Which energy and environment stories will get the most coverage in 2011? During today's OnPoint, Jonathan Lash, president of the World Resources Institute, previews his yearly list of stories to watch. Lash explains why U.S. EPA's regulation of emissions, the rising cost of food and the influx of electric vehicles in the marketplace will be among the most popular stories.
Monica Trauzzi: Hello and welcome to OnPoint. I'm Monica Trauzzi. With me today is Jonathan Lash, president of the World Resources Institute. Jonathan, thanks for coming on the show.
Jonathan Lash: Thank you.
Monica Trauzzi: Jonathan, you just released your Yearly Stories to Watch list, basically highlights the big energy and environment issues that we need to be looking at over the next year. EPA regulation is at the top of that list. What will the biggest opportunities be for stopping EPA regulation and stopping EPA from moving forward?
Jonathan Lash: Well, it seems very likely that the House will attach resolutions limiting EPA's authority to every important piece of legislation that moves forward. So I would expect to see something attached to a continuing resolution funding EPA. If there's a bill to expand the debt limit, I would expect to see it attached to that. And Congress has a specific authority called the Congressional Review Act that allows them to review rules for 60 days after the rules have been enacted. There are no CO2 regulation rules that are now within that review period, but eventually they'll have that opportunity.
Monica Trauzzi: You say utilities are really going to have the toughest time and the most choices to make in terms of investments in the coming year. Does the EPA regulation give them the certainty that they're looking for or does it keep things unclear?
Jonathan Lash: Well, the status quo is what's worse, because they have uncertainty about what is the price going to be attached to carbon, what's going to happen to conventional pollutants, a whole series of issues that significantly change the cost balance between gas, coal, nuclear, renewables and so forth. And they need that information because they're making billion-dollar investments in capital stocks that will be around for 20 years. EPA regulation will answer those questions. The best way to answer it would be Congressional legislation, but we don't have that. So a number of utilities are beginning to say, you know, actually, EPA regulation would be a lot better than nothing.
Monica Trauzzi: What are the key signals you'll be looking for from the utilities when it comes to investments?
Jonathan Lash: This is the season of the year when CEOs or CFOs go to Wall Street and they hold their informational calls with investors. It will be very interesting to see what they say they're going to do in terms of investment in new capacity as the economy begins to grow. Are they going with gas, big new wind capacity, coal or nuclear? The accepted wisdom seems to be gas is cheap, gas is easy. They're going to move toward gas. But I think we're going to see more wind as well. Second big thing to look for will be our state regulatory authority is prepared to approve long-term gas contracts, which is what the utilities will be looking for if they make these long-term investments.
Monica Trauzzi: And bigger picture in Congress, is there any chance of passing some kind of meaty energy or climate legislation this year?
Jonathan Lash: Not much. I hope that we will see Senator Lugar reintroduce his bill, which was a comprehensive bill designed to encourage efficiency. If he does and if he has a substantial number of cosponsors, that would be an encouraging sign. I know there will be some efforts to pass a clean energy standard that requires a certain amount of electricity to be from clean energy, but I think those are all much less than 50 percent probabilities.
Monica Trauzzi: Food prices are another big story. Will biofuels continue to be blamed for the rise in food prices?
Jonathan Lash: Yeah, you know, this is a really complicated story. Oil plays a role, the rising price of oil is driving up food prices. Expanding population, expansion in the number of people eating meat creates more demand and raises prices. But biofuels are a big issue, particularly in the U.S. with corn ethanol and in Indonesia with the production of palm oil for biodiesel.
Monica Trauzzi: So what do you think is going to be done on food efficiency and also food production in order to meet the rising demands?
Jonathan Lash: I think we're at this stage with food that we were with energy 40 years ago. We're beginning to recognize that food supplies are a very important global issue and that there is a huge amount of waste in the food supply system. So I think efficiency is going to rise as an issue. Some of the analyses suggest 40 percent of U.S. food is wasted, not actually used for feed or food. There is also an opportunity, there are about a billion hectares of degraded forest land that could be used for agriculture with a certain amount of effort and expenditure. It would be good to see agriculture expanding in those areas instead of by cutting down forests in the Amazon or in Indonesia.
Monica Trauzzi: Here in the U.S. we're expecting to see an influx of the number of electric vehicles on the market this year, but it's going to come with its own set of problems. So what are some of those key issues?
Jonathan Lash: Yeah, this is a really cool story. There are something like 27 electric vehicles for plug-in hybrids that are going to come on the U.S. market this year. So all of a sudden we're going to have a whole range of options that you can go out and, as a consumer, buy at affordable costs. They're going to be real cars that enable you to drive on real highways. These Chevy Volt is, from all the reports, a terrific car. And that save you a thousand dollars a year depending on your driving habits, but there are some issues. We're used to having a three, 400 mile range. The pure electrics don't have that much of a range yet. The batteries aren't up to it. We're used to being able to pull in almost anywhere and find a gas station to fill up. The fast charging stations aren't yet available for electric, so consumers are going to have to balance that. What we'll see initially is fleets. We're seeing GE buy 25,000 electric vehicles, Hertz, Enterprise Rent a Car, a number of companies, AT&T, are buying these electric vehicles. I think that's-our first experience driving them will probably be in that context rather than going to a show room and buying one.
Monica Trauzzi: So, if the infrastructure isn't yet in place or yet up to speed, does it make sense to continue offering subsidies and tax incentives for consumers to be buying these vehicles?
Jonathan Lash: Well, that's how we make the transition. The infrastructure isn't going to be there until the vehicles are there to use it. The U.S. actually has the lowest level of incentives among most of the major nations and since we're producing a lot of these cars, it's curious that we aren't providing the incentives. So the Chinese expect to have a million on the road in the next few years and they have incentives that are much larger than ours. But I think we need is a coordinated policy that consciously puts the infrastructure in place.
Monica Trauzzi: If you have to pick one country that you're going to be keeping your eye on this year for advancements in energy and environment policy, which country would that be?
Jonathan Lash: Well, I mean China is doing the most. In terms of levels of investment in renewables in terms of the speed of development of their high-speed rail network, in terms of their technological advancements, China is just out there very strong. But the most interesting case is Brazil. A new president wasn't known as green when she ran for office, but just in her inaugural address committed herself to a set of green policies. They have the World Cup and the Olympics coming up. They're going to make a big commitment to infrastructure and to green infrastructure for that. Brazil is going to burst on the world in a very significant way.
Monica Trauzzi: All right, interesting stuff.
Jonathan Lash: Yeah.
Monica Trauzzi: Thank you for coming on the show.
Jonathan Lash: Nice to be here.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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