Why Cheap Renewables Won't Save Us
Hiya!
This month I’m diving into the economics of renewable energy. Specifically, I explored a disheartening phenomenon that’s been happening in the world of energy. For a long time, pundits and experts have claimed that one of the biggest barriers to renewable energy is its price. Renewables were more expensive than fossil fuels, so they weren’t getting adopted. As of this decade, however, that is no longer the case. Solar and wind are significantly cheaper than oil, gas, and coal. Yet, fossil fuel production and use continue to rise. Why? That’s what I tried to answer in this month’s video (with the help of Brett Christophers’ book The Price is Wrong). You can check out the video below, as well as three quotes and three links I found useful during the research process.
Three Quotes:
“Four out of five executives consider the ability to create acceptable returns on projects a main barrier to decarbonization of the energy system.”
— Bain & Company
“To be sure, investment decisions are themselves shaped by price, as indeed they are shaped by government policy and regulation – which, needless to say, can and to one extent or another will reshape the ‘purely economic forces’ acting on technology shifts as referred to by Martin Wolf; and which, deployed in a highly interventionist way, would potentially render the energy transition something other than strictly ‘capitalist’ (i.e. market driven). But investment decisions are not determined by price. The nub of investment is profit.”
— Brett Christophers
“In 2022 the global oil and gas industry earned nearly $4 trillion, according to the I.E.A.’s Fatih Birol — two to three times as much profit as they made in previous years… If renewables are the energy of the future and the green transition is rapidly accelerating, then why are the fossil-fuel dinosaurs so obviously thriving?”
— David Wallace-Wells
Three Links:
Everything You’re Told About Green Capitalism is Wrong | Brett Christophers talks to Aaron Bastani (Novara Media)
Why making oil is more profitable than saving the planet (NPR)
Fossilized Capital: Price and Profit in the Energy Transition (Brett Christophers)
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Hope you have a great day,
In solidarity,
Charlie