Investment in Scientific Research and Development

Support for basic science and engineering is a fundamental role of government, similar to national security, emergency response, infrastructure, and criminal justice. Investment in basic research and development has historically been a high priority for federal governments. Government-funded research, coupled with private-sector application to commercial products and processes, has led to some of the most significant technological breakthroughs in the last century: computers, cell phones, the Internet, global-positioning systems (GPS)—all breakthroughs that have created enormous economic growth in the United States and globally. Public investment has been there, behind the scenes, for these important innovations, generating the basic scientific research and helping to bridge the gap between those scientific discoveries and applied research and development. This role is perhaps paramount in the sustainability transition. We know the outcomes of the investments made in science during the post–World War II era; we don't know what the innovations of the 21st century will be, but we are continuing to invest to ensure that those discoveries occur. We believe that they will change the way we think about the future of sustainability.

Over the last three decades, until recently, science funding has increased fairly steadily. The American Association for the Advancement of Science (AAAS) has tracked federal funding for R&D and found an increase from roughly $80 billion in 1978 to a peak of nearly $180 billion in 2009 before declining to roughly $130 billion in 2013 (AAAS, 2013). Over the last few years, funding for the government agencies that fund science has been roughly flat, with slight increases or decreases year to year, depending on the agency. For example, the president's proposed Department of Energy fiscal year 2015 budget represents a 2.6 percent increase above the fiscal year 2014 enacted level (U.S. DOE, 2014). Although funding for the Environmental Protection Agency (EPA) is declining—a trend that is expected to continue in the near future—other agencies responsible for investment in environmental science, such as the National Science Foundation (NSF), the U.S. Geological Survey, the National Oceanic and Atmospheric Administration, and the Forest Service, are expected to see slight increases in funding in the short term. Despite these small gains, funding for these agencies is far below other agencies, like the National Institutes of Health (NIH), which supports medical research, or the Defense Department; for example, the proposed budget for the NIH in the president's fiscal 2015 budget request was nearly $30.4 billion, compared to the $7.3 billion for NSF and $7.9 billion for the EPA, respectively (OMB, 2014).

In 2009, in efforts to bolster the global economy, countries across the globe increased federal spending through stimulus programs, which provided a quick boon to the sustainability field. In the U.S., the American Recovery and Reinvestment Act (ARRA or the stimulus plan) resulted in an increase in research funding across most federal agencies. That same year, President Obama announced a long-term goal for the United States to invest 3 percent of its GDP in research and development as part of “A Strategy for American Innovation” (OSTP, 2010, 1–2). The proposed Plan for Science and Innovation, which was never approved by Congress, focused on three main federal agencies: the National Science Foundation (NSF), the Department of Energy (DOE), and the National Institute of Standards and Technology (NIST). President Obama aimed to put these agencies on a doubling trajectory by 2017. The 2011 budget sustained the administration's commitment with increased funding for these key science agencies, keeping the doubling path on track (OSTP, 2011, 1–2). However, in a 2013 report, the American Association for the Advancement of Science found that the agencies fell short of the doubling pace, despite receiving increases (AAAS, 2013, 4).

The impact of ARRA was particularly notable for clean technology. From the period 2002–2008, federal support for clean technology (across agencies) totaled an estimated $44 billion and grew to $150 billion from the period 2009–2014 (Banks, 2011, 40). Despite these gains from ARRA, funding has decreased since the peak in 2009. In 2009, the budgets for clean tech totaled $44.3 billion and then dropped to roughly $11 billion in 2014—a 75 percent decrease in funding for solar, wind, and other clean technologies (Jenkins, 2012, 6). This continued to decline as subsidies expired. By the end of 2014, 70 percent of 2009 programs had expired and non-ARRA funding declined by 50 percent (Jenkins, 2012, 4, 6).

So, what does this all mean? What did the Obama stimulus funding actually do? To understand the impact, it's important to understand what federal funding is allocated toward. The National Science Foundation supports the physical sciences, environmental sciences, engineering, mathematics and computer sciences, and life sciences. In fiscal year 2012, approximately 88 percent of its budget went to universities and colleges, the highest proportion of any federal agency (NSF, 2013, 9). The National Aeronautics and Space Administration (NASA) focuses one-third of its research on engineering, about a quarter on environmental sciences, and the remaining on physical sciences. Of the environmental science that NASA funds, a significant percentage flows to oceanography and atmospheric and geological sciences. For example, $1.8 billion of NASA funding in 2013 supported research for a fleet of Earth observation spacecraft to better understand climate change, improve future disaster predictions, and provide vital environmental data to federal, state, and local policymakers (OMB, 2013, 183).

The National Oceanic and Atmospheric Administration's (NOAA) core responsibility is environmental science and stewardship and it supports critical weather and climate satellite programs. This includes better forecasting of ocean conditions and events; more and better data about severe storms and sea-level rise, which helps coastal communities prepare for threats; and restoration and protection of important habitats that protect communities and support healthy ocean ecosystems (National Ocean Council, 2013).

The Department of Energy (DOE), which proposed a budget of $27.9 billion in 2015, supports priority areas such as clean energy, advanced transportation, and grid modernization and resiliency (OMB, 2014). Most of the DOE's budget is devoted to nuclear weapons and nuclear waste and the part allocated to energy resources is less than 10 percent of the total. The fiscal year 2015 budget included increased funding for applied research, development, and demonstration in the office of Energy Efficiency and Renewable Energy (EERE), and expanded funding for the Advanced Research and Projects Agency-Energy (ARPA-E), with the hope of positioning the United States as a world leader in the clean energy economy, creating new industries and domestic jobs. “Within EERE, the Budget increases funding by 15 percent above 2014 enacted levels for sustainable vehicle and fuel technologies, by 39 percent for energy efficiency and advanced manufacturing activities, and by 16 percent for innovative renewable power projects such as those in the SunShot Initiative to make solar power directly price-competitive with other forms of electricity by 2020. The Budget provides funding within EERE to help state and local decision-makers develop policies and regulations that encourage greater deployment of renewable energy, energy efficiency technologies, and alternative fuel vehicles” (OMB, 2014, 74).

These investments symbolized the federal government's growing but, in our view, still small-scale effort to improve our understanding of earth, environmental, and climate science. Even so, the stimulus funding continued the U.S. commitment to international science experiments and support of the frontiers of energy research (OSTP, 2009, 2).

One program of specific note is the Advanced Research and Projects Agency-Energy (ARPA-E), which has funded a number of cutting-edge innovations in clean technologies. Created within the DOE and modeled after the Defense Advanced Research Projects Agency (DARPA), the military's primary division for new technology innovation, ARPA-E works toward developing new technologies to reduce dependence on imported energy, reduce emissions, and increase energy efficiency (Greenstone, 2011, 6). In 2009, Congress and President Obama allocated $400 million to the ARPA-E program as part of the stimulus, providing funding for their first initiatives (ARPA-E, 2014a). Over the next five years it funded 362 projects. Initiatives include projects in biofuels, thermal storage, grid controls, and solar power. “To date, 22 ARPA-E projects have attracted more than $625 million in private-sector follow-on funding after ARPA-E's investment of approximately $95 million. In addition, at least 24 ARPA-E project teams have formed new companies to advance their technologies, and more than 16 ARPA-E projects have partnered with other government agencies for further development” (ARPA-E, 2014b). It is not hard to see how investments in early stage research and basic science can lead to private sector investment during the commercialization and deployment stage. Still, considering the size of federal funding levels, allocations below $1 billion are so insignificant they are not typically mentioned.

While funding levels for basic science are not quite at post-2009 levels, they continue to be supported. Unfortunately, dysfunction in Washington, like the government shutdown in the fall of 2013, seriously impairs government's ability to do this important work. Scientists that depend on federal funding for their research cannot count on a government that could shut down at any moment over partisan squabbles. Federal funding cuts remain a significant challenge to research universities (like Columbia University, where we work), and can discourage scientists from pursuing key opportunities.

How does the United States compare to its international counterparts in federal investment in research? When examining the United States' public and private investment in R&D in terms of GDP, it represented 2.9 percent in 2009, placing it below several other developed countries including Japan (3.3 percent), South Korea (3.4 percent in 2008), and Sweden (3.6 percent) (AAAS, 2013, 21). China's continued increase in R&D investment is now on par with the European Union at 1.98 percent of their total GDP (OECD, 2014, 2). If the United States aims to be a global leader in the green economy, we must ensure that funding for science does not become politicized, and that it remains a top priority for the federal government, demonstrated through continued and increasing support.

Public Procurement

While investment in R&D will be the engine to invent the technologies of the future that will lead us towards a green economy, we must also focus on widespread adoption and implementation of both new and existing technologies and practices. Here too, the federal government has a substantial role. Fossil fuels can only be replaced by renewables when clean technologies become cheaper than dirty ones. To drive clean technology prices down, we need demand on a grand scale. Economies of scale for sustainable products and processes push those prices down, closing the gap between these new technologies and older traditional ones. The U.S. federal government is one of the few single purchasers that can use its immense spending power to be a market mover. Governments can use sustainable procurement practices to “create high-volume and long-term demand for green goods and services. This sends signals that allow firms to make longer-term investments in innovation and producers to realize economies of scale, leading in turn to the wider commercialization of green goods and services, as well as more sustainable consumption” (UNEP, 2011, 546). As is the case in many countries around the world, the U.S. government is the largest consumer of goods and services nationwide, and therefore has significant influence over the market. Christian Parenti, Professor in Sustainable Development at The School for International Training Graduate Institute, puts it clearly:

The fastest, simplest way to do it is to reorient government procurement away from fossil fuel energy, toward clean energy and technology—to use the government's vast spending power to create a market for green energy. After all, the government didn't just fund the invention of the microprocessor; it was also the first major consumer of the device…A redirection of government purchasing would create massive markets for clean power, electric vehicles and efficient buildings, as well as for more sustainably produced furniture, paper, cleaning supplies, uniforms, food and services. If government bought green, it would drive down marketplace prices sufficiently that the momentum toward green tech would become self-reinforcing and spread to the private sector (2010).

Why is government procurement so important? First, they spend a lot. The average share of public procurement in GDP in OECD countries is about 11 percent, reaching 16 percent in the countries of the European Union (OECD, 2008, 41). According to the Council on Environmental Quality in the United States, “the federal government occupies nearly 500,000 buildings, operates more than 600,000 vehicles, employs more than 1.8 million civilians, and purchases more than $500 billion per year in goods and services” (The White House Council on Environmental Quality, 2009). Second, it can be directed and executed by the president and the executive branch. The ability to act without Congress is unfortunately the key to making serious shifts toward a green economy. We will probably never see a carbon tax, but we can use the federal government to purchase clean energy now. The United States has begun to make changes in this area, announcing a sustainable procurement strategy in 2009 through Executive Order 13514. It set sustainability goals for federal agencies, focusing on increasing energy efficiency, reducing fleet oil consumption, water conservation, waste reduction, and using their purchasing power to promote environmentally responsible products and technologies (The White House Council on Environmental Quality, 2009). The executive order also called for measuring, reporting, and reducing federal greenhouse gas emissions, and in 2010 President Obama announced goals for 2020: a 28 percent reduction of 2008's direct emissions (e.g., fuels and building energy use), and a 13 percent reduction of indirect emissions (e.g., employee commuting and business travel) (The White House Council on Environmental Quality, 2009). These efforts can have a significant impact. It's estimated that the federal government can save an estimated $1 billion a year through energy efficiency measures in federal buildings (Walsh and Gordon, 2012, 35).

Governments across the globe are using procurement to advance their environmental sustainability and climate change goals. In 2012, over 30 governments and institutions supported an initiative to harness sustainable procurement processes. The initiative promotes the benefits and impacts of sustainable procurement and encourages greater collaboration between key stakeholders (UNEP, 2012, 1–2). The United Nations Environment Programme has found that “sustainable public procurement has the potential to transform markets, boost the competitiveness of eco industries, save money, conserve natural resources and foster job creation” (UNEP, 2012, 1).

Case Study: Defense Investments in Clean-Energy Technology

In the United States, the military is one of the biggest clean technology proponents. Recognizing the security implications of our fossil fuel dependence and the energy savings potential of renewables and energy efficiency, the military has consistently served as a test bed for innovation in energy. In the Department of Defense's 2014 Quadrennial Defense Review, the military outlined its vision for environmental sustainability and the critical importance that it places on these issues, as well as their increasing relevance to our national security. “The impacts of climate change may increase the frequency, scale, and complexity of future missions, including defense support to civil authorities, while at the same time undermining the capacity of our domestic installations to support training activities. Our actions to increase energy and water security, including investments in energy efficiency, new technologies, and renewable energy sources, will increase the resiliency of our installations and help mitigate these effects” (DOD, 2014, vi).

These efforts have a global impact. The U.S. Department of Defense is the single, largest energy consumer in the world, passing the consumption total of more than one hundred nations (Adamson, 2012, 1). As part of President Obama's strategy to develop the United States' domestic energy resources, the Department of the Interior (DOI) and the Department of Defense (DOD) teamed up to strengthen the nation's energy security and reduce military utility costs. The two agencies formed a Renewable Energy Partnership Plan, agreeing to work together to facilitate renewable energy development on public lands, and other onshore and offshore areas near or adjacent to military installations (DOD and DOI, 2, 2012).

The U.S. government is also able to use military installations as test beds for new technologies, with the DOD serving as a sophisticated first-user evaluating the technical validity, cost, and environmental impact of advanced technologies before they enter the commercial market (DOD, 2012, 3). The DOD is working to improve energy efficiency of buildings, improve renewable energy technologies, and develop smart microgrids. The DOD is helping create a market for emerging technologies that prove effective and reliable, accelerating the availability of next-generation energy technologies for other federal agencies and the private sector (DOD, 2012, 3–4).

According to a 2014 study by the Pew Charitable Trusts, the deployment of clean energy technology continues to expand throughout the military. They found that the number of energy efficiency projects at military installations “more than doubled from 2010 to 2012, from 630 to 1,339…the number of renewable energy projects increased from 454 to 700 during the same period” (Pew, 2014). These projects are reducing energy demand, increasing on-site energy production, and enhancing energy management (through smart grids), all of which save taxpayer dollars and advance the clean tech market. Pew, and its research partner, Navigant Research, predict that by the end of 2018, renewable energy capacity on military bases could increase by more than fivefold, putting it in position to meet its goal of 3 gigawatts of renewable energy by 2025 (Pew, 2014).

Case Study: The Production Tax Credit

Similarly, the Production Tax Credit (PTC) supports the development of renewable energy, most commonly wind, though also geothermal and some bioenergy. The PTC provides an incentive of 2.3 cents per kilowatt-hour (kWh) for the first 10 years of a renewable energy facility's operation (Union of Concerned Scientists, 2014). The tax credit has been a major driver for wind power. It facilitated the tripling of U.S. wind capacity between 2007 and 2012, with an annual average investment of $18 billion. It has also resulted in 550 manufacturing facilities across 44 states producing 72 percent of the wind turbines and components installed in the country (Union of Concerned Scientists, 2014). In 2012, wind power provided 42 percent of all new U.S. power capacity—more than any other single energy source (Steve, Severn, and Raum, 2013).

However, the tax credit for wind power, first enacted in 1992, has since expired three times, and has been temporarily renewed a total of seven times (Jenkins, 2012, 37). This on-again/off-again status has resulted in what has been described as a boom–bust cycle of development. In each of the years following expiration, installations dropped significantly—between 76 and 93 percent (Union of Concerned Scientists, 2014). The credit was scheduled to expire again in 2012, but Congress extended it at the very last minute, and it ran through the end of the 2013. However, the deal came so late in the year, that the market was unable to avoid a pull back from investors. As a result, 2013 saw a 93 percent reduction in wind installations in the United States, and the nation's lagging wind market led to a 20 percent drop in global wind development—the first decline in eight years (Eaton, 2014). By the time the extension deal arrived, it was too late to stop planned layoffs and project cancellations (IER, 2013). For example, the Danish-based wind turbine manufacturer Vestas laid off employees at their U.S. factories as a result of the tax credit expiration. In Colorado, Vestas cut its workforce by 40 percent in 2012 (Jaffe, 2013). The last minute deal to extend the credit was unable to revive the momentum that had built up over the previous years, and once again, the tax credit was not extended after it expired at the end of 2013.

This on-again/off-again extension cycle has tremendous impact on investors, price, and availability of renewable energy. Investors look for market certainty, and do not want to rely on the whims of Congress in any given year. While the industry benefited from the short-term tax extensions, they also created uncertainty, job layoffs, and higher-cost projects because organizations were unable to engage in long-range business planning. The absence of a long-term policy discourages manufacturers from investing in and expanding U.S. manufacturing facilities (Steve, Severn, and Raum, 2013), and also causes developers to rush to complete projects as they near the date of the tax credit expiration, leading to smaller projects, higher costs, and increased electricity prices. The planning and permitting process generally takes up to two years to complete, and with expirations looming, developers that depend on the credit to improve a facility's cost-effectiveness will be less likely to begin new projects. This uncertainty and last minute option for extension result in market instability and thwart efforts in wind development. Ultimately, this haphazard policy compromises long-term business investment. Solar power, biofuels, energy-efficient products, and other market segments have experienced similarly erratic expirations (Jenkins, 2012, 37). A study by Navigant Consulting in 2012 found that “a four-year PTC extension would create and save 54,000 American jobs, including growing the wind manufacturing sector by one-third.” Unfortunately, congressional politics makes effective investment decisions difficult if not impossible.

Cap and Trade or Tradable Pollution Permit Systems

Another successful market-based tool employed in the United States is cap and trade, also called tradable pollution permit systems. While often associated with greenhouse gases, pollution trading systems were originally conceived for more traditional air pollution challenges, and have been very successful to date. Cap and trade systems are designed to limit the total amount of pollutants emitted in a defined region by specified parties. Within the cap, parties either receive, or bid on at auction, emission allowances that they may use or sell for a profit. The cap sets the limit on emissions and is gradually reduced over time, while the trade creates a market for allowances, helping companies innovate in order to meet, or come in below, their allocated limits. Companies are penalized if they exceed their emission allowance. The specific reduction at each plant is not rigidly set by government regulation. The total amount of allowances each facility “owns” equals their cap, thus, a regulated entity may only emit as much of a pollutant as it has allowances for. Some initial emission allowance is given (or sold) to each facility by the government. If the facility is clean and doesn't need to use all of its allowances it can sell them; if it is dirty it can either buy allowances or clean up its facility. Since the cap is lowered on a gradual and predictable schedule, industries can plan ahead for reductions, using engineering and process innovations to meet the reduction. This option gives companies more flexibility by allowing them to make long-term investments instead of forcing a rapid change.

The cap and trade system allows companies to buy and sell allowances to match their individual needs, leading to more cost-effective pollution control and an incentive to invest in cleaner production. Each company decides the best method for its own emission reductions. If a company ends up with extra allowances, it can sell them to other companies, creating a powerful incentive to be a market leader and develop processes to reduce pollution generated by their practices. These types of market mechanisms spur innovation as companies engineer new methods to enhance efficiency and reduce pollution.

Cap and trade has been successfully implemented in the case of sulfur dioxide (SO₂) emissions. A series of studies in the 1980s found that SO₂ emissions, mostly from coal-fired power plants, were causing acid rain, which was responsible for damaging forests, lakes, and buildings in the northeastern United States and Canada. This discovery led to heated debates over how to reduce this harmful pollutant. Ultimately, policymakers concluded that directing every plant owner to cut their emissions in a traditional, top-down government approach would cost too much, impede innovation, and ignore the valuable insight and initiative of local plant owners (EDF, 2014a).

Instead, policymakers designed a unique approach—emissions trading, which is the result of collaborative efforts, led by the Environmental Defense Fund (EDF), between environmentalists and government conservatives. The cap and trade system was implemented through the 1990 Amendments to the Clean Air Act as a way to harness the power of the market by allowing each plant to decide how to cut their SO₂ emissions. This has resulted in a significant reduction at a quarter of the cost initially projected (EDF, 2014a). By 2009, the Acid Rain Program, run by the EPA, reduced SO₂ emissions by 67 percent compared with 1980 levels and 64 percent compared with 1990 levels (EPA, 2010a). A similar program was later developed for nitrogen oxides, a primary contributor to ground-level ozone (i.e., smog). The acid rain emissions trading program has been very successful, exceeding its initial objectives and demonstrating the potential of this type of policy tool. According to EPA, “A 2003 Office of Management and Budget (OMB) study found that the Acid Rain Program accounted for the largest quantified human health benefits—over $70 billion annually—of any major federal regulatory program implemented in the last 10 years, with benefits exceeding costs by more than 40:1” (EPA, 2014b, 1). In 2002, The Economist termed it “the greatest green success story of the past decade” (2002).

Case Study: Regulatory Capture in the Minerals Management Service

The now-restructured Minerals Management Service (MMS) was an agency housed within the Department of the Interior that managed the nation's natural gas, oil, and other mineral resources on the outer continental shelf. Until its restructuring in 2010, the MMS was responsible for generating revenue by leasing land to extractive companies, overseeing the process, and protecting the environment. Created in 1982, the Minerals Management Service was given two goals: (1) to collect royalties from oil companies operating on U.S. soil, and (2) to protect U.S. soil and water from the companies operating on them. Its dual purpose put the agency in a difficult position and its two goals sometimes came into conflict, especially as its revenues soared.

In the 1990s, the Minerals Management Service was instructed to accelerate royalty collection, and at the same time, 10 percent of its staff was laid off in five years. In 1995, with royalty revenues at the center of its focus, the MMS adopted a regulatory style that used performance goals instead of prescriptive rules to protect the natural environment. “Performance goals leave it to the offshore drilling industry to prevent blowouts…Prescriptive rules detail how it's supposed to do so—and hold the industry accountable if it doesn't” (Blumenthal and Bolstad, 2010). In the Minerals Management Service's case, rewards were the royalties flowing from oil and gas companies to the federal government. The desired performance was twofold: (1) good oil-drilling practice, and (2) the maximization of revenue. Unfortunately, good drilling practice was sometimes sacrificed in favor of revenue maximization. Studies funded by the MMS that called for more regulation were often ignored or rewritten. This regulatory style explains why it did not regulate the number of blind shear rams on every oil rig or insist that oil companies perform regular upkeep tests on their safety equipment. By relying on a regulatory style directed by performance goals, the Department of the Interior essentially handed regulatory power over to the industry that it was supposed to be regulating.

In the case of the BP Deepwater Horizon disaster, the Minerals Management Service consistently allowed the industry to self-regulate and make its own choices when it came to safety. It failed to enforce measures that would have prevented oil companies and their contractors from choosing cost reduction over safety. The primary cause of the Deepwater Horizon oil spill was that resource-extraction technology outpaced effective government regulation of the industry. The Department of the Interior has an inherent conflict of interest because it generates revenue by leasing government land and water for mining and drilling, and regulates those activities that take place there. Under this arrangement, the mining and drilling companies are clients of the Department of the Interior, which must also act as an unbiased regulator. A similar conflict of interest would arise if a chief food inspector were also a partner in the same city's biggest restaurant.

In response to the Deepwater Horizon catastrophe in the Gulf of Mexico, the Obama administration decided to break up the Minerals Management Service to separate its regulatory and revenue collection functions in an effort to reform the government's regulation of offshore energy development. However, this may serve to simply move the conflict up the organizational food chain, as both entities are all still housed within the Department of Interior.

The BP spill is certainly not the only case of regulatory capture, but it is one of the most visible. The Fukushima Daiichi nuclear accident in Japan, which followed a 2011 earthquake and tsunami, was also due in part to regulatory capture and oversight failure. Some defenders of the close relationships between regulators and industry claim that only those with the deep knowledge and expertise that comes from working within the industry itself can enable a regulator to truly understand the technical challenges in the field. We argue that is not the only way to gain this expertise; for example, we could instead invest in our regulatory agencies and attract top experts in these fields.

Federal Regulatory Failure

When the technology to extract resources so significantly outpaces our ability to clean up or fix failures in that system, or even to understand the environmental and health implications of those activities, we are in trouble. We are beginning to see this with hydraulic fracturing (commonly called fracking) across the United States. Fracking is a process in which water, sand, and chemicals are injected under high pressure into deep earth wells to fracture shale rock formations, which release natural gas that can be extracted. Industry has devised an innovative new method to profitably extract oil and gas that were previously unreachable, but we are proceeding before we have had a chance to truly understand fracking's impact on the geology of the land, the toxicity of the chemicals used in the process, and the resultant impact on the local communities.

In the long run, we need to develop a fossil fuel–free economy, but in the short run, we are forced to choose between the energy sources now available. Natural gas pollutes the air and emits greenhouse gases, but it is not as dirty a fuel as either coal or oil. Every energy source has costs and benefits that need to be carefully weighed before it is dismissed or adopted. Hydraulic fracturing, deep-sea oil drilling, and mountaintop removal are risky and environmentally destructive, but it is infeasible to ban them until we develop a renewable energy source that is readily accessible and affordable. Our economic well-being and political stability depend on energy. The forces pushing to extract these fuels are far more powerful than the political and economic power of those in favor of leaving the fuels in the ground. If hydraulic fracturing is to take place, then it should be carefully regulated to reduce its impact on ecosystems and public health. We should carefully study the technology of hydraulic fracturing in order to develop a set of best practices designed to reduce fracking's impact on ecosystems and human health.

The federal government's abdication of its regulatory responsibilities in this area is a legacy of the Bush-Cheney years. Through loopholes and political maneuvering, hydraulic fracturing was exempt from EPA regulations in energy legislation enacted in 2005. Hydraulic fracturing cannot be successfully regulated without national rules, and in the long run that is what we will need to do. Fracking is allowed in 30 states, yet it is not regulated at the federal level. States with no rules and little accountability, like Pennsylvania, Ohio, and West Virginia, are said to be like the Wild West when it comes to gas drilling practices. Processes in these areas can be sloppy and poorly managed, and invite environmental catastrophe. Other states have seen a backlash against fracking. In 2008, New York State issued a moratorium on fracking until more studies could be completed. New York's Governor Cuomo has worked to avoid making a decision on ending the moratorium (Klopott, 2014).

If scientific study indicates that there is no safe way to extract shale gas from the ground, the practice should be banned. A more likely outcome is that a carefully managed fracking process can be designed, but it will cost more than the current version. Given the need for energy and the cost of other energy sources, fracking can probably be profitable, even if it is rigorously regulated at the federal level.

Fracking demonstrates the lack of ability at the federal level to take on new environmental challenges. We certainly see this in other areas. We have no federal policy on climate change. We have no federal policy on electronic waste recycling and that is a growing problem due to the rapid replacement and disposal of smartphones, laptops, and tablet devices. We have not had any major piece of federal environmental legislation since the early 1990s. We are relying on existing laws, agencies, and other mechanisms to deal with new problems not envisioned when those laws were designed. We need legislators who are willing to take on the complexities of global, regional, and local sustainability issues. We also need to enhance the ability of our regulatory structure to keep pace with the industries it is meant to be regulating.

Case Study: the European Union Emissions Trading System

Despite failing to pass federally in the United States, greenhouse gas cap and trade schemes exist elsewhere at the national and regional levels. One example is the European Union Emissions Trading System (EU ETS). Launched in 2005, the European system was the world's first and largest emissions trading scheme, operating in 30 countries, and covering emissions from power stations, plants, oil refineries, and cement, paper, and other factories. According to the Environmental Defense Fund, the cap and trade program has driven significant reduction in greenhouse gas emissions, led to the innovation of new low-carbon processes, and has done so at a fraction of the predicted costs—only 0.01 percent of GDP (Brown, Hanafi, and Petsonk, 2012, 5). In the program, the EU sets a legally binding cap on the amount of carbon dioxide emissions allowed by covered entities. The price of carbon allowances on the open market is determined by the price of the penalty and the need for extra allowances.

Since its inception, emissions in sectors affected by the trading system have decreased by approximately 13 percent between 2005 and 2010. By 2012, the EU trading system was responsible for the reduction of more than 480 million tons of CO₂, more than the entire 2009 CO₂ emissions of Mexico or Australia (Brown, Hanafi, and Petsonk, 2012, vi). However, some argue that the apparent results of the EU emissions trade may be inflated. The financial crisis of 2008 resulted in reduced energy use and industrial activity in Europe. The unexpected reduction in the energy usage due to the financial crisis created a surplus of emissions permits, which lowered the price of the allowances (Reed, 2014).

The EU trading system stipulates that the revenue received from the auction of allowances must be returned to the EU member states. Eighty-eight percent of the allowance revenues are distributed to the member states based on their relative share of emissions from regulated installations in 2005. Ten percent of the revenue is distributed to the least wealthy member states as an additional source of revenue for the purpose of solidarity and growth in the European Union. The remaining 2 percent is distributed to the members who had reduced greenhouse gas emissions by at least 20 percent from their respective Kyoto Protocol base year levels (European Commission, 2014). The use of the distributed auction revenues is mostly left to the discretion of the member states, although at least half of the revenues returned to each member state is meant to be dedicated to combat climate change. Although this provision is not legally binding, member states are obligated to inform the European Commission on how they use the additional revenues (European Commission, 2014).

While the EU system is the largest system of its kind, a handful of other countries are beginning to implement programs of their own. In 2008, New Zealand implemented the New Zealand Emissions Trading Scheme that covers emissions from forestry, stationary energy, industrial processes, and liquid fossil fuels (New Zealand Ministry for the Environment, 2012). Since 2005, Japan has been operating a voluntary emissions trading scheme that covers carbon dioxide emissions from fuel consumption, electricity and heat, waste management, and industrial processes. More than 300 companies take part in this voluntary program (New Zealand Ministry for the Environment, 2012). In 2012, South Korea enacted a trading scheme that requires about 500 of its largest emitters (covering approximately 60 percent of Korea's greenhouse gas emissions) to pay for their carbon dioxide emissions beginning in 2015.

High-Speed Rail

There is currently one high-speed rail line running in the United States—the Amtrak Acela Express, which travels along the Northeast Corridor between Boston, New York, Philadelphia, and Washington, DC. However, the U.S. definition of high-speed rail is generous. Even on the Acela train, it still takes approximately 3 hours to travel the 225 miles between Washington, DC, and New York City. The Acela is also expensive; the average price of a one-way ticket runs from $150 to $200. By comparison, in Europe, you can take the Eurostar from London to Paris (approximately 280 miles) in about 2 hours and 15 minutes for £77 ($126 USD), round trip.

For more examples of successful high-speed rail systems, we look to China, which is comparable in area to the United States. High-speed rail was introduced to China in April of 2007. In less than seven years, the high-speed rail system now carries twice as many passengers each month as the country's domestic airline industry (Bradsher, 2013). Over the first five years of operations, high-speed rail traffic has grown about 28 percent per year. In fact, airlines in China have more or less ended service on routes of less than 300 miles if high-speed rail is available between the cities. They have even reduced service on routes of 300 to 500 miles because so many people can travel by train. Projections from 2013 estimated that the number of passengers using China's high-speed rail line each month would soon exceed the number of people taking domestic U.S. flights each month (Bradsher, 2013). China's high-speed rail lines have had a significant impact on local economies: a World Bank study found that the Chinese cities connected to the high-speed rail network are more likely to experience broad growth in productivity because companies are a manageable ride from tens of millions of potential customers, employees, and corporate rivals (Bradsher, 2013). China's investment in high-speed rail has not come without expense. The government has accumulated approximately $500 billion in overall rail debt, and predicts they will continue to invest $100 billion a year in the system for many years to come (Bradsher, 2013.) Despite the high price tag, China's rapid growth in high-speed rail is a tangible example of green growth that will serve the country for the next century.

High-speed rail is also a popular form of transportation in Europe. It has improved travel times on intranational corridors ever since it was first introduced in the late 1980s. In 2007, a consortium of European rail operators, known as the Railteam, formed to boost cross-border high-speed rail travel. Austria, Belgium, France, Germany, Italy, the Netherlands, Russia, Spain, Sweden, and the United Kingdom are just a handful of countries that are all connected via high-speed rail. These systems have a significant impact when it comes to reducing greenhouse gas emissions. An independent study commissioned by one of Europe's rail companies, Eurostar, found that a flight between London and Paris generated approximately 10 times more carbon dioxide emissions than the equivalent Eurostar journey (Eurostar, 2006). According to a study by the Center for Clean Air Policy and the Center for Neighborhood Technology, the United States could save around 6 billion pounds of carbon dioxide emissions per year by implementing high-speed rail between select major cities in the United States. If implemented, they project 112 million trips by 2025, resulting in 29 million fewer automobile trips and nearly 500,000 fewer flights (Center for Clean Air Policy, 2006, 1).

In 2013, President Obama requested $40 billion over five years for a new National High-Performance Rail System (Federal Railroad Administration, 2013, 6). However, almost all of the money in this program goes towards improving current rail service and infrastructure, leaving very little for research, development, and technology of new services, including implementation of new high-speed rail tracks.

Electrification of Vehicle Transportation

High-speed rail is one way to bring our transportation system into the 21st century while enhancing efficiency, advancing environmental sustainability, and improving the quality of life for riders. A second method is to transition from the internal combustion engine to electric vehicles (EVs). Electric vehicles release no emissions when operating, and are nearly zero-emission when they are fueled by electricity generated from renewable sources. Electric vehicles can also be used as batteries, storing electricity when they are not in use, and they can be charged when the grid has excess capacity late at night.

Up to this point, local and state governments have primarily led efforts to provide electric vehicle incentives and infrastructure (such as charging stations). The federal government made investments, but they have not been substantial. In his State of the Union Address in 2011, President Obama established a goal of 1 million electric vehicles on the road by 2015. The United States invested funds from the stimulus plan to help achieve this goal. However, in January 2013, the Department of Energy announced that they were easing off President Obama's goal and articulated a more modest goal of promoting advanced-drive vehicles over the next nine years and decreasing their cost as well as supporting research for new battery technologies and manufacturing methods (Rascoe and Seetharaman, 2013).

Despite this reduced goal, the federal government is building capacity for electric vehicle deployment with the EV Project. With funding from the Department of Energy, and partnerships with Nissan, General Motors, and over 10,000 city, regional and state governments, utilities and other organizations, the project deployed 12,000 electric vehicle chargers across the country. The project was tasked with installing chargers, collecting and analyzing data, conducting trials of revenue systems, and evaluating the effectiveness of charging infrastructure. It represents the largest deployment of electric vehicles and infrastructure in history (The EV Project, 2013; INL, 2014). “The data collection phase of The EV Project ran from January 1, 2011, through December 31, 2013 and captured almost 125 million miles of driving and 4 million charging events.” The Department of Energy's Idaho National Laboratory is responsible for analyzing that data (INL, 2014).

While efforts have begun, what will it take to transition to a renewable energy transport system? Currently, insufficient infrastructure and uncertainty about the future of EVs have made consumers hesitant about making the switch. We need charging stations at workplaces and other public destinations so drivers know that they will not be stranded when their batteries run low. Public charging needs to be convenient and quick to compete with gasoline powered combustion engines; no one wants to wait six hours to recharge a car battery. The construction of a national electrified transportation system goes hand in hand with the country's effort to modernize the electricity grid. Investment in R&D to advance EV technology is also crucial to tip the scale in favor of widespread adoption.

The Smart Grid

The United States needs to continue its progress toward enhancing our energy infrastructure and improving the production and distribution of electricity. By transforming the way we produce, distribute, and consume electricity, the smart grid offers the United States the opportunity to transition to a more sustainable energy future.

A smart grid leverages technology in order to produce and react to information in the electrical system. Smart grid technologies enable two-way communication between the consumer and supplier using switches, sensors, software, meters, and other devices that allow the electrical system to monitor and control in real time the available supply and demand of electricity. It will be able to conserve energy, facilitate integration of new decentralized energy resources, and make the grid more resilient, responsive, and reliable (Succar and Cavanagh, 2012, 3). For example, a smart grid enables grid operators to detect power outages in real-time, allowing them to redirect electricity, control the size of the outage, and decrease restoration times. In addition, smart grids enable consumers to understand how much electricity they are using and to choose to use the electricity at off-peak times when the prices are discounted instead of during periods of peak demand. Smart grids pair well with electric vehicles, which typically charge overnight when electricity demand and prices are low. Smart grid technologies will increase the flexibility of the grid, allowing smoother integration of renewable technologies such as wind and solar to replace current sources.

The federal government has made investments in the smart grid already, but it must decide how to proceed. The government could help develop a framework that establishes guidelines and protocols for smart grid development. There are concerns that, because the electrical grids differ by jurisdiction, nationwide regulation may be nearly impossible to implement and police. A successful undertaking with similar challenges can be found in the interstate highway system, which created a national system of transportation. To facilitate smart grid power, the federal government could modernize the transmission of electricity with a similar tax and grant structure.