The Economics Behind the Migration to Clean Energy

Today, back to back, I experienced two different sides to an important argument that I hope readers will find interesting.  I had a meeting this morning with Richard Stuebi, a gentleman who’s been in and around the game of raising capital for cleantech start-ups long before I had the idea.  He’s a believer in the importance of the development of technology from the standpoint of the sustainability of our civilization, but doesn’t see how the economics can work, given that we’re competing against large, moneyed interests that offer an inexpensive solution that works just fine – if you ignore the environmental consequences.

And pricing in those environmental issues is a task of monumental proportions.  Obviously, we need to raise the price of dirty solutions, e.g., fossil fuels, “internalizing the externalities,” as economists say, to pay for the cost to the environment, simultaneously making the value of clean solutions, e.g., renewable energy, to become clear.

How likely is that to happen anytime soon, being perfectly realistic?  Not very, in Richard’s opinion, and I can’t say I disagree.  Could we have a revenue-neutral carbon tax?  Sure.  We could have comprehensive campaign finance reform, too, but I’m not holding my breath.

But as soon as our meeting was over I happened across this piece of really good news: Gina McCarthy, the new administrator of the U.S. Environmental Protection Agency (EPA) gave a really compelling talk at Harvard University in which she explained her position that protecting the environment and growing the economy can be accomplished at the same time, that innovating and mobilizing to build energy efficiency and renewable energy solutions will put huge numbers of people back to work.

So after all this, can clean energy — and cleantech more generally — work economically?  The real question is: Do we have the political will to find out?