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predetermined price ceiling for the market price of the carbon permits that, if reached, allows the government to issue more permits to reduce the trading price.9 It is also common to “grandfather” in some industries, providing free permits to these select companies and then auctioning the rest. This can lead to windfall profits for politically connected corporations.10 Although the carbon tax would not be as politically feasible, it is recommended for its transparent pricing of the external costs of carbon emissions in an equitable system that distributes the cost of emitting behaviors among energy producers, energy consumers, and other energy interests in the absence of exemptions. Interviewees stated that the government must put a price on carbon emissions for a transition to occur; however, they did not indicate a preference for cap-and-trade systems versus a carbon tax pricing scheme.11 All of the experts surveyed agreed that a properly implemented cap-and-trade system would benefit renewable energy technologies.12 One expert, Ross Baldick, a professor of electrical and computer engineering, believed a “carbon tax would work even better.”13 3. Continue DOE Loan Guarantee Program for low-carbon solutions to coal-based power generation. Congress should continue using federal guaranteed loans and grant programs to promote the commercialization of new low-carbon energy technology. The DOE currently promotes the commercialization of new technology by issuing loan guarantees to commercially viable projects. To qualify, these projects must reduce emissions using new and advanced technology, and the DOE has been given the authority to issue the loan guarantees if there is a reasonable expectation of repayment of the principal and interest by the borrower. The program is currently accepting solicitations for coal-based power generation and industrial gasification facilities that incorporate carbon capture and sequestration.14 Efforts to find more efficient methods of using existing hydrocarbon resources will be necessary to abate the costs of the carbon tax in the near term, and essential to carbon emissions reduction as the energy infrastructure transitions. 4. Continue Clean Coal Initiative, FutureGen, and other federal initiatives to reduce emissions of existing coal and natural gas power facilities. The Office of Fossil Energy within the DOE is currently directing research programs to reduce the emissions of coal and natural gas power and is coordinating efforts between the various national laboratories in this area. These research and development programs include the Clean Coal Initiative that funds programs to reduce various air pollutants released by coal power plants, the $1 billion FutureGen projects to build new coal power plants with carbon capture and storage technology; retrofitting existing power plants; developing gasification technologies, fuel cells, and combustion turbines; and pursuing an advanced research program in hydrocarbon energy power systems.15 Coal gasification and cleaner natural gas have the potential to provide needed energy in the future with lower carbon emissions. Carbon capture and sequestration also, in concept, promises emissions-free coal power. Twenty experts interviewed for this report 168PDF Image | Shaping Energy Technology Transition
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