Travis Bradford, founder and president of the Prometheus Institute for Sustainable Development, joins the postmodern crusade for the affirmative motion over at The Economist magazine: “This house believes that subsidising renewable energy is a good way to wean the world off fossil fuels.” (Voting is in its last day.)
Let’s assume (not debate) that fossil fuels are unsustainable, he says. And let’s just believe that a lot of government this-or-that can make the dilute dense and the intermittent firm. Build it, and they will come … or coerce and it will all work out.
Bradford asserts at the beginning:
In an effort to refocus the debate on whether subsidies are a good way to wean the world off of fossil fuels, it might be useful to frame the alternatives instead of rehashing the same old arguments about whether we should. As the moderator says, we absolutely should—full stop. Now on to more earthly concerns.
Sadly, energy commentary is dominated by general writing filled with vague assertions and assumptions, apple and orange (or apple seed and apple orchard) and inappropriate analogies. A careful reading of Travis Bradford’s piece reveals a number of shortcomings.
First is his assertion that we need subsidies for renewables, period. What he means is that we need economically efficient renewables, and he is sneaking in the logical leap that subsidies will deliver this result. He also refers to the ‘heavily subsidized’ fossil fuel industry, overlooking the fact that the those subsidies are trivial relative to the volume of production. Solar gets somewhere between 30 and 100 times the subsidy that petroleum does, for instance, relative to production, according to a new study by the U.S. Energy Information Administration.
Also, his assertion is bizarre that solar has not boomed in Germany and California because of heavy subsidies, but because of “proactive policy Darwinism” by which he apparently means taxing the fittest to support the weakest. (I must have missed that part of Darwin’s work.)
He does admit that “close examination may suggest it is this policy flexibility and not excessive payments,” that explain their renewables boom (emphasis added). Of course, there was a similar boom in Spain which evaporated when subsidies were removed, suggesting that close examination probably will demonstrate it was the money.
And repeated references to falling costs and improving economics for solar, for example, avoid the real question: if greater volumes of sales would make these viable products, why are subsidies needed? Industry has no problem building plants on expectations of lower costs and viable consumer products.
In reality, the existing photovoltaics technology has long passed the point where economies of scale will bring massive reductions in costs, and the ‘learning curve’ effect will mean gradual improvements, as in other industries. A major failure of ‘clean’ energy technologies in the 1970s energy crisis was the assumption that existing technologies would be frozen, not experience falling costs like renewables.
The reality is that solar power requires a technological breakthrough to become a major part of our energy mix, and this doesn’t come from refinements on the production line, but rather from research in the laboratory. The subsidies for existing, uncompetitive technology simply lead to the installation of ineffective equipment and financial losses. The more apt analogy would be the fast breeder reactor, which was thought essential in the 1970s for development as fossil fuel scarcity raised prices and sufficient investment would create viability. Instead, the money was all wasted.
And while I haven’t audited Solyndra’s books, they appear to have gone one step beyond the mistake of getting into the business of subsidy farming. They pursued a specific technology that appeared attractive during a tight market for photovoltaic panels, which caused prices to rise, but only briefly. The mystery is why Solyndra executives expected those prices to prevail in the long term.
The answer is obvious to those who follow economic markets. There is a tendency for many analysts to misinterpret short-term price moves as permanent, representing a ‘new paradigm’ and ‘market fundamentals’, rather than short-term imbalances in supply and demand. The same is true of the assumption that ‘cheap fossil fuels’ won’t be able to meet long-term demand. Oil prices have been high for a decade because of the loss of more than three billion barrels of production due to political turmoil in various producing nations.
Mr. Bradford is right that we shouldn’t “rehash the same old arguments” and instead “frame new alternatives.” But those alternatives should not be ways to encourage investment in products that aren’t close to market competitiveness, like photovoltaics, electric vehicles and, God help us, hydrogen fuel cell cars. Wind power too despite decades of false promises of impending competitiveness.
The only thing that can help is research and development, old fashioned R&D, that will lead to effective technologies instead of subsidies that comprise high-tech ditch-digging projects.
But why is the market saying ‘no’ to the politically correct and yes to real energies? Energy density …. that is where the real technological action is as the opposition to the motion notes.