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The digital revolution sweeping the energy sector would seem poised to help reduce the greenhouse gas emissions that cause climate change. Progress in artificial intelligence and computing power, the plunging cost of sensors and  other digital equipment, and rising connectivity could all make it easier to use clean energy sources and cut wasteful energy use.

Yes, but: Digitalization is a double-edged sword. Unless policymakers around the world act quickly, it could make the global energy system dirtier. Policies such as carbon pricing are needed to steer the energy industry toward digital technologies that reduce emissions rather than raise them.

Take self-driving cars, for example — a technology that could transform the transportation sector. Robot taxis could cut emissions in half by ferrying people to mass transit, facilitating carpooling, and running on clean electricity rather than petroleum. But the same study warns that they could also jack up demand for vehicle  travel by making it cheaper and more convenient. For self-driving cars that aren't electric, those extra miles could cause transportation emissions to balloon. Left on autopilot, the spread of self-driving technology could actually lead to a doubling of transportation-sector emissions.

Similarly, a smarter power grid could make it possible to deploy much more intermittent wind and solar power. And digital technologies like programmable thermostats make it much easier for consumers to save energy. But if firms move  more aggressively to use AI for predictive maintenance of fossil-fueled power stations rather than renewable energy plants, the fossil plants could live longer and produce power more cheaply. Moreover, oil and gas firms can harness greater computing power  to drill more productive wells.

The bottom line: As the digitalization of energy accelerates, policymakers must encourage the industry to prioritize emissions reduction. Policies such as putting a price  on carbon emissions would help push the market toward clean energy technologies, while leaving unfettered the free market innovation those technologies need to flourish.

Varun Sivaram is the Philip D. Reed Fellow for Science and Technology at the Council on Foreign Relations, the author of "Taming  the Sun: Innovations to Harness Solar Energy and Power the Planet" and the editor of "Digital Decarbonization: Promoting Digital Innovations to Advance Clean Energy Systems" (out today).

How to align the digital revolution with a clean energy transition

If not managed right, there's a risk tech innovations could increase emissions.

autonomous vehicle at consumer electronics show in Shanghai

A Baidu apollo self-driving vehicle on display at the June 2018 Consumer Electronics Show (CES) Asia in Shanghai. Photo: VCG/VCG via Getty Images

Energy

Renewable energy

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Alternative energy

The digital revolution sweeping the energy sector would seem poised to help reduce the greenhouse gas emissions that cause climate change. Progress in artificial intelligence and computing power, the plunging cost of sensors and other digital equipment, and rising connectivity could all make it easier to use clean energy sources and cut wasteful energy use.Yes, but: Digitalization is a double-edged sword. Unless policymakers around the world act quickly, it could make the global energy system dirtier. Policies such as carbon pricing are needed to steer the energy industry toward digital technologies that reduce emissions rather than raise them.

Ominous forecasts about the impact of climate change serve as the backdrop for the world — led by U.S. lawmakers and companies — to debate big action on the problem, which could upend energy systems and our way of life.

Energy & Environment

Tasked with defending the Trump administration’s 2019 Department of Energy budget to a Senate committee yesterday, Secretary Rick Perry instead hinted that senators should overrule White House cuts to energy innovation.

“If this Congress, this committee, supports the funding of that, it will be operated in a way you will be most pleased at,” Perry said of ARPA-E, an agency that invests in breakthrough energy technology bets and is slated for elimination in Trump’s budget.

How we got here: Last June, Perry testified about Trump’s 2018 budget — which also slashed funding for research, development and demonstration (RD&D) of new energy technologies — but distanced himself from the proposal by noting that it was crafted before he was confirmed as secretary. 

What's new: This time, Perry couldn’t escape the uncomfortable position of defending steep cuts to departmental innovation programs he supports. For example, he recently called improved battery technology “the holy grail,” but Trump’s budget slashes RD&D for energy storage by 74% and for renewable energy by 66%.

Perry likely could not count on the Office of Management and Budget, helmed by deficit hawk Mick Mulvaney, to sustain funding for energy innovation, but he knows Congress will reject the White House’s cuts. The Senate has already opposed them, and Congress passed a bipartisan budget deal in February that authorized $57 billion more than Trump budgeted. That paves the way for Congress to fund line items such as ARPA-E and maybe even budget increases: Senators from both sides of the aisle yesterday called for more technological innovation funding, from carbon capture to renewable energy.

Why it matters: Because it can boost economic growth and shore up energy security, energy innovation enjoys bipartisan support. Trump's cuts have been successfully opposed thus far, but the real test is whether Congress can marshal the political will to increase support for energy innovation to a level that will reap its full benefits.

Varun Sivaram is the Philip D. Reed Fellow for Science and Technology at the Council on Foreign Relations and the author of "Taming the Sun: Innovations to Harness Solar Energy and Power the Planet."

Trump’s Energy Secretary to Congress: Please ignore my boss

Rick Perry testified about proposed budget cuts to innovation programs he supports.

Secretary Perry at the Conservative Political Action Conference. Photo: Michael Brochstein / SOPA Images / LightRocket via Getty Images

Politics

Department of Energy (DOE)

Climate change

Tasked with defending the Trump administration’s 2019 Department of Energy budget to a Senate committee yesterday, Secretary Rick Perry instead hinted that senators should overrule White House cuts to energy innovation.“If this Congress, this committee, supports the funding of that, it will be operated in a way you will be most pleased at,” Perry said of ARPA-E, an agency that invests in breakthrough energy technology bets and is slated for elimination in Trump’s budget.

President Trump announced the first sweeping trade actions of his administration, enacting tariffs on solar panels and components (as well as washing machines) from nearly every country around the world. Even though Trump was right to blame Chinese government subsidies to its solar manufacturers for bankrupting U.S. solar producers, his "America First" tariffs are a decade too late to matter.

Solar manufacturers across Asia can now stand on their own feet without public handouts, and their massive scale enables them to win brutal price wars. As they have driven down the cost of solar panels by three quarters over the last decade, the global share of U.S. solar manufacturing has dwindled to less than 5%.

What's next: Expect minimal investment in U.S. solar factories (any that are built will be highly automated), net U.S. job destruction as higher solar panel prices shave the boom in solar installations by 10%, and Chinese trade retaliation. Ultimately, the WTO may well rule Trump's tariffs illegal. 

Trump's solar tariffs won't bring back manufacturing from China

Asian firms' dominance is now too well established.

Solar panels in Grafton, Massachusetts. Photo: Robert Nickelsberg / Getty Images

Expert voices

World

President Trump announced the first sweeping trade actions of his administration, <a class="gtmContentClick" data-vars-link-text="enacting tariffs" data-vars-click-url="https://www.axios.com/trump-issues-tariffs-on-imported-solar-panels-1516657913-8494a383-555f-45dd-b869-086a6524e94f.html" data-vars-content-id="d08dc015-2244-40ea-8913-457b21a36c6e" data-vars-headline="Trump&#x27;s solar tariffs won&#x27;t bring back manufacturing from China" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.axios.com/trump-issues-tariffs-on-imported-solar-panels-1516657913-8494a383-555f-45dd-b869-086a6524e94f.html" target="_self">enacting tariffs</a> on solar panels and components (as well as washing machines) from nearly every country around the world. Even though Trump was right to blame Chinese government subsidies to its solar manufacturers for bankrupting U.S. solar producers, his &quot;America First&quot; tariffs are a decade too late to matter.Solar manufacturers across Asia can now stand on their own feet without public handouts, and their massive scale enables them to win brutal price wars. As they have driven down the cost of solar panels by three quarters over the last decade, the global share of U.S. solar manufacturing has dwindled to less than 5%.What&#x27;s next: Expect minimal investment in U.S. solar factories (any that are built will be highly automated), net U.S. job destruction as higher solar panel prices shave the boom in solar installations by 10%, and Chinese trade retaliation. Ultimately, the WTO may well rule Trump&#x27;s tariffs illegal. Varun Sivaram is the Philip D. Reed Fellow for Science and Technology at the Council on Foreign Relations and the author of &quot;<a class="gtmContentClick" data-vars-link-text="Taming the Sun: Innovations to Harness Solar Energy and Power the Planet" data-vars-click-url="https://www.amazon.com/Taming-Sun-Innovations-Harness-Energy/dp/0262037688/" data-vars-content-id="d08dc015-2244-40ea-8913-457b21a36c6e" data-vars-headline="Trump&#x27;s solar tariffs won&#x27;t bring back manufacturing from China" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.amazon.com/Taming-Sun-Innovations-Harness-Energy/dp/0262037688/" target="_blank">Taming the Sun: Innovations to Harness Solar Energy and Power the Planet</a>.&quot;

Top stories & latest news on the Federal Reserve, real-time data, plus the biggest shifts happening in the U.S. and global economy.

Economy

After a record economic expansion, the coronavirus pandemic sent the U.S. economy into a recession as unemployment soared to staggering heights. The country now faces urgent questions about how much stimulus is needed for reeling consumers and businesses, and what a recovery might look like.

Economy & Business

From December 2019 into the next several years, a slate of federal tax credits for solar and wind power are set to expire, allowing Congress a chance to revisit this valuable plank of clean energy policy.

The big picture: Under current incentives, wind and solar power have come to produce over 8% of U.S. electricity, up from less than 1% a decade ago. But the credits have ballooned in cost — from under $1 billion in 2008 to $5.5 billion in 2018 — while doing little to promote other new energy technologies that will play a vital role in decarbonizing the economy.

Context: Clean energy tax credits are one of the rare policy tools that have a meaningful climate impact and also enjoy broad support.

Congress has passed them with bipartisan majorities several times, and recent proposals for new incentives have come from Democrats and Republicans alike.

What’s needed: Cost-effective decarbonization requires bringing new technologies to commercial scale. Three principles could help maximize the benefits of a new generation of tax credits:

Tailor incentives to the most critical applications, such as long-duration storage for renewable energy, rather than to specific technologies. That approach would prepare the U.S. electricity system for deeper decarbonization without locking in payments for underperforming technologies.

Coordinate government support for research, development and demonstration (RD&D) to ensure that novel clean energy technologies — such as advanced nuclear reactors and carbon capture and storage — are ready for commercial scale-up with the help of tax credits.

Ramp down support for new technologies as they're adopted in the marketplace, to avoid spikes in incentive costs that don't deliver commensurate returns. If laid out clearly ahead of time, these phase-out conditions could avoid chilling the climate for private investment.

The bottom line: Tax incentives are just one element of a comprehensive climate  plan, which could extend to increased RD&D funding and a price on carbon. But they are a bipartisan policy tool well positioned to scale up new technology options and squeeze emissions out of the electricity system, which accounts for more than a quarter of U.S. emissions.

Go deeper: Read more analysis from the Columbia Center on Global Energy Policy.

Varun Sivaram is CTO of ReNew Power and an adjunct senior research scholar and fellow at Columbia University’s Center for Global Energy Policy (CGEP). Noah Kaufman is a research scholar and directs the Carbon Tax Research Initiative at CGEP.

Updating clean energy tax credits could help commercialize new tech

A number of current incentives begin to expire at the end of 2019.

Electrolyte tanks of a redox flow battery, which can store electricty generated by renewables. Photo: Uli Deck/picture alliance via Getty Images

Tax incentives

From December 2019 into the next several years, a slate of federal tax credits for solar and wind power are set to expire, allowing Congress a chance to revisit this valuable plank of clean energy policy.The big picture: Under current incentives, wind and solar power have come to produce <a class="gtmContentClick" data-vars-link-text="over 8% of U.S. electricity" data-vars-click-url="https://www.eia.gov/tools/faqs/faq.php?id=427&amp;t=3" data-vars-content-id="de64758c-af4c-4b7d-b221-d8397711027c" data-vars-headline="Updating clean energy tax credits could help commercialize new tech" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.eia.gov/tools/faqs/faq.php?id=427&amp;t=3" target="_blank">over 8% of U.S. electricity</a>, up from less than 1% a decade ago. But the credits have <a class="gtmContentClick" data-vars-link-text="ballooned in cost" data-vars-click-url="https://home.treasury.gov/policy-issues/tax-policy/tax-expenditures" data-vars-content-id="de64758c-af4c-4b7d-b221-d8397711027c" data-vars-headline="Updating clean energy tax credits could help commercialize new tech" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://home.treasury.gov/policy-issues/tax-policy/tax-expenditures" target="_blank">ballooned in cost</a> — from under $1 billion in 2008 to $5.5 billion in 2018 — while doing little to promote other new energy technologies that will play a vital role in decarbonizing the economy.

Adapted from Livingston et al., 2018, "Applying Blockchain Technology to Electric Power Systems"; Chart: Axios Visuals

In 2017, startups raised over $300 million to apply blockchain technology to energy, and deal flow has only ballooned in 2018. Although evangelists herald blockchain as the new internet, capable of upending mainstays of the energy sector like the centralized power grid, many applications have created more hype than value.

The big picture: There has been a dearth of straightforward, publicly accessible data on blockchain experiments in the energy sector, but that’s starting to change. What we’ve seen so far makes clear that some of the humbler initiatives — those that work within the existing system and partner with incumbent utilities and regulators — are likely to have the greatest impact.

The details: Within the electric power sector, there are five major categories of blockchain applications.

Electricity trading markets: Some of these aim to upend the centralized electric power system by introducing peer-to-peer transactions (such as trading rooftop solar power), while others seek to incrementally improve it through grid transactions (such as enhancing existing wholesale energy markets).

Energy financing: Startups have proposed using cryptocurrencies to raise funds for energy projects, overwhelmingly in the clean energy space. 

Sustainability attribution: Blockchain could be used to record and trade attributes of sustainability, including whether a unit of electricity is renewable and how much emissions resulted from its production.

Electric vehicles: Blockchain networks could enable private owners of electric vehicle charging infrastructure to sell charging services, enabling greater electric vehicle adoption and helping to stabilize the grid through smart charging.

Others: Less common applications include orchestrating customers' internet-connected appliances to help balance the grid and enhancing the grid's cybersecurity.

Although the largest number of blockchain ventures aim to replace the centralized grid with peer-to-peer electricity networks, the electric power sector is slow to change and has powerful incumbents, making a radical transformation unlikely.

Instead, the most promising applications — such as making existing trading markets more efficient and orchestrating far-flung networks of customer appliances — seek to manage the increasing complexity of the electric power system, which is under strain as intermittent solar and wind generators, power-hungry electric vehicles and decentralized electrical equipment connect to the grid.

What’s next: Because the electric power sector is highly regulated, policymakers will play a crucial role in determining how much of blockchain’s potential can be realized. An important first step is understanding what blockchain is and what it can and cannot do. One strategy, which energy regulators in the U.K. have tried, is to create a "sandbox" that relaxes regulations in a limited section of the grid so that entrepreneurs can experiment with blockchain and other new technologies.

David Livingston is deputy director for climate and advanced energy at the Atlantic Council’s Global Energy Center. Varun Sivaram is the Philip D. Reed Fellow for Science and Technology at the Council on Foreign Relations.

Go deeper: "Applying blockchain technology to the electric power sector" at CFR.org

Where blockchain will really matter in energy

Managing the growing complexity of the grid is more pressing than decentralizing it.

Electric power

Business

In 2017, startups raised over $300 million to apply blockchain technology to energy, and deal flow has only ballooned in 2018. Although evangelists herald blockchain as the new internet, capable of upending mainstays of the energy sector like the centralized power grid, many applications have created more hype than value.The big picture: There has been a dearth of straightforward, publicly accessible data on blockchain experiments in the energy sector, but that’s starting to change. What we’ve seen so far makes clear that some of the humbler initiatives — those that work within the existing system and partner with incumbent utilities and regulators — are likely to have the greatest impact.

Varun Sivaram

Stories

Updating clean energy tax credits could help commercialize new tech

Where blockchain will really matter in energy

How to align the digital revolution with a clean energy transition

Trump’s Energy Secretary to Congress: Please ignore my boss

Trump's solar tariffs won't bring back manufacturing from China