How Conservatives Can Break the Liberal Monopoly on Green Policy

Ideas like D.C.-funded venture capital and venture philanthropy for building retrofits are business friendly and common sense -- but you won't hear about them in today's debate.

A cautionary tale about what happens when one side determines the entire policy debate (Reuters)

Conservation isn’t the first word that comes to most people’s minds when they think of conservative values. That’s a shame.

President Reagan explained why in 1984. “We want to protect and conserve the land on which we live -- our countryside, our rivers and mountains, our plains and meadows and forests,” he said. “This is our patrimony. This is what we leave to our children. And our great moral responsibility is to leave it to them either as we found it or better than we found it.”

When I was governor of North Dakota and secretary of agriculture, I often spoke to ranchers, farmers, landowners, hunters, small businesses, and community officials.  These local leaders value the environment and believe in being good stewards of the land while balancing necessary priorities of a successful economy.  That common-sense, balanced approach is what’s missing in today’s politically charged discussion about environmental issues. That’s why conservatives need to reengage on the issues of conservation so that our voices and ideas are heard -- because they can directly and positively affect the financial future of many of our businesses and industries and, of course, the capacity of the land on which we live.

Many environmental solutions are consistent with long‐standing conservative principles: fiscal responsibility, limited government, market entrepreneurship, community leadership, and public‐private partnerships. All have been proven to be effective. But supporters of big-government solutions have acquired such a monopoly on defining our challenges that conservatives seldom do a focused assessment of the state of conservation. Current environmental policy too often defaults to one-size-fits-all approaches that hinder innovation, curtail entrepreneurship, and disregard local initiative. This top-down government approach has repeatedly proven to be ineffective, especially today with limited financial resources.

That’s why I recently helped launch the Conservation Leadership Council, a coalition whose members represent a range of conservative politicians, policymakers, and business leaders. We need to rewrite the rules of conservation, and the way to do that is to ensure that conservative thinkers are finding data-driven, business-friendly environmental solutions.

Take clean energy. Two years ago, the name Solyndra was on everyone’s lips. The massive failure of the California-based solar company left clean-energy backers and taxpayers reeling and the Obama Administration struggling to explain itself. Conservative leaders launched a necessary truth-finding mission to find what went wrong and how the administration could invest $535 million taxpayer dollars in an obvious lemon.

But that failure doesn’t mean we don’t still need a cleaner energy economy and a stronger commitment to protecting our environment. While the Obama Administration’s failings have shown how not to do things, conservatives should be exploring the right ways to address these issues.

There is innovative conservative thinking out there. For example, take a new paper by Derek Stimel, an economist at Menlo College, commissioned by the CLC. The paper proposes structuring federal investment by using market dynamics to encourage clean energy innovation. Call it the un-Solyndra way.

Stimel notes that venture capitalism could be used to finance new innovations, because it spreads risk among a large number of investors and has a proven track record of weeding out the ideas that are least likely to succeed. This creates a flexible and competitive market able to absorb high levels of uncertainty. Within this framework, Stimel proposes two possible solutions to be incorporated into the government loan program -- block grants and federal auctions.

Block grants, an incremental improvement, disperse funds across states thereby reducing the risk of loss and potential for cronyism. By allocating federal funds to states, block grants introduce a level of competition and diversification to innovation. More ambitious would be an auction process, where federal funds are sold to venture-capital organizations to create an authentic market dynamic and take the federal government out of the process entirely.

Not every new policy has to be a sweeping innovation  -- incremental changes can have impressive impact too. Buildings currently account for 40 percent of the energy used in the United States. Stephanie Gripne, a fellow at University of Denver, and Dan Last of AtSite, argue for exploring new sources of capital to pay for energy-saving retrofits. Specifically, they focus on program-related investments, which are cash infusions from private foundations that support charitable activities but also involve the potential return of capital within a given time frame. They conclude that this type of investment capital would be especially well suited to projects like building upgrades because such grants aim for lower financial returns and tend to adopt longer time horizons than conventional investments.

Program-related investments are an effective model for a range of retrofits  -- from small to significant, serving as the concrete first step in garnering additional investment for bigger projects and lowering interest rates for the overall project.

Between scandals like Solyndra and over-regulation at the EPA, environmental and energy issues have become synonymous with big government and even bigger economic burdens. But as these researchers show, they don’t have to be. Spurring entrepreneurism and innovation can create stronger environmental policy for America  -- an approach that weans us from the one-size-fits all way of doing things.

As Reagan said, we must leave a better environment for our children. There are proven, conservative solutions to the challenges we face today  -- and conservatives need to be part of the debate to make sure those ideas are implemented.