Steven Chu came to Washington expecting to manage a massive expansion of energy R&D. Chu had cut his teeth as a research scientist at the justly famed U.S. government-funded Bell Labs, which he saw as a model because they were responsible for inventing or developing a range of devices now part of the fabric of American life, from fax machines to TV transmission, radio astronomy, solar panel cells, the transistor, calculators, cell phones, Wi-Fi, and hundreds of other technological miracles.
Chu had never bought the idea that, in Al Gore's words, "we have all the technology we need" to solve the climate problem. Instead, he told the New York Times that Nobel-caliber breakthroughs are required in chemistry, physics, and biology to make more efficient batteries, solar panels, and biofuels that can compete with fossil fuels in price, and that nuclear power is needed to displace coal.
Unfortunately, his view hasn't shaped the actions of the administration or Democrats in Congress. By early spring it was clear that Democratic leaders on the House and Senate budget committees were not inclined to honor the president's request for a dramatic scale-up of federal clean energy R&D and that the White House was not inclined to fight for it. And with greens and establishment Democrats fully lost in the magical idea that we can achieve massive emissions reductions through conservation, efficiency, and existing renewable technologies, there was scarcely any constituency inside the Beltway for the kind of big energy-technology program that Chu had hoped to launch.
Incumbent energy interests were happy to indulge the magical thinking by green groups and Democrats, who have been certain since Jimmy Carter's administration that solar and wind are on the verge of becoming economically competitive with coal and oil. And so a deal was cut by green groups, coal utilities, and Reps. Henry Waxman and Ed Markey, who co-authored the legislation. Energy firms could purchase offsets rather than reduce their emissions for a far-off target date. The price of carbon dioxide would hover around $15 per ton -- a far cry from the $70 per ton that Chu suggested would be needed to result in significant deployment of clean energy technologies. And utilities would be given trillions in free pollution credits even while raising energy prices for consumers.
The green giants in Washington -- the Environmental Defense Fund (EDF), the Natural Resources Defense Council (NRDC), and the Center for American Progress (CAP) -- claimed that cap and trade would constitute a breakthrough, and Chu dutifully defended the legislation, expecting it would include his $15 billion for R&D.
But Waxman and Markey ended up using virtually all of the money raised from carbon auctions to buy off fossil fuel interests, leaving virtually nothing for technology innovation. Believing that a carbon price -- any carbon price -- would work as a quasi-mystical "price signal" on the market, ushering in a world of solar farms and electric cars, they stiffed Chu.
In the end, Waxman-Markey would give R&D $1.1 billion a year, less than a third of current levels, and would give coal and utility companies $32 billion.