Sustainability Conference – The Financial Implications of Going Green
I write this from the beautiful campus of UCLA, specifically, the Anderson School of Management, where I’m a few minutes early for a conference called: Sustainability Conference – The Financial Implications of Going Green.
After all, this really IS the central issue: If the world is, as we all hope, truly “going green,” it will be happening within the context of economic implications. To me, this is what makes the concept of a responsible and sustainable use of energy resources so tantalizing: we’re very close to the point that solar and wind are at “grid parity,” the point at which an incremental kilowatt-hour of electricity from a renewable source costs the same as it does from fossil fuels. Obviously, at that point, it will be very hard for anyone anywhere in the world to argue for the validity of coal, oil, and gas.
But until then, we need to deal with certain complicating issues:
• All sources of energy have “externalities,” i.e., costs that are not captured in the process of generating and consuming that energy. Coal, for instance, is by far the dirtiest source of electricity, but, in general, the producers and consumers of electricity are not asked to pay for the costs of the lung disease, climate change, etc. caused by burning coal.
• The fossil fuel industries are the most powerful entities on Earth, and use the force of all that wealth to defend their positions. The oil companies, for instance, employ more lobbyists than any other group in the known universe.
• The U.S. tax-payer subsidizes the oil industry to the tune of tens of billions of dollars per year, creating an “unlevel” playing field on which it’s hard for renewable energy to compete.
• There are numerous other important ingredients that contribute to the unlevel nature of the financial playing field, e.g., master limited partnerships (MLPs, the vehicle used in capital formation for oil and gas exploration) are illegal for renewable energy, despite the ongoing protests of the burgeoning clean energy industry.
• Renewable energy is a long way from “scale,” i.e., from achieving the cost reductions that will occur when (if?) our society moves in favor of solar, wind, geothermal, hydrokinetics, and biomass.
More on this after the conference.
I hope Bloom and others who extol the virtues of gas are on top of the production issues that keep natural gas a not-yet-ready-for-prime-time. Current production losses into the atmosphere are something over 3% now, probably closer to 4. At that level, and strictly from a greenhouse gas perspective, natural gas has greater negative consequence than coal. Note: Greenhouse gas is what I’m referring to. Not carcinogenic effects et al.
Its not something many people are focusing on because we are in a ‘party’ mood from the resource being on USA soil. Its not even particularly rocket science to deal with it and get losses down below 1% where we get a win-win. I am not privy to seeing anyone doing anything at present, and if you pay attention to Gasland and other alternative views, it would seem to be getting worse.
• Renewable energy is a long way from “scale,” i.e., from achieving the cost reductions that will occur when (if?) our society moves in favor of solar, wind, geothermal, hydrokinetics, and biomass.
Yes and many environmentalists like it just that way.
There is a big distrust of large corporations delivering any product to “the people”. This hails back to the communist ideal of a blast furnace in everyone’s back yard. Chairman Mao, how did that work out for you?
Walmart has scale but is ripped at every opportunity even though they are turning their mega stores into sustainable models of green energy producers on their roof tops and state of the art waste recylers.
OIl companies that produce wind or solar energy are accused of being dishonest in their intentions.
Auto makers (Nissan I think) has built a zero emissions factory in Mississippi. This has quite a bit of scale. They don’t have unions but pay at least as well as unions with excellent benefits.
All too often political dogma gets in the way of recognizing green projects for what they are no matter what the scale even if the “wrong folks” are doing the right thing.
Larry: Thanks. Trust me, I’d be thrilled to see the wrong folks doing the right thing, if that’s possible. I really don’t care who solves these problems. I’d far rather be wrong about my assessment of the world’s problems than right, based on how I see this playing out from here.