Idea of the Day: Restoring Markets for Low-Carbon Energy

Creating dependable markets and driving demand for low-carbon energy is critical to giving the private sector the security it needs to make capital-intensive investments. One simple and budget-friendly approach is to adopt new standards that shift incentives for policymakers, energy companies, consumers, and firms to adopt low-carbon, high-efficiency policies and practices. Some examples of rules and incentives that improve market functioning in the current policy debates include:

• A cap–and-trade system, establishing a firm ceiling on carbon emissions across the economy and putting a price on carbon emissions to place clean energy on a level playing field with pollution and to fix market signals.
• A Renewable Electricity Standard, or RES, requiring every state to meet a set percentage of its power needs through renewable generation.
• An Energy Efficiency Resource Standard, or EERS, requiring every state to decrease its energy consumption through efficiency measures. And, updated codes to increase efficiency of home appliances, and residential, commercial, and industrial buildings.
• Financial incentives, such as production and investment tax credits for renewable energy; rebates for building owners who invest in efficiency improvements; and performance-based incentives to reduce carbon emissions from existing fossil fuel resources such as carbon capture and sequestration.

For more on this topic, please see:

• Creating Clean Energy Jobs to Drive Economic Recovery, by Bracken Hendricks.