Use policy to proactively shape the market.

Advocates

Compare

American Recovery and Reinvestment Act of 2009

The ARRA included a $13 billion allocation to companies to extend tax credits for renewable energy production until 2014.

Tom Friedman

When markets underprice goods and services by failing to price their externalities… it’s the job of government to step in and shape the market Hot, Flat, and Crowded, 309

If you want to bring about a mass movement toward more energy-efficient cars, windows, buildings, power-generation systems, lighting, and heating, the simplest way is to make sure that the true cost of using any and all hydrocarbon-based fuels is reflected in their price to consumers—the true climate costs, the true environmental costs, and the true geopolitical costs… Price those into every product and the market will do the rest. Well, why doesn’t the market reflect the true cost of the things being sold? … the government has failed to shape the market with honest prices. It is not a ‘market failure.’ Markets don’t price externalities when they don’t have to. It is a leadership failure. Hot, Flat, and Crowded, 302

Bottom line: America needs an energy technology bubble just like the information technology bubble. In order to get that, though, the government needs to make it an absolute no-brainer to invest in renewable energy. Hot, Flat, and Crowded, 307

USGBC

The USGBC advocates government incentives for green building practices. It states, “One of the most effective strategies to encourage green building is through financial or structural incentives. Rewarding developers or homeowners who adopt green building techniques spurs innovation and demand for green building technologies.” It also states, “Financial incentives, including tax credits/ abatements and revolving loan funds, are a highly successful means of encouraging developers to follow green building practices.” (http://www.usgbc.org/ShowFile.aspx?DocumentID=6247 “Financing and Encouraging Green Building in Your Community”)

Commentary

Sustainable South Bronx

In its campaigns to cut down truck emissions in the South Bronx, SSBx takes advantage of government-led incentives but recognizes that the incentives for business owners are often market-based.  Environmental Policy Analyst Jaime Stein explains her experience with truck retrofits:  

“There was all this money with the Stimulus... for placing these incredibly expensive particulate filters on trucks. PM [Fine particulate matter] 2.5 or PM 10 and really small particulate matter that comes from combustion of diesel engines, which are mostly long-haul trucks, one of the main triggers or causes of asthma.... [P]eople who own fleets will not purchase those filters. If the government gives them money to put them on, it makes them feel better, they'll do it. But maintenance and operation of them is not something that they're going to spend any money on.

"As we looked further into that, it became clear to us that the answer is not these cost-prohibitive technologies that the government pays for, that an owner would only put on if they were forced to, or if they were given them, because it might make them feel a little bit better.  What we found is that it wasn't highly accepted. 
 
"A lot of what SSBx does is we engage the business community, because we’re situated in a space that is highly industrial and highly polluted. We engage because we believe that keeping the industry and greening it could retain jobs, could retain that sort of community resilience that comes with having economic safety or security, but also improve the air quality by helping that business to green. So, the idea is to engage fleet owners and work with them to do a retrofit that's cost-beneficial. So it's about finding what that is and convincing them to do that.
 
"We know what the incentive is.  'Is it going to save gas money? Is it going to save maintenance money?' Yes.  ... So, it’s about going to the really small fleet owners, seeing how they’re operating, and seeing if we can’t retrofit the refrigeration unit, so that they can, in a more fuel-efficient way, keep the cargo and the cabin cool, like for air conditioning. … To me, that’s a real, direct impact of the free market, which is how I would term it, because hopefully we can create a little business around folks doing cabin heaters or reefer retrofits. The people that get them save money, and then that can sustain itself, rather than the government coming in, putting something on, and then it doesn’t go further than that." Underdome Interview, Jaime Stein
 

Heather Rogers

"I think the role of government is really important. But of course it's not everything, because it can't be. …But one of the things that the German government has done which is really successful, is they have this thing called the Feed-In Tariff, for subsidizing people installing solar panels. It's really simple, the way it works is: if you want to put solar panels on your roof you install them, you pay for it up front. … And you sell that power to the utility....So what this has done is, it allows people to pay off their solar panels in seven to eight years, and then they get 12 or 13 years of just profit from it.... So now one in every hundred Germans has solar panels and it's really effective. So that's facilitated by government, but it's not government-funded. But it is funded with ratepayers’ money, so I guess you could call it a public-private partnership or something, but it's the type of thing that it works, so why not do it?...

"But yes, I think the role of government is really crucial, and I mean not just in making these kinds of environmentally-sane decisions but of course also the decisions that they make that are really destructive, the way that they subsidize and encourage and foster with research and all kinds of other supports [things like] industrial farming and fossil fuels, oil exploration, and all that....

"So to separate those things is a tremendous undertaking that needs to be done-- and that's the thing, ultimately in the research that I've done-- where I'm at right now is that the problems and barriers we have are not technological. They're not scientific. We know what's wrong. We know how to fix it. We basically have what we need. It’s not that technologies can't be improved, of course they can. But the reason that we're still in this downward spiral is political. And everyone says that.

"That's where you get to: you have to generate the public will. Everybody says it's a lack of political will. And that's just the way of kind of writing it off. I think it's maybe more useful to talk about it in terms of a lack of public will. And so how do we generate public will?"

(Underdome Interview)

References

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