The future of clean energy in America, a guest blog by former Colorado Governor Bill Ritter, Jr.

By Ashley Grosh
April 22nd, 2014

Gov Ritter Headshot. 150 wide

Bill Ritter, Jr. is director of the Center for the New Energy Economy (CNEE) at Colorado State University. CNEE launched Feb. 1, 2011, with Ritter as the founding director. CNEE employs an assistant director, three senior policy advisors, an executive assistant and six student researchers.

CNEE works directly with governors, legislators, regulators, planners, policymakers, and other decision makers. It provides technical assistance to help officials create the policies and practices that will facilitate America’s transition to a clean-energy economy.

Ritter was elected as Colorado’s 41st governor in 2006, and built consensus to tackle some of the state’s biggest challenges. During his four-year term, Ritter established Colorado as a national and international leader in clean energy, by building a new energy economy. He signed 57 new energy bills into law, including a 30% Renewable Portfolio Standard and a Clean Air Clean Jobs policy to replace nearly a gigawatt of coal-fired generation with natural gas. In total, the Colorado new energy economy created thousands of new jobs.

Wells Fargo collaborated with former Colorado Governor Bill Ritter, Jr. to support CNEE, which provides policy makers, governors, planners and other decision makers with a roadmap that will accelerate the nationwide development of the new energy economy. That economy will create and keep jobs in the United States; encourage development and use of clean and affordable domestic energy; protect our environment and climate; and keep America on the leading edge of global competition.

1. Bill, CNEE is a relatively new initiative underway at Colorado State University. What do you think are the biggest opportunities for an organization like yours?

A central theme of my campaign and administration as Governor was to promote what we called a new energy economy in Colorado. When I left the Governor’s office, it was clear that to understand where the country was going on advanced energy is to understand how states are leading the transition. Today, more than 220 million Americans live in states with a renewable energy standard and 240 million Americans live in states with plans to reduce greenhouse gas emissions; 25 states have Energy Efficiency Resource Standards and 37 have Renewable Energy Standards. States clearly have led this transition and they will continue to lead in the foreseeable future.

For this reason, CNEE’s core work is to assist states as they continue to advance their clean energy agendas. That work includes things like crafting legislation, consulting on a new efficiency programs or natural gas rules, or advising on strategy. We have worked with nearly two dozen states since CNEE was founded.

One reason why states have been leaders is that their political environment is far different from that in Washington, D.C. Public opinion polls by Gallup, Yale University and others have consistently found over the past decade that sizeable majorities of Americans across the political spectrum favor greater efficiency over new generation, clean fuels versus traditional fuels, and action to address climate change. This public sentiment has clearly not translated into congressional action. At the federal level, CNEE’s work has focused primarily on ways the federal government can contribute to a clean energy transition, without additional action by Congress. We detail about 200 recommendations in our new report titled Powering Forward: Presidential and Executive Agency Actions to Drive Clean Energy in America.

2. The Powering Forward Plan is a significant endeavor. Tell us about how the project came about and who is involved.

The Powering Forward project was conceived in March 2013 following a meeting President Obama convened with 14 energy industry and thought leaders, including myself, to discuss what can be done to advance clean energy, recognizing that new legislation from Congress is unlikely. Following the meeting, I was asked to take the lead in bringing together many of the nation’s energy experts to develop a comprehensive collection of executive policy options. Last summer and fall, CNEE convened roundtable discussions, drafted white papers and peer-reviewed ideas in five areas of energy policy: energy efficiency, renewable energy financing, responsible natural gas production, 21st century utility business models, and alternative fuels and vehicles.

Contained in Powering Forward are more than 200 new ideas for how the Administration can reduce America’s greenhouse gas emissions over the next three years while improving the economy and our energy security. The President and his staff are inundated with ideas from policy advocates and interest groups on all manner of topics, including his energy policies. What makes this report unusual is the breadth and depth of the recommendations, the fact that it was inspired by a meeting convened by the President, and the involvement of more than 100 industry C-level executives, non-government organizations, and state officials from across the country.

Here are a few of the recommendations in the Powering Forward report:

  • Leverage the federal government’s buying power: As America’s biggest energy consumer, the federal government can create stable and sizeable markets for clean energy, including energy efficiency, renewable energy, natural gas, and alternative fuels for vehicles. We recommend that the President set even more aggressive goals than he has already for clean energy procurement by federal agencies.
  • Unleash private capital: One of the more significant actions the White House could take to spur more capital investment involves residential and commercial mortgages. We found that research over the past 20 years consistently showed that energy efficiency improvements in a home reduced the chance that its owners would default on their mortgage. The research also shows, however, that lenders still don’t feel they have sufficient proof that folding energy efficiency into underwriting, appraisals and loan qualifications reduces defaults. The federal government manages a multi-trillion-dollar mortgage loan portfolio and several energy-efficient mortgage programs (EEMs). We recommended that the Administration analyze its data to see if it verifies earlier findings about the benefits of energy efficient loans. If so, the Administration could do much more visible marketing of the government’s EEMs programs and encourage more private lenders to use them.
  • Modernize our utility regulatory polices: Utility executives told us they see the benefits to their customers from incorporating new technologies such as solar and wind power into their systems, but utility regulations are not keeping pace with the development of new energy technologies. We recommended that the Administration engage in more dialogue with utility executives to identify the barriers they’re finding in federal regulations so out of date or unnecessary regulations can be removed. We also suggested that some of the federal government’s own power assets such as the Tennessee Valley Authority could become proving grounds for the new policies utilities need to adopt to accommodate more clean energy technologies.
  • Create long-term market certainty with policy setting informed by full carbon life-cycle analysis and full cost accounting. At present, the federal government lacks the tools to do a thorough life-cycle analysis of our energy choices – analyses that count societal costs and benefits as well as environmental and economic factors. As we know, many of the energy prices in the marketplace don’t accurately reflect their true costs, from national security to public health. A state of the art method of assessing full costs and benefits would allow policy makers to see clearly which of our energy options may provide the greatest benefit to the country at the lowest cost.

3. Since you founded CNEE, Wells Fargo has become a key proponent, supporting various initiatives such as the annual Natural Gas Symposium and other renewable energy financing initiatives. Why is it important for corporations to engage and be involved in the work you are leading?

It is absolutely crucial that policy makers understand the industry perspective and vice versa. This is a time when governments are less able to provide funding to develop and help commercialize new energy technologies. At the same time, a tremendous amount of investment capital remains on the sidelines waiting for consistent public policies that support clean energy. It will be the private sector’s investments that will be the principle source of capital for a clean energy economy.

As we’ve seen in recent years, particularly in regard to the sporadic federal support for wind power, for example, government policy makers often don’t seem to understand the dynamics of industry. The current patchwork of state energy policies, financing programs, and regulatory structures combine to make a complex market for institutional as well as private investors seeking opportunities. Industry needs to be at the tables where public policies are formed. Financial institutions such as Wells Fargo, the largest tax-equity owner of solar generation in North America, are critical to creating the policies and innovations we need to drive the renewable energy marketplace in the United States.

Second, for the past three years CNEE has hosted a Natural Gas Symposium that brings together natural gas industry leaders, academia, elected officials, environmental groups, lending institutions, students and the general public to discuss, in an open dialogue, topics of public interest in natural gas development. The symposia have included presentations and discussion of the science, policy, politics and public concerns around the issue. Nearly 800 people attended last year’s symposium and another 300 people participated online through live streaming. This symposium, we think, provides a rare opportunity for policy makers to hear from a wide range of stakeholders all in the same room on issues pertaining to natural gas extraction.

Another example of a greater need for industry engagement in state policy making is in the area of state clean energy finance legislation. In 2013 alone, there were more than 400 individual bills signed into law addressing financing of advanced energy. If you talk with a lending institution about what they think would move capital off of the sidelines and into the market, it isn’t the creation of new state financing programs as much as the need for greater certainty that there will be a market for clean energy 5, 10, and 20 years down the road. Lenders want certainty that their loans will be paid back. I would argue there is too much of a disconnect in energy finance policy between policy makers and the lending community.

Institutional investors require consistent public policies that support long term investment in clean energy. State energy policy makers require a willing lending community in order to achieve their public policy objectives of economic development, job creation, environmental protection, and secure energy source for their constituents. Institutional investors and policy makers working together is the key to mobilizing these assets and realizing America’s clean energy potential.

4. As you carry this work forward and bring states, corporations, utilities and others to the table, what will be the legacy of this effort or the largest hurdle to overcome?

Only history can really judge what our legacy will be, but I think it is clear that our public policy and regulatory models around energy are evolving much faster than they have at any time over the last 100 years. Yet at the same time, utilities are moving faster than regulatory reform and technologies are moving faster than utilities.

Xcel Energy’s Colorado operating company, Public Service Company of Colorado, estimates that by 2020, their greenhouse gas emissions will be 35% below their level in 2005. That public policy transition has happened very rapidly beginning with the voter adopted Renewable Portfolio Standard, Amendment 37, in 2004.

We believe that utilities are the lynch pin for leading this transition. The current utility revenue model dates back to the beginning of last century when the public objective was to electrify the country by building large central generation plants. In this model, utilities had a financial incentive to sell more electricity and to build more power plants with guaranteed revenue and earnings. Today, public policy objectives have moved into stronger environmental protections, greater energy productivity and the development of more sustainable energy resources. In addition, there is a growing demand on the part of customers for greater product choice. In regard to productivity, for example, a recent report the American Council for an Energy-Efficient Economy found that that we are only getting one unit of work for every seven units of primary energy we put in to our economy. Yet, the current business model for our utilities doesn’t reward productivity. In addition, utilities are also rightly point out that their revenue model wasn’t designed to accommodate millions of people investing in solar and other forms of distributed generation. In short, we need a new compact with our utilities to enable the transition to a new energy economy.

In my view, the largest barrier is a political one. Unfortunately, our energy policy and partisan politics have become inextricably linked in America. There is a clear unwillingness by many of our elected officials to acknowledge that climate change is real, is caused by human activity, and that we can and should do something about it. We need to stop viewing clean, secure, affordable energy as a wedge issue, or as a Democratic or Republican issue. Clean, affordable energy is in the national interest and the interest of every energy consumer. Until Americans vote with climate and energy as a higher priority in their candidate selection, we will continue to lose the opportunity on one hand to reduce the risks of climate change and on the other, to capture our piece of the rapidly emerging world market for clean energy technologies.

5. How can our customers and team members learn more about this work moving forward, and can the general public get involved?

There are a variety of ways for Wells Fargo customers and the general public to learn more about and get involved in the work CNEE is doing.

First, CNEE maintains a user-friendly, searchable database of advanced energy legislation introduced in all 50 states called the Advanced Energy Legislation Tracker, or AEL Tracker. It contains more than 3,500 bills from the 2013 legislative sessions and, as of this blog post, 1,200 bills from the 2014 sessions. Our team adds more legislation every day as it is introduced. For readers who are interested in learning about energy legislation in your state, or legislative energy trends around the country, the AEL Tracker is the place to go. You can find it at www.AELtracker.org.

Second, for the past three years CNEE has hosted a Natural Gas Symposium that brings together industry, academia, elected officials, environmental groups and the general public to discuss, in an open dialogue, topics of public interest in natural gas development. This past year, I facilitated a discussion between Jeff Immelt, CEO of General Electric, and Chuck Davidson, the CEO of Noble Energy to kick-off the symposium. If you missed the symposium, go to http://naturalgas.colostate.edu/ to download video of each of the speakers. CNEE will host our fourth symposium in the fall of this year.

Third, the Powering Forward: Presidential and Executive Agency Actions to Drive Clean Energy in America executive summary (16 pages) and full report (207 pages) are available for download at www.PoweringForwardPlan.org.

Finally, all of these resources are free, including admission to the Natural Gas Symposium. If you have comments or suggestions on the work the Center for the New Energy Economy is doing, please let us know at http://cnee.colostate.edu/p/connect.

Tags:   climate   energy   innovation   operations   
Ashley Grosh

Ashley Grosh

As a Project Manager for Environmental Affairs, Ashley Grosh helps further the connection between banking and environmental initiatives with customers, communities, non-profits, universities, and Wells Fargo business groups. She earned a BA in Economics with a minor in Finance from the University of Colorado at Boulder, and is currently seeking an energy certificate program from the LEEDS School of Business.

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