Decarbonizing The Economy
The transition to a renewable resource-based economy should not be limited to energy but extend to all material goods; nevertheless, the most urgent transition must focus on energy. This will be a massive and complex endeavor, and its difficulty should not be underestimated. The transition depends on five key components, and I will address them in this summary:
1.Technical obstacles and potential
2.Financial obstacles and opportunities
5.Mass public and elite values and perspectives
The technology of renewable energy has advanced rapidly, but no transformative technology is yet available. This statement is tautological, because by definition when the transformative technology is available it will transform our energy system. The current technologies with the most potential appear to be solar cells and energy storage batteries. Improved battery technology overcomes the issues of intermittent solar and wind energy and makes electric vehicles feasible. What is missing is a technology that is lower priced, more convenient and at least as reliable as fossil fuels. When that technology is developed, the fossil fuel business will be disrupted and the losses to that industry will be profound and destabilizing. The fear of this transition is pushing the fossil fuel industry into massive political mobilization that may delay the transition, but it will not prevent it.
The technical and financial constraints on the transition to renewable energy in the United States converge on the issue of the electrical grid. One issue is development of low-cost, widespread distributed generation of electricity. If consumers become net producers of electricity, they may pay grid utilities for protection against intermittent sources of electricity, but they will not pay utilities as much as they do now. There is also the possibility that for home consumption, battery technology could become so reliable that some people might disconnect from the grid. This leaves those remaining dependent on the grid with higher costs to maintain the grid. As with fossil fuels, power utilities have long wielded significant political power; in this case, lobbying is focused on the state level utility regulatory bodies. In Florida, utility political power has discouraged household solar energy installation. In some other states, we can expect opposition to development of microgrids and smart-grids and net metering rules due to opposition to distributed generation of electricity. But as Mary Ellen Klas wrote in the Miami Herald about a year ago:
Florida’s utility industry steered more than $20 million of their profits into a failed constitutional amendment to impose new barriers to the expansion of rooftop solar energy generation, but developers say that as the cost of installing solar panels drops, the state could quickly become a leader in private solar energy expansion no matter what the energy giants do.
The Florida political battle demonstrates the grassroots support for lower cost renewable energy. This political support cuts across the ideological spectrum: both conservatives and liberals love lower cost energy. Continued reductions in the cost of renewable energy will embolden more political leaders to support the transition to renewable energy. Some leaders are anticipating those cost reductions and acting now. The role of political will is highlighted by the impact that determined state governments can have in facilitating the transition to renewable energy. California’s Governor Brown and New York’s Governor Cuomo have both set ambitious renewable energy and energy efficiency goals and those states have been making steady progress in decarbonizing their economies. Political will is certainly needed to push grid modernization. But the wild card here is technological development. If battery technology and solar cell technology continue to advance, people will begin to disconnect from the grid.
We have already seen this drive to disconnect with communications technology. It is the rare millennial who installs a landline telephone in their home. We are also seeing young people replacing cable TV with internet-based streaming services. It is not difficult to see a similar tipping point possible with electricity. However unlike home communications and entertainment systems, energy systems perform household functions that are essential to human health and well-being. Energy is needed for food refrigeration, cooking, climate control, lighting, home security and often water and sewage pumps. It may also be needed for medical devices. Going it on your own brings risks; while you can do without streaming video, try going without climate control in the Arizona desert. Although this may change, energy systems are more complicated than home entertainment systems and connecting the renewable energy system to the home may require equipment and expertise that may not be readily available.
The issue of organizational capacity is often overlooked during discussions of decarbonization. Economists typically assume that if the price is adequate, capacity will be developed. But when a nation is close to full employment and both immigration and training programs are under attack by the national government, it may be difficult to recruit the trained personnel needed to perform the tasks required. While household decarbonization may end up being relatively straightforward, the work required in factories, office buildings, mass transit systems and in modernizing the grid itself will present engineering, logistic and other operational challenges.
Meeting these challenges will require sophisticated public-private partnerships. Government’s role involves regulation of electric utilities, delivering technical education, funding basic and applied research, revising building codes and decarbonizing its own facilities…..