How to solve the problem of fossil fuels in fewer than 100 years.

Last week, I had a reunion of sorts with several colleagues whom I met during graduate school.  Among the pleasant conversations about family and work, we got onto the topic of fossil fuel energy and its place in our world.  As we all met working on "green energy" projects, we all agreed on the need to get away from fossil fuels, but disagreed on the timeframe.  One friend noted it would be one hundred years before we were able to eliminate them from the bulk of our economy, and challenged me to come up with the actions I would take if I had all the capital and power in the world to make them happen.  I considered the question for most of the week, and came up with the following:

1.  Buy up all leases for fossil fuel deposits, all American public utilities, and all the aging fossil fuel reliant infrastructure and capital.
Sunk costs for electricity-generating assets and infrastructure, as well as the expected profits associated with future development of fossil fuels weigh heavily on the economics of switching to an efficient and renewable future for energy.  The next great financial bubble will come from the over-valuation of the carbon resources in the earth, resulting in another potential - and perhaps even more devastating - market correction.  The need to recover sunk costs puts a cyclical burden on the transition to a green energy future.  First, we prolong the use of the infrastructure in order to allow the utility to make back its investment with a guaranteed return, then we make complementary investments in infrastructure that works with the existing in order to meet growth.  We need to break both of these cycles in order to move forward at a rapid enough pace.  In addition, I would buy up all the used parts and pieces I could, disassemble them into their constituent parts, and repurpose the raw materials for green energy development.

2.  Reissue the resource and utility leases as a package deal, with a twist.
In order to continue the services that the utilities facilitate, but with a minimum of damage to human health, I would auction off the leases to fossil fuels, but link them (by energy content) to management of a utility.  This would link production and performance.  Then, I would restructure the utility in two ways.  One, the utility would provide the end service (i.e. heat, light, access to entertainment) instead of energy.  Customers would pay for the service instead of the units of energy, and thus reward those who provide the best end result, not the ones whom they are forced to pay.  Then, at the end of each year, these new utilities would receive a bonus payment based upon the amount of resource remaining in the ground.  They would not only increase profitability by using fewer resources in efficiently delivering services, they would receive incentive payments for leaving more of the carbon resources in the earth.

3.  Carbon tax to meet the real cost of using the energy and eliminate all subsidies.
The mining, transporting, processing, transferring, and eventual releasing of energy associated with fossil fuels has myriad negative impacts, and currently receive almost $700 billion in worldwide subsidies.  Currently, the fossil fuel industry only pays direct costs (transportation, storage, processing) but does not pay for ecological restoration of mined areas, healthcare costs for those located near combustion sites, property damage associated with polluted air, or other similar indirect costs.  To start with, we would end any subsidy to a fossil-fuel based company, using the money to subsidize a transition for those who cannot immediately afford the increased costs that might result from the end of that subsidy.  Then, each year, the insurance industry would determine the tax level based upon the reinsurance costs for each of the indirect impacts.  Governments would collect the tax to continue to provide the services they do to make up for the slight from industry, and would offset the new tax collected by lowering the overall income tax to balance.  Companies could lower their tax burden by including some of the indirect costs into their direct costs.  They can do this by taking over ecological restoration of mined areas, implementing complete carbon capture and repurposing (the act of preparing the carbon or carbon dioxide for benign storage and reuse in a specific industry...this means no sequestration without a plan for reuse), completely scrubbing exhaust streams for particulates of all size, and reducing waste heat to benign levels.

Tar sands mining area

4.  Require 99.99999% reliability from fossil fuel infrastructure and complete restoration of ecological services.
Currently, we tolerate too many oil spills, coal ash pollution incidents, and mine collapses as "the cost of doing business".  Industries know what they need to do in order to ensure near perfect performance records.  We need, as a society, to expect that they deliver.  In addition, when they complete mining activities or do have an environmental issue, we need to expect the complete restoration of ecological services.

5.  Immediately implement ecological valuation into the world economy.
Perhaps the best way to make sure capital flows to poorer regions of the world without the extractive growth that fueled southeast Asia and continued our damaging ways comes from the concept of ecological valuation.  Scientists and economists working together determine the real-time value of watersheds, forest systems, plains, species, etc., then include that value in a nation's asset sheet.  This would provide incentive for investment and restoration, while providing a mechanism for richer countries to offset their activities by investing in the preservation of existing ecosystems.  This provides the resources for developing economies to increase quality of life without the health sacrifices we had to make.

6.  Capitalize a series of building and loans in each 50-75,000 person community whose investment portfolio carries only energy efficiency and renewable energy projects in that community.
These nearly 5,000 banks would provide the needed capital to drive the shift from extractive energy reliance to neighborhood energy reliance.  The development of local businesses, and the expansion of local manufacturing to meet this demand would build a more resilient economy while improving the quality of life.  The banks would remain independent entities, beholden to shareholders like any bank, with the only restriction being the boundary of their investment region.  They could link their risk through insurance products, or state/regional-government based loan guarantee programs, in order to minimize their exposure.

7.  Provide free college tuition to top students entering the field of clean energy research and development.
Currently, the top students go into the financial sector or into fields associated with the extractive economy.  Fewer enter the fields of medicine or engineering associated with life-supporting activities.  We want the best ideas to prepare us for a future without fossil fuel energy, and need to provide the incentive to get them into those fields.

8.  Place clean-energy-based restrictions on the not-for-profit status of university endowments.
University endowments represent a significant portion of the nations held wealth, and as such, they wield great power.  For the significant benefit they receive from their tax-exempt status, the universities can bear a certain level of restriction over what they can do with those assets.  First, all of them must divest from all fossil-fuel investments.  Second, they must commit one-third of their asset portfolio to clean energy or energy efficiency projects; they choose the ones that maximize their return.  Third, they must make all buildings on all properties that they own net zero impact buildings within a decade; this includes all existing buildings as well as new and recently constructed.  The knowledge base and technology exist to make this happen, and institutions that have a forty to one-hundred year horizon for building ownership have the ability to recoup their investment easily.

9.  Change the current way we discount future life value.
We need to make all energy and quality of life decisions providing equal value to a life seven generations from now as we do to a current life.  We conveniently employ a discount rate that makes positive impacts on the future have to save ten lives to have equal value to saving one life today.  For non-life threatening activities, discounting the future has merit, for it favors conservative allocation of resources.  For activities that damage human health, however, this practice amounts to a death sentence for the future.

10.  Manage a smart transition for developing economies.
In addition to the economic development incentives offered by ecological valuation, we need to provide reasonable support and incentives for the developing world.  Unlike the developed world, these economies cannot easily remove fossil fuels from their quality of life systems.  People in these parts of the world still have underdeveloped fresh water systems, little or no electrification, and must travel great distances for basic needs.  We do not need to enable reliance on fossil fuels for new development, but cannot pull the rug out from under their current way of life.  Pursuing the above strategies will free resources to help manage this process, and ensure that developing economies avoid our pitfalls while raising the quality of life for nearly half of the world's population.  People are resourceful, and right now they are finding the simplest way they can to develop with the most readily available technology.  If we put the right technologies in front of people, they will innovate and find the right solution with the best outcomes.  We do not need to do things for them, but we need to make the right pieces available to them.

The challenge presented to me gave me no limit on my power or wealth, so I have not concerned myself with the economic impact of these activities.  Over the coming months, I will investigate them further and evaluate the costs and benefits of them.  We need to pursue these, and all other ideas for realizing a clean energy future, with a great sense of urgency.  We do not have the one-hundred years my friend conjectures we need to fully transition.  From this point forward, we need to stop enabling our dependence on fossil fuels merely because it is hard to do otherwise.  We need to expect more of ourselves; we have the knowledge, resources, and ability...now all we need is the will.