CCLC2020: Open for Innovation
On September 24, 2020, Rod Richardson and Trammell S. Crow of EarthX co-hosted a Zoom Charrette (perhaps the first with a public policy focus) exploring new free market strategies to more rapidly open US and global markets to clean technology competition and innovation. Jigar Shah helped Rod kick off the dialog with an overview of next generation free market policy for clean energy, in the context of COVID recovery.
We were delighted to be joined by so many expert participants - from the UK, Canada, the USA, Mexico, and Honduras. During this, the 4th Annual meeting of the Clean Capitalist Leadership Council, we explored the range of new free market policies, especially as applied to innovative new clean technology, and discussed potential avenues to open markets around the world more rapidly. The agenda and participant list can be found on the event page.
- Highlight Reel
- Session 1: Opening Power Markets to Innovation and Competition
The energy transition gets a lot of airtime in policy circles. Yet how will this actually occur? Will existing power utilities abandon their infrastructure and switch to renewable sources? Or will upstart independent producers get a toe hold in power markets and introduce additional types of energy sources along with new competition in pricing? Rod Richardson of the Clean Capitalist Leadership Council guides the discussion on the merits of open markets, price competition within those markets, and the potential for greater open power markets within the United States. To discuss the domestic impact of open markets, Rod was joined by Lynne Kiesling of Carnegie Mellon University, who moderated the discussion with experts Pat Wood of the Hunt Energy Network, Michael Giberson of Texas Tech University, and Jigar Shah of Generate Capital. A leading example of an energy system undergoing profound change was explained by Guillermo Peña Panting of Fundación Eléutera in Honduras. Guillermo, flanked by Jose Morán and Kevin Rodriguez, explained how the transition in the Honduran energy market began, highlighting big obstacles to overcome, as well as pointing to new systems in place to improve openness, reliability and affordability - all of which has served to enhance Honduras' ability to participate in international financial negotiations.
- Session 2: Intro to Clean Tax Cuts & Clean Free Market Policy as Incentives for Competition
Tax exempt private debt has been considered a game changer for small businesses seeking to recover from the economic collapse brought on by the COVID-19 pandemic, and has the potential to open billions of dollars in capital for eligible low- to no-emission energy assets. Listen to thoughts from Jigar Shah of Generate Capital, a leading investor in the clean energy space. Other comments come from Jeremy Harrell of ClearPath, Travis Bradford of Columbia University and the initial proposer of tax-exempt private debt in our charrette in 2016, Steve Nadel of ACEEE who has taken the lead on crafting the legislative approach on this clean free market policy, and Rod Richardson, the champion of the Clean Tax Cuts concept.
- Session 3: Brainstorming New Free Market Trade & Incentive Strategies to Open Markets Faster
The Brainstorming Session moderated by Steve Nadel of ACEEE with an assist from Marcin Branowski, the new director of the British Conservation Alliance, yielded several new ideas from the Clean Capitalist Leadership Council and Clean Capitalist Coalition members, as well as new ideas from the invited speakers and Zoom attendees. See the list of ideas below.
- Session 4: Exploring New Strategies for Clean Open Markets in the United States
Lynne Kiesling of Carnegie Mellon University and Sarah Hunt of the Rainey Center moderated this session on power markets within the United States. The regulatory and business side of power markets were discussed by Jim Connaughton of Nautilus Data Technologies, Travis Kavulla of NRG, and Pat Wood of the Hunt Energy Network. The advantages of open and competitive power markets were outlined, continuing to praise the power market structure in Texas, and strategies - even controversial strategies - for how to deal with monopoly power interests, were also contemplated. On the policy front, two members of the Rainey Center LAMP program, Del. Linville from West Virginia and Rep. Jackson from Alaska, touched upon the challenges facing these two energy stalwarts. Emerging ideas for potential pathways along the energy transition include tax cuts for utilities who voluntarily unbundle their monopoly energy assets (demonopolization tax cuts), and the use of 'Green Patent Boxes,' to drive economic activity and intellectual property protection to those states. The idea of Green Patent Boxes was first put to the group by Hendrik Brakel, Chief Economic Advisor to the Opposition within the government of Canada, during the previous Brainstorming Session.
- Session 5: Free Trade & Clean Free Trade: Post WWII Lessons, Anti-Competitive Market Distortions, the Agreement on Climate Change, Trade and Sustainability
The international perspective came into focus for Session 5. Roberto Salinas León of the Atlas Networks' Center for Latin America highlighted the value of free trade agreements within North America, and passed along the proposal for a clean energy enterprise zone along the US-Mexico border, featuring solar and wind farms to power the region. (This was complemented in the final session by an update from Bruce Lourie of the Ivey Foundation about a North American regional energy zone encompassing Quebec and other Eastern Canadian Provinces with states in New England - especially Maine, Vermont and New York.) Across the Pond Julian Morris of the Reason Foundation and Shanker Singham of Competere spoke about the importance of dealing with anti-competitive market distortions, and the rare policy opportunity presented by the UK and Brexit. Ronald Steenblik of the IISD informed the gathering about the Agreement on Climate Change, Trade and Sustainability (ACCTS), which led into a broader discussion on national and international standards, regulations and tariffs.
- Session 6: Exploring New Strategies for Clean Open Markets Globally
The final session of CCLC2020 included Charles Hernick of CRES Forum, who spoke about his organization's bipartisan, bicameral bill called the Growing Climate Solutions Act which seeks to enable US farmers and other land managers to participate in the carbon market by trading offsets. The group noted that this initiative has potential to allow cross-border carbon offset trading, and could engage farm, forest and land managers in reducing emissions, and benefit those same managers in a meaningful way. On the heels of Roberto Salinas León of the Atlas Network, and his mentioning of a potential energy enterprise zone straddling the US-Mexico border in Session 5, Bruce Lourie of the Ivey Foundation in Canada, discussed ongoing plans for a North American regional power market encompassing Quebec and other Eastern Canadian Provinces with states in New England - especially Maine, Vermont and New York. The discussion on trade, tariffs, and anti-competitive market distortions rounded out the program, which led into an overflow discussion on national and international standards, regulations and tariffs. Next steps from the Clean Capitalist Leadership Council include additional charrettes to drill into some of these ideas, and an ongoing video series interviewing key players in the realms of policy, trade, energy and technology.
- Full Charrette Presentation
The group generated and explored several new and existing straw proposals during the charrette, including:
- Patent boxes for green technologies – taxed at lower rate, perhaps even with cross-border options.
- Demonopolization Tax Cuts – utilities would not be taxed on gains from selling monopoly assets.
- No more subsidies for monopolies
- Treat climate-tech investments like Opportunity Zones: no capital gains tax after holding asset 10 years or more.
- Instead of a US/Mexico border wall, establish a cross-border, tech neutral clean energy enterprise zone, with robust cross-border energy trading.
- Make it easy for private investors to spread innovation abroad: e.g., not be taxed on capital outflow or inflow
- Clean asset bonds and loans: low- to no-tax on investments in eligible assets or on loan interest
- Co-Victory bonds and loans: low- to no-tax on investments to small businesses as part of COVID recovery during a two-year loan window with a five-year payback schedule
- Competition for utilities within performance-based ratemaking (PBR) for GHG reductions
- Innovation incentives combined with clean energy standards as a backstop
- Address anti-competitive market distortions in trade agreements
- Clean Open Market InterNational – framework to raise commitments
- Create regional planning board to de-carbonize regional power sectors (e.g. Canada/New England regional power market)
- Allow farmers and other land managers to participate in the carbon offset market, as part of a larger voluntary framework on greenhouse gas emissions.
These and other proposals will be more thoroughly explored and vetted at two full charrettes taking place in 2021: one focussing on the accelerated opening of US power markets to competition; the other on the same question for global markets for energy, power and environmentally beneficial goods and services, via unilateral and multilateral strategies, incentives and trade agreements.
Our co-hosts – Reason Foundation, Atlas Network’s Center for Latin America, Funadción Eléutera, ClearPath, CRES Forum, ACEEE, British Conservation Alliance, the Rainey Center and more – kept the program moving, and we are grateful for their participation and support, as well as to everyone who attended the session.
Please review the Zoom charrette summary reel and session videos. In preparation for the 2021 charrettes, we also plan to some Zoom interviews with key participants and additional experts, to further frame issues and explore potential solutions. More to follow...