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Most Americans are apathetic about protecting the environment, because such policies are often restrictive to either economic practice or individual recreation. Most citizens and elected officials would rather use public funds for other purposes. Hence, a sound environmental solution to global warming and air pollution must fit three criteria: 1) it must improve the economy 2) it must generate its own funding 3) it must cause a drastic change in the way Americans generate and use energy. I propose drilling for oil in the Alaska National Wildlife Reserve (ANWR) to provide sufficient funding to cut American automotive fuel consumption by 75%, to reduce building energy expenditures by 50-75% across the U.S., to shift the majority of light commercial and single-home electrical production in the south and mid-west to solar energy and to dramatically increase research funding for non-solar renewable energy resources. These massive changes in U.S. energy consumption will benefit the environment far more than preventing any development in the ANWR.
The Plan
The ANWR contains an estimated 10 billion barrels of crude oil [1]. At a current market price of roughly $60 per barrel, this area has a potential revenue of over $600 billion. The federal government will auction off drilling rights to interested parties in a fashion similar to that used by the FCC for broadcast frequencies. Since oil companies have recently posted record profits, they currently can bid higher, making time of the essence. The government will design the auction to generate roughly $10 - 15 billion. Additionally, a $4 per barrel environmental tax will be applied to the ANWR oil. Because this oil is easier to reach and process than deep offshore or Canadian sites, these fees should not make the ANWR uncompetitive. The government should verify the optimum tax rate for generating revenue while allowing the oil to remain competitive with other sources. The remaining text will assume $12 billion generated up front through bidding and $40 billion generated over the life of the oil field through taxes. Congress shall legislate that this money be used exclusively for executing the remainder of the plan.
The $12 billion shall be used to promote the rapid development of high efficiency automobiles and certain renewable power resources through the use of large awards administered in a similar fashion to the famous Ansari X Prize or the DARPA Grand Challenge. Prize contests appear to be most useful for advancements in which the basic technological pieces are already reasonably mature, but whose assembly into a new system is considered a large risk or in cases where it is difficult to judge the risk of introduction to the target market. The author considers the following areas to be ripe for a contest.
1) Prize: 1st place $2 billion, 2nd place $500 million. The winner shall design a 5 occupant sedan-class car with the following characteristics: 0 to 60: 7.5 seconds or better. Top speed 100+ mph. Highway mileage: 100+ mpg. Urban mileage: 150+ mpg. The car shall meet all current requirements for safety and reliability. The winner shall prove the marketability of the car by selling 100,000 units at a profit.
2) Prize: 1st place $2 billion, 2nd place $500 million. The winner shall design a 4WD light truck or SUV class vehicle with the following characteristics: Towing capacity 6000+ lbs. Highway mileage (not towing): 60 mpg. Urban mileage (not towing): 100 mpg. Highway mileage (towing): 30 mpg. Urban mileage (towing): 65 mpg. The truck or SUV shall meet all current requirements for safety and reliability and shall have its marketability proven by selling 100,000 units at a profit.
3) Add-on prize: 1st place $1 billion. The winner shall reduce the price of the technology developed for prize 1 or 2 such that they are able to profitably sell a 5 occupant car (compact class or larger) with the mileage specifications in prize 1 for under $15,000. Again 100,000 units must be sold at a profit.
The following requirements and clarifications apply to each of the three categories: Any company may compete, but each car must be manufactured in the U.S. to support American workers and the economy. A profit of $0.01 over the sale of the 100,000 cars is considered sufficient to win. The first two prizes shall expire in 2012 if not yet won. The third shall expire in 2014 if not yet won. The urban test shall be conducted over a 50 mile urban-style course. For the highway test a 1000 mile freeway-style course shall be used, and the vehicle shall maintain speeds in excess of 65 mph. If plug-in recharging technology is used, the car must able to recharge from a common outlet configuration in 8 hours. The same car must succeed in both tests, and it must have the same performance as the vehicles sold to the public. The towed trailer shall be a 6000 lb trailer provided by the testing agency. It may be aerodynamic.
The remaining $6 billion shall be used as follows:
1) Prize: 1st place $2 billion. The winner shall profitably sell a 5 KW solar system that is capable of fitting on a 1000 sq. ft. roof or other opening for under $1000 (without the help of any government incentives or rebates). The system must be designed to operate for at least 10 years. By accepting the prize, the winner shall agree to license the product to any other U.S. manufacture for not more than $200 per unit (~20%). The company shall sell at least 1000 qualifying units to claim the prize.
2) Prize: 1st place $2 billion. As the U.S. contains and uses much coal, the winner shall be the first company able to demonstrate zero-emission coal-based power production in a 1000+ MWe plant while adding no more than $0.01 / KWH to the cost of the generated electricity. By accepting the money, the winner agrees to license this technology under reasonable terms to any manufacturer. The winner must demonstrate that this technology will be viable for long-term use.
3) Prize: 1st place $2 billion. The winner shall develop technology that solves the nuclear waste storage problem. While long-lived waste could technically be recycled or broken down by neutron bombardment (or possibly other means) into short-lived radioisotopes, no one has really attempted to do this due to various economic and political barriers. Hence the final $2 billion will go to the first individual or company that develops a way to cheaply process high-level radioactive waste by 1) recycling isotopes that can be reused as reactor fuel, and 2) breaking down long-lived radioisotopes into short-lived ones. The winning technology will produce a non-gaseous, storable radioactive waste with a half-life of less than 50 years and will add no more than $0.02 / KWH to the cost of electrical generation.
These prizes shall expire in 2014. As the coal and nuclear prizes may have a greater degree of difficulty in attracting capital investment, up to $500 million from each prize may be used to fund likely ideas in a manner that follows the NASA COTS model for developing cheap space station access. Use of a COTS program would reduce the final prize in each category to $1.5 billion. Congress shall remove the political barriers to developing the processing techniques needed for nuclear waste reduction and shall provide a legal means for using the winning technology once it is developed.
Regarding the likelihood of success for each prize, this author believes that each prize can be won within a 5 – 10 year time frame, radically changing the U.S. greenhouse footprint. If any prize is not won, then a decision must be made whether to extend the competition, to mildly soften the competition requirements, or to reassign the money to a new environmental competition. The latter choices should only be acceptable if little or no progress towards the original goal has been made, or if the original goal is determined to be unattainable and a slightly softened set of requirements is considered attainable.
While the $12 billion generated by the bidding process is used for short term prize funding, the $40 billion ($4 per barrel) generated over the life of the ANWR oil fields will be used to promote longer term environmental growth. To protect ANWR, $0.25 per barrel ($2.5 billion total) will go protecting the ANWR environment. Another $0.25 per barrel will go to the state of Alaska for wildlife conservation in general. This will help to secure the needed support of the Alaskan government. Of the remaining $3.50, $2.00 per barrel ($20 billion total) will be used to promote and develop “green roof” technology across the U.S. Green roofs are a technology that safely covers the roof with vegetation. It has been used extensively in Europe for over 20 years and has been shown to increase roof lifetime by up to 200%, reduce the urban heat island effect and lower summer energy usage by up to 75% [2]. Additionally, the use of green roofs will add additional plant material to cities, thereby helping to remove air and rainwater pollutants. Finally, the last $1.5 per barrel tax ($15 billion total) will be used to fund research into renewable energy production suited to the NW and NE coastal regions since these are the areas which will be least benefited by the solar energy prize. These may include wave, geothermal or other suitable research areas.
In addition to the $40 generated in taxes, the $12 billion in prize funding will generate short-term interest over the 5 years in which the first three contests run. The interest revenue generated will be used to administer and publicly promote the contests. Any leftover funds will be used to fund renewable energy research.
Commentary and Benefits Description
The prizes are large enough to attract most relevant businesses and venture firms. While highly efficient cars are considered risky in the U.S. market, the size of the prize should prove a sufficient catalyst to overcome that hurdle. The timing of the automotive competitions is designed to allow sufficient time to design and produce the vehicle and to provide wins in or before major election years allowing current congressmen who support the plan to use its highly visible success in their reelection campaigns. The average American consumer desires a powerful car more than an efficient car. Hence the car specifications necessarily include performance qualities sufficient to attract most drivers. As the cars must be produced in the U.S., the competition will be a boon to automotive-related segments of the overall economy. Additionally, the massive reduction in U.S. fuel consumption will allow us to forgo middle-eastern oil except in cases where continued use of the oil is diplomatically advantageous.
The alternative energy prizes are designed to move much of the U.S. to cheap renewable energy and to eliminate the carbon footprint of the major U.S. energy source. Since not every area of the U.S. will benefit from solar production, it is important to use some of the generated $40 billion to perform research into suitable renewable energy sources for cloudy areas. Many of these areas will benefit greatly from green roof technologies. (Chicago has estimated that it could save the equivalent of a small nuclear facility – 720 MW peak – with widespread use of the technology.[2])
Two questions which should be raised regarding the plan is whether the potential reduction in oil use will retard the funding for the plan and whether oil companies will refuse to bid on ANWR for fear of losing their oil profits. Most likely these will not be significant concerns for the following reasons: Most of the technology is paid for with an up front auction of the ANWR oil rights. A reduction in ANWR oil production may slow green roof adoption, wildlife efforts and some renewable energy research, but it will not affect the development of the most important green technologies. In response to the second question, the plan actually gives oil companies the chance to reap windfall profits. After bidding for access to cheap oil, they can recoup much of that money by partnering with automotive firms (in return for part of the prizes) to produce better fuels (e.g. 1 gallon of diesel contain roughly 10% more energy than 1 gallon of gasoline) that allow manufacturers to achieve the prize goals. They are also in a prime position to contribute to or compete in other prize attempts (perhaps coal emissions can be safely stored underground in oil fields). Hence they have the prime opportunity to both have and eat their financial cake. The prize also opens up several new energy markets allowing deep pocketed firms the ability to partner or fund high-technology ventures in exchange for a cut in the profits. Intelligent oil companies have the same chance as other firms to position themselves as renewable market leaders with this plan.
In summary, this plan offers a way of changing America's environmental usage in an economically beneficial way. The greatest benefits offered by this plan are that it contains elements that satisfy the demands of both sides of the political spectrum, that it pushes the U.S. to become the world leader in global warming prevention, that it strengthens and boosts the U.S. economy by billions of dollars through technological innovation, and (perhaps most importantly) that it changes the American perception of environmentalism as a burden to environmentalism as an economic and quality-of-life improver. This last benefit is the key to any permanent change in our environmental footprint. While this plan is not perfect (no plan is), it is far better than the current plan we operate under, namely arguing over a “perfect” solution and doing nothing while letting the problem grow worse.
References
[1] “ANWR Oil Reserves Greater Than Any State, ” U.S. Dept. of Interior News Release, Mar.12, 2003m http://www.doi.gov/news/030312.htm
[2] A. Holladay, “Green Roofs Swing Temperatures in Urban Jungles.” USA Today, Apr. 24, 2006, http://www.usatoday.com/tech/columnist/aprilholladay/2006-04-24-green-roofs_x.htm
