The twin tasks of government in every country are not ideological but scientific and economic: how can societies solve the problem of collective action in order to replant their energy production from carbon to non-carbon platforms and how can these same societies stop destroying wealth and income and begin increasing at least income for all their members.

President Obama's remarkable and very sudden accomplishments lay out a theory of the case. He has combined the two problems and launched wholistic solutions.

In the stimulus legislation he created more means to encourage alternative energy legislation than all previous presidents combined. These techniques include guaranteed loans for all sizes and types of alternative energy

generation and transmission, substantial new seed money for venture capital-like investment, and special funds for smart grid technology, among other things. Energy Secretary Chu is not only a brilliant scientist, but an experienced reviewer of business plans as an investor and technology company board member. He has brought in Matt Rogers of McKinsey to re-organize the Department's processes for expediting decisions. His capable deputy, Sue Tierney, brings a wealth of experience as a consultant and regulator; her political sagacity will be critical to the Department's problem solving.

Meanwhile, the President's stimulus bill also created, for the first time, a grant program that effectively substitutes Treasury cash for 30% of the cost of new alternative energy projects. This is particularly important to start-up's that do not have taxable income against which tax deductions can be taken. Grants are highly unusual; they show the pragmatic, experimental, get-things-done approach of this Administration.

At the same time, due in no small part to Carol Browner's leadership and of course the advocacy of her mentor Al Gore, President Obama's budget has committed the country to a cap and trade program for addressing carbon emissions. Congress needs to rise to the moment and pass this legislation very soon, preferably in sixty days. The result, after more than two decades of global discussion, will be, at last, to put a price on carbon, so that forever firms will have a clear vision of the costs they can avoid by moving to alternative energy.

In the context of these bold moves to save the world (no less than that is at stake, according to all science), it is especially critical to find ways to finance the great change from carbon to non-carbon. All modern economies, and especially the developing world that wants so badly to become developed, need cheap and widely available energy. There is no such thing as an energy-light modern economy. Like communications, universal electricity is the sine qua non of modernity. But at the same time, no country can afford to place its future on a carbon platform. Even for those few who have access to substantial carbon reserves, the inevitable prospect within the lifetime of many now living is of diminishing access to cheap carbon, whether coal or oil. Regardless of the terrible truth that carbon emissions are poisonous to our world, it is simply economic madness to base an economy on a resource that will grow ever more scarce and expensive.

Economic reasons alone suffice to make the case for the great switch to renewables. But that big change -- the change we can all hope for and believe in -- can only about without harm to the global economy if firms can obtain access to capital in order to build wind and solar generation and rewire the distribution systems for electricity. Billions are needed for transmission from the windy Dakotas to Chicago, the sunny deserts to California. Billions are needed for tapping the geothermal energy of Iceland and conveying it undersea to energy-starved Europe. More billions are needed to build solar arrays on every rooftop and empty space of Africa and India.

To rebuild the world's energy platform will require about eight to ten trillion dollars in total. In the now-vanished circumstances we would call normal, that's a manageable investment over the course of a decade. Indeed, that's about how much will be invested in carbon-based energy unless the world's nations take the vital step of redirecting the money to wind, sun, and other sustainable alternatives.

However, given the slump's negative impact on capital markets, at least half the money will have to be borrowed (by firms or governments) at very low rates in order to keep the cost of the resulting electricity at levels that will support economic growth. This is important because electricity, like communications services, is fundamentally an input to the creation of other goods and services, and when input costs are low more, output is cheaper to provide, demand rises, and global wealth grows. To put it another way, in stimulating economic recovery, it is better not to raise prices, unless the goal is, as with a sin or "Pigou" tax, to discourage consumption. We do want to discourage carbon consumption, but alternative energy ought to be provided as cheaply as possible to everyone.

One silver lining to the global economic crisis is that governments around the world are rising to the responsibility of loaning money at historically low rates. To rebuild the global energy platform they need to extend those loans to the alternative energy sector at a scale never before thought necessary, but which is now imperative. This global lending has to reach to every country. The World Bank showed the way last year by floating Green Bonds, as a sort of $300 million test. That technique should be applied in every country and across borders as well.

Green Banks and Global Green Bonds have to be carefully devised to avoid creating the problem of stranded assets, encouraging poor technology choices, and triggering excessive government involvement in the negotiation of supply and demand that occurs at the point of sale to the ultimate user. In general, equity should be private and debt public, so that equity owners can negotiate price and utility with end users, leaving government to provide debt on a technologically neutral basis, without preference for any particular firms.

As the community of economists examine the current slump, they are rapidly approaching a consensus that governments must do more to create jobs and investment. In some purely theoretical sense, any job is as useful in stimulating economic activity as any other job. But the long run is, after all, only a succession of short-run periods, and so it is better to create jobs that last longer rather than shorter, as well as those that create high and rising productivity gains. Those jobs are, in America, to be found not so much in finance or retail, residential housing or health care. Instead, these fine jobs lie most importantly in alternative energy, and probably secondarily in mass transit and ICT -- information and communications technology.

It is the energy sector as well that is the most in need of new investment in generation and transmission. The sector has suffered under-investment for many years, because of the drop in carbon prices through the 90s and early 00s, and also because states have supplanted private firms as energy owners and producers and these states have reduced their investment in resource acquisition.

The energy sector thus is crying for investment and poised for job creation. If the new jobs and new money goes into alternative energy, all interests are served. All that is missing is access to finance.

Fixing the banking crisis in the United States and around the world is going to take many more months. But part of the fix that can be instituted immediately is the creation of government-backed debt for alternative energy. This debt, if deployed with appropriate oversight, can earn profits for lending banks as well as promote economic growth. Indeed, that insight is what lay behind the Administration's substantial increase in the Department of Energy's loan guarantee authority. We need only expand on that wise action, by creating financing techniques that will last a decade and extend across borders as well, in order to assure economic recovery. At the time, if all countries come to see that alternative energy investment is practical and helpful to recovery, they should be that much more inclined to support the global cap and trade treaty at Copenhagen at the end of this momentous year.