"...A new analysis from Bloomberg New Energy Finance compares the roughly $45 billion of global government subsidies for renewable energy (mostly tax breaks) to the $557 billion of subsidies for fossil fuels in 2008 alone. That 12-to-1 ratio of dirty-to-clean subsidies..."
The title of Winston's latest blog post is appropriate, but not specific enough. Luckily, this short, readable post does more than most commentaries with titles like this (read: most are more fluff than substance). With the skill of a ninja (yes, that's right, I just made that bizarre analogy), he slices apart two common arguments against the growth of the clean energy sector: (1) supportive subsidies for things like renewable energy are a perversion of the free market economy (see statistic above) and (2) this kind of transition to a green economy hurts economic competitiveness and translates into job loss.On point #2, he reminds us that peak oil implies, well, that the only direction from here is, sooner than later, downwards. The implications for the long-term trajectory of job creation and economic growth in traditional fossil fuel sectors should then also be, well, not upwards. Notice the movement of oil giants like Exxon to make big bets on alternatives like algal biofuel (yes, "big" is not so big relative to their core business now, but $600 million is not chump change). Moreover, he highlights that the choice of no action is indeed a choice, even if the options before us are both seemingly unattractive -- (1) make serious investments to dramatically change industries' and consumers' use of energy (while still delivering the "cold beer and hot shower" factor of which RMI Chief Scientist Amory Lovins reminds us)...OR...(2) face what most scientists consider fairly planet- and life-altering changes to the planet within our children's lifetimes.
- SOURCE: Andrew Winston (August 17, 2010). "Going Green for the Economy." Harvard Business Review. View website.
So what's the "so what" factor from this post? I'm not sure, but my cold beer is getting hot and my hot shower is waiting for me upstairs after today's bike ride to work.
"...the residential sector, which accounts for 35% of end use potential for energy savings...[would require an investment of $229 bn in efficiency upgrades across 129 mm homes in the US in order to achieve] present value savings of $395 bn..."
The financial logic of energy efficiency improvements seems obvious whether you're looking at this statistic, or the other reference in the article to $1 trillion in savings to society as a whole via energy efficiency. Lots of questions should follow, of course?: Over what time period? Who pays? Who benefits? Do these include the economic benefits of things like reductions in public health mortality and morbidity due to fewer energy-related externalities, or just real dollars which show up on someone's balance sheet? The residential sector is particularly tricky however -- 129 mm is a big number. As such, in order to achieve the benefits referenced above, a lot of individual decision makers have to be sold on the economic rationale of energy efficiency upgrades (vs. owners or large portfolios of real estate). And unlike the commercial or institutional sector, the residential sector is plagued by frequent change of ownership (e.g., 5-7 years before a family moves again) and more emotional vs. logical buying (e.g., great paint color vs. my personal favorite, spreadsheets!). The other factor, which is not unique to this sector, is the degree to which people's decisions are based on individual vs. societal needs. Luckily, with the appropriate financing mechanisms, the financial rationale behind energy efficiency becomes pretty compelling, even if the broader environmental reasons don't rise to the top of mind. It's a bit like the vaccine debate: Do parents avoid vaccinations out of concern for possible side effects on their children (think of the media's coverage of possible associations with autism) or should they be motivated by the possible repercussions of an outbreak of measles, made more possible with the increasing ease of international travel, especially on those other children too young for relevant vaccinations. Just as in debates over other issues regarding environmental issues in our economy, I'd argue that in this case parents large make the decision based on what's best for their family. So, how do we translate all environmental problems into clear stories about why the right choice for society is also the right choice for the individual? And what role does the media play in gently guiding us towards these conclusions?
- SOURCE: Jon Creyts et al. (January 2010). "US Energy Savings: Opportunities and Challenges." McKinsey Quarterly. View website.
"...[third-party turnkey financiers, designers, installers and owners of solar PV systems] get to use [land or buildings] to install solar PV systems and a contract to sell [land/building owners or tenants] the electricity produced for a set cost over a long period, typically 15 or 20 years
- SOURCE: Walzer, Robert. (December 22, 2009). "Fresh Funds for a Green Energy Start-Up." NY Times Green Inc Blog. View website.
What we're talking about here is a system where property owners or tenants get to brag about using green energy while also setting up a hedge against unpredictable and rapidly rising energy costs plus paying below market energy rates. The most important thing is that they don't have to pay the up-front capital costs or hassle with the maze of state and federal incentive programs -- these third party providers take care of all of this and bring in big-name investors, such as Morgan Stanley, Goldman Sachs and Wells Fargo, to make it happen. SunEdison
was the first to make a splash with this model, but others, such as Tioga Energy
and CarbonFree Technology
, are also getting in the game. The point, of course, is that it's these kinds of creative business models, not just innovation in technology, that we need to scale green ideas. That said, even SunEdison, the biggest player in this space, only has around 90 MW of solar capacity under management (with hundreds more MWs in the pipeline) while a typical coal-fired power plant may have 750 MW of capacity. So, great idea, but plenty of room for and need for growth in this space...
(originally published on September 27, 2009)
Consider this... "...With a combination of city, state, and local incentives, homes and businesses in New York, New Jersey, Delaware, and Colorado can make all their money back from a solar installation in three years..."
- SOURCE: Global Solar Center. (September 2009), "50-State Solar Study." View website.
If the calculations behind these statistics are indeed accurate, then grid parity, the point at which power from renewable energy sources becomes cheaper than conventional fossil fuel and nuclear power, may be closer than many now think. The $400 billion or so committed to clean energy investments by the G20 countries via various economic stimulus packages is sure to speed up this process. For background, The Global Solar Center is a new initiative, led by entrepreneur and environmentalist Jack Hidary, designed to streamline the process for assessing the feasibility of solar at a particular site, picking qualified installers and arranging financing for the solar installations.
(originally posted September 18, 2009)
Consider this... "...Standard lumber dimensions were utilized in the design, which helped the team reduce the amount of wood in the buildings by 30% -- a savings that more than paid the premium for FSC-certified wood..."
While this may seem like just a narrowly focused illustration of a much larger green building project, the bigger point here is this -- green building doesn't have to cost more, but the process of green building, something often ignored or downplayed, must consider ways to minimize resource use and question need vs. want in all areas of the project budget. If the building team had just added in FSC-labeled wood, then it would have shown up as a premium to the overall project budget. But by finding ways to reduce costs and material consumption in a different line item, the team accomplished multiple green building goals while keeping costs more or less neutral
- SOURCE: Greensource (July and August 2009), "Chasing Net Zero." pg. 59