By Arne Hessenbruch,
Partner at Muninsight
Faced with our daunting energy and climate challenges, one can at times be overcome with frustration, even anger.
How can the proponents of the old, fossil fuel based, energy system actually believe and do what they believe and do? It is good to remember that the old system is losing out – slowly but inexorably.
The main driver in this slow historical process is economics. The price of fossil fuels cannot but fluctuate in the short term and rise in the medium term. The price of renewables cannot but fall, and without fluctuation. Even within the current energy system, skewed as it is in favor of fossil fuels, there can only be one winner in the medium term.
Why? We are running out of fossil fuels except when the price rises sufficiently to make further prospecting and extraction worthwhile. In other words: no price rise, no drilling.
With renewables, the fuel itself is free. The expensive part is the upfront investment. And we are getting ever better at putting solar panels on rooves, wind turbines into the ocean, and storing the energy locally. The technology, the process of installing renewables, and financing: all are getting cheaper by the day.
And this is not just my argument. Francesco Starace, CEO of ENEL, a global energy utility, recently made this argument at Harvard. He also told us that this argument was well-known among his peers. Even fossil fuel proponents respect the opinion when coming from utility executives.
It is worth repeating: over the medium term, fossil fuels will necessarily lose out to renewables, whether you like it or not.
Many people like it: people and institutions (such as reinsurance companies) not denying the risks from climate change, job growth advocates, and some investors.
And many more people will like it. Land line telephone users also saw no need for cell phones, and it took them many years to move from disinterest to realization of tremendous new advantages. The same will happen in energy. Lots of people are not yet interested in a move towards the 21st-century energy system, but they will be.
The 20th-century energy system is not only as limited as landlines were, it is positively outrageous. It is monopolistic, centralized, and wasteful in a way that bears resemblance with the Soviet Union. Consumers do not see the wholesale price, do not understand the retail price, and do not pay attention except when the bill rises suddenly. Suppliers (utilities) have no culture of trying to understand customers’ demands, why would they? And they have had, and to a large extent still have, no incentive to cut down on waste or to innovate.
As more and more consumers get a perspective on the perversity of the 20th-century system, the more we will be propelled into the new, better, and more climate friendly system.
I wrote above that the old system is losing out, inexorably. In other words: inescapably, inevitably, unstoppably. Do I mean to say that we can all lean back and watch progress? No, not at all.
To use a military metaphor: a war consists of many battles, some of which are lost. The Cape Wind project may soon be a case in point, and there will be others. (But opponents should not be seen as enemies, so the metaphor breaks down.)
We can help create a level playing field for renewables, currently prevented by huge and ingrained subsidies for fossil fuels. The battle fields are in regulation and legislation; locally, at municipal, state, regional, national, and international levels.
We can help by funneling capital away from fossil fuels by divesting our own capital and that of institutions we are involved with, such as universities or pension schemes.
We can help with innovation, technological and business model. We can help with science and bolstering the credibility of science.
We can help with the winning of minds, both by talking to the people we know and by developing better messaging and claiming the moral high ground. For example, a very powerful but false argument proffered by fossil fuel industry think tanks is that environmentalism benefits the rich while fossil fuels benefit the poor. Another that renewables get more subsidies than fossil fuels.
We can all participate and contribute in one or some of these arenas. And the more we do, the sooner we will get to the goal. CABA participates where we have best leverage, namely where small business interests and climate action clearly intersect. Examples include establishing a price on carbon, which benefits the local economy, solar net-metering which helps grow a thriving solar industry, climate resilience, to protect our economic interests, and divesting from fossil fuels.
It can be frustrating that it takes years, even decades, to the goal; and especially that the process of getting there is so cumbersome and messy. But as Winston Churchill said: democracy is the worst form of government, except for all the others.
