One of the least reported but most important stories of this congress is their failure to renew the Renewable Energy Tax incentives necessary for industries such as wind, solar and geothermal to compete with the heavily subsidized death fuels (nuclear, oil, coal and natural gas).  With the threato of a Bush veto and the inability to get enough votes to avoid a filibuster, the slim Democrat majority found itself in a stand-still.

    Behind the heavy Republican opposition stand many of the big energy firms, from Big Oil, to large Utilities, desperately swimming against the current in order to maintain their profits in a rapidly warming world.

    There is one corporation that is fighting back, and it shows a great example of how Market Capitalism can be regulated to make sure that Big Companies do Good Things.

    Pacific Gas and Electric, one of California's investor owned utilities released an Opinion piece in the San Francisco Chronicle encouraging congress to pass the Renewable Energy Tax Incentive, or face the loss of over 100,000 jobs and billions of dollars in annual investments.

    What struck me about this is that PG&E was not acting out of the goodness of their heart, just like they aren't when they distribute free Compact Fluorescent Lightbulbs to help their customers decrease their energy bills. They are acting because in the heavily regulated market system in California, utlities profit when they conserve energy and loose money when they have to build new non-renewable capacity.

    Two innovative state initiatives led this large corporation to  become an example of socially responsible business practices. Utility decoupling is the first. In really simple terms (I don't fully understand it myself), the state freezes the income for Utilities at a certain level tied to the amount of customers reached, meaning that the only way that utilities can make money is by reducing operating costs and reducing energy waste, therefore maximizing its costs. For better (and more factual) explanations, reade here and here.

    The second reason that California utilities are doing amazing things in terms of climate mitigation is that the state legislature approved Renewable Portfolio Standards in 2002 to mandate incrementing amounts of renewable energy production from utilities as a percentage of total generating capacity. The RPS paired with utility decoupling are ensuring that California's utilities prioritize efficiency, renewable energy production and 'death energy' decommissioning to increase their profits and avoid taxation. 

    The Free Market won't magically develop ethics and morals, but will have to be guided by progressive legislation providing carrots along with sticks. California Utilities were excited to revolutionize their industry because it gave them the chance to pursue higher profits while doing something good for society. Were they to fail, taxation and fines would still present in the system, but it is much easier to get companies to do good things for profit, then out of fear of reprisal.