When the government sends price signals to the market it matters. What is a price signal you ask? It is an action by the government that establishes the lines on the playing field in a particular market. These groundrules allow the marketplace to respond with the confidence that they understand the lay of the land and if they invest and innovate the rug isn’t going to be pulled out from under them. (I’m trying to come up with as many mixed metaphors in the first paragraph as possible…how am I doing?).

A great example of a green price signal was sent last week when President Obama issued an Executive Order insisting that the EPA re-examine the request by California (and 13 other states) to increase automotive mileage and emission standards in the face of the threat from Global Climate Change (see my most recent post).

This was meant as a clear signal to the market that the administration is going to support - and probably nationalize - efforts to cut greenhouse gas emissions from our transportation fleet. The response from Detroit? Typical screaming that this will kill them and hurling an army of lobbyists into Washington to fight against it. Are these guys nuts? Don’t they realize the the president just told them in politi-speak that there is going to be a guaranteed market for all of these next generation green cars they are working on building?

What do I mean? Well, California (if it were a country) has the 5th largest economy in the world. The other states that helped sue the governement when the Bush adminsitration REFUSED to do anything about the request for the waiver (Connecticut, Maine, Maryland, Massachusetts, New Jersey (whoo hoo!), New York, Oregon, Pennsylvania, Rhode Island, Vermont, and Washington) make up an enormous chunk of the country’s GDP. Other states that are going to support it include Illinois, Arizona, Colorado, Florida, New Mexico, and Utah. Are you kidding me? What other economic powerhouse states aren’t playing ball?

If I am an executive for the car companies (not that these guys have proven themselves to be very smart), I look at this and say, ‘wow, the people in over half the country are going to HAVE to buy these things we are working on because the laws in their state will insist on it…and we are probably going to have a federal standard insisting on it soon…this is a no brainer’. Instead, the boneheads are fighting it. Remind me again why we are bailing these guys out.

And it isn’t just the car companies…what about the battery companies, the tire companies, fuel cell manufacturers, biodiesel and ethanol producers and distributors, and all the other businesses that are now looking at a new exploding marketplace to invest and innovate in. Check out the transporation directory at Green Collar Economy to see the types of businesses that will benefit from this price signal.

There are going to be a whole bunch of price signals coming out of Washington over the next year. And this means that the handcuffs will finally be taken off of the American marketplace and we will be positioned to lead the world in going green. Finally.

When I read this amazing open letter to President Obama from Stavros Dimas, the European Union’s Commisioner on the Environment, I had two conflicting feelings, depression and pride.

Depression because it made it very clear how far behind the EU we are in fighting global climate change. Not only from an implementation perspective, but from a commitment, regulatory and innovation perspective as well. They are seeing the fruits of a green economy starting to ripen and it is not destroying their economy (as the former administration and lovers of the status quo would have you believe) but is instead strengthening it.

Pride because the letter spells out how desperately the Europeans and the rest of the world want us to get our act together because they know we will kick ass.

America’s support will be an essential part of any successful global effort. Innovation and new technologies will certainly be a part of the solution and America has some of the best universities and best researchers in the world. I am convinced
that many of the new ideas that will move us away from our carbon addiction will come from America. What is more, your country has the proven ability to translate research into results.

To take it over the top and play on our patriotic heartstrings, he concludes the letter with a call to action from a former US President,

Against the background of the Cold War, President John F. Kennedy announced a great
change when he launched the Apollo Programme. He noted that “These are extraordinary
times and we face an extraordinary challenge”. He went on to conclude that “Now it is time
for a great new American enterprise - time for this nation to take a clearly leading role [in
space achievement], which in many ways may hold the key to our future on earth… I believe
we possess all the resources and talents necessary. But the facts of the matter are that we have
never made the national decisions or marshalled the national resources required for such
leadership.”
President Kennedy’s conclusions could be applied almost word for word to today’s
“extraordinary challenge” of the war against climate change. The biggest difference being that the future of our planet did not depend on man setting foot on the moon.

I wish America every success as it faces up to this challenge.

If this type of call to action can’t get you excited to change the world then I don’t know what can.  A little leadership and some good old fashioned American ingenuity, entrepreneurialism and elbow grease and we will lead the world out of this mess - environmentally and economically.

It has been a heck of a first week in office for the new President. Let me see if I can sum up some of the things he’s done:

• Established the toughest lobbying regulations ever for members of the executive branch
• Ordered the closing of Guantanamo
• Implemented governmental transparency (check out http://whitehouse.gov to see what this looks like)
• Eliminated the executive orders banning stem-cell research
• Sent a clear message to the Arab and Muslim world that a new conversation is starting

All very important and exciting actions.  My favorite without question however, is the Executive Order titled: State of California Request for Waiver Under 42 U.S.C. 7543(b), the Clean Air Act which is an unequivicol step in the direction of making America’s transporation system A LOT greener.  President Obama has ordered the EPA to re-examine California’s request (along with 13 other states) for a waiver to insist on tighter emission standards for cars and trucks in their state.  Remember, this is the request that the Bush administration was doing back flips to keep from being approved. 

Even after California sued the federal government and the Supreme Court ruled that the EPA was empowered and obligated to act under the Clean Air Act, the Bush adminstration came up with some of the lamest reasons ever not to do anything.  President Obama wasn’t putting up with that nonsense, and told the EPA to get moving on his 4th day in office. 

This is exactly the kind of price signal that the marketplace needs to start kicking ass and coming up with game changing products.  If we know that we need to jump over a higher bar, there is no economic engine in the world that is more capable of inventing and deploying breakthrough technology than the American market.  There is no matching legislation at this point, but the EPA can go a long way to changing mileage and emission standards without congressional debate or approval. 

The guys in Detroit are fighting it like crazy (probably with our bailout money paying for the lobbyists), but I don’t feel too bad for them.  This is exactly the type of thing they need.  There is now going to be a guaranteed market for more efficient products.  Isn’t this what every company would want. 

There was an interesting artice in Green, Inc. (the New York Times green business blog, which I usually like), called Will the Mileage Tax Replace the Gas Tax. The premise of the article was that a tax on mileage driven may be more effective than a gas tax….or at least will be if mileage really starts to go sky high.

Here’s the thing. This idea is absurd until we are many, many years down the line, if ever. What we need to be doing right now as a society is sending price signals to the market that are easy to implement and change behavior in a way that is beneficial to the country. A gas tax fits the easy to implement bill and we know from experience that expensive gas changes behavior quickly. The goal of an increased gas tax is to drive down greenhouse gas emissions.

I couldn’t care less if people drive a lot as long as they are not releasing green house gasses.

Times are as tough as any in the last 70 years.  The huge majority of Americans also have no experience with a situation in which keeping your head down and working hard may not be enough.  We certainly don’t have experience with a president-elect having to run the country before inaguration because our current president has checked out, but that is the situation we find ourselves in.  Thank goodness that the incoming president seems to be a lot more engaged and competent than the outgoing one.

We should be encouraged that while president-elect Obama is laying out the details of the much needed economic stimulus package, he is sticking to his green guns. As he laid out the structure of his plans in yesterday’s weekly radio address, the first area of investment and job creation he mentioned was in the Green Collar Economy. According to his address:

We’ll create nearly half a million jobs by investing in clean energy – by committing to double the production of alternative energy in the next three years, and by modernizing more than 75% of federal buildings and improving the energy efficiency of two million American homes. These made-in-America jobs building solar panels and wind turbines, developing fuel-efficient cars and new energy technologies pay well, and they can’t be outsourced.

This is an important statement so close to the inaguration and the likely passage of this stimulus bill. There is nothing that we Americans can invest in that will create more short and long-term benefits than jumpstarting the green marketplace. This kind of investment will level the playing field for alternatives by sending important price-signals to the marketplace and be the kind of thing that releases the kind of American entrepreneurial spirit that will move the Green Economy to the mainstream for years to come.

Keep up the good work Mr. Almost President.