Chu's Wish List: Cap-and-Trade and Cheaper Solar

What are on Energy Secretary Steve Chu's wish list these days: a carbon cap-and-trade program and technologies that will make solar power five times cheaper.

Chu trekked over to a U.S. Senate hearing Thursday to pitch for more money for scientific research as the White House prepares for what it expects to be a nasty budget fight. President Obama has provided an outline of his budget proposal, though the detailed budget won't be available for another few months.

In his testimony, in front of the Senate Energy and Natural Resources Committee, Chu also nudged lawmakers into working quickly on a cap-and-trade legislation, which the administration desperately needs to fund more clean energy programs. In fact, Obama's proposed budget includes revenue from a cap-and-trade program, which he estimates would send $646 billion to the government coffers from 2012 to 2019.

"I look forward to working with others in the Administration, this Committee, and the Congress to meet the President's goal of legislation that places a market-based cap on carbon pollution and drives the production of more renewable energy in America," said Chu, speaking from a prepared statement. "Such legislation will provide the framework for transforming our energy system to make our economy less carbon-intensive, and less dependent on foreign oil."

The cap-and-trade would set emission limits for various industries, and require those who pollute above the limits to buy allowances from those who don't. The European Union launched such a program in 2005 and saw it as a way to force polluters to figure out ways to emit less – or pay up.

European countries have hoped that its cap-and-trade program would help them meet the emissions-reduction goals set out by the Kyoto Protocol. But the program's success has been mixed. Efforts to expand the reach of the program to new industrial sectors have drew strong opposition from member countries arguing that any such effort would crush businesses that already have to deal with a severe economic downturn.

This "pay to play" rule will likely be hotly debated. Already, Sen. Jeff Bingaman, chairman of the Senate Energy and Natural Resources Committee, said Obama's plan to auction all of the emissions allowances would be too costly for businesses. Instead, the government should look at giving some allowances to operators of cement factories and coal-fired power plants, for example, while selling the rest, Binagaman said.

There will be plenty of other debates about what the cap-and-trade program should look like. Several industry and environmental organizations already have started pitching their ideas to lawmakers and the White House.

Aside from talking about carbon cap-and-trade, Chu also pitched for more funding for scientific research at national labs and universities in the new federal budget. He cited a research by Dan Kammen of UC Berkeley showing that energy research only gets one-tenth of the government investments in overall research and development, and that overall investments represent 3 percent of the gross domestic product.

Chu said federal dollars should be spent on "transformational research" and cited the invention of the transistors – which are the building blocks of all electronic devices -- as an example.

"[The] DOE must strive to be the modern version of the old Bell Labs in energy research," Chu said.

He outlined several technology goals:

• Gasoline and diesel-like biofuels generated from lumber waste, crop wastes, solid waste, and non-food crops;
• Automobile batteries with two to three times the energy density that can survive 15 years of deep discharges;
• Photovoltaic solar power that is five times cheaper than today's technology;
• Computer design tools for commercial and residential buildings that enable reductions in energy consumption of up to 80 percent with investments that will pay for themselves in less than 10 years; and
• Large-scale energy storage systems so that variable renewable energy sources such as wind or solar power can become base-load power generators.

Join industry leaders and influencers at Surviving the Shakeout: Greentech Media’s 2009 Solar Industry Summit in Phoenix, Ariz., April 14–15.