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Agassi: Let’s Lead the Green Industrial Revolution

The Obama administration and the leadership of the 111th Congress have made the development of a clean energy economy a national priority. Meanwhile, automakers have signaled that zero-emission electric vehicles represent the future of the industry.

Nevertheless, America’s ability to compete in this emerging sector of the global economy is jeopardized by access to the capital markets, the state of the global auto industry and the chicken/egg dilemma for enabling widespread consumer adoption of affordable, convenient and environmentally friendly electric cars.

While the U.S. debates, other countries, including China and France, are leading the “Green Industrial Revolution,— having already offered substantial financial incentives and rebates to consumers who purchase EVs.

We recognize the historic opportunity for the United States to reshape its energy policy and unlock the economic and environmental benefits that come from leading this race and securing America’s leadership for the next 100 years.

It begins with a focused federal effort to use market-making policy tools, in combination with financial mechanisms and state-based partnerships that attract capital to help unlock the next wave of innovation, adoption and growth that comes from embracing a sustainable mobility model.

In so doing, we believe that such policies will allow the United States to significantly outperform President Barack Obama’s goal of 1 million plug-in hybrid vehicles on the road by 2015. In fact, that goal is achievable in the Pacific Coast states alone, which could serve as a critical test-bed to demonstrate at scale the deployment of EVs and associated infrastructure.

We wholeheartedly endorse the president’s vision of the future, which is possible today, when he remarked in a March speech at an EV research facility in Southern California:

“True to form, California has already forged ahead with its own plans rather than wait for Washington. It’s fitting that the state home to the first freeway and the first gas station is already at work devising the next freeway and the next gas station. This green freeway’ you’re planning with Oregon and Washington would link your states with a network of rest stops that allow you to do more than just grab a cup of coffee, but also charge your car … or swap out a battery in the time it takes to fill a gas tank. Charging stations have begun to pop up around downtown San Francisco, and that city has joined with San Jose and Oakland with the vision of becoming the electric vehicle capital of the United States.’—

Better Place believes the following “ABC— policy objectives help to lay the foundation for the United States to move off oil for transportation for the next 50 years while stimulating economic opportunity in energy, transportation, manufacturing and IT and reducing dangerous greenhouse gas emissions:

A=Automobiles: Of the more than 645,000 civilian and non-tactical military vehicles that constitute the U.S. government’s worldwide vehicle inventory, more than 330,000 are subject to a wide variety of requirements intended to improve their efficiency and reduce petroleum consumption.

The current system of alternative fuel vehicle requirements should be revised to reflect a carbon-constrained reality. A purchasing preference should be established for zero-emission vehicles, where they are commercially available at reasonable cost. Reasonable cost should be calculated not just on the basis of upfront vehicle purchase price, but should reflect the costs per-vehicle-mile-traveled, including a carbon compliance price as called for by the Obama administration.

The U.S. government, by signaling demand for zero-emission vehicles, can help reshape the domestic auto industry so it can compete in the future against European, Japanese and the coming Chinese automakers. That’s a win for industry and the American taxpayer.

B=Batteries: To date, the domestic battery industry has been hamstrung not just by a lack of funding for the research, development and demonstration challenges associated with exploring a portfolio of different battery chemistries, but also the lack of a market for their end product. Meanwhile, the battery industry has grown by leaps and bounds in China, Japan and Korea.

The federal government should extend existing loan and loan guarantee programs that apply to manufacturing facilities to the purchase of advanced battery technologies themselves, deployed in either the auto or grid contexts — or the combination of the two. A financial mechanism of this kind would buy down the cost of battery purchases for original equipment manufacturers, utilities and systems operators alike — and provide battery manufacturers an additional source of upfront financing to take to capital markets at the time they are ready to scale their domestic operations.

Such a policy also will enable the significant investments needed to make our electric grid “smart.—

C=Charging Infrastructure: The American Recovery and Reinvestment Act provided $400 million for transportation electrification grants, for which the Department of Energy just released the solicitation rules. This is a good start. The demand for these funds will far exceed supply, and Congress should provide additional support for this program in the future — to build on electrification projects begun as a part of the president’s stimulus initiative. Electrification infrastructure projects are truly “shovel ready— as approximately 80 percent of the cost for deploying a network is labor — green jobs that are local and can’t be outsourced.

Likewise, in dispersing these funds, policymakers should prioritize projects occurring in conjunction with federal and state fleet turnover initiatives.

The ARRA also provided loan guarantee funds of $6 billion to support an estimated loan volume of $60 billion to $80 billion for renewable energy and transmission projects. Electrification infrastructure projects that rely on smart grid technologies (with priority use of renewable electricity) should be made eligible for this federal financing.

Much like a U.S. military server network formed the foundation for the early Internet, charging infrastructure on military bases, corporate campuses, airports for taxi fleets and other public sector locations can serve as the initial seeds that grow into a nationwide electric car charging network.

Taking a comprehensive approach today that relies on market-making policies, state and public/private partnerships that leverage investment in each critical link of the EV ecosystem will result in substantial short-term job creation — consistent with the goals of the president’s stimulus plan.

Such a policy approach also will lay the groundwork for U.S. leadership in an emerging growth sector of the global economy.

Much like the first transcontinental railroad helped usher in the Industrial Revolution 150 years ago, allowing the United States to lead the past 100 years of industrial growth, we believe a similar vision of a green freeway could equally serve as a catalyst to usher in a Green Industrial Revolution to unlock the economic and environmental opportunities that inherently come with sustainable transportation.

Shai Agassi is founder and CEO of Better Place, a venture-backed company that looks to reduce global dependence on oil.

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