What you can do for your country

When it comes to Green ignore Gore, listen to the real inventor of the Internet

There is a popular myth that Al Gore invented the Internet.  Never to be out done, he went on to be the father of Green, won a noble prize, Emmy etc.  The man is a genius, so he thinks.

The Reality is the Internet was developed over many years by many great entrepreneurs who toiled in the lab and the market place to develop real innovation.  They did this with a passion for the technology they were developing, but great uncertainty with regard to how their technologies in the end would effect society.  The true entrepreneurs of the bunch evolved with the market place, discovering new angles and views on how to be successful.  They were beat up in the market place, and survived stronger for it.

First amongst these Entrepreneurs is Bob Metcalfe, the inventor of Ethernet (as in he has the patent, not a noble prize) which is a critical foundational technology for the Internet.  His classmates at MIT were key players in Email, FTP, TCP/IP, etc.  And no, Al gore was not in their graduating class at MIT.

Metcalfe went on to found 3Com corporation, a leader in the Internet.  He has been around all the key innovations in information technology over the last 40 years.  He is now a major investor in all forms of new start-ups, with a particular concentration on Energy.

Metcalfe's perspective on how to solve the energy problem is radically different than Gore.  Metcalfe, based on his real and successful experience actually doing something that has changed our lives, believes that the pathway to climate salvation will be the development of Clean and Cheap energy.  This notion of Cheap is critical to his perspective.  Where Gore wants to limit and conserve, Metcalfe wants to expand and make efficient.  Now think about this, computers use to be expensive, over time they became cheaper, new applications were developed, society shifted, the world operates in a different manner.  I would argue in a better manner.  Metcalfe suggests (again based on real practical experience) that the dire climate predictions will be swept away by entrepreneurs who blow our mind with market derived innovation.  For a great summary of Metcalfe's views, you need to see this YouTube video:

 

If you listen to Metcalfe, you are compelled to think differently about how to solve the climate problem in a way that meets all our needs.  Who but the most goofball extremist could be against clean cheap abundant energy?  I guess Gore could.  Or maybe Waxman.  The Juxtaposition of Metcalfe (A guy who has "Done It") to Waxman, Gore, Pelosi, etc who know nothing about technology, entrepreneurship, business, innovation, etc is amazing. 

We should put the Climate Bill in the trash and let Metcalfe lead us out of our despair.  Give up on congress and lets here from the Metcalfe's of the world.

The American Clean Energy and Security Act - Delay in Game

The American Clean Energy and Security Act is critical to our nation, saving the environment, and curtailing global warming!  At least that is what the nation voted for, in part, in the last election.  And, moving with change in the air, the Congress has produced a sweeping important piece of legislation that will effectively address the climate issue and drive the necessary change, right?

Not so sure?  1,500 pages of legislation suggests a lot of deep thoughtful thinking.  I am reminded by a Mark Twain quote, “I didn't have time to write a short letter, so I wrote a long one instead.”.

After my last posting from Sunday summarized key elements of the legislation, I got a lot of interesting Emails.  The short summary is ACESA is a bill with way to many very detailed (Nanny) solutions mixed together in one big piece of legislation, which as observed by Mark Twain may represent a lack of time.  But what is the rush?  Are the polar caps melting?  Is a hurricane coming?

I am told that the bill was rushed through for purely marketing reasons.  Pelosi et. al., apparently in anticipation of upcoming world wide climate discussion in Copenhagen, wanted to get the bill passed in the house so that the US can demonstrate moral leadership on the climate issue.  But, I am told by DC insiders, she and Waxman know the bill as it stands will never get through the Senate!  Furthermore, she apparently let several democrats with marginal re-election changes to vote No on the bill (you mean the american people may not be For higher utility bills in a recession).  Its all politics.

So, the American people vote for change.  They appear to want action on the climate.  Congress musters the effort for climate, and they deliver a bill that is tuned to please Copenhagen instead of the American people.  If your life depended on it, who would you bet on first, Europe or the US.

I am further told that Senator Reid has no plan to address the Clean Energy bill in the Senate until after health care.  This suggests 4th quarter 2009 or early 2010.  The polar bears are waiting.  More over, the bill will be dramatically revamped to address impact on the economy amongst other things.  If the economy keeps going into the ditch, failing to save or create more jobs, the votes "For" will vaporize as we approach an election season.  Perhaps Reid is Mark Twain in disgust, using time to write a shorter bill.  We have had a Democrat lead Senate and House since 2006, and the furthest we have gotten in a comprehensive energy bill is the changes in lighting standards passed under Bush's presidency.

Though we have learned to expect little from congress, there is a broader issue of our country's move to a more secure and energy efficient place.  My sense is, based on the election, that a majority of us would like to import less energy and emit less CO2. We would like to do this even more if was cost effective, created jobs and improved the United States competitiveness in the world.  Interestingly enough the United States knows a thing or two about competing.  Our companies do it quite well time and time again, always beating the odds.

Indecision however is the cholesterol in our arteries.  GE, Emerson, etc are bringing more efficient things to market.  They are ready to do more.  Solar, wind, nuclear, lighting are all evolving.  In the last 30 years energy consumption as a function of GDP has declined almost 50% (From ~10% in 70's to 5% today).  We know how to work these things out.  Good legislation, like EPA Energy Star, have created a gentle nudge to help drive more efficiency.  But, uncertainty slows the innovation process.  Is the Government going to implement Cap Trade?  What will it look like?  How will money be distributed?  Is DOE going to provide their promised "Bonus Incentives" to vendors of super performing appliances?  Will congress be planting more trees or should those selling Renewable Energy Credits do it?  After 1,501 pages of legislation you can imagine there are all sorts of winners, losers, and new incentives.

So imagine you are CEO of Emerson, Boeing, Duke, or some other industrial concern deciding how to invest $5B in R&D to be competitive in the emerging landscape.  You need to build a new power plant.  With Cap Trade and Government incentives you would go with solar.  Without Cap Trade, you will build coal.  Oh, and you need to make the decision today so its on-line and producing in 2015 when its needed.  You have 10M homes to light up, day in, day out.  The answer is, as CEO, you would try not to do anything.  They would look for any small increment of investment that would let them delay a decision on investment until the Congress, Senate, and President make a decision.  Of course after their trip to Copenhagen to show off their newly formed Moral Authority.

It must be fun to be in charge in Washington getting to make all the big decisions, talking about how the creation of a Bill might change the world.  But the world is changed by companies and people implementing new innovations.  It is changed by people adopting solutions that work for their lifestyle, family and location.  Washington might be a great place to feel good about oneself, while everywhere else we live in a reality that has to make real decision about how to invest, employ resources, hire/fire people, grow, divest, etc. 

A 1,501 page bill, designed to persuade the world we mean business even though the bill will be slashed by the senate some time in the future is a hypocrisy.  It will take several years for the DOE and executive branch to translate this bill into rules and procedures and a couple more years after that for industry to understand how to operate under these new regulations.  This bill is a giant distraction, just like the department of home land security was.  Its moving a bunch of deck chairs around in a way that appeals to Washington.  Maybe instead they should enact legislation that tells us which way to generally head, and let industry figure out the best deck chairs to deliver and how to set the view.

Pelosi, Waxman, Reid, Obama, etc have succeeded in delaying progress.  Their antics will just delay the decision companies need to make.  Capital will be held at bay until clarity emerges.  Other countries will continue to innovate in their local markets while we wait for our gang to return from Copenhagen, maybe with an Emmy, Oscar or Nobel Prize.

What a disappointment!

The American Clean Energy and Security Act (HR 2454)

The American Clean Energy Act was approved in the House of Representatives on Friday, June 26, 2009.  The bill is some 1,201 pages.  At the last minute (Technically 3 am in the morning of the 26 th) a 300 page amendment to the bill was added.  At the time of the vote, it is unclear what was the actual version of the bill being voted on.  The bill is headed to the Senate.  Reid says he will wait until the fall to take action.  The Senate will likely dramatically reduce the scope of the bill.

I believe the issue of climate change is serious.  I can't profess to know if it is man made, natural, or both (more likely).  But, having read this bill (Yes I read the entire thing and the amendments), I don't think congress is taking this thing seriously.  We may have "Passed legislation, but not gotten anything done", a congressman once said.  As Bob Metcalfe(Founder of Ethernet, 3com etc) says, "When you go to Washington to get stuff, you often get the wrong stuff".

So, the basis of the bill is probably OK.  Energy is important.  The country voted for change.  Using less oil seems like a good idea.  The democrats won.  We need to do something about the climate.  OK.  The notion of Cap Trade, and this bill, is in line with the elections.  It may impose a tax of sorts.  Industry will be disrupted.  Someone is moving our  "Cheese".

But the 1,201 pages are not about Cap Trade.  The bill has numerous provisions like:

• Limiting wattage of outdoor Luminaries (that means lights) and making them so they have different levels of output to deal with demand response
• Limiting wattage on candelabra lights in your home (making them so dim that you will just get lights with more sockets)
• Providing grants for home owners and small business to plant trees to shade their home "Reducing winter time demand for energy from residences and small office buildings by blocking cold winds from reaching such structures, which lowers interior temperatures and drives heating demand."
• Establishing regional councils to educate people on the value and proper care of trees.
• Subsidy for 150% of poverty home owners whose "Purchasing Power" is diminished by the new costs imposed by this bill (Despite the claim that the bill will impose no more than $150 or so of cost on each family)
• Bonuses for retailers, distributors, and manufactures that sell a lot of "Best in class appliances" (To be determined by the feds.  So that the feds will be picking whether GE or Sony are the best most efficient appliances, and them bribing Best Buy to sell more of one or the other's goods
• Smoot Hawley for Green, imposing trade restrictions on countries that do not have similar climate policies as the United States

I could go on and on with all the unnecessary addons for this bill.  On a more significant subject, there is a whole section of the bill focused on demand response.  Demand response is a process of limiting load during the energy demand peak of a hot summer, essentially to make the grid more stable.  This really has little to do with CO2 emissions.  Perhaps they are advocating demand response in anticipation of a need for a responsive load for inclusion of more variable capacity generation like solar and wind.  But this is cart before the horse.  I wired my home for Ethernet in 2001, dropping Ethernet lines into every room at a cost of about $600/room.  But now I use wireless throughout the house at a cost of a couple of wireless routers ($100/each). 

Solar and Wind represent something like 1 or 2% of the energy source in the United States.  It is unclear how best these resources will be deployed as they move to larger scale.  Betting now on demand response is sort of like mandating everyone wire for Ethernet in 1990 in anticipation of the Internet economy.  The bill dictates an approach to solving the energy problem before our engineers and innovators have found the best way to provide better and cheaper energy.

At a macro level, this bill is yet another slap in the face of the Green movement.  The extra crap in the bill will just generate animosity to the objective.  As everyday people are effected by limitations in what lights they can buy, subsidies to certain citizens, higher costs, etc they will wonder why they voted for the president and this congress.  The mass of the bill and its over reach may stir up a backlash against the objectives of the movement.  Where will we be then? 

Its time for folks to be serious about how they act.  There was virtually no legitimate conversation in DC on this bill.  It was rushed through to show concern for the planet.  But, it ignores the practical lessons of how technology and innovation occur.  Innovation occurs in the market place, with various competing pressures.  The best green answer will come from innovators seeking to provide competitive cheep and abundant clean energy, that competes cost effectively against existing technology.  We have 10 years ahead of us to turn those innovations into scale.

Those who wrote this bill will say, "But we can't wait, we need this technology now".  You can't legislate innovation and you can't buy your way into it.  If we taxed the nation to death to implement immediate solutions, those solutions will be overtaken by drastically cheaper next generation choices.  This happened in the Cell phone market.  The US implemented TDMA well before everyone else. The better solution came along, GSM, and took the world by storm while the US dragged its feed on TDMA.  Ultimately we switched over to get better service.  There was a delay however because we had a 1st generation installed base, and 2nd generation was better and cheaper.

Instead if we fund our innovators well and bring some coherence to market objectives (1,200 pages is not coherent) so they can place their bets, then we can build a next generation architecture, let the market drive down cost, and then drive adoption because the market will have low cost, affordable, clean and abundant solutions. 

Congress needs to trust the American innovation engine.