Martin Wolf: Making clean energy cheaper than coal

Improved technology might end our dependence on the burning of fossil fuels

Incentives and innovation could be the best way to ensure carbon-free technologies are competitive with fossil fuels. Photograph: Reuters

Incentives and innovation could be the best way to ensure carbon-free technologies are competitive with fossil fuels. Photograph: Reuters

 

Every silver lining has a cloud. The technologies that offer human beings comforts and opportunities that would have been unimaginable two centuries ago ultimately depend on an abundance of energy.

Fire is the source of that energy. But the burning of fossil fuels, from which we gain so much, also releases the carbon dioxide that threatens to destabilise the climate.

For some, the answer to this challenge is to embrace poverty. But humanity will not – and should not be expected to – give up the prosperity that some already enjoy and others greatly desire. The answer lies instead in breaking the links between prosperity and fossil fuels, fossil fuels and emissions, and emissions and the climate. We must not reject technology, but transform it.

This is not yet happening. BP’s latest Statistical Review of World Energy shows that global demand for commercial energy continues to grow, largely driven by growth of emerging countries, despite improvements in energy efficiency. Moreover, fossil fuels meet the bulk of that demand. In 2014, renewables contributed just over 2 per cent of global primary energy consumption. Together, nuclear power, hydroelectricity and renewables contributed merely 14 per cent.

A report entitled A Global Apollo Programme to Combat Climate Change, written by a number of high-profile British scientists and economists, offers a bold answer. It argues that carbon-free energy has to become competitive with fossil fuels. “Once this happened, the coal, gas and oil would simply stay in the ground.”

The need, then, is to generate a technological revolution. The paper (named after the successful mission to the moon of the 1960s) argues that this will require rapid technological advances. Progress is happening, notably the collapse in the price of photovoltaic panels. But this is not enough. The sun provides 5,000 times more energy than humans demand from industrial sources. But we do not know how to exploit enough of it.

Despite the evident need, publicly-funded research and development on renewable energy is under 2 per cent of all publicly-funded R&D. At just $6 billion a year, worldwide, it is dwarfed by the $101 billion spent on subsidies for renewable production and the amazing total of $550 billion spent on subsidising fossil fuel production and consumption.

This is a grotesque picture. Far more money needs to go to publicly funded research. The public sector has long played a vital role in funding scientific and technological breakthroughs. In this case, that role is particularly important, given the agreed goal of reducing emissions and the fact that the energy sector spends relatively little on R&D.

The envisaged programme would have a single purpose: “To develop renewable energy supplies that are cheaper than those from fossil fuels.” The authors suggest that to do this, research should focus on electricity generation, storage and smart grids. The suggested programme would amount to $15 billion a year, still a mere 0.02 per cent of world output. That is indeed a minimal amount, given the goal’s importance.

Pace of cost

Any country that decided to join would commit to spending this proportion of its national income. While the money would be spent at each country’s discretion, the programme would generate an annually updated road map of the breakthroughs needed to maintain the pace of cost reduction. The suggestion is that heads of government agree such a programme of accelerated and targeted research by the time of the Paris climate conference later this year. Improved technology might end our dependence on the burning of fossil fuels. It might also reduce the emissions of carbon dioxide that accompany that burning. But Climate Shock by Gernot Wagner and Martin Weitzman, notes that new technology might also break the final link – that between emissions and climate. This then raises the seductive, but dangerous, possibility of geo-engineering – seductive because it may seem cheap, and dangerous because its results are so uncertain.

Carbon capture

Some ideas for geo-engineering are close to carbon capture and storage, which is aimed at eliminating emissions from specific facilities. Carbon-dioxide removal might be applied to the atmosphere: this is what plants do. Another idea is “ocean fertilisation”, to accelerate natural absorption of carbon dioxide.

Replication of the atmospheric impact of a volcanic eruption would directly offset the impact of greenhouse gases. The matter emitted by the eruption at Mount Pinatubo in the Philippines in 1991 lowered global temperatures by 0.5 degrees. The 20 million tonnes of sulphur dioxide emitted dimmed the amount of radiation from the sun by 2 to 3 per cent in the following year. If we continue on our present path, that is the sort of measure people might well try to replicate. It is not hard to envisage the dangers of such an intervention. It could not be a one-off, since particles put into the atmosphere would quickly fall out of it again. So the actions would have to be repeated on an ever-larger scale, as concentrations of greenhouse gases in the atmosphere increased.

Such a programme of deliberate pollution of the global atmosphere might well be viewed as an act of war. The consequences of repeated large-scale planetary engineering of this kind would also be highly unpredictable. This must be a very last resort.

The best way of responding to the challenge of climate change is through changed incentives and accelerated innovation aimed at making carbon-free technologies competitive with fossil fuels. Both demand more active public policies.

The proposed Apollo programme would be an essential element. Its proposed costs are modest; its potential upsides are enormous. Success would be transformative. It would be far better to try and fail than not to try at all. – Copyright The Financial Times Limited 2015

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