Banking on the energy transition
- June 12, 2019
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Victory was not delivered in 1945 using weapons available in 1939. So can we nip one thing in the bud: the idea that we have to fix the climate using just the tools we have today. That would hobble us. That would give credence to the denialist rearguard's claims about costs.
Yes, we must get serious now & go on a "war footing". But while solutions currently available will get us started, they won't finish the job. This requires installation of at least ten terawatts of renewable energy generation capacity coupled to all sectors of the economy through electrification & storage, significant demand-side management & behaviour modification, & the planting of at least one trillion trees, in the next decade.
This needs mobilisation of market mechanisms by cost reduction achieved through innovation & deployment at scale. The denialists' last throw of the dice is to admit there's a problem but assert the solution costs too much, so they must ignore the very mechanisms that drive down costs. The final irony: those who claim to speak for the market deny what it can achieve. No-one thinks every car costs the same as the first car. We don't cross the Atlantic in biplanes. Yet they'd have us believe every MWh of renewable energy will cost as much as the first one generated.
But this was always a pretext anyway. It turns out they were never arguing in good faith after all. Every objection raised was disingenuous. They would have us run out of canaries for their love of coal mines.
Instead improved energy assessments & projections using cutting edge instruments and methods will support & enhance confidence in our ability to access zero fuel costs using facilities managed & operated in an optimal manner with a through-life perspective. Innovative financial instruments will emerge that leverage this to provide a pathway for investment. These developments will compound the rate at which capacity grows, until we get past the six-fold increase needed to deliver ten terawatts in time. Vanishing incremental costs of energy will transform the economy. But first a "massive reallocation of capital" is required, as Mark Carney, governor of the Bank of England, has remarked, to avert a Minsky moment due to the stranding of unsustainable assets.
This massive reallocation of capital is effectively a transformation of the way accumulated wealth is represented. This is required due to the inherent decay of wealth through obsolescence & environmental impacts that erode all value, which I discussed in my post "the wealth of nations". It is how a healthy society responds.
We need to bank on the energy transition to deliver the outcome we seek, a future we can share, and in which we can all prosper.