Midwestern governors need to follow energy markets

Madison, Wis. - Setting ambitious goals is nothing new in business or government. So it wasn't much of a surprise last week when Midwestern governors, including Wisconsin's Jim Doyle, got behind a platform to increase the region's energy efficiency and reduce emissions of greenhouse gases.

The trick is turning ambition into tangible, market-ready achievements. That will require much more than signatures on a largely voluntary accord.

Meeting in Milwaukee, the governors of six states and one Canadian province signed an agreement - now one of three in the nation - to work together to slash emissions linked to global warming over the coming decades. Three other states signed on as “observers” but three states did not take part. All 12 governors signed a separate and somewhat less prescriptive energy security and climate stewardship platform that is designed to set goals for the Midwest.

Among the platform's goals:

• All coal-fired plants built after 2020 would be required to capture carbon dioxide and ship it to an underground storage site. • 30 percent of the region's energy would come from renewable energy sources such as wind turbines and landfill gas.

• One-third of the region's gas stations would be selling the E85 blend of ethanol by 2025.

• Energy efficiency measures would allow the region to reduce demand by 2 percent a year beginning in 2015.

Global climate change is the defining environmental issue of the 21st century, so it's admirable that Midwest governors are pushing for smarter policies. But it cannot be done without the help of technologists and the marketplace.

Setting the early stage

On the same days the governors were meeting in Milwaukee, the annual Wisconsin Early Stage Symposium was being staged in Madison. There, more than 45 investors were rubbing elbows with scores of start-up companies - some of which have exciting “cleantech” technologies that could help lead the way. An investor from Piper Jaffray Capital in Minneapolis described how early-stage “cleantech” investments have become a major part of his firm's portfolio.

The operative words in all of this, of course, are “early stage.”

Many of the technologies that will lead Wisconsin and the world to a safer, cleaner, and more efficient energy future are still under development or awaiting the right business model. Fortunately, Wisconsin is well-prepared to lead. The Great Lakes Bioenergy Research Center that will be housed on the University of Wisconsin-Madison campus is one of only three, $125 million labs funded by the federal Department of Energy. It will focus on production of cellulosic ethanol from plant sources other than conventional crops.

About $15 million in grants and loans for renewable energy projects have been set aside in the latest state budget. Companies such as Virent Energy Systems in Madison (producing hydrogen and other high energy fuel gases from renewable sources) and Orion Energy Systems in Plymouth (conservation technologies) seem poised to grow quickly and deliver for investors.

It's still up to the market, however, to sort through what works. Policymakers are right to set broad goals, but it's still too early to pick winners and losers.

The refusal of the governors to embrace nuclear energy as a part of the portfolio is a prime example. The governor of South Dakota was typical of the group when he said that while nuclear power would make the most sense, especially from a greenhouse gas perspective, he couldn't endorse making it a part of the platform because there is no national plan to deal with radioactive waste from reactors.

So it's okay for the governors to push - regionally - for a national energy plan on every other front, but to exclude nuclear energy because the political problems associated with the Yucca Mountain repository have yet to be resolved? That's a bit inconsistent. Why not prod Congress on the nuclear waste issue, too?

In sync

It's important the Midwest governors have set strong goals, which should help Congress and the president do the same. In order to make it work, however, they must make sure the incentives as well as the regulations in their home states are in sync. Technology and the markets can deliver solutions that will save energy, enhance our security, and reduce greenhouse gases. But it will happen better and quicker with government encouragement than government fiat.

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