Policies for Clean Energy Investments

Discussion

Robert Pollin:

"Basics of a green new deal The core feature of the Green New Deal needs to be a worldwide programme to invest between 1.5 and 2 per cent of global gdp every year to raise energy-efficiency standards and expand clean renewable-energy supplies. Through this investment programme, it becomes realistic to drive down global co2 emissions relative to today by 40 per cent within twenty years, while also supporting rising living standards and expanding job opportunities. co2 emissions could be eliminated altogether in forty to fifty years through continuing this clean-energy investment project at roughly the same rate of about 1.5–2 per cent of global gdp per year. It is critical to recognize that, within this framework, a higher economic-growth rate will also accelerate the rate at which clean energy supplants fossil fuels, since higher levels of gdp will correspondingly mean a higher level of investment being channeled into clean-energy projects.

In 2016, global clean-energy investment was about $300 billion, or 0.4 per cent of global gdp. Thus, the increase in investments will need to be in the range of 1–1.5 per cent of global gdp—about $1 trillion at the current global gdp of $80 trillion, then rising in step with global growth thereafter—to achieve a 40 per cent emissions reduction within twenty years. The consumption of oil, coal and natural gas will also need to fall by about 35 per cent over this same twenty-year period—an average rate of decline of 2.2 per cent per year. Pursuing this same basic investment pattern beyond the initial 20-year programme, along with the continued contraction of fossil-fuel consumption, could realistically achieve a zero-emissions standard within roughly the next fifty years. Of course, both privately owned fossil-fuel companies, such as Exxon-Mobil and Chevron, and publicly owned companies like Saudi Aramco and Gazprom have massive interests at stake in preventing reductions in fossil-fuel consumption; they also wield enormous political power. These powerful vested interests will have to be defeated.

Investments aimed at raising energy-efficiency standards and expanding the supply of clean renewable energy will also generate tens of millions of new jobs in all regions of the world. In general, building a green economy entails more labour-intensive activities than maintaining the world’s current fossil fuel-based energy infrastructure. At the same time, unavoidably, workers and communities whose livelihoods depend on the fossil-fuel industry will lose out in the clean-energy transition. Unless strong policies are advanced to support these workers, they will face layoffs, falling incomes and declining public-sector budgets to support schools, health clinics and public safety. It follows that the global green-growth project must commit to providing generous transitional support for workers and communities tied to the fossil-fuel industry.

There are major variations in the emissions produced by burning oil, coal and natural gas. To produce a given amount of energy, natural gas will generate about 40 per cent fewer emissions than coal, and 15 per cent less than oil. It is therefore widely argued that natural gas can be a ‘bridge fuel’ to a clean-energy future, through switching to it from coal. Such claims do not withstand scrutiny. At best, an implausibly large 50 per cent global fuel switch to natural gas would reduce emissions by only 8 per cent. But even this calculation does not take account of the methane gas that leaks into the atmosphere when natural gas is extracted through fracking. Recent research has shown that when more than about 5 per cent of the gas extracted by fracking leaks into the atmosphere, the impact eliminates any environmental benefit from burning natural gas relative to coal. Various studies have reported a wide range of estimates as to what leakage rates have actually been in the United States, as fracking operations have grown rapidly. A recent survey puts that range between 0.18 and 11.7 per cent for different sites in North Dakota, Utah, Colorado, Louisiana, Texas, Arkansas and Pennsylvania. It would be reasonable to assume that if fracking expands on a large scale in regions outside the us, it is likely that leakage rates will fall closer to the higher-end figures of 12 per cent, at least until serious controls could be established. This then would diminish, if not eliminate altogether, any emission-reduction benefits from a coal-to-natural gas fuel switch.footnote11

For some analysts, ‘clean energy’ includes nuclear power and carbon capture and sequestration (ccs) technologies. Nuclear power does generate electricity without producing co2 emissions. But it also creates major environmental and public-safety concerns, which have only intensified since the March 2011 meltdown at the Fukushima Daiichi power plant in Japan. Similarly ccs presents hazards. These technologies aim to capture emitted carbon and transport it, usually through pipelines, to subsurface geological formations, where it would be stored permanently. But such technologies have not been proven at a commercial scale. The dangers of carbon leakage from flawed transportation and storage systems will only increase if ccs technologies are commercialized and operating under an incentive structure where maintaining safety standards will reduce profits. An appropriately cautious clean-energy transition programme requires investment in technologies that are well understood, already operating at large-scale and, without question, safe.

Thus, the first critical project for a global green-growth programme is to dramatically raise energy-efficiency levels—that is, using less energy to achieve the same, or higher, levels of energy service through the adoption of improved technologies and practices. Examples include insulating buildings more effectively to stabilize indoor temperatures, driving more fuel-efficient cars—or, better yet, relying on well-functioning public-transport systems—and reducing the amount of energy wasted through generating and transmitting electricity, and through operating industrial machinery. Expanding energy-efficiency investment supports rising living standards because, by definition, it saves money for energy consumers. A major study by the us Academy of Sciences found that, for the us economy, ‘energy-efficient technologies . . . exist today, or are expected to be developed in the normal course of business, that could potentially save 30 per cent of the energy used in the us economy while also saving money.’ Similarly, a McKinsey study focused on developing countries found that, using existing technologies only, energy-efficiency investments could generate savings in energy costs in the range of 10 per cent of total gdp, for all low- and middle-income countries. In Energy Revolution: The Physics and Promise of Efficient Technology, Mara Prentiss argues further that such estimates understate the realistic savings potential of energy-efficiency investments.footnote12

Raising energy-efficiency levels will generate ‘rebound effects’—that is, increased energy consumption resulting from lower energy costs. But such rebound effects are likely to be modest within the context of a global project focused on reducing co2 emissions and stabilizing the climate. Among other factors, energy-consumption levels in advanced economies are close to saturation point in the use of home appliances and lighting—we are not likely to clean dishes more frequently because we have a more efficient dishwasher. The evidence shows that consumers in advanced economies are more likely to heat and cool their homes and drive their cars when they have access to more efficient equipment—but again, these increased consumption levels are usually modest. Average rebound effects are likely to be significantly larger in developing economies. It is critical, however, that all energy-efficiency gains be accompanied by complementary policies (as discussed below), including setting a price on carbon emissions to discourage fossil-fuel consumption. Most significantly, expanding the supply of clean renewable energy will allow for higher levels of energy consumption without leading to increases in co2 emissions. It is important to recognize, finally, that different countries operate at widely varying levels of energy efficiency. For example, Germany presently operates at an efficiency level roughly 50 per cent higher than that of the United States. Brazil is at more than twice the efficiency level of South Korea and nearly three times that of South Africa. There is no evidence that large rebound effects have emerged as a result of these high efficiency standards in Germany and Brazil.

As for renewable energy, the International Renewable Energy Agency (irena) estimated in 2018 that, in all regions of the world, average costs of generating electricity with clean, renewable energy sources—wind, hydro, geo-thermal, low-emissions bioenergy—are now roughly at parity with fossil fuels.footnote13 This is without factoring in the environmental costs of burning oil, coal and natural gas. Solar-energy costs remain somewhat higher on average but, according to irena, as a global-weighted average, solar photovoltaic costs fell by over 70 per cent between 2010 and 2017. Average solar photovoltaic costs are likely to fall to parity with fossil fuels as an electricity source within five years. Adnan Amin of irena summarizes the global cost trajectory: ‘By 2020, all mainstream renewable power generation technologies can be expected to provide average costs at the lower end of the fossil-fuel cost range. In addition, several solar pv and wind power projects will provide some of the lowest-cost electricity from any source’." (https://newleftreview.org/issues/II112/articles/robert-pollin-de-growth-vs-a-green-new-deal)

Land Use Requirements for Maximum Clean Energy Requirements

(as these Vettese arguments are disputed, and even refuted, please read the whole article through the hyperlink just above - MB)

Robert Pollin:

"In the last number of nlr, Troy Vettese argued that it would be unrealistic to expect that a global renewable-energy infrastructure could be the foundation for a viable climate-stabilization project because, at present consumption levels, it would take up enormous amounts of the earth’s land surface. Vettese writes: ‘A fully renewable system will probably occupy a hundred times more land than a fossil-fuel powered one. In the case of the us, between 25 and 50 per cent of its territory, and in cloudy, densely populated countries such as the uk and Germany, all of the national territory might have to be covered in wind turbines, solar panels and biofuel crops to maintain current levels of energy production.’" (https://newleftreview.org/issues/II112/articles/robert-pollin-de-growth-vs-a-green-new-deal)