind industry included over 50 companies and generated approximately $5.73 billion in business

volume. (84)

Reflecting the power of the Spanish clean energy sector, the Spanish company Iberdrola recently purchased

the American energy company Energy East, in what was the largest industrial acquisition ever by a Spanish

company in the United States. Iberdrola was already the 2nd largest wind power company in the US, operating

2,000 MW of installations before the merger. Iberdrola is projected to increase this capacity to 6,900 MW of

by 2012. In 2009 Iberdrola had a net profit at €2,824 million increasing its profits by 6.3% to €6,815 million

while its manufacturing output grew by 1% in 2009 to 143,000 GWh, due primarily to the increase in wind

power generation. Wind power activities now represent 15% of the Iberdrola’s total output. Iberdrola

currently manages 25,705 MW of wind installations in Spain, 6,818 MW in the UK, 5,536 MW in Latin America,

and 1,083 MW in the rest of the world (86).

Denmark

Denmark is heralded worldwide for its pioneering approach to clean energy policy and innovation. Beginning

with a fundamental shift in its energy strategy in the aftermath of the 1973 OPEC oil embargo, Denmark

emerged as a pioneer in wind energy and has become a leader on the EU level, urging ever more ambitious

policies to deploy cleaner energy technologies to reduce carbon emissions. Denmark is now a world leader in

wind turbine manufacturing with significant export markets abroad and has developed a deep expertise in

offshore wind farms that is sought after around the world. As the share of electricity from wind and other

renewable sources has grown in Denmark, the nation has taken on the challenge of integrating these variable

energy sources with conventional power. Today, Denmark generates a quarter of its own electricity from

wind (87), the majority of its renewable energy supply and a large share of its total energy needs.

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Like many other nations rocked by the OPEC embargo outlined above, Denmark responded to the crisis by

looking for ways to ensure the security of its national energy supply through energy resource diversification.

Prior to the crisis, Denmark had become 100 % dependent on imported oil for its electricity and heating &

cooling needs (88) and 90% of its total energy needs (88). This highly asymmetrical relationship left Denmark

vulnerable to external factors and energy disruptions. In 1976 Denmark responded by establishing its first

national energy plan, outlining plans to explore oil and gas in its North Sea territory and identifying renewable

energy, energy efficiency & conservation, and reduced consumption as important steps towards a greener and

more secure energy supply (89) (90). Denmark also began to shift from a focus on imported oil, to use of coal-

fired electricity plants and began using highly-efficient combined heat and power (CHP) plants to recoup lost

energy and to provide district heating and cooling to entire communitiesx.

As part of Denmark’s energy transition, wind energy emerged as a promising solution to diversify its energy by

harnessing the large coastline and consistent wind gusts in the country. A comprehensive energy research and

development program was launched in 1976 with renewable energy sources, including wind energy, as areas

for potential growth (90). The program sponsored efforts to plan and construct of large (more than 500

kilowatts) wind turbines and helped spark new initiatives to establish wind turbine standards and certification

procedures for turbine producers. A wind turbine testing facility was established in 1978 and in 1979 a

subsidy equal to 30% of the investment costs of a wind turbine was offered to those seeking to invest in the

increasingly lucrative wind energy sector. This subsidy was funded primarily via a nation-wide tax on

electricity consumption initiated in 1977. Due to the subsidy, 200—300 turbines were deployed yearly

following its implementation (90).

Rapid growth in Denmark’s renewable energy sector continued throughout the 1980s and early 1990s,

spurred by the governing Social Democratic Party, which saw the promotion of clean, alternative energy as a

national imperative. With the 1983 “Alternative Energy Plan 83”, renewable energy electricity producers

were provided a subsidy equivalent to the electricity tax. In 1984, Danish utilities and wind turbine

associations agreed on long-term wind power purchases at a set tariff. And in 1985, the government

committed utilities to purchase an additional 100MW of wind power, an agreement that was achieved by

1992 (91). This goal was set again in 1990 and doubled in 1996, for a total capacity goal of 400 MW of wind

energy by the year 2000. In 1998 a new order was issued for 750 MW of offshore wind power (91).

While Denmark made vast progress in wind and other alternative energy technologies during this period, the

shift from imported oil to use of coal for combined heat and power plants resulted in rather high per-capita

rate greenhouse gas emissions. Under pressure from environmental groups and citizens increasingly

concerned about climate change, Denmark chose to tie its national energy goals to climate targets. With

nuclear power outlawed by a 1988 parliamentary resolution (92), Danes chose to pursue heavy investments into

renewable energy as a solution to these emissions problem. In 1990 Denmark introduced sustainable energy

plan “Energy 2000” with proposals for increased energy efficiency, combined heat and power plants

(cogeneration), renewable energy and a goal of 20% CO2 reduction by 2005 from 1988 level. The plan also

introduced national CO2 taxes to help fund new clean energy initiatives (93). The plan was updated in 1996 with

the energy plan “Energy 21” that included a target of 1% additional renewable energy in the energy supply

annually and projection of 50% electricity consumption from wind energy by 2030.

x Combined Heat and Power (CHP) Combined heat and power (CHP), also known as cogeneration, provides thermal energy for buildings or processes while

simultaneously generating part of the electricity needed at the site. It is the sequential production of two forms of useful energy from a single fuel source. A CHP

system recovers heat from electricity generation for productive uses such as heating, cooling, dehumidification, and other processes. This heat is usually wasted at

conventional power plants. (228)

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Throughout the 1980s and 1990s, fueled by generous research support, new design innovations, and a

national government set on energy transformation, Danish wind energy companies expanded to new export

markets while building ever cheaper and ever larger wind turbines. Leapfrogging over older manufacturers,

newer companies harnessed of economies by selling cheaper turbines in emerging clean energy markets like

California. Wind turbine exports to California from Denmark leaped to over 2,000 annually by 1985.

Meanwhile the number of people employed by the Danish turbine manufacturers increased drastically from

300 to about 2,500 between 1982 and 1985 as the Danish market share in California increased from 0% to

65% (94).

One wind energy manufacturer, Vestas, emerged from this period as a

major global player in the clean energy sector that has seen nearly

exponential growth in its global staff and manufacturing activity. The

‘success story’ of Vestas is remarkable. Founded in 1945 by Peder

Hansen as the West-Jutlandish steel technology, Vestas initially

manufactured household appliances, moving its focus to agricultural

equipment and industrial equipment in the 1950s and 1960s. In 1979, it

made its first foray into the wind turbine industry, though it nearly went

bankrupt in 1986 after the Danish government halved the tax rebate for

wind turbines, leaving Vestas with a massive overstock. Fortunately,

global demand for the turbines kept the fledgling company afloat.

In 2003, West-Jutlandish merged with the Danish wind turbine manufacturer NEG Micon to create the largest

wind turbine manufacturer in the world, under the banner of Vestas Wind Systems. By consistently expanding

its exports, lowering the cost of manufacturing in a global values chain and drastically increasing the scale of

its turbines, Vestas has become a major global company with manufacturing plants in Denmark, Germany,

India, Italy, Britain, Spain, Sweden, Norway, Australia, China and the United States. Today, Vestas employs

more than 20,000 employees globally reflecting a staggering growth rate for a global manufacturer (Figure 6)

(95). In 2009, Vestas weathered the storm of the global financial crisis, increasing its revenue by 10 per cent to

EUR 6.6bn, increasing its earnings by 28 percent at EUR 856m (95).

The Vestas story would not have been possible without the concerted efforts of the Danish public and

government and without the furtive policy frameworks that Denmark put in place to seek new sustainable

forms of energy. These measures have launched Denmark into a front-runner position in the global race a

global clean energy economy. With Denmark’s ratification of the Kyoto Protocol in 2002 and promotion of

ever stronger climate and energy legislation at the EU level, the Danish clean energy sector has prospered and

become a central pillar of the national economy. By 1997, Danish companies like Vestas were dominating the

world market for wind turbines, with 58.5% of global sales. By 2001 over 100,000 Danish families belonged to

wind turbine cooperatives (90). And between 1998 and 2008 Danish energy technology exports more than

tripled and today make up around 11% of total Danish goods exports. In 2008, Danish energy technology

exports reached over 11 billion USD in 2008 (87).

As a result of highly effective policies to promote clean energy deployment, Denmark now has the lowest

energy consumption per unit of GDP in EU and highest contribution to electricity from new renewable in the

EU. Pushed by the etraordinary effort by the national government and citizens to increase energy efficiency

and massive investments in renewable energy sources, Denmark has achieved this without sacrificing its

national economy. Effectively de-coupling economic growth and energy consumption since 1980, Denmark

Figure 12: Growth in Vestas global employees

from 1986 to 2008

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has continued economic growth while reducing per-capita energy consumption (96). According to official

statistics, the Danish economy has grown, as measured by gross domestic product (GDP), since 1980 by 78

percent, at prices of the year 2000. During the same period, the country’s energy consumption remained

practically the same. This means that the Danish economy’s energy intensity - the ratio of energy

consumption to GDP - has fallen by 40 percent. Danish GHGE, especially carbon dioxide (CO2), has also

decreased substantially, by some 20 percent. According to the International Energy Agency, the Danish CO2

intensity of GDP is the third lowest among European Union (EU) members, only after Sweden and France (97).

Despite lower than expected results from 2009, Vestas has a bright future in Europe and beyond. According to

Vestas corporate communications, thus far in 2010 Vestas has signed agreements for the production of over

5GW of wind turbine capacity in countries around the world. From Brazil to India and China, Vestas will be

contributing to some of the largest and most powerful wind park projects around the world (98). China

represents an area of serious growth and demand for Vestas

Denmark aims to one day income 100% independent of fossil fuels. By 2020, it aims to generate 30%

renewable energy in final energy consumption and 10% renewable energy in its transport sector. With these

efforts, it is aiming for a 20% reduction in greenhouse gas emissions compared with 2005 by 2020. If current

progress is any indication, this Scandinavian powerhouse is well on its way to reaching these ambitious goals.

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International Climate and Clean Energy Efforts

International coordination efforts are of central importance in the fight against climate change and in

coordinating the exchange of knowledge and expertise on energy. Providing global rules and institutions to

reduce green-house gas emissions, coordinating trade rules to reduce market barriers and providing forums

for debate and discussion, intergovernmental organizations such as the United Nations, the International

Renewable Energy Agency and the G20 and bilateral coordination forums such as the Transatlantic Energy

Council offer essential channels of communication and coordination as the world’s energy resources become

increasingly scarce and citizens call for more sustainable forms of power. The United States and Europe are

lead players in these organizations and have a unique responsibility to help guide the international community

to a clean energy future. Possessing the resources, knowledge and political power to change course, the

transatlantic community must embrace the efforts being made by international organizations and bolster

collaboration by placing greater emphasis on these forums and projects.

UN

The United Nations has played a lead role in international negotiations on climate change. The United Nations

Framework Convention on Climate Change was the product a major United Nations Conference on

Environment and Development (UNCED), informally known as the Earth Summit, held in Rio de Janeiro from 3

to 14 June 1992. The treaty aims to stabilize greenhouse gas concentrations in the atmosphere at a level that

would prevent dangerous anthropogenic interference with the climate system by setting an overall framework

for intergovernmental efforts. The treaty recognizes that the climate system as a shared resource whose

stability is impacted by industrial and other emissions of carbon dioxide and other greenhouse gases. Under

the treaty, members gather and share information on greenhouse gas emissions, national policies and best

practices launch national strategies for addressing greenhouse gas emissions and adapting to expected

impacts, including the provision of financial and technological support to developing countries cooperate in

preparing for adaptation to the impacts of climate change (99).

The Convention entered into force on 21 March 1994 and served as the basis for the formulation of the Kyoto

Protocol, which was adopted in Kyoto, Japan, in December 1997 and entered into force on 16 February 2005.

The Kyoto Protocol which established a global agreement to reduce national CO2 emissions from 1990 levels

by setting binding targets for 37 industrialized countries and the European community for reducing

greenhouse gas (GHG) emissions. These targets amount to an average of five per cent against 1990 levels over

the five-year period 2008-2012. While the UNFCCC encouraged industrialized nations to stabilize their

emissions, the Kyoto Protocol commits them to do so.

The Kyoto Protocol took notice of the fact that developed countries are principally responsible for today’s high

levels of GHG emissions in the atmosphere as a result of more than 150 years of industrial activity and thus

placed a a heavier burden on developed nations under the principle of “common but differentiated

responsibilities.”

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To achieve its aims the Kyoto Protocol relies primarily on measures established by member nations, but also

offered additional ways to meet targets with market-based mechanisms including an emissions trading

scheme and the use of a Clean development mechanism (CDM) and Joint implementation (JI) measures, which

allow developed nations to assist developing nations with clean energy and reforestation projects (100). The

Clean Development Mechanism (CDM), allows a country with an emission-reduction or emission-limitation

commitment under the Kyoto Protocol (Annex B Party) to implement an emission-reduction project in

developing countries, which might include funding for renewable energy or energy efficient infrastructure. By

supporting such project, developing countries earn certified emission reduction (CER) credits enabling them to

meet their obligations under the Kyoto Protocol. These credits may then be traded and sold in the global

carbon credits market.

Since the CDM was put into place in 2006, it has been successful in stimulating investment in over 2099

projects which, if implemented, would reduce greenhouse gas emissions by 220 million ton CO2 equivalent

per year. An additional 4,000 projects, which could reduce CO2 emissions by over 2.5 billion tons until the end

of 2012 are awaiting certification. Currently, the fastest-growing project types are renewable energy and

energy efficiency and by 2012, the largest potential for production of CERs are estimated in China (52% of

total CERs) and India (16%). CERs produced in Latin America and the Caribbean make up 15% of the potential

total, with Brazil as the largest producer in the region (7%) (101).

Through the UNFCCC process and the ongoing negotiations for a successor to the Kyoto Protocol, which is set

to expire in 2012, the UN provides one of the most important forums for the international community to

confront the rapidly emerging threat of irreversible climate change. Through their efforts, the US and EU can

help to engage the global community and particularly the emerging economies of Brazil, India, and China in

order to find consensus on a global cap on carbon. Such an achievement would send needed price signals to

global investors that the international community is serious about the need to transition to a low-carbon

economy. This is, of course, easier said than done. Yet, the leadership of US President Barack Obama the

resilience of US clean energy companies may provide the needed impetus to pass national legislation in the US

and to push for consensus at a future COP meeting.

International Energy Agency (IEA)

Established in the wake of the 1973-74 oil crisis, the IEA is an intergovernmental organization that advises its

23 member countries on balanced energy policy making, including matters of energy security, economic

development and environmental protection. Based in Paris, it focuses on climate change policies, market

reform, energy technology collaboration and outreach to developing nations and OPEC countries (102). While

the IEA’s historical workload has placed a heavy emphasis on the sustainable supply of conventional fossil

fuels like oil, coal and natural gas, it has begun to focus intensively on renewable energy, providing forecasts

and technology roadmaps for wind, solar photovoltaic and concentrated solar energy.

In fact, the IEA’s has recently urged its member nations to maintain strong and sustained support for

renewable energy, warning that without deliberate efforts, western nations would begin to see large increases

in the price of conventional fuels surging demand by China. Such demand could drive the price of oil from an

average price of $60 in 2009 to $113 in current dollars by 2035, according the IEA forecasts. The agency said

renewables can increase their share of world energy output from 7 percent to 14 percent, an amount it found

“collectively inadequate to meet the Copenhagen Accord’s overall goal of holding the global temperature

increase to below 2°C.” (103)

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In addition to supporting renewables, the IEA urges member governments to discontinue their subsidies for

fossil fuels in order to enhance energy security, reduce emissions of greenhouse gases and air pollution and

bring economic benefits.

In light of these efforts, the IEA will play a key role in supporting US and European governments in a clean

energy transformation. Combined with efforts by the International Renewable Energy Agency and other

relevant bodies, the IEA will serve as a critical source for information, forecasts and policy coordination. It will

be ever more important that the transatlantic community heed its advice.

International Renewable Energy Agency (IRENA)

Nearly 20 years in the making, the International Renewable Energy Agency was formally established in 2009

and will serve a key institution to facilitate access to renewable energy and energy efficiency information and

as a center to exchange experiences, best practices and lessons from policy frameworks, projects, and

financing (104) (105). IRENA will allows member nations access to a wealth of technical, economic and renewable

resource potential data, allowing them to better tailor their own national and regional programs using the

collective wisdom and knowledge of experienced nations (105). The establishment of IRENA signals a logical and

significant step in the development of global energy governance. Complementing the work of the

International Atomic Energy Agency and the International Energy Agency, which have historically focused on

conventional and nuclear fuels, IRENA will focus solely on clean energy and provide a better resourced

institution to drive global clean energy efforts.

The IRENA was officially established in Bonn on January 26, 2009 at the Founding Conference, which convened

125 delegations from the 75 nations that signed the Agency’s Statute. The Statute officially entered into force

on July 8, 2010 and to date 149 countries and the European Union have signed the agency’s statute. These

include countries in 48 African, 38 European, 35 Asian, 17 American and 10 Australia/Oceania States. Forty

two nations have ratified its treaty.

IRENA is headquartered in Abu-Dhabi, in the United Arab Emirates, and will host an innovation and technology

center in Bonn, Germany, and an office dedicated to liaising with the United Nations and other international in

Vienna, Austria. Driven by this institutional framework, IRENA aims to work closely with the UN programs and

agencies such as the UN University, UNESCO, the World Bank and GEF, UNIDO, UNDP, UNEP and the WTO in

the areas of education and training, financing, access to energy, potential studies and trade.

At the third session of the Preparatory Commission in January 2010 Member States adopted the 2010 work

program and budget. This meeting also outlined the key priorities for the coming year including the launch of

the first advisory programs and pilot projects, the establishment of secretarial and governance structures, and

hiring of experts at Agency. It was agreed that The 2010 budget for IRENA’s headquarters will amount to USD

13.69 million, with USD 678,000 provisioned for the Liaison Office in Vienna and USD 2.4 million for the Centre

for Innovation and Technology in Bonn. These modest figures will allow for the initial hiring of staff and

operational costs.

IRENA’s work program will focus in its first year on building a network with organizations, stakeholders and

experts in renewable energy. This will include building a database and institutional links to build information

and exchange structures with main partners working in renewable energy such as UN-Energy, the European

Union and the IEA, as well as with relevant NGOs such as REEEP and REN21. IRENA will also focus on

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knowledge management in the field of renewable energy including a comprehensive review of existing

information and data, launching a policy database, including policy instruments and best practices on its

website and a publication series on policy challenges. (106)

While IRENA has faced some particular difficulties in its first year, including the unexpected resignation of its

Director General Helene Pelosse and a budget shortfall, it is expected that new leadership will bring an

injection of momentum and improved management by the new Interim Director General, Mr. Adnan Amin, a

Kenyan development economist and seasoned UN official (107). Already, IRENA started its first program with

the Kingdom of Tonga, a group of South Pacific islands heavily reliant on imported diesel for electricity. Under

IRENA’s guidance Tonga developed a Energy Road Map (TERM) for 2010-2020, that hopes to reduce diesel

importation. This will be accomplished through a range of appropriate renewable technologies, including wind

and solar, as well as innovative efficiencies.

IRENA will require continued support and engagement from the United States and Europe in order to build the

capacity and structures that it will need to perform its incredibly important function for the global clean

energy transformation. In addition to assuring its financial wellbeing, the US and EU should provide

contributions of expertise and political support as IRENA begins to stand on its own while building out its body

of programs and resources.

Group of 20 (G20)

As the official successor of the Group of 8 (G8), which, like the IEA was established following the 1973 oil crisis

to better coordinate policy efforts between industrialized democracies, the G20 brings together the heads of

state and government of 20 industrialized democracies to better coordinate matters of mutual economic

interest to its members. Comprising the United States, European Union, and other nations, the G-20 was

established in 1999 to promote open and constructive discussion between industrial and emerging-market

countries on key issues related to global economic stability and to the strengthen the international financial

architecture. The G20 reflects two-thirds of the global population and 90 percent of world (108).

In recent years, G20 has focused its attention increasingly on matters of energy as they related to global

economic development. At the 2009 Pittsburgh G20 Summit leaders focused on the urgent need to transition

the world to cleaner energy and to reduce dependence on fossil fuels. Under US President Barack Obama’s

urging, G20 leaders committed to phase out fossil fuel subsidies over the medium-term and expanding access

to renewable energy to the world’s poorest nations (109). While this agreement contained to concrete, binding

elements, it reflects the consensus of the world’s major economies that they must work harder to reduce their

carbon footprint while maintaining economic growth.

During the 2010 G20 Summit in Seoul this November, energy is once again expected to be an important

agenda item. South Korean leaders are expected to put green growth high on the agenda, focusing on

continued international efforts on global economic recovery as well as the need to fight climate change (110).

Going forward, it will be important for the United States and Europe to build on their leadership within the

G20 to engage emerging economies and build consensus on a global clean energy transformation. In light of

US President Barack Obama’s remarks at recent G20 Summits, this forum could prove to be a very important

body for policy coordination between developed and lesser developed nations, while circumventing the very

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difficult gridlock that has entrapped the UNFCCC process. However lacking political commitments and clear

binding agreements, the G20 could remain a rhetorical forum. It must not be allowed to.

Major Economies Forum

Like the G20, the Major Economies Forum on Energy and Climate (MEF) offers great potential to promote

more robust international cooperation on clean energy matters in a forum outside of the UNFCCC process.

The MEF was launched under the initiative of US President Barack Obama in March 2009 and aims to facilitate

candid dialogue between 17 major developed and developing economies in order to develop concrete

initiatives and joint ventures to promote clean energy use and to reduce greenhouse gas emissions. MEF

members include Australia, Brazil, Canada, China, the European Union, France, Germany, India, Indonesia,

Italy, Japan, Korea, Mexico, Russia, South Africa, the United Kingdom, and the United States.

Prior to the December 2009 COP15 meeting in Copenhagen, the MEF played a very important role by initiating

a series of Technology Action Plans for clean energy. The MEF launched the Technology Action Plans for the

Global Partnership covering Advanced Vehicles; Bioenergy; Carbon Capture, Use, and Storage; Energy

Efficiency – Buildings; Energy Efficiency – Industrial Sector; High-Efficiency, Low-Emissions Coal; Marine

Energy; Smart Grids; Solar Energy; and Wind Energy. With the Technology Action Plans as a basis, the MEF

aims to increase and coordinate public sector investments in research, development, and demonstration of

transformational clean energy technologies. These efforts will be assisted by the International Energy Agency,

which has developed a preliminary analysis titled, "Global Gaps in Clean Energy Research, Development, and

Demonstration (RD&D)."

In addition to the Technology Action Plans, the MEF will regularly host a Clean Energy Ministerial bringing

together ministers and stakeholders from around the world to collaborate on policies and programs that

accelerate the world's transition to clean energy. The first such meeting was held in Washington DC on 19-20.

At the meeting governments discussed the outcome of the Technology Action Plan initiative and presented

ideas and actions for the global deployment of clean energy. The second Clean Energy Ministerial will be held

in the United Arab Emirates in April 2011.

With its central focus on the global deployment of clean energy and a broad membership spanning the

Atlantic and the globe, the MEF offers an invaluable opportunity for the US and Europe to engage each other

and other nations and to formulate concrete plans. With involvement from important actors in the US

Department of Energy and Department of State and contributions from Energy and Environmental Ministers,

the MEF has all the right people in the room to provide invaluable ideas and concrete measures for a global

clean energy transformation. By coordinating efforts with the IEA, IRENA, and the initiatives of the G20 and

national governments the MEF may prove to be a central forum in a global clean energy transformation. But,

like the G20, it must aim to produce concrete commitments and outcomes.

Climate Technology Fund

Financial support is a critical element for the large scale deployment of clean energy technologies. In addition

to obstacles presented by cheaper conventional fuels, large scale clean energy and energy efficiency projects

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are massive investments, requiring long-term planning and financial risk. Recognizing this, the international

community established a Clean Technology Fund to drive clean energy development in poorer nations. These

funds are channeled through multilateral and regional development banks including the African Development

Bank, Asian Development Bank, European Bank for Reconstruction and Development, Inter-American

Development Bank, and World Bank Group. With their support, 44 developing countries are eligible for

funding to support clean technology, sustainable management of forests, and increased energy access to

renewable energy (111).

The Clean Technology Fund provides needed support to governments in developing nations to transform their

energy and climate policies through long-term planning and projects. The CTF helps fund important

demonstration projects to scale up renewable energy, energy efficiency, and urban transport infrastructure. It

also helps to leverage private sector funding. In fact, for every CTF dollar 8.4 dollars are leveraged from other

sources (111). Such support has become critically important has governments around the world struggle to

recover from the global economic crisis.

Thus far, CTF Investment Plans totaling $4.5 billion have been introduced in 13 nations including Colombia,

Egypt, Indonesia, Kazakhstan, Mexico, Morocco, Philippines, South Arica, Thailand, Turkey, Ukraine, and

Vietnam. Additionally, projects for large scale Concentrated Solar Power have been approved for CTF support

in Algeria, Egypt, Jordan, Morocco, Tunisia (111).

The CTF has already gotten off to a strong start and, while not making headlines, will be leading to very

concrete outcomes including major clean energy demonstration projects and support for developing nations

as they formulate long term clean energy strategy. The CTF is poised to make a major contribution in

resources rich developing nations in Northern Africa and the Middle East. By supporting the rapid deployment

of concentrated solar power and wind installations, the CTF will be able to help these nations leapfrog over

more developed countries.

Going forward, it will be important that the US and Europe maintain financial and political support for the CTF

and its work. Additionally, it will be important to utilize multilateral development bank funds and foreign

assistance resources in order to leverage more funding for CTF projects. In light of the current global financial

crisis, home governments may be tempted to forego or cut such important programs. By emphasizing the

importance of supporting developing nations and the vast demand that they will have for energy in the future,

the transatlantic community can not only provide critical assistance, it will be able to open new markets for

high-tech companies and build long-term economic growth.

US-EU Summit

With policies increasingly formulated at the ‘transnational’ level in the EU, the regular meetings between the

US President and the European Council Presidency have grown increasingly important for the coordination of

US and European policies. Initiated in 1995, the US-EU summits have covered key areas of mutual US and

European interest, including matters of financial, economic, security and political concern. With the

establishment of the Transatlantic Economic Council in 2007 and the Transatlantic Energy Council in 2009,

energy has moved increasingly to the fore of transatlantic relations. The annual US-EU Summit is thus a key

forum for the Transatlantic community to forge more robust cooperation on clean energy deployment and to

initiate important new programs that will allow the US and Europe to help drive a global clean energy

economy.

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Energy was an issue high on the agenda of the 2009 US-EU Summit in Washington DC. In the lead up to the

2009 UNFCCC COP 15 meeting, US President Barack Obama discussed ways to coordinate the US and EU

position on climate change going into the meeting. In addition to addressing legislative challenges in the US

Congress, leaders discussed the need to better coordinate research and policies on clean energy and agreed to

establish a permanent forum with the Transatlantic Energy Council.

Energy is once again expected to be a key issue at the 2010 US-EU summit. Once again, it will be important

that the US and EU use the opportunity to work toward a coordinated position in the UNFCC process and to

support the efforts of the Transatlantic Energy Council. The US and Europe should continue to push forth an

agenda that reduces barriers for clean energy companies to invest in the transatlantic marketplace and

coordinates regulation of key clean energy products, including clean energy and energy efficiency production

components and systems, electric vehicles, and fuels. Promoting the mutual recognition of standards and

programs, such as EnergyStar, can have tremendous mutual benefits of the US and Europe.

Transatlantic Energy Council

The Transatlantic Economic Council (TEC) was established in 2007 with the aim to promote greater economic

integration and promote prosperity in the Atlantic community. Established by an agreement signed on 30

April 2007 at the White House by US President George W. Bush, EU Council President Angela Merkel (also

German Chancellor) and EU Commission President José Manuel Barroso, the TEC offers a particularly effective

tool to address mutual economic concerns, such as energy security and the role of the transatlantic market in

driving a clean energy transformation. The TEC received input from a Group of Advisers, consisting of the Co-

chairs of three transatlantic dialogues, the Transatlantic Legislators' Dialogue, Transatlantic Consumer

Dialogue and Transatlantic Business Dialogue. But as a rather new institution, the TEC’s great potential has not

yet fully materialized, so the importance of its role and potential must be reemphasized.

Since its first meeting in 2007, the TEC has focused primarily on the implementation of a Framework for

Advancing Transatlantic Economic Integration, including ways to coordinate compatible regulatory approaches

to goods and services and to remove barriers to mutual investment. This process has built on top efforts of

the EU-US High-Level Regulatory Cooperation Forum established at the 2005 EU-US Summit (112). In 2009, the

TEC took a bold step into the area of energy by establishing a new Transatlantic Energy Council in November

2009 with the aim to deepen the EU- US bilateral cooperation on energy security, complementing the work of

the Transatlantic Economic Council on energy (113). The Transatlantic Energy Council aims to increase

transatlantic cooperation on energy policy and technology research and to promote discussion of global

energy security and the need to switch to low-carbon energy sources. The establishment of the Transatlantic

Energy Council reflects the growing urgency of energy related matters as well as the increasing relevance of

energy coordination for the United States and Europe.

On November 5, 2009, the Transatlantic Energy Council held its first meeting chaired by US Secretary of

Energy Steven Chu and Swedish Minister for Enterprise and Energy Maud Olofsson (114). In the discussion,

which included high level government representatives from across the US and Europe, the group agreed to

focus on ways to coordinate programs and policies on energy efficiency, renewable sources of energy the

clean energy market. They also addressed the need to better integrate the business sector in these issues and

the need to promote scientific cooperation to foster development of low carbon energy technologies (114).

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The Transatlantic Energy Council is building on previous transatlantic cooperation that began at the 2006 EU

Presidential Summit in June 2006 in Vienna. Initiated by this meeting the US and EU have been working to

coordinate energy labeling of products the EU-US 'Energy Star' agreement. The forum has also been used to

discuss technological cooperation on hydrogen energy, the ITER project for nuclear fusion form an important

part of joint efforts in the field. (115)

Going forward the TEC might be able to establish far more far reaching programs and efforts, including

potential joint US-EU demonstration projects for emerging clean energy technology; permanent liaisons and

exchange programs for US and EU energy officials; increased funding for training and educational programs

that focus on clean energy success stories in the US and EU; joint ventures to build harmonized clean energy

infrastructure such as electric car powering stations, smart grid and smart metering technology and electricity

transport. The TEC should also explore the potential role that the US might plan in contributing to and

learning from the EU’s Mediterranean Solar Plan – a process that could provide key lessons as the US seeks to

harness the rich solar and wind resources of its desert Southwest.

Transatlantic Business Dialogue

The Transatlantic Business Dialogue presents a particularly valuable forum with great promise to advise the

Transatlantic Community on a clean energy transformation. Established in 1995 under the guidance of former

U.S. Secretary of Commerce Ron Brown, the TABD was intended to encourage public and civil society input to

fostering a more closely integrated transatlantic marketplace. The dialogue system, which includes separate

dialogues for consumers, labor, environment and business, is led by an Executive Board and works in close

cooperation with its conveners in the U.S. Administration, the European Commission and the Presidency of

the European Council (116). The Dialogue is funded exclusively by the membership companies and regularly

convenes meetings of the executive leadership of some of the largest companies in the world and has

provided highly influential

Transatlantic Consumer Dialogue

Like the Transatlantic Business Dialogue, the Transatlantic Consumer Dialogue plays an important consultative

role for the Transatlantic Economic Council and provides a key channel of communication for consumers on

both sides of the Atlantic. Launched in 1998, The TACD serves as the official forum of US and EU consumer

organizations to develop joint consumer policy recommendations to the US government and European Union

and to promote the consumer interest in EU and US policy making. The TACD provides input to EU and US

political negotiations and issues statements and recommendations on important food, information society,

and intellectual property and trade issues.

In light of the very direct role that energy plays for consumers, both as an input into goods and as a

commodity, the TACD offers an opportunity to focus on consumer needs and to consider ways the that the US

and EU can work together to provide benefits to their publics. The TACD has already begun to provide valuable

input on matters related to clean energy, issuing a set of comments on the EU-US Innovation Dialogue in

January 2010. In its comments, the TACD encouraged the TEC to find ways to promote and harness energy

efficient technologies, focusing on production and consumption-driven solutions. In particular, TACD

recommended a joint approach to the funding of research into energy saving; cooperation on the

development of ambitious energy efficiency and eco-design standards; the sharing of best practice and

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research regarding the use of policies and incentives to promote change in consumer behavior; exchange best

practices on how to connect effectively with consumers, such as learning from branding, psychology,

communications and social marketing to engage with them more effectively on the up-take of energy efficient

technologies; coordinated work on facilitating consumer up-take through consumer information policies such

as labeling; and cooperation regarding the use of public procurement to stimulate green innovation.

This set of comments offers a number of good ideas and illustrates the importance of such forums. In a set of

comments issued in September 2010, the TACD once again addressed the issue of clean energy innovation,

urging the Transatlantic Energy Council to address methodologies for measuring product lifecycle impacts

(including indicators on carbon and water foot-printing); to facilitate exchange of information and best

practice regarding the most effective labeling schemes that would allow consumers to make product and

lifestyle choices to manage their overall environmental footprint; and to cooperate on initiatives to remove

the least sustainable products from the shelves.

Moving forward, it will important that the contributions of the TACD and the TABD be included in the work of

the Transatlantic Economic and Energy Councils. With a direct ear to the needs of consumers, the end users

of energy, the TACD and TACB will play invaluable roles. It will be important that these forums continue to

follow and comment on developments in the energy sector and to continue to advocate for the interests of

consumers. Issues such as standards and labeling can have a very large impact on consumer decisions and

could help to reduce waste while encouraging the consumption of more sustainable products.

NGOs and Civil Society

In addition to these important government and intergovernmental forums, a host of non-governmental

organizations have been urging greater transatlantic cooperation and coordination on clean energy.

Institutions ranging from the German Heinrich Böll Foundation to the Atlantic Council and Center for

American Progress have released publications, coordinated events and exchange programs and provided

invaluable suggestions to policy makers on ways to better coordinate a clean energy transformation by

adopting best practices and sustained support programs.

In the field of renewable energy, the REN21 network plays a critical role in convening experts from around the

world in order to assess the status of global clean energy deployment. REN21 is the global policy network that

and forum for international leadership on renewable energy that seeks to bolster policy development for the

rapid expansion of renewable energies in developing and industrialized economies. It brings together

representatives from governments, international institutions, non-governmental organizations, industry

associations, and other partnerships and initiatives. Through its annual conferences, interactive website and

annual Global Status Report, REN21 provides an important forum for clean energy experts and crucial data for

policy makers and investors. Going forward it will be important the American policy makers and leaders

engage in the REN21 network, particularly as it ramps up its cooperation with the newly established IRENA.

Complementing the efforts of REN21, the Renewable Energy and Energy Efficiency Partnership (REEEP) is a

global partnership aims to reduce barriers limiting the uptake of renewable energy and energy efficiency

technologies, by focusing on emerging markets and developing countries. It was conceived in 2002 at the

World Summit on Sustainable Development and is now hosted in Vienna, Austria with support from member

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governments around the world. REEEP works with governments, municipalities, financial institutions and

industry to initiate and fund projects to assisting governments in creating favorable regulatory and policy

conditions for clean energy and energy efficiency and to promote innovative finance and business models.

Through a web of expert-oriented sub-networks, including the Energy Efficiency Coalition (EEC), the

Sustainable Energy Regulation Network (SERN) and Renewable Energy and International Law (REIL), REEEP

helps to promote the exchange of knowledge and best practices. It also operates a search engine for the green

energy world (reegle) including a clean energy blog. REEEP also works with governments in emerging markets

to help formulate laws and legislation in support of renewable energy or energy efficiency.

As members of REEEP, US and EU nations must continue to support its important work by providing invaluable

assistance to emerging nations, allowing them to develop policy frameworks that suit their needs and that will

allow for rapid clean energy deployment. They US and EU can also help to better coordinate the overlapping

efforts of REN21, REEP, IRENA and the IEA by identifying a clear division of labor and opportunities for synergy.

In light of the commitments made by the G20, IRENA and the UNFCCC, the importance of organizations like

REEEP cannot be underestimated.

A highly influential NGO with a deep network bridging the Atlantic, the Atlantic Council of the United States,

has provided some very important recommendations to business and policy leaders through its Energy and

Environment at Transatlantic Relations programs. Of note are a set of recommendations outlined in its report:

“A Shared Vision for Energy and Climate Change” issued in 2009. The report urges a strong government role

to create a holistic framework with input from industry and the public for addressing the multiple challenges

associated with transforming the energy industry. The report urges a set of coordinated communications

across the transatlantic community to help overcome growing resistance to new facilities and infrastructure,

and reluctance to absorb higher per unit energy costs. The Council encourages the creation of “Track II

workshops” bringing together business, NGOs and government experts have the potential to strengthen

significantly the understanding of issues, broaden the political will, and provide governments with useful

information on energy issues (117).

In a subsequent report, “Transatlantic Cooperation for Sustainable Energy Security”, the Atlantic Council urges

the development and commercialization of renewable energy technologies, as well as the coordination and

acceleration of demonstration projects for carbon capture and storage through US-EU cooperation. The

report emphasizes the need to quickly develop and deploy of safe, lower-cost nuclear power, and to focus on

nuclear waste and site issues, and international regulation. The report argues for the establishment of a

Transatlantic Energy Research, Development, Demonstration, and Deployment Fund to support joint research

on new technologies, as well as the creation of a transportation initiative to cut oil consumption in

transportation in half by 2030. In addition, the report argues that the US and EU assess the future availability

of oil and gas supplies and develop options, including alternatives. It urges the IEA to expand its membership

base (118).

These suggestions are well complemented by the work of the Heinrich Boell Foundation, which recently

released a report titled “Clean Energy Jobs for the U.S. Midwest -Lessons Learned from the German Success

Story of Low Carbon Growth”. In the report, author and German clean energy expert Christine Wörlen

presented her finding from a study tour of the US Midwest. Based on her observations in Germany and in the

US, Wörlen argues the case for long term sustained growth based on clean energy deployment. Citing the

German Experience, she notes that due to their nature renewable energies require more local labor than

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other energy industries and could present an opportunity for Midwestern job creation in manufacturing

renewable energy plants, as well as in installing and operating those plants, jobs that remain local in the long

and that cannot be outsourced. She also notes that the US needs state-wide standard offer programs (aka

“Feed-In Tariffs”) as implemented in Germany in order to set price signals to clean energy investors (119).

Through its Energy [R]evolution series, Greenpeace has provided some important thinking on a global clean

energy transformation, making the case that a complete shift to a low-carbon global energy is an urgent need

in order to avoid catastrophic climate change. Looking at the various financial, infrastructure and policy

needs, the Energy [R]evolution series offers some convincing arguments for governments to make a

concerted, holistic plan to reduce dependence on fossil fuel energy and to rapidly scale up clean energy

projects and infrastructure, including smart-grid, electric vehicles and large scale wind, solar, geothermal and (120) (121) (122) According to Greenpeace’s Energy Revolution Scenario – without considering the costs of CO2

emissions – the cost of the transformation will amount to a maximum of 6 billion € yearly in 2020. These

additional costs will begin to decrease after 2020, and by 2050 the annual costs of electricity supply will be 10

billion €/a below the electricity supply costs in a business as usual scenario.

The Energy Revolution Scenario notes that renewable energies will make a growing contribution to the global

economy by providing 700,000 jobs in electricity generation from renewable energy sources alone. Comprising

‘direct’ effects related to electricity generation and the production of investment goods as well as ‘indirect’

effects covering the upstream production chain. It’s anticipated that, under the Energy Revolution Scenario, in

2050 more than 90% of the jobs related to electricity generation will be linked renewable energies.

To make this transformation possible, Greenpeace urges the phasing out of all subsidies for fossil fuels and

nuclear energy and the internalization of external costs. It argues for legally binding targets for renewable

energy, the provision of defined and stable returns for investors and guaranteed and priority access to the grid

for clean energy producers. To tackle the growth of emerging economies, Greenpeace argues for a

‘decarburization’ track, engaging rapidly industrializing countries such as China, India and Brazil in major with

programs to ‘decarbonize’ their economies. The report argues for an early start and rapid conclusion of a

post-Kyoto treaty for the period of 2013-2017 that contains absolute emission-reduction caps for

industrialized countries and increasing them to at least 30% overall reductions for the third commitment

period 2018-2022 (120).

While its aims are ambitious and it’s rejection of nuclear energy highly controversial, Greenpeace continues to

play an important role in tenaciously advocating to national governments about the need to for concerted u-

turn from current fossil fuel dependence. Policy makers should listen closely to the expertise of its staff and

the arguments they make on behalf of the environment.

Like Greenpeace, the World Resources Institute based in Washington, DC, has issued a number of highly

influential reports on the global clean energy economy. Focusing on thematic and regional areas, WRI offers

some of the best thinking on a range of climate and energy issues such as CCS technology, transformation of

public transport infrastructure, Tax incentives for clean energy, Chinese policy on clean carbon, global

financing for clean technologies, the US solar PV market and a host of other issues. As a central institution in

the field of energy and climate, WRI has a will continue to play a critical role in international coordination and

knowledge exchange on clean energy (123).

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48

Finally, while officially funded and managed by the German Foreign Office, the Transatlantic Climate Bridge is

a flagship initiative that is reaping tangible benefits by promoting closer cooperation and idea exchanges

between the German clean energy sector and regional stakeholders in the US (79). Originally intended as a

means to foster better German-US bilateral cooperation by circumventing the Bush Administration’s lack of

action on climate issues, the Transatlantic Climate Bridge has already lead to some very concrete outcomes.

In addition to organizing a number of important conferences, the Transatlantic Climate Bridge continues to

support a Transatlantic Renewable Energy Exchange, bringing talented young Americans to Germany to learn

first-hand from German experts and practitioners. This unique program has already provided an opportunity

for over 20 young Americans to meet and learn from Germans about their success in advancing renewable

energy (124) (125). The Climate Bridge has also been deeply engaged with leaders in Northern Virginia who are

aiming to develop an ambitious, long-term community energy plan that will borrow ideas from Germany

municipalities by decreasing energy consumption in buildings, promoting low-carbon technologies, increasing

use of sustainable transportation and us of district heating and cooling with CHP (126).

Organized cooperatively between the German Foreign Office and the German Environmental Ministry the

Transatlantic Climate Bridge has organized an exchange between US and German farmers, hosted

representatives from the US Governors Associations in Germany and has endorsed a number of reports by the

German Marshall Fund, Heinrich Böll Foundation and the Ecologic Institute.

These NGOs and initiatives provide the critical ‘grassroots’ thinking and advocacy that will be required to

implement a clean energy transformation ‘on the ground’. By convening leading experts, local and national

policy makers and by reaching out to the next generation of clean energy stakeholders, these organizations

and many others are playing very important roles on the ‘front lines’ of policy and market transformations.

Within these reports and programs are a wealth of invaluable information on best practices and convincing

arguments for urgent action. Many of these could be replicated and applied in new areas and regions and

many could use sustained support to continue their efforts.

To promote continued transatlantic cooperation on a clean energy transformation, these organizations must

be provided with a voice and support by policy makers and private citizens alike. Heeding their words and

guided by their advice, policy makers, business leaders, and students will be provided with the information

and tools they need to succeed.

Conclusions

In the face of the seemingly insurmountable obstacles presented by our faltering global economy and an

energy system that is entrenched in dangerous fossil fuel dependence, the prospects for a clean energy

transformation and recovery seem daunting. To avoid a 2 degree increase in atmospheric surface

temperatures, the global economy must attempt a drastic and rapid about turn away from fossil fuels and

toward more sustainable, secure and clean forms of energy. To do so will require levels of coordination and

cooperation that are unprecedented. The United States and Europe, by far the greatest historical culprits of

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49

the earth’s greenhouse gas binge, must take bold and swift action and must do so in a harmonized and

coordinate fashion.

Representing the largest trade market in the world and holding some of the most influential positions in

intergovernmental organizations, the US and Europe hold the tools to make a significant impact by leading by

example and providing badly needed support to emerging economies, allowing them to circumvent the epic

error of fossil-fuel based development. Not only is this ecologically catastrophic, it is economically necessary.

As the world’s fossil fuel sources continue to be depleted, their prices and the cost to attain them will slip

increasingly out of reach. At the same time clean energy technologies will become increasingly affordable as

innovative businesses drive down their cost with new approaches and practices. But to do so, governments

and international organizations must lead the way by creating inviting markets and stable policy frameworks

for investment.

The tools for this transformation are already at hand. The challenge is no longer if this transformation is

possible, but when. It is a matter of investment in the right portfolio of clean technology solutions. From

geothermal energy to solar photovoltaic systems and smart grid integration clean technology companies are

offering the tools that nations need to kick their fossil fuel addictions. Sadly, these technologies have been

unable to compete with historically subsidized conventional fuels like coal and petroleum. This can only

change with a concerted global effort that is coordinated by the world’s wealthiest nations.

The US and Europe are already making good progress on this path, but efforts must be redoubled if the global

community is to avert a climatic disaster. Efforts by US states like California and Texas have shown that even

in the absence of global price on carbon or national renewable energy law, rapid deployment of renewable

energy technologies and green growth are possible. And through their national policies, European nations

such as Spain, Germany and Denmark have set first class examples of how to decouple economic growth and

energy consumption. The tremendous success of their policies, including the feed-in-tariff, soft loans to clean

energy projects and stiff low-carbon building codes, offer important lessons for the United States and other

emerging economies.

Drawing from these experiences and aiming to continue the rapid success of the European Union, the

transatlantic community must make use of all avenues to continue to push for an even faster advancement.

There is no time to spare. By continuing to focus on mutual interests and promoting even greater investments

into the transatlantic market the US and Europe can maintain their competitiveness in the global clean energy

market. In the face of rising competition from China and with new markets in India and Africa opening, now is

the time to act to ensure the US and European businesses have a chance to thrive in what is certain to be a

rapidly growing area of demand.

By ensuring that emerging institutions like the International Renewable Energy Agency, the Major Economies

and the Transatlantic Energy Forum are effective, the US and EU must invest the necessary time, resources

and guidance necessary for them to thrive. Alongside the efforts of existing institutions, like the International

Energy Agency, the UNFCCC and the G20, these institutions offer great promise to create a new global

institutional arrangement to better and more rapidly coordinate matters of clean energy deployment.

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50

Through financial institutions like the German KfW or the Clean Technology Fund, the US and Europe can

provide badly needed seed money for innovative start-ups and large scale power plants to provide for future

energy needs.

Finally, the US and Europe must heed the advice and expertise of civil society actors, such as the Atlantic

Council and Greenpeace, who have offered up some of the best thinking and valuable road-maps to guide

policy makers toward a clean energy future. By offering opportunities for input from forums like the

Transatlantic Consumer and Business Dialogues and by fostering exchanges of experience and knowledge

through the Transatlantic Climate Bridge, stakeholders and policy makers in the US and Europe can better

learn from one another and empower private citizen to begin making a difference by advocating new

approaches in their communities, businesses and in their own careers.

Together the US and Europe hold a key to a clean energy future. By harnessing the power of clean energy

innovation and the powerful tools presented by a range of institutions, the transatlantic community can be on

its way to a cleaner, brighter and more sustainable future. There is no time to spare.

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51

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