As Solar and Wind Prices Continue To Fall, Markets Become Less Attractive
According to the Energy Society: Renewable energy prices have become competitive around the world:
- Zambia – a World Bank-led solar power auction saw a winning bid of 6.02 cents per kilowatt-hour
- Saudi Arabia – solar generated electricity dropped to 1.79 cents per kilowatt-hour
- Mexico – in an non-subsidized auction, wind energy prices reached 1.77 cents per kilowatt-hour
- Alberta – the province’s first wind auction saw a winning price of 3.7 cents per kilowatt hour (half the cost of natural gas per kilowatt hour).
At first blush, all this is good news, though the word “competitive” is a considerable understatement. Who can make money selling electricity at under $0.02/kWh?
An ideal world would put a price on carbon, lifting the price of energy from fossil fuels, enabling renewable energy to be sold at a price that rewards operators fairly for what they’re bringing to the table.
As noted elsewhere, the pre-eminent tool for making this happen is Carbon Fee and Dividend. Here’s how it works, per the website:
1. Place a steadily rising fee on fossil fuels
To account for the cost of burning fossil fuels, we propose an initial fee of $15/ton on the CO2equivalent emissions of fossil fuels, escalating $10/ton/year, imposed upstream at the mine, well or port of entry.
Accounting for the true cost of fossil fuel emissions not only creates a level-playing field for all sources of energy, but also informs consumers of the true cost comparison of various fuels when making purchase decisions.
This process chart shows the basics of calculating a carbon fee that’s passed down the energy supply chain from the point of extraction to the retail and end-use consumers. Chemistry determines the carbon dioxide or equivalent emissions of a fuel, which becomes part of its price within a transaction to discourage its use and garner revenues for a rebate (dividend).
2. Give 100% of the fees minus administrative costs back to households each month.
100% of the net fees from the carbon fee are held in a Carbon Fees Trust fund and returned directly to households as a monthly dividend.
About two-thirds of households will break even or receive more than they would pay in higher prices. This feature will inject billions into the economy, protect family budgets, free households to make independent choices about their energy usage, spur innovation and build aggregate demand for low-carbon products at the consumer level.
Monthly projected share of the monthly carbon fee revenue across American households.
3. Use a border adjustment to stop business relocation.
Import fees on products imported from countries without a carbon fee, along with rebates to US industries exporting to those countries, will discourage businesses from relocating where they can emit more CO2 and motivate other countries to adopt similar carbon pricing policies. Building upon existing tax and trade systems will avoid complex new institutional arrangements.
Firms seeking to escape higher energy costs will be discouraged from relocating to non-compliant nations (“leakage”), as their products will be subject to import fees.
It’s good for the economy AND even better for people.
A study from REMI shows that carbon fee-and-dividend will reduce CO2 emissions 52% below 1990 levels in 20 years and that recycling the revenue creates an economic stimulus that adds 2.8 million jobs to the economy.
A structured rising price on greenhouse gas emissions will focus business planning on optimizing investment priorities to thrive in a carbon-constrained world.
Additionally, Carbon Fee and Dividend is projected to prevent over 230,000 premature deaths over 20 years from improved air quality.
Nice info – thanks, Craig, for posting!
Thanks! …. I believe I’m right on this.