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Op-Ed

Make the Big Green Buy

Republican gains in Congress don't have to mean the end of efforts to combat greenhouse gas emissions. Obama can use governmental buying power.

December 19, 2010|By Mark Hertsgaard and Christian Parenti

Now that anti-science Republicans have taken control of the House, and the Cancun climate summit made only modest progress, pessimism about fighting climate change is fast congealing into conventional wisdom. Those on both sides of the issue say there is no chance of strong action emerging from Washington over the next two years to reduce greenhouse gas emissions.


FOR THE RECORD:
Green: A Dec. 19 Op-Ed about government spending on green technology misspelled the last name of the chief executive of Smith Electric Vehicles. His name is Bryan Hansel, not Hansen. —

Luckily, that's not true. President Obama has the power to unleash dramatic emissions reductions without congressional approval. And in the course of doing so, the president can bring jobs and profits to communities across the nation, even in places represented by climate change deniers such as Sen.-elect Roy Blunt of Missouri.

How? By mobilizing the government's vast purchasing power to kick-start a green energy revolution. Federal spending is responsible for roughly 25% of the gross national product, giving Washington enormous power to influence marketplace behavior even if annual spending levels are trimmed.

The federal government is the world's largest consumer of energy and vehicles. If the Pentagon, the Postal Service and other agencies shifted their buying wherever possible from dirty technologies to clean ones, it would give manufacturers such as Smith Electric Vehicles, headquartered in Blunt's state, a huge influx of orders. These orders would yield economies of scale that would enable green manufacturers to substantially reduce prices.

As the prices of green technologies fall to near that of dirty technologies, consumers and private companies will begin buying green of their own accord. Their purchases will yield additional economies of scale, enabling green manufacturers to lower prices further and entice more buyers, thus hastening the displacement of dirty technologies.

Bryan Hansen, chief executive of Smith Electric Vehicles, explains how it might work. Hansen's company makes delivery trucks that require components bought from the same suppliers used by fossil fuel vehicle makers. But, he says, "If we could buy equipment in batches of 100 rather than 10 at a time and make long-term commitments to our suppliers, that would immediately cut the costs, in some cases by 30% to 40%."

Smith Electric Vehicles received a $32-million Energy Department grant this year to help offset the cost of its trucks. But what would really help the company, says Hansen, is a move that would have the additional virtue of saving taxpayers money. If, say, the General Services Administration ordered 1,000 trucks a year for the next 10 years, Hansen says, Smith Electric could close the price gap that makes its electric vehicles 20% costlier than diesel equivalents. Then Smith could move forward with plans to open 20 more manufacturing facilities across the country.

Think of it as the Big Green Buy: The government's spending power would be used to close the price gap between dirty and green technologies and stimulate new markets for green technologies.

We know this approach works because it fostered the greatest economic success story in recent American history. Most Americans own computers today because the government not only funded the research and development of microprocessors (as part of the space race) but also became the first large-scale purchaser of the devices. Sustained orders from the Pentagon and NASA helped manufacturers attain economies of scale and reduce prices so consumers eventually could afford their own computers.

A similar green-tech revolution is ours for the taking — if Obama shows the requisite leadership, including the courage to affirm that some forms of government spending are actually good for the economy.

Would buying green cost more? Sometimes yes, sometimes no. Price differentials vary from product to product, GSA officials said in interviews. Recycled paper costs about the same as virgin paper; electric vehicles can cost 20% more than standard models; green buildings cost more upfront but less over time because operating costs are lower.

In cases in which the lifetime costs of green technologies are the same as or less than those of dirty technologies, buying green should be a no-brainer. But even when buying green costs somewhat more, it still makes economic sense.

For one thing, the government routinely pays more than retail if doing so serves broader national interests. Medicare, for example, is forbidden to buy drugs in bulk, presumably to strengthen the drug industry. The federal government also has strict "buy American" rules that cost more but benefit our national economy. So why not buy green? What's more, the government should heed the advice of Hansen. Instead of giving green companies grants to develop their products, why not redirect such monies to cover the extra costs of actually purchasing them?

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