Who created the miracle of renewable energy?

Like so many things in the world, climate change is unique in that it poses a threat to civilization. And it is horrible that so many politicians have died in such a drastic step to address that threat.

Still, there is plenty of room for improvement – not because we are wise, but because we are lucky. Although not as many anti-environmental activists say, we believed it would be difficult and expensive to achieve significant reductions in greenhouse gas emissions. But over the past decade or so, we have experienced the miracle of technology. According to a well-documented article by Max Rosser, the costs of solar and wind power, once rejected as silly hippies, can be reduced by the use of fossil fuels.

But was it really a chance? Has this miracle — actually two miracles, generating electricity entirely from the sun and wind — come at just the right time? Or was it the result of good policy decisions?

Answer: There is a good policy – the Obama administration’s central investment in green energy and European subsidies, especially on the coast.

What is the reason for that conclusion? Start with the fact that neither wind nor solar power is basically new technology. Wind turbines have been widely used since at least the 11th century. Photovoltaic was developed in the 1950’s. And as far as I understand, there were no major scientific discoveries behind the recent decline in both technology costs.

What we are seeing seems to be the increase in the use of renewable energy in itself. We have seen a series of improvements for solar and wind, as power companies gain experience, when things like turbine knives go into mass production and so on. According to Reuters, renewable energy is seen as a learning curve, in which costs fall with accumulated production.

And here’s the thing: When an industry has a downward spiral, government support can have huge positive effects. Subsidize such an industry for a few years, and the costs fall into practice, and eventually the growth reaches its peak and the subsidies are no longer needed.

That is what happened or was about to happen for renewable energy.

The 2009 U.S. Reconstruction and Development Act – Obama’s stimulus – is primarily designed to address the aftermath of the 2008 financial crisis. He helped a lot but all the bad names were the same because he was incapable and therefore could not bring about a quick recovery. (And no, that’s not going to go back. I was shouting about it at the time.) But it also includes a lot of financial support for green energy – tax breaks, subsidies, government loans and loan guarantees.

Some government-sponsored projects went bad, and Republicans poured political mud on their losses. But corporate capitalists expect some businesses to return. If that does not happen, they will not take enough risks. Similarly, a government program aimed at advancing technology will end some lemons. If not, it does not expand the boundaries.

And looking back, those Obama initiatives seem to have extended the boundaries, especially since solar energy is often much cheaper than traditional energy sources with limited adoption technology.

Obama’s policies have also helped wind up, but I think many of the loans there will go to European governments that have been heavily subsidizing coastal wind projects in the early decades.

In short, there is a good deal of expenditure on government renewable energy support – and this expenditure miracle may be the key to saving us from climate change.


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