Ted Kaufman - United States Senator for Delaware

The Need For a Price on Carbon

July 20, 2010

Mr. President, two years ago, for the first time, global investments in clean energy technology exceeded those for fossil fuels.

This is clearly a trend that will continue.

Unfortunately, America is not keeping up with the clean energy revolution.

Today, 90% of the market for and production of clean energy is outside of the U.S. We are losing the race to develop these technologies in nearly every market.

  • Of the top ten solar panel companies in the world, only one is American.
  • Similarly, of the top ten wind turbine manufacturers, only one is American.
  • And of the top ten advanced battery manufacturers, only two are American.

For decades we have talked about the need to reform our nation’s energy policy.

Every President since Franklin D. Roosevelt has included energy reform in their policy agenda, and in virtually every Congress we pass an energy bill.

But these efforts have not been successful in revolutionizing our nation’s energy system because they didn’t go far enough.

Our oil imports have tripled since 1974. Today we rely on fossil fuels to meet 86% of our energy needs, and we are one of the largest contributors to global carbon pollution.

The truth is simple and unmistakable: if we want to move away from dirty fossil fuels, we need to put a price on carbon pollution.

Putting a price on carbon will reflect the true costs of our energy sources and enable market forces to drive American ingenuity to develop clean energy technologies that will create jobs, enhance U.S. competitiveness, strengthen national security, and cut carbon pollution.

We are in the worst economic recession our country has seen in decades.

We need to invest in sectors of the economy that can create jobs today and long into the future.

Studies have shown that investments in clean energy create more jobs per dollar than fossil fuel-based energy projects. 

These clean energy jobs use American ingenuity to turn sun and wind into electricity, waste into fuel, and reduce the energy we use to power our homes, businesses, cars, and trucks.

These are the sectors that will provide the long-term economic security and job creation we desperately need.

Studies by numerous academic institutions show that by putting a price on carbon we could create up to 1.7 million net new jobs over the next ten years.

That’s 170,000 jobs per year, and it includes any jobs that may be lost in the transition away from fossil fuels.

And many clean energy jobs can’t be shipped overseas. From installing insulation to building offshore wind turbines, these are jobs that can exist only on American soil.

The creation of these new clean energy jobs will themselves create a multiplier effect, allowing Americans to do more with their income, like eat out at a restaurant, take a vacation, or buy a house.

These activities could add an additional 39 to 111 billion dollar boost to the economy.

It is clear that investing in clean energy will give us the best bang for our buck by creating more jobs today and for generations to come, paving a long-term, sustainable path to economic recovery.

The good news is that we don’t have to wait for these clean energy technologies to be developed.

We can get started today.

Over the last few decades, we’ve made great strides in improving clean energy technologies.

For example, advances in wind energy technologies have reduced the cost from 30 cents per kilowatt-hour in the early 1980’s to less than 5 cents per kilowatt-hour today.

The Obama Administration, as well as cities and states across the country have recognized the potential of these technologies.

In fact, the energy provisions of the Recovery Act represent the largest single investment in clean energy in American history.

But the truth is that it’s not nearly enough.

The rest of the world also faces an economic recession, energy insecurity, and carbon pollution, and many countries have already begun to take significant steps to transition to a new clean energy economy, including China.

We have some things in common with China.

We each contribute roughly 20% of the world’s carbon pollution, and we both rely heavily on foreign oil to meet our energy needs.

However, China is outpacing the U.S. in investments in clean energy.

From 2005 to 2009, China’s investment in clean energy increased by 148%. This surge of financing led China to surpass the U.S. for the first time last year, spending nearly twice as much on renewable energy technologies.

The country is now the largest manufacturer of wind turbines and solar panels, 95% of which they export to other countries.

My home state of Delaware is a leader in renewable energy development.

In fact, we are on the verge of constructing one of the first offshore wind farms in the U.S. Project leaders are working hard to make sure that the turbines off the Delaware coast will proudly wear the label “Made in the U.S.A.”

Today, the average wind tower has 50% American-made components.

If we want to ensure that 100% of future wind and other renewable energy projects are made in America, then we must make it a national priority. Only then will we have the capacity to meet our own rising demand for clean energy.

We must also recognize the fact that our reliance on foreign oil is a serious threat to our national security.

The U.S. imports nearly 60% of the oil we use, and 70% of those imports come from outside North America.

All told, we send 1 billion dollars overseas every day for foreign oil.

Some of the nations we buy oil from do not share our interests, and may be hostile to the U.S. or their own people. And some of these nations are unstable, corrupt, and sometimes dangerous.

Because of this, we send our troops overseas to ensure the secure flow of oil around the world.

This stretches our military thin and puts our troops in harms way.

Even during times of peace, we have spent 50 billion dollars a year to patrol shipping lanes and secure Middle Eastern oil fields and transport routes.

Our dependence on foreign oil also forces us to deal with undemocratic nations in order to protect our interests.

It reduces our leverage and forces us to make oil security part of our international diplomatic and military strategies.

Furthermore, because we consume 25% of the world’s oil, our high demand drives up prices worldwide.

So, no matter whom we choose to buy from, oil-rich nations, some of which are unstable and hostile to the U.S., will reap the benefits.

This dependence on oil also leaves us vulnerable to price manipulation by entities like OPEC which can influence global oil prices at any time, as they have done in the past.

We have the opportunity to make this right. We can eliminate the threat of foreign oil to our national security by transitioning to a clean energy economy.

We can harness American ingenuity and regain our competitive edge in the global market.

And we can create hundreds of thousands of new jobs here in America for generations to come.

By putting a price on carbon, we will send a signal to investors, industries, manufacturers, and global competitors that the future of the American economy lies in clean energy.

Pricing carbon is the most cost-effective policy tool available to transition the nation away from dirty fossil fuels.

It will create incentives for business and industry to find the lowest cost solutions to reduce carbon pollution. And it will send a clear signal that offers predictability in the marketplace.

It will allow businesses and investors to finance long-term projects in renewable energy, knowing that they are standing on the same common ground as their competitors.

Many of the new clean energy technologies will require decades of lead-time before they are ready for commercial-scale deployment.

Therefore it is imperative that we start investing in them immediately.

Furthermore, because market barriers exist we must also provide additional investments such as loan guarantees, grants, tax incentives, and other assistance to encourage early and significant action towards clean energy technology development and deployment.

            We can no longer afford to pay for the high costs of a fossil fuel-based economy.

Putting a price on carbon will reflect the true costs of our energy sources and enable market forces to drive American ingenuity to develop clean energy technologies.

We have the most creative, talented workforce in the world.

We can transform our energy system to one that will create jobs, enhance U.S. competitiveness, strengthen national security, and cut carbon pollution.

But we have to take the bull by the horns.

Now is the time to chart a new course for the country.

I urge my colleagues to join me and seize this moment.

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