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Will American ingenuity and entrepreneurship be the key to reducing emissions and solving climate change? In his new book, "Earth: The Sequel," Environmental Defense Fund President Fred Krupp highlights entrepreneurs throughout the United States who have ventured into the clean tech world. Krupp details how these innovators are not only creating solutions to climate change but also establishing successful business ventures. During today's OnPoint, Krupp discusses the book and gives his thoughts on the future the job market as the United States looks to reduce emissions. He addresses concerns over the high cost of researching and developing new technologies and gives his take on the presence of climate and energy issues in the 2008 presidential race.
Monica Trauzzi: Welcome to OnPoint. I'm Monica Trauzzi. Joining me today is Fred Krupp, president of the Environmental Defense Fund, and author of "Earth: The Sequel: The Race to Reinvent Energy and Stop Global Warming." Fred, thanks for coming on the show.
Fred Krupp: Glad to be here, Monica.
Monica Trauzzi: Fred, rather than focus on the science of global warming or get into this sort of 300 page policy debate on how we should be approaching solutions to climate change, your new book sort of takes a more hopeful approach and you talk about how American ingenuity can help to solve the problem of climate change. Why did you decide to go this route? You've been in this business for longtime. You know these issues really well and you could probably affect change by writing a book about this specific policy. So why did you go this route?
Fred Krupp: Well, you know, I began to have a glimpse of the future while listening to the venture capitalist John Doerr talk about all the things that he was investing in that would profit from the coming regulation of global warming pollution. And as I saw him lay out the puzzle pieces one by one, I realized that they fit together into a real glimpse of what was coming. And what's coming is the complete transformation of a $6 trillion sector of our economy, the energy business. We are going to be generating energy in whole new ways that reduce global warming pollution and I thought it was important to give people a glimpse into that future because it has so many implications.
Monica Trauzzi: We're at a very critical time for these issues, so is this sort of hopeful, cheerier approach than other doom and gloom books a good way to go? Does it spur action enough do you think?
Fred Krupp: Well, I think when people can see over the horizon to this new future and realize that, sure, American ingenuity can help solve this problem, once government does what it needs to do, which is to put a cap on global warming pollution, I think people are more likely to get engaged in bringing about that future once they see that there is reason to be hopeful. Frankly, in my 30 years of doing this work, the sense of powerlessness is the biggest obstacle we have to people participating in our democracy. So, I think there is a strategic reason. I would own up to that, but it's definitely going to happen that we will be recreating our economy. And I know that, particularly now, because the presidential field has winnowed down to just three candidates, all three of whom are for a strong cap-and-trade policy that will put a lid on global warming pollution. Now we know that the entrepreneurs and the inventors profiled in this book are going to be the next billionaires in the future.
Monica Trauzzi: Is there any one presidential candidate do you think would do the best job at keeping the economy on track and also helping on the environmental front?
Fred Krupp: I think we're lucky that all three of them have been in favor of a cap-and-trade policy, which will get the reductions we need, but will also give the incentives we need to get the lowest cost answers. Particularly now, as we head into a potentially a recession, a solution, policy option that hunts down and causes entrepreneurs and businesses to hunt down the latest technologies that can tackle the problem at the lowest cost. That's exactly the sort of policy that I think has the best chance of solving the problem.
Monica Trauzzi: All right, so let's tackle that for a moment. Recent reports by the American Council on Capital Formation, the National Association of Manufacturers, EPA, Charles River Associates, they all point to the negative implications that the Lieberman-Warner bill specifically could have on the American economy. Should we be proceeding with caution, with this bill in particular and cap-and-trade in general, not necessarily knowing what the economic impacts are going to be?
Fred Krupp: Well, first of all, there's an environmental imperative that we solve this problem. No one wants to damn our children to a global warming world. But second of all, I think it's important to note that the consensus of the models out there does predict there will be some costs. Now, these models are always pessimistic. In the case of acid rain, they predicted that the cost of solving the problem would be 10 times greater than they turned out being. In fact, EPA has now estimated that the benefits from solving acid rain or reducing sulfur dioxide vastly outweighed the minimal costs. So, perhaps in 30 years, the models show that the economy will double. Instead of doubling by January 1, it will double by February, March, maybe July, so it's really a few months of economic growth, at most, that even the pessimistic modelers predict.
Monica Trauzzi: What about jobs? In the book you're talking about all these different technologies in these different sectors that are going to grow tremendously. People are going to become billionaires over it. But there is some concern about job loss on the flip side with these energy intensive industries, in the oil industry, the coal industry. How do you balance the two and are those job losses going to outweigh the green-collar jobs that are going to be created?
Fred Krupp: Well, we need to be concerned about all jobs and we need to find a way to make global warming policy work for everybody. Chapter 8 in the book talks about solutions for coal, where there's many promising technologies to actually take the carbon dioxide out of these smokestacks that burn coal. So, a cap-and-trade policy actually is the best solution for those in the fossil fuel industry, because it leaves the flexibility for them to compete, although compete on an even playing field. So, yes, it does give it a big boost to solar energy and wind power and ocean power because it makes fossil fuels clean up their emissions, but they're still offered the opportunity to compete once that playing field is leveled.
Monica Trauzzi: On coal specifically though, there is still a lot of uncertainty about where the carbon capture and sequestration technology lies and how far we can get with it and in what timeframe. I mean there are estimates that we may not be able to implement it for 15 to 20 years. Are we being too hopeful about a technology like that?
Fred Krupp: Not at all. One of the fellows I met, Ellie Gaul, is an engineer. He was working for GE when the acid rain law was passed. The scrubbers that took sulfur dioxide out of the smokestacks didn't work too well. They kept getting gummed up in the old days, but once the first President Bush signed into law the Clean Air Act Amendments of 1990, suddenly companies had an incentive to get more sulfur out of their smokestacks. And so the acid rain scrubbers were dramatically improved. I asked him the same question you are now asking me, well, what about carbon dioxide? He said, "The only thing between now and companies capturing CO2, is the government just has to ask it, ask companies to do that." So there are many entrepreneurs. He's working with Alstom, the French manufacturer of pollution control equipment. Many entrepreneurs are onto this problem and there now are a plethora of demonstration projects being built. It's quite doable.
Monica Trauzzi: So, the government needs to be asking companies to do this. Should there be subsidies?
Fred Krupp: Well, I would say the government needs to, I did say asking, but I meant requiring. We need a hard cap on carbon dioxide. And I'm sure that whatever bill is passed there will be provisions to bring along this technology.
Monica Trauzzi: And so, are you satisfied with the Lieberman-Warner bill or are there specific changes that you think should be made in order to make it a strong bill, a viable bill?
Fred Krupp: I think it is a strong bill, of course, there's always tweaks. Any of us who spends time in this town would always like to rewrite a section or two. But I think right now I'm proud of the leadership that Barbara Boxer has shown to get the bill out of committee. I'm looking forward to a vote on the floor of the Senate in May or June and I would very much like to see the Senate move this legislation and the House to come along too. This is an urgent problem. We not only have huge environmental stakes, but we have economic stakes. Other countries have gotten their entrepreneurs into the game by putting a cap-and-trade system in place. The sooner we do, the sooner we will be giving our solar energy entrepreneurs and our biofuel entrepreneurs the real incentives that they need. You know, there's a story in the book about Amyris, which takes sugar and reprograms yeast and turns it into not ethanol, which has a series of problems, but turns it into gasoline or even jet fuel. These are the entrepreneurs who really benefit by having a system that measures carbon output and penalizes that and measures carbon reductions and rewards that. It's what allows American ingenuity to really go to work and solve the problem. You know, frankly, Monica, while it's true that the profit motive got us into this fix, I've come to believe that it's the profit motive and innovation that can get us out of this fix.
Monica Trauzzi: Paying for the research and development of these technologies is expensive. Do you believe that there's going to be a trickle-down effect to the consumer and that utility rates and costs for energy are going to be higher than they are now? And that the customer might not like that and accept these technologies as readily?
Fred Krupp: Well, the research that the government pays for, so far, is only a billion dollars a year for renewable energy. That's compared to Exxon's sales of a billion dollars a day. So I do think the government should spend a little bit more money. But the beauty of the Lieberman-Warner bill is that instead of having the government pay for this, it's the polluters that actually pay and the money goes to those innovators. Sure, electric rates in some areas will rise, but they would come down as consumers install energy-efficient flat screen TVs, as well as light bulbs, as well as washers. So, while the rate per kilowatt hour will go up, it's not at all clear that household electricity bills will go up more than a very small amount.
Monica Trauzzi: Final question here. There is a clear divide in the business community. There are those businesses that are all for a cap-and-trade and they want action as soon as possible. And then there are those who, in these sort of more energy intensive sectors, that are concerned about what a cap on emissions might mean for their bottom line. Do you think that both sides of the debate are being heard equally or are the pro cap-and-trade businesses getting more attention?
Fred Krupp: Well, I think the real news is that when we passed the Clean Water Act or the Clean Air Act, there weren't any businesses for a strong program. Now, we have 29 major Fortune 100 companies in favor of a strong cap-and-trade program. This is unprecedented and it really deserves tremendous coverage, because it, along with the three presidential candidates being in favor of this, mean we are about to see a cap put on global warming pollution and a transformation of the economy, which I think is going to be pretty damn exciting and create a lot of jobs as well as a lot of wealth and prove that we can save ourselves from ourselves.
Monica Trauzzi: All right. We will end it on that note. Thanks for coming on the show, Fred.
Fred Krupp: Thank you, Monica.
Monica Trauzzi: This is OnPoint. I'm Monica Trauzzi. Thanks for watching.
[End of Audio]
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