While the subprime mortgage crisis is at the top of businesses' minds right now, as congressional negotiators work on a $700 billion bailout, another crisis is around the corner - "subprime carbon," said former U.S. Vice President and Nobel laureate Al Gore on Saturday.
During a keynote address at West Coast Green in San Jose, Gore described the situation is leading to another type of subprime lending that is "about to go 'splat.'"
"The world economy has trillions of dollars in subprime carbon assets," he said, "whose value is based on the assumption that it is perfectly all right, and virtually without risk, for us to collectively dump 70 million tons of global-warming pollution into the thin atmospheric shell surrounding this planet every 24 hours."
As the government works on a rescue plan for the U.S. financial system, negotiators are surely thinking that they should have prevented the crisis from ever happening, Gore said. That same lesson should be applied to carbon assets, he said.
"We should prevent the worst of the climate crisis by unwinding the overinvestment in these subprime carbon assets," he said. "It is time for a bold approach."
The United States should aim to produce 100 percent of its electricity from renewable and carbon-free sources within 10 years, he said.
It's not the first time the former vice president has touted that goal. He first urged America to take on the ambitious goal in July (see Al Gore Sets Energy Goal).
While at West Coast Green, Gore also called for a national smart grid to help home and business owners identify where energy is being wasted and to take steps to improve their energy efficiency.
He also said the grid needs to the ability to transmit renewable energy from sources likesolar-thermal parks, which tend to be built in remote locations far from the largest populations of energy users.
Gore also emphasized the urgency of the situation.
"We are running out of atmosphere," he said. "We cannot continue what we are doing. We have to have a major revolution."
But revolutions aren't cheap. Gore said a "massive one-off investment" is needed to transform the country's energy infrastructure from one that depends on what he called "dirty, dangerous, expensive" fossil fuels to resources that are free - once the infrastructure is built, and excluding maintenance costs - like sunlight and wind. He didn't suggest who should make the investment.
He also urged Congress to pass investment-tax incentives that would help offset the cost of renewable-energy projects.
The trouble is, Congress has tried several times - and failed - to extend an incentive package, which is scheduled to sunset at the end of the year. Republicans and Democrats haven't been able to agree on how to pay for them.
The U.S. House of Representatives on Friday passed a different version of tax incentives that the Senate approved Tuesday, essentially sending them back to the beginning. The Senate has previously rejected similar bills that eliminate tax subsidies for oil and gas companies to help pay for the renewable-energy tax credits (see Volley Continues Over Renewable-Energy Credits and Senate OKs $18B in Tax Credits).
Renewable-energy tax credits have been allowed to expire 17 times in the last 20 years, Gore said. The lack of steady support will keep investors from investing in renewable energy companies that depend on tax credits to fulfill their business plans, he said.
Abengoa Solar, for example, in July said it would suspend plans to build a concentrating-solar factory in the United States if the tax credits weren't extended (see No Tax Credit, No Solar Power).