In a stunning example of how the political climate today shoots US economic growth in the foot, little beats today’s American Coal Company’s decision to shelve development of a $668,000 coal plant that captures and buries carbon dioxide using state-of-the-art  technology.   According to the New York Times, although the federal government agreed to back half the cost of the plant, “…A.E.P said it was unwilling to spend the remainder in a political climate that had changed strikingly since it began the project.”

The company itself advocates CCS (carbon capture and sequestration) technology and believes it will be needed to meet emission standards in the future.  However, because the federal government has not passed rules that would set a common standard for coal-burning plants across the country, state regulators won’t allow the companies to recover their expense.  In a jobless recovery, no politician wants to be accused of supporting ‘regulation’ that adds to the cost of doing business. Environmental regulation is stuck-in-place.

Story Doesn’t End 

If there is one thing President Obama emphasizes over and over, it’s the thread that binds the environment, innovation and economic growth together in shaping America’s future.  The American economy shot ahead of all others in the 20th century and first decade of this century because it innovated. It innovated industrial production techniques, car fabrication and steel manufacturing; its innovation in computer and software technology took over Japan’s and drove economic growth in the ’80s and ’90s.

The American economy needs to constantly renew its technological might.  Innovation is crucial.  In the 80s, other countries began to produce cheaper steel and smaller, less expensive cars, but innovations like the PC and MAC and software giants like Microsoft took over the lead and drove the economy to new heights.   The free-market has been good to the US.

However, the experience of A.E.P. shows that the total disdain for  government so prevalent in today’s politics can itself result in a drag on development of new technologies that are too expensive for one company to invest in on its own.

And that’s what’s happening here: the US is handing innovation in the clean energy technology field over to China.  China is so far ahead of the US in putting ‘clean coal’ technology to work that American scientists and corporate engineers are heading there to test out new theories.  Last year, The Atlantic featured a cover story that told why:

In the search for “progress on coal,” like other forms of energy research and development, China is now the Google, the Intel, the General Motors and Ford of their heyday—the place where the doing occurs, and thus the learning by doing as well. “They are doing so much so fast that their learning curve is at an inflection that simply could not be matched in the United States,” David Mohler of Duke Energy told me.“In America, it takes a decade to get a permit for a plant,” a U.S. government official who works in China said. “Here, they build the whole thing in 21 months. To me, it’s all about accelerating our way to the right technologies, which will be much slower without the Chinese.

They can go from concept to deployment in half the time we can, sometimes a third. We have some advanced ideas. They have the capability to deploy it very quickly. That is where the partnership works.”

From another  US scientist quoted in the article:

“You can think of China as a huge laboratory for deploying technology. The energy demand is going like this”—his hand mimicked an airplane taking off—“and they need to build new capacity all the time. They can go from concept to deployment in half the time we can, sometimes a third. We have some advanced ideas. They have the capability to deploy it very quickly. That is where the partnership works.”

China Uses Regulation to Enhance Development,  Not Retard It.

The demise of A.E.P.’s plans is a reverse example of how the government can help or hinder innovation.  The fragile interplay of regulation and private enterprise can work to America’s advantage.  But the polarized all-or-nothing political climate makes it impossible.  As long as one side promotes government as the default solution to society’s problems and the other side believes it to be the source of everything wrong in America, government and industry don’t have the support to collaborate for the long-term health of the country.