I write this from the beautiful campus of UCLA, specifically, the Anderson School of Management, where I’m a few minutes early for a conference called: Sustainability Conference – The Financial Implications of Going Green.
After all, this really IS the central issue: If the world is, as we all hope, truly “going green,” it will be happening within the context of economic implications. To me, this is what makes the concept of a responsible and sustainable use of energy resources so tantalizing: we’re very close to the point that solar and wind are at “grid parity,” the point at which an incremental kilowatt-hour of electricity from a renewable source costs the same as it does from fossil fuels. Obviously, at that point, it will be very hard for anyone anywhere in the world to argue for the validity of coal, oil, and gas.
But until then, we need to deal with certain complicating issues:
• All sources of energy have “externalities,” i.e., costs that are not captured in the process of generating and consuming that energy. Coal, for instance, is by far the dirtiest source of electricity, but, in general, the producers and consumers of electricity are not asked to pay for the costs of the lung disease, climate change, etc. caused by burning coal.
• The fossil fuel industries are the most powerful entities on Earth, and use the force of all that wealth to defend their positions. The oil companies, for instance, employ more lobbyists than any other group in the known universe.
• The U.S. tax-payer subsidizes the oil industry to the tune of tens of billions of dollars per year, creating an “unlevel” playing field on which it’s hard for renewable energy to compete.
• There are numerous other important ingredients that contribute to the unlevel nature of the financial playing field, e.g., master limited partnerships (MLPs, the vehicle used in capital formation for oil and gas exploration) are illegal for renewable energy, despite the ongoing protests of the burgeoning clean energy industry.
• Renewable energy is a long way from “scale,” i.e., from achieving the cost reductions that will occur when (if?) our society moves in favor of solar, wind, geothermal, hydrokinetics, and biomass.
More on this after the conference.