Technology-forcing policies in the US cover the entire cost of a Tesla Model 3 battery pack
Nothing is better for fossil fuel interests than current government policies supporting wind, solar and electric cars, writes independent researcher Schalk Cloete. These green technologies won’t reduce fossil fuel consumption sufficiently for a long time to come, so the fossil fuel sector will be able to survive that much longer. In the third and last part of a series on green technology-forcing, Cloete calls on all sustainability advocates to work together towards the common goal of emission reductions instead of pushing certain preferred technologies.Â
The two previous articles outlined the dangers of current technology-forcing of wind/solar power and battery electric vehicles (BEVs) and discussed the wide range of available alternatives that will flourish under more intelligent technology-neutral policies. Even so, technology-forcing policies have already redirected trillions of dollars against natural market forces, while technology-neutral policies are still struggling to get off the ground.
The world has committed over $3 trillion to wind and solar technology-forcing (source). Additional indirect subsidies such as artificially low interest rates, underutilization of dispatchable plants and large transmission buildouts should be of a similar magnitude.
This article is a call to all sustainability advocates to work together towards a common goal instead of perpetuating stalemated arguments about preferred technologies (e.g. wind/solar vs. nuclear). Consistent advocacy for technology neutrality combined with strong opposition to any kind of technology-forcing is a much more productive use of the time and initiative of sustainability advocates. This article will strive to clearly justify this statement.
Technology-forcing is great for fossil fuels
If I was the CEO of a fossil fuel company today, I’d be very happy with the current policy landscape. Everyone knows that fossil fuel use must start declining in the medium-term future, but wind/solar/BEV technology-forcing policies will ensure that this inevitable decline is delayed as long as possible.
While green advocates celebrated solar PV’s first 100 GW year, fossil fuels quietly accounted for 70% of energy growth in 2017
As an example, current BEV technology-forcing policies in the US cover the entire cost of a Chevy Bolt or Tesla Model 3 battery pack. As a result, about 0.1% of passenger cars are now BEVs, displacing about 0.03% of oil consumption. But the very low US gasoline taxes (lack of technology-neutral policies) means that the recent oil price crash caused a large relative reduction in gasoline prices, prompting people to buy large trucks and SUVs and drive more. As a result, US oil consumption has jumped a full 5% since the oil price crash, dwarfing the small reduction from BEV technology-forcing.
Indeed, after a single year of pain in a golden decade for oil & gas companies, the fossil fuel profit machine is again leaving clean energy companies behind. As shown below, the billions in profits from the two largest US oil & gas companies is matched only by the similarly large losses from prominent US clean energy players, both of which have benefited enormously from over a decade of strong technology-forcing policies and very generous capital markets.
While green advocates celebrated solar PV’s first 100 GW year, fossil fuels quietly accounted for 70% of energy growth in 2017. Oil and gas both made significant gains, with even much maligned coal registering a significant uptick. Over the next decade or two, even a full commitment to all clean technology-forcing plans will not stop fossil fuel growth, leading to rapidly widening emissions gaps.
Illustration of rapidly growing emission gaps (source).
No amount of technology-forcing can change the fact that fossil fuels are perfect for industrialization (simple, low up-front costs, and directly applicable to all sectors of the economy), or that most of the world still needs to industrialize. No amount of technology-forcing will change the fact that some OPEC nations make 500% operating profit at a moderate oil price of $60/bbl.
Most sustainability advocates are totally distracted by the emotionally charged wind/solar power and BEV growth story. .. fossil fuel interests simply need to sit back and allow them to do their work for them
And no amount of technology-forcing will change our wasteful and unhealthy consumerist culture. (In fact, a significant part of the appeal of companies like Tesla is the false promise that exponential material consumption growth can continue uninterrupted without fossil fuels, that excessive consumption can be guilt-free.)
Displacing unabated fossil fuel combustion at the rate recommended by climate science will require the absolute maximum out of every one of the sustainable development pathways discussed in the previous article. And this can only be done through technology-neutral policies.
Technology-forcing is a great distraction
If humans were rational creatures, we would have had technology-neutral policies addressing all major externalized costs long ago. Almost everyone agrees that such policies are the most efficient way to address undesired effects that are not directly accounted for in current price signals. In addition, the scientific literature has already quantified these externalized costs to a sufficient degree of accuracy to initiate meaningful policies.
Unfortunately, most sustainability advocates are totally distracted by the emotionally charged wind/solar power and BEV growth story. They spend a lot of time and effort tracking every new deployment, building 100% renewable energy scenarios, campaigning for continued or even stronger technology-forcing policies, and arguing how much better these technologies are than dirty fossil fuels or dangerous and expensive nuclear. In other words, an enormous amount of effort and initiative is being invested in promoting one sustainability pathway over all others.
As outlined in the previous section, fossil fuel interests simply need to sit back and allow these sustainability advocates to do their work for them. Since the rate and extent of wind/solar/BEV growth is fundamentally limited and the majority of the global economy is yet to be built, these trends offer no material threat.
Technology-neutral policy and the wide range of sustainable development trends it will unleash is the only thing that can halt and reverse global fossil fuel growth, but sustainability advocates are too distracted by wind/solar/BEV developments to recognize this key truth.
Technology-forcing is divisive
Clean energy technologies evoke a surprisingly large amount of emotion. Anyone who has spent some time on energy and climate discussion forums will know how emotional the debate can become. Predictably, the most common outcome of such debates is that both parties just become even more entrenched in their beliefs.
Consistent advocacy for technology neutrality combined with strong opposition to any kind of technology-forcing is a much more productive use of the time and initiative of sustainability advocates
Wind/solar power and BEVs are capable of inducing an especially strong emotional response. The ideological attractiveness of a world powered entirely by sun and wind combined with the promise that rapid cost reductions will soon overthrow the dirty fossil fuel establishment has gathered a broad global fan-base. Nuclear energy also has a passionate following, with other technologies like biofuels and the hydrogen economy enjoying notable support.
This formation of distinct and opposing technology-forcing camps within the sustainability movement (wind/solar vs. nuclear being the most prominent example) is the best possible outcome for fossil fuel interests. In any conflict, getting your opposition to fight among themselves is the easiest road to victory. Unfortunately, this is what is happening at the moment.
Difficult, but mandatory
So there it is: fossil fuels are invincible without technology-neutral policies, but the current commitment to wind/solar/BEV technology forcing will delay the onset of such policies for as long as possible. As clearly illustrated in earlier articles, continued evolutionary improvement in wind, solar and battery technology is not going to achieve some magical tipping point beyond which fossil fuels will be unceremoniously swept aside by market forces.
Seven years of stagnant clean energy investment (source).
These technologies face various fundamental headwinds that will increase with deployment at least as quickly as costs come down. This is especially true in the developing world where discount rates are high, making strategies with high up-front costs and low capacity utilization economically uncompetitive.
The levelized cost of $1000/kW solar PV can vary over an order of magnitude depending on the capacity factor (CF) and discount rate.
In addition, there is a distinct possibility that green technology-forcing can do more harm than good. Technology-forcing is inherently economically inefficient and, in the developing world, economic inefficiency slows the rate of improvement in quality and quantity of life, climate change resilience, and the productivity required to pull off a rapid future decarbonization effort. In short, economic inefficiency costs many more lives than coal power plants or internal combustion engines.
See earlier article.
It is therefore crucial that we change the clean energy and climate discussion from an argument about which technology is best to consistent advocacy for the most efficient solution: technology-neutral policies. Not only does technology-forcing of certain ideologically attractive technologies have no chance of toppling fossil fuels, but it may even be more harmful than doing nothing.
Continuing on the current path will surely allow clean energy to win several battles to great fanfare from wind, solar and BEV advocates, but ultimately fossil fuels will win the war
Technology neutrality, on the other hand, has been proven to work. As a simple example, Europe imposes much higher energy taxes than the US, mostly to improve energy security and to minimize pollution and congestion. As a result, the EU produces an enormous 50% more GDP (PPP) per unit primary energy consumed and an even greater 65% more GDP per unit CO2 emitted than the US. Despite its relatively low energy consumption, the EU achieves significantly higher life expectancy and similar life satisfaction to the US.
Data sources for GDP and energy/CO2.
Final word
In closing, I want to repeat:Â This article is a call to all sustainability advocates to work together towards a common goal instead of perpetuating stalemated arguments about preferred technologies (e.g. wind/solar vs. nuclear). Consistent advocacy for technology neutrality combined with strong opposition to any kind of technology-forcing is a much more productive use of the time and initiative of sustainability advocates.
Continuing on the current path will surely allow clean energy to win several battles to great fanfare from wind, solar and BEV advocates, but ultimately fossil fuels will win the war. We really need to open our eyes to the bigger picture. And we need to do so very soon.
Editor’s Note
Schallk Cloete describes himself as “a research scientist searching for the objective reality about the longer-term sustainability of industrialized human civilization on planet Earth. Issues surrounding energy and climate are of central importance in this sustainability picture and I seek to contribute a consistently pragmatic viewpoint to the ongoing debate.”
This article was first published on The Energy Collective and is republished here with permission.
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The article is long, so I will confine myself to a couple of points.
“technology-forcing policies have already redirected trillions of dollars against natural market forces”. I’d be interested in hearing an explanation of “natural market forces”. Natural in what sense?
“stalemated arguments about preferred technologies (e.g. wind/solar vs. nuclear)” I was not aware there was a stalemate. There is little nuclear build in the USA or the EU, there is a great deal of PV & wind, because they are lower in cost compared to nuclear.
“Everyone knows that fossil fuel use must start declining in the medium-term future” define “medium term” – until all the fossil fuel have been pumped out of the ground?
“but wind/solar/BEV technology-forcing policies” – erm in increasing numbers of places there is no need for “forcing policies” – PV and wind are cheaper than the fossils.
In the case of people’s buying preferences & cars: the relationship (car manufacturers and buyers) could be characterised as that between paedophiles and children. The buyers are groomed through the media – with daft ads showing uncrowded roads (really? where?). Hence the propensity to buy overpowered toys.
Clean energy losses? Vestas? Orsted? The bit of Siemens that makes wind turbines? They lose money? I don’t think so.
“most of the world still needs to industrialize” Try reading “Sapiens” by Harari – the chapter called “The Luxury Trap” is relevant to this colossally [misguided] statement.
The only bit I agree with is the point about the consumer society. However, speaking as an engineer I have an answer to that.
Citing Singapore as a climate leader – would that be the same Singapore that wanted to be classed as a developing country – for the purposes of emission reduction tagets? Yes it would.
Technology neutrality would lead to more PV and wind not nuclear and most definitely not fossil.
German FiT was technology neutral. Biomass failed, small hydro failed, wind succeeded, PV surprised. Now, they know what is worth building.
Thank you Mike for saving me the time of writing the same points; I fully agree with you.
Natural market forces are those that direct investment in absence of subsidy.
I really do not want to get into a typical nuclear vs. wind/solar debate here (because it typically ends in stalemate). However, the standard nuclear response to your assertion is that it can be built much cheaper if not over-regulated and, more importantly, it can achieve the required very deep emissions cuts more easily than wind/solar.
We certainly have enough fossil fuels to pump and dig for the long-term. Most coal and most unconventional oil/gas will hopefully remain in the ground. Unfortunately, I don’t see how it is possible to keep cheap conventional oil & gas in the ground. And we have more than enough of that stuff to exceed our carbon budget.
I fully support wind/solar in areas where they can be built without subsidies. However, the fact is that wind/solar resource quality varies greatly across the world, that there are large value declines and integration cost increases with increasing deployment, and that electricity represents only about a fifth of current final energy consumption. Due to these issues, it is highly unlikely that we will transition from a fossil fuel monopoly to a renewables monopoly within the recommendations of climate science.
Yes, European wind companies are doing reasonably well. I chose the largest US companies because the US has excellent resources both in oil & gas and wind & solar, making for a fair comparison.
Good luck convincing 5 billion (and counting) developing world citizens not to industrialize… Note that I support industrialization up to the $20000-30000 GDP(PPP)/capita range, after which the newly industrialized society should use its greatly increased productive capacity to pursue sustainable development.
On a global averaged basis, I’m pretty sure that current technology-forcing policies are stronger than the benefits that wind/solar will get in a technology-neutral policy framework. I therefore doubt that wind/solar will expand more rapidly under such a system. In the future, value declines of wind/solar will cancel out further cost reductions, keeping growth far below the requirements for a wind/solar dominated system within the recommendations of climate science.
I am not so pessimistic in many points. The vale decline of wind and solar happens locally. If this is relevant mainly depends on the size and strength of the grid where they are integrated in. It also depends on time because the local markets adopt to the new market conditions after arrival of larger mounts of power from wind and solar, this can be seen in the german market for example.
Grid expansions have a huge economy of scale. building a corridor which transports twice the power costs far less than twice the money. And mainaining it is again much less expensive. (A austrian grid operator published costs to maintain grid elements, costs per km of a 400V connection of a house, and a 400kV power line to supply a whole region differred just by a factor of two. Cost difference between a 2×1,4 GW and a 2×3,8GW 400kV system in maintenance are almost negible)
Which means that expanding grids to trade power over one or more weather systems might not be that expensive, especially if new systems are built from the beginning with enough capacity. (changing capacity is expensive, often a rebuild, if this was not included in the design from the beginning)
The industrialisation also has aspect which make it less a problem. Grids war almost being built from scratch, and can be designed for more power to be transported over longer distances from the beginning. And CO2 free power generation competes on LCOE with fossil powered plants, not on the base of fuel costs as in already industrialised countries. Which is a huge difference. Which is a huge advantage for CO2 free power generation, and especially renewables, which also have the advantage that they can be built fast and in small increments according finances and demand.
Without technology-forcing policies wind, solar, etc. would still be >20cnt/KWh…
So the world would be stuck with the old expensive technologies which makes the battle against climate change more difficult and success unlikely.
”
Wrong assumptions:
1. Nuclear was deeply under-regulated, which caused the TMI accident. Chernobyl and then Fukushima demonstrated that nuclear was still under-regulated!
The under-regulation is also shown by the fact that ~1% of nuclear reactors ended its life in a disaster creating huge amounts of damage (trillion$) which are paid by taxpayers and citizens who also pay with genetic & health damage.
2. Wind & solar expansion can be realized ~10times faster than nuclear:
– Money limit expansion speed. Nuclear needs far more money per MWh.
– Nuclear needs a lot of nuclear engineers which are not available. It will take >20years before we have those.
– It takes ~20years to plan and construct a nuclear plant (also because people around don’t want the increased genetic & health risks.
3. Economy of scale is not valid for nuclear as shown by a.o. the investment costs for French new nuclear plants. Those costs increased substantial during their build out period. Also because of stronger safety regulations after the TMI and Chernobyl accidents.
Cheaper alternatives can do that.
And wind, solar combined with storage are the only technologies that have a real prospect to become cheaper than cheap fossil within next decade. They are already cheaper in parts of the world.
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Cost reductions have only a weak relation with value declines. Especial since wind & solar costs reductions are mainly due to technology improvements.
Technology-forcing should be increased, so the price decrease of wind, solar and storage will accelerate!
Because those technologies are the only that have the potential to compete all fossil off the market.
Btw.
Nuclear enjoys major technology-forcing, probably more than wind, solar & storage!
The most important subsidies which disturb free competition are:
– Accident liability limitations to extreme low levels of ~$1billion (UK*) to ~$30billion (US) while accident damage can easily reach levels of $3000billion (e.g. Londen becoming an exclusion zone, etc).
Considering the historic chance on accidents with such major radiation releases, the insurance premium should be 1 – 6 cent/KWh. An huge subsidy.
– Nuclear waste liability restricted to some decades, while its stays dangerous during ~ a million years.
A subsidy which accounts for ~0.5cnt/KWh…
Without those technology-forcing subsidies, near all nuclear would stop shortly.
There are “three devils” in fossil fuel industry – BIG Satan (coal), Another Big Satan (oil) and Small Satan (natural gas). You conflate all three into one. While fight against coal (80% use is for electricity) via wind+solar seems to work, the fight against oil still does not work and gas should be Santa’s Little Helper. BEVs may work but their effect is lagging 10 years when compared with W+S which in 2017 covered whole new consumption for the first time.
I agree with technology neutral policies but beware, motivation by punishment leads to cheating and unintended consequences. Onshore wind, PV solar and Li-ion battery tech are getting to the situation where they can stay on their own feet. So, countries may switch their support to next wave of technologies with potential. Do what Germany did with their FiT to renewable electricity generation – give them a chance to scale. We will need long term energy storage, clean flexible generation, …
And especially strong amd huge grids. Place a cable production line on a ship, e.g. a outdated container carrier with 300m length. Producing this way is allowing much larger shares of Aluminum in the cable and much larger diameters. With this start laying cables accross oceans. It’s not a real problem, but someone has to trigger it on the financial side. Eliminates all needs for stationary storages.
Constantly advocating for bigger grids to address renewables intermittency is not a panacea. Particularly if subsea cables are needed due to their limited transmission capacity – even using HVDC.
I am in Gibraltar currently. Gibraltar has a number of 5 MW diesel sets supplying all the local load. As far as I can see wind turbine blight is not a problem high up on the rock, and solar is not evident. I expect Spain could supply Gibrlatar’s electricity needs from cleaner sources but to do so would risk Gibraltar’s independence and right to self determination.
The UK, and I believe Germany too, also place energy security as a priority so will not risk not having adequate indigenous electricity generation sources.
A technology neutral approach to reducing emissions is the way forward rather than picking winners. Security of supply is clearly an important driver too for any nation state.
“There are “three devils” in fossil fuel industry – BIG Satan (coal), Another Big Satan (oil) and Small Satan (natural gas).”
In Germany, coal accounts for 40% of power generation, natural gas 10 and nuclear 10%.
With total energy consumption in Germany, oil accounts for 34%, coal 22% and natgas 24%. That’s 80% fossil fuels.
Nuclear accounts for 6% and renewables 13%. Half of renewables is biomass. Wind and solar account for 4%.
It looks like Germany is and will remain wedded to the three devils and that, I think, is the point Schalk is trying to make.
So, the way, the transition is pointless because we are not there yet?
And are you referring that faulty metric called primary energy? Try energy service provided to be fair, it is what it is all about. Nobody will produce PV/Wind/Hydro electricity just to throw away 2/3 like coal or nuclear do. That why nuclear is bigger than wind in primary energy but smaller in electricity produced.
My rough estimate of energy service provided is:
Oil 15% (ICE really sucks), Gas 39%, Coal 16%, Uranium 4%, Renewables 21%, Wind+Solar 9%.
Jan,
if you look at German emission cuts during Energiewende, it does seem rather pointless. Compare it to Britain, France, Scandinavian countries etc.
Not yet there…that is a nice understatement. German emissions have grown albeit slightly for 3 years in a row, correct?
Emissions in Germany were shrinking in 2017: https://www.umweltbundesamt.de/presse/pressemitteilungen/klimabilanz-2017-emissionen-gehen-leicht-zurueck
France seems to have rising emissions in 2017: https://www.platts.com/latest-news/electric-power/london/eu-ets-co2-emissions-seen-rising-05-in-2017-analysts-27942030 https://www.reuters.com/article/us-france-carbon-emissions/france-to-revise-carbon-emissions-target-after-missing-2016-goal-idUSKBN1FB2W0
Sweden looks similar, although I could not find most recent data for 2017.
Nevertheless, the building and transport sector, and recently also the industrial sector remain a problem. Things are moving forward in the power sector.
I”t looks like Germany is and will remain wedded to the three devils” – that is not an option. That said currently they are in “dither mode” – with no idea how to proceed..
“and that, I think, is the point Schalk is trying to make”
I’m still wondering about the specific points Mr Cloete was making.
about power production: coal in 2018 so far is at 38%, Gas around 7%. 10-12% nuclear is correct. 42-43% renewables.
Every modern energy technology has enjoyed the benefits of technology forcing until it reached maturity. So why renewables would not be allowed these benefits that for example nuclear enjoyed in the past (and partially still enjoys) is beyond me.
The problem in real life is of course that there is no real free market for energy and power, and external costs are not priced in. The government support for renewables and nuclear compensates for this.
To have the technology development develop according to the free-market ideology playbook we must first:
1) Put a proper price on carbon and other external costs
2) Create a real free market for power by splitting up utilities in production, grid and retail. Allow/force competition in production and retail. Put the grid in the hands of a neutral party.
3) Remove all direct and hidden subsidies for all technologies, including free government insurance for nuclear, loan guarantees etc.
4) Have all technologies reserve realistic sums for end-of life disposal. Not as virtual sums in the books, but in a separate bank-account, that will stay outside any bankruptcy
I am quite confident that renewables will thrive under these circumstances.
Renewable energy opponents usually only concentrate on only removing subsidies and ignoring the subsidies for other technologies and the other points. This will of course not give the optimum outcome.