The Green Energy Economy: What It Will Take to Get There

Giant turbine blades lie awaiting new construction at the National Renewable Energy Laboratory's wind technology center on the outskirts of Boulder, Colorado.

What Washington won't do—not in theory, anyway—is pick specific winners. "The market will decide what the mix will be," says Matt Rogers, a former director at McKinsey & Co. and now one of Chu's top advisers. "It will be interesting to see what the market brings forward." Of course, in reality, Congress's record is one of subsidizing some industries but not others. Even within the biofuel world, corn-based ethanol is heavily supported, but some others, such as biofuel made from algae, receive almost no backing.

In this new era of national energy, one of the primary questions facing the country is that of timing. When should things happen? In what order? And how soon can they occur? "Broadly, what scares me is that we want to do this in an incremental fashion. We want this to come across as painlessly as possible," say Rich Wells, vice president of energy at Dow Chemical. "We need a breakthrough mentality."

It has become a cliché to say that there is no "silver bullet" for the nation's energy and climate problems. Most experts prefer to think about energy solutions as a collection of options to be deployed in tandem. Perhaps the most widely quoted example is the "wedge model," developed by Princeton University professors Stephen Pacala and Robert Socolow in 2004. It outlined 15 wedges, each one representing a way to significantly reduce greenhouse gas emissions over the next 50 years. Among them: raising the fuel economy of 2 billion cars from 30 mpg to 60 mpg and doubling nuclear capacity worldwide.

Only some of these, of course, are realistic in the shorter term. "If you're only going to do one, the top one is always energy efficiency," says Dow's Wells. "It is for the most part the easiest, cheapest fuel out there." Amory Lovins, chief scientist at the nonprofit Rocky Mountain Institute, agrees, saying that energy savings from highly fuel-efficient cars would be equivalent to "finding a Saudi Arabia under Detroit." Perhaps the biggest barrier for buildings has been the upfront cost of doing retrofits, with the need to convince people that the costs can be quickly recouped by lower energy bills. The stimulus package is taking a stab at this, setting aside $5 billion for home weatherization.

Meanwhile, everyone else is jockeying for position. The biofuel industry wants Congress to lift the cap on how much ethanol can be blended into gasoline. The nuclear industry is asking Congress to cough up billions to insure new nuclear power plants; wind and solar industries are asking for transmission superhighways. Detroit wants more in government bailout money. And coal wants money to research carbon capture technology. The great energy nationalization is here.