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Opinion

Federal Climate Policy Needs a Digital Reboot

The heightened discussion on climate change and emerging rollout of solutions from both political parties have one thing in common: They are all stuck in the analog world.

Data production will be 44 times greater in 2020 than it was in 2009, which is the last time Congress seriously debated climate policy. So far, proposals such as a revenue-neutral carbon price, increased public spending and the Green New Deal are all missing the chance to put data to work to transform the climate debate into a market and investment opportunity.

The platform economy is just getting started, and it is already roaring. In 2018, online marketplaces created 2.5 quintillion bytes of data every 24 hours. That equates to more than 5.5 million Uber rides a day, or 3 million Google searches per minute.

Dominant technological, industrial and financial forces are racing to revolutionize business models and reinvent every aspect of how our global economy works based on the power of networked data. This market reality needs to be better understood by policymakers, and it must be reflected in climate policy going forward.

Chances are you haven’t heard of the OPEN Government Data Act, a bipartisan bill signed into law as part of the Foundations for Evidence-Based Policymaking Act. It builds on the Federal Data Strategy requiring federal agencies to institute and oversee best practices for the use, protection, dissemination and generation of data — including disclosure of all non-sensitive government data in open and machine-readable default formats.

A robust transition to a low-carbon economy — regardless of policy — will inevitably involve a shift in how wholesale and retail markets differentiate, value and price assets and commodities based on their lifecycle environmental impacts. That shift will necessarily involve advanced data use and management.

Data empowers transparency. Transparency empowers innovation. And data could lead to more evidence-based, market-driven policy approaches.

New methods of sourcing, refining and optimizing data are already transforming the energy sector, from electricity, buildings and transportation to industry supply chains. Emerging data analytics, machine learning, and blockchain-based tools are converting machine-readable data from a byproduct of economic activity into a transactable asset in its own right.

Going forward, transactive energy and environmental data, guaranteed by digital “smart contracts,” will enable immediate, measurable and transactive consumer value.  Products, commodities and services will naturally command market premiums by delivering resiliency, sustainability and reduced consumer exposure to energy and environmental risks.

This is not pie-in-the-sky thinking. As we at the Energy Consumer Market Alignment Project highlighted in our New Policy for an Era of Energy Digitalization reports, pioneering companies are already harnessing digital technologies to turn their data streams from all levels of energy production, distribution and use into valuable climate and sustainability solutions. Applications include leveraging transportation data to customize local alternative fuel infrastructure, crowdfunding clean energy and using blockchain to better control demand and track energy flows.  

What can policymakers do to leverage such innovations in the climate policy debate? First, we need consistent data governance standards and frameworks at the federal and state levels, in order to facilitate and reward market-driven behavior. The OPEN Government Data Act and President Donald Trump’s recent executive order promoting leadership in artificial intelligence are steps in the right direction.

Next, we need policies that accelerate the digital technologies necessary to empower consumers to drive markets for energy products and services that meet their needs. Electricity market reform, transportation finance and the illumination of industrial supply chains will all be critical, because many federal and state energy policies and mandates drafted in previous decades are (often unintentionally) creating barriers to their adoption.

Finally, governments themselves need to leverage energy and environmental data to streamline measurement, reporting and verification processes to improve regulatory outcomes. Regulators should not require analog reporting, legal documents and transactions merely because underlying rules were written in an analog era.

Congress, agencies, regional transmission organizations/independent system operators, state utility regulators and others will be needed to scale to a digital energy future. There’s no reason why these initiatives can’t serve as opportunities for real bipartisan policy breakthroughs.

Data is already emerging as the lifeblood of private-sector efforts to address and manage business-related climate risks. The digital economy could very well be the disruptive key to bringing about bipartisan climate policy solutions, as well.

If we care about addressing climate change while staying secure and competitive, it’s clear that the status quo in Washington is not the answer. We need to disrupt the climate policy machine in Washington and harness the power of data to enable investment and market-driven answers to today’s biggest environmental challenges. We need a climate proposal that seizes on the essential paradigm shift of the 21st century: digital transformation.

  

Tom Hassenboehler is the founder and executive director of the Energy Consumer Market Alignment Project and a partner at COEFFICIENT, and he most recently served as the chief counsel for energy and environment at the U.S. House Committee on Energy and Commerce under Chairmen Fred Upton (R-Mich.) and Greg Walden (R-Ore.).

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