Low Carbon Technology Policy

Beyond Cap and Trade

The favored policy solution to climate change over the past many decades has been “cap-and-trade.” But this approach has failed to gain traction in the US or internationally.

At CEG we have long advocated that a cap‐and‐trade system alone will not create incentives for adequate investment in expensive technologies or innovation for cost and performance breakthroughs. Instead, dedicated low carbon technology programs are needed. These include incentives, mandates, public procurement and creative public-private innovation strategies. They are needed to scale up existing technologies, but also to create breakthroughs in cost and performance of new technologies. Beyond technology, breakthroughs in business models and finance to support the technology transition are needed.

The Scale of the Energy and Climate Challenge Requires New, Cheaper Technologies 

The reasons for this direct approach are  simple – existing technologies at current costs and performance will not meet the demand for clean, carbon‐neutral energy needed over the coming decades.

The scale of the energy challenge is often underestimated. To achieve the emissions targets that scientists tell us is necessary, we must develop a carbon‐free energy infrastructure in 50 years that is larger than the entire existing global energy infrastructure, which includes all power plants, vehicles, industries, and buildings on the planet today.

All of this must happen while also providing cheap energy technology to billions of people emerging from poverty in the developing world. The costs of today’s clean energy technologies are simply not politically tenable in the developing or developed world. 

Energy Security and Economic Development  

But even without a climate perspective, accelerating clean energy development is clearly a national and international imperative.  Apart from environmental pressures, advanced economies such as China, those in the European Union, others in North America and throughout Asia see clean energy as the next big industrial revolution. Countries with economic foresight will take steps to capture as much of these emerging markets as they can in the decades ahead.

Importantly, these ideas should appeal to both those advocates of climate change and those who don't believe it is a critical problem. For those who believe climate action is imperative, they need a new approach without cap and trade. But, for those who don’t believe in climate change, they cannot ignore that clean energy technology development is one of the most important security and economic challenges of the 21^st century.

You can read more about our work in this area in the related publications on this page.