Monday, December 09, 2013
Defense Energy Reservations
Defense Energy Reservations (DER) would be renewable energy projects retrofitted, constructed and operated at United States military installations worldwide. The purpose of DERs is to fight global warming, provide reliable and redundant energy systems for military preparedness and to harden facilities against the threat climate change poses to the military and our national security.
The first step in implementing this fight would be a Declaration of War by the U.S. Congress and a program to pursue this climate change mitigation effort with military precision. This Declaration of War on global warming and climate change can be authorized by the U.S. Congress under the War Powers Resolution of 1973. The U.S. Congress should authorize the President to fight the war because climate change poses a significant threat to the military and our national security. Energy infrastructure investment combined with military branch participation can become the next American industrial revolution. Economic growth, electricity reliability and smart grid construction can be accomplished by mid-century if we declare war on global warming.
The President should issue an Executive Order declaring his intention to go to war on global warming and climate change. The President has control over the military and an Executive Order can also streamline the solicitation, bidding and construction of projects at military facilities. We envision this being a two-way process where contractors petition the Administration to post generic solicitations for energy retrofits and deployment of large-scale renewable generating systems, including wind, solar and geothermal projects.
Private sector contractors will work in partnership with the federal government to fight this war. DERs will significantly boost private sector renewable energy retrofits, generation and efficiency investments. We need adequate emission free electricity generation in order to meet future economic growth and we need redundant energy systems for military preparedness.
The U.S. Congress will need to authorize the Department of Defense (DoD) to establish a Defense National Energy Association (Danny Mae) that can issue Defense Backed Securities (DBS) to assist in fighting this climate change mitigation war. DBS will be similar to Fannie Mae and Freddie Mae Mortgage Backed Securities (MBS). A mortgage-backed security is a type of asset-backed security that is secured by a mortgage, or more commonly a collection ("pool") of sometimes hundreds of mortgages. The mortgages are sold to a group of individuals (a government agency or investment bank) that "securitizes", or packages, the loans together into a security that can be sold to investors. The mortgages of a MBS may be residential or commercial; in the United States they may be issued by structures set up by government-sponsored enterprises like Fannie Mae or Freddie Mac, or they can be "private-label", issued by structures set up by investment banks. DBS will be established in the model of MBS with collateralization provided by carbon dioxide (CO2).
The federal government owns the carbon dioxide it generates. Reductions in CO2 have market value in international, regional and state CO2 trading markets. For instance, the current market value of a ton of CO2 in the Regional Greenhouse Gas Initiative (RGGI) in the American Northeast is about $3.00 per ton. CO2 will be the collateral held by Danny Mae. Danny Mae DBS will be available for purchase in the global marketplace. DBS should also be available for purchase by The Federal Reserve.
The Federal Reserve will need to purchase Defense Backed Securities, for a short period, in order to assure a return on investment for private sector renewables entrepreneurs. This will require DoD to establish a DBS service that should also be available to investors.
DER projects will need DoD to streamline the solicitation, bidding and construction of projects at military facilities. We envision this being a two-way process where contractors petition the Administration to post generic solicitations for energy retrofits and deployment of large-scale renewable generating systems, including wind, solar and geothermal projects.
The National Defense Authorization Act of 2007 codifies the DoD's voluntary goal of 25% of all energy to be derived from renewable technologies by 2025, but doesn't include any interim targets. And the pace of procurement for renewable technologies within the military is slowed by regulations and now the sequestration cuts. Some identified Federal Acquisition Regulations are time-consuming for vendors and are amplified when the DoD is the contracting officer. That can also be changed iby Executive Order.
The U.S. Department of Energy reports 51% of all generating capacity was at least 30 years old while 74% of all coal-fired capacity was 30 years or older at the end of 2012. New coal starts are greatly in decline. Renewal of our energy infrastructure is in order. And, bold new ideas must lead the way.
The Department of Defense should be an instrument for change and should be the focus of a government-wide implementation of shared energy savings, power purchase agreements and leasing agreements. DoD manages more than several hundred thousand individual buildings and structures located at more than 5,000 different sites. It utilizes over 30 million acres of land.
DoD has begun development of non-essential tracts by issuing a $7 billion Multiple Award Task Order Contract to develop renewable and alternative energy power production. That is a small step relative to the potential.
We are collaborating with other appropriate government agencies, NGOs, current and former military officials and private sector companies to realize this potential for scaling up the public/private energy program partnership.
We are calling for the creation of Defense Energy Reservations (DER) to host private sector energy generation and efficiency investments. We also call on the U.S. Congress to utilize its Constitutional powers to declare war on global warming and to give the president authorization to fight this climate change mitigation war. We need adequate emission free electricity generation in order to meet future economic growth and we need redundant energy systems for military preparedness.