There is no technical or financial reason why our planet should not be powered by renewable energy systems by 2050 – a renewable energy transformation could be achieved significantly earlier than that. There is every reason such changes should be initated, solemnly based on cost considerations. However, a meaningful energy system transformation would require significant changes to current energy policies on several levels: political, in the business world, and in the financial markets:
- Removal of market distortions
Current energy policies and regulations favour fossil and nuclear systems through tax breaks, direct and indirect subsidies, state guarantees, and ensuring security of resources and transport. More than U$ 500 billion are showered on fossil energy system each year in the form of direct and indirect subsidies. In order to establish a level playing field for all energy sources and technologies, subsidies for fossil/nuclear technology have to be removed. If these subsidies were directed to renewable energy systems...
- Applying climate economics:
The economics of climate change is simple: taxing emissions on the source, i.e. adding a value for GHG emission on all energy carriers/technologies according the respective emissions associated with extraction and burning of the fuel. The same applies to the other greenhouse gases.
- Developing long-term energy strategy and goals:
Current energy policies are following a Band-Aid approach characterised by only dealing with the most pressing issues without a wider framework, let alone a clear long-term strategy and goals
- Ending short-termism
CEO's are paid based on yearly share performance while the decision they make have an impact of 10, 20, 30 or more years in the energy industry. At the same time, businesses lack the mind-set and tools to analyse, anticipate and integrated the cost implications and impact of their decisions – both negative and positive – today AND into the future into their management decision making.
barriers and particular interests
In reality major changes to energy policies anytime soon are highly unlikely. So what are the barriers?
Renewable energy technologies are still perceived as expensive desipte clear evidence to the contrary. Unfortunately, this opinion is often shared in financial institutes that keep financing fossil infrastructure projects. It is astonishing how people in high position keep repeating this mantra although it could not be further from the truth. Fossil energy is expensive.
Some people associated everything that aims at changing current structures - e.g. renewable energy technology - as "socialist" and therefore has to be resisted.
The current system serves large organisations very well, both in the extractive industry and the utility sector - both industries characterised by insufficient competition. They normally dispose over large resources to influence decisions to their liking, which they use to ensure that wrong investment decisions from the past remain viable.
More than U$ 500 billion are showered on fossil energy system each year in the form of direct and indirect subsidies. If these subsidis were directed to renewable energy systems...
Lack of system thinking
Unfortunately, most oil companies consider themselves oil companies. They should consider themselves energy companies - i.e. a business that delivers energy, regardless of the fuel or form of the energy carrier. The same applies for utilities. They consider themselves as nuclear power plant or goal plant or gas plant owner, rather than electricity utilities.
CEOs have comparable short mandates. They do not have to take responsibility for the long-term impact and results of their decisions, and their bonuses are tied to yearly performance. Which doesn't make much sense, particularly in the extractive industry and the utility sector, where investment decisions have a life-span of up to 60 years.
No politician would dare to sign a global agreement that he perceives would jeopardise the competitiveness of his country relative to other countries. Since climate change is a global phenomena, it would require globally co-ordinated action (e.g. a global climate tax on fossil fuel). This is highly unlikely to happen.
People are not asked what direction they want to go as a society, not even if they want to go to war. In most democracies, "democracy" means that we are allowed to choose every couple of years between 2 or 3 individuals to be our leader. And hope that they will stick with their promises, which we already know they won't. The same applies in the corporate world - CEOs are equipped with near absolute power over waste organisations, controlled only by Boards filled with CEO-type characters. Employees - who will still be doing their job when the CEO is long gone - have no means of influence.
In the course of evolution, humankind never had to plan ahead more than a year. We developed by surviving one winter at a time. Our natural time horizon has not yet adapted to the current challenges, as can be seen at the yearly global climate conferences. It would be our political leaders job to extent that horizon in time - especially when everybody else seems to be pre-occupied mainly with consuming.
Generally don't have any balls. Are more interested in being politicians than in the interest of their nation.
The development of our energy infrastructure depends on the relevant policies and efficiency. Eventually, we will have a renewable energy system anyway - simply because renewable energy is more efficient and cheaper. Renewable energy systems only require upfront investment. Maintenance cost of renewable energy systems are marginal in comparison to fossil energy systems - simply because the fuel is free.
However, climate science suggests that we do not have the time to wait for the markets to work. There is no reason why we should not make the market. Contrarely to popular belief, a Marshall plan for the global energy infrastructure would not ruin us. It would generate new technologies, a thriving industry, and jobs. And avert the worst impacts of climate change.