“Clean energy is something that will only be practical a few years from now. Yes? No! Some of those clean technologies have already reached grid parity,” said the Professor. Sensing he’d lost at least two of his audience, he added, “Grid parity, for those of you who don’t know, is when the cost of electricity from renewable or clean energy matches that of typical fossil fuel sources used by electric utilities.”
There was a loud voice from the right side of the auditorium: “But how’s that work, sir? Solar costs two dollars a watt and coal only costs a few cents. The fuel companies have been cleaning up their act, haven’t they? And besides which, they’ve been working with fossil fuels for decades, so their technology’s more advanced – isn’t it?”
Professor Ruiz screwed up his eyes to make out the owner of the voice. “That’s actually a very intelligent point. What’s your name?”
Daniel Vargas was an intelligent young man who had sailed through high school on a raft of top grades and high expectations. His parents were poor and had sacrificed a lot to get their only son the education that he was so clearly cut out for. He had developed an arrogant self-confidence about his own intellect and was prepared to argue with anyone on most subjects.
“Well, Daniel…” began the Professor, but Daniel hadn’t finished.
“How can people say renewables are competitive, when they obviously cost a lot more? Frankly, I don’t get it,” continued the student.
“Well, Daniel, I actually agree with you. Some renewables are still expensive at the moment. But” – he stressed the word “But” with a wag of his index finger – “But! If government implemented the right incentives and subsidies, it could compete with fossil fuel-based power.
“Technology is advancing week by week to address cost and efficiency issues. And what is usually missing from the equation: you have to factor in the social costs of added health care, the impact of climate change and pollution of the environment.”
Nodding in an unconvinced way, the student smirked, and then quite rudely muttered to his classmates: “The guy’s a tree hugger: all that stuff about renewables being ready for the market is rubbish. I’m not letting him get away with this.”
Daniel drew him¬self up to his full height: “Sir, all of this is very nice to hear, but the fact is: these technologies are still really expensive. We can’t afford them. In the meantime, the fossil fuel and coal industries are cleaning up their act. So isn’t the sensible option to stick with what works and improve it rather than some pipe dreams of hippies and liberals?” In a slightly lower voice he added, “…and university lecturers?”
The effect was immediate. As if a whip had been cracked, students emerged from their conversations or slumbers and looked at the professor expectantly. Professor Ruiz cleared his throat and spoke slowly and deliberately: “There are ways that governments around the world have made clean energy attractive to investors. For example, there are, aside from the regular incentives like tax breaks and credits, new incentives like carbon credits and feed-in tariffs.
“There are also voluntary carbon markets, where companies and individuals can purchase carbon offset credits voluntarily even without a mandated cut. Increasingly, this has been born out of a trend where companies want to claim they have zero carbon emissions, so aside from their internal reductions, they can also buy carbon offsets from the voluntary market…” He trailed off, noticing that his efforts had done little to alter Daniel’s skeptical expression.
At this, a female co-ed advanced towards the microphone. She was uncommonly pretty and momentarily distracted Daniel, and most of the other boys, when she spoke. “My name is Maria, sir. I’d like to ask you what you mean by a feed-in tariff?”
After a pause, Ruiz gratefully continued. “Yes, thank you, Maria. Good question. A feed-in tariff is an example of a new type of incentive to encourage investors to set up clean energy plants. Incentives like feed-in tariffs and renewable portfolio standards mandate that electric utilities purchase a certain percentage of their electricity from clean energy sources by a certain year.
“Now there are slight differences between these incentives. The feed-in tariff, for example, normally mandates electric utilities to purchase the renewable electricity at a higher cost as compared to fossil-fuel-based electricity. In turn, the utility can then pass on this added cost to consumers.”
Feeling like he’d won the room again, he removed his horn-rimmed glasses and placed them in his breast pocket. “Now, since the utility has thousands of customers, this added cost can be spread out among all of them, so it only shows up as a minor addition to the electricity bill…”
Daniel leapt up excitedly. “That’s what I mean! You see, it is still an added cost to the consumer!”
The Professor was ready for this one: “Technically, yes, of course, it is still more expensive at the start. But you have to remember that in order to spur massive adoption, which leads to economies of scale that will drop the cost of renewables in the future, sometimes governments have to enact these types of mandates.
“Fossil fuels, because they have been the de facto standard for many decades, have already reached the point of being mature technologies. Of course, there are still going to be new ways of cleaning up fossil fuels, but things simply cannot go on as usual without catastrophic damage to the environment.
“In fact, the fossil fuel industry itself receives large subsidies worldwide. So it isn’t the free and fair market you may have been led to believe,” he said, playing, as he saw it, his ace.
With thanks to Dennis Posadas.
Dennis Posadas is an Asia-based fellow of the Washington, DC based Climate Institute and a technical consultant for clean energy projects. He is the author of Jump Start: A Technopreneurship Fable (Singapore: Pearson Prentice Hall, 2009) and Rice & Chips: Technopreneurship and Innovation in Asia (Singapore: Pearson Prentice Hall, 2007).
Although the importance of climate change is hard to overstate, it nevertheless consistently fails to engage at the level that it so patently needs to. This is what has led technology expert and seasoned commentator Dennis Posadas to approach the issues in a new and intriguing way. Greenergized is a much-needed route into the issues surrounding the most serious debate our generation faces. And it pulls off the brilliant trick of being highly readable at the same time.
Images courtesy of xedos4 and Pixomar at freedigitalphotos.net