Batteries

Published on October 15th, 2015 | by Tobias Engelmeier

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A Low-Carbon World – Are We Finally Getting It?

October 15th, 2015 by  



As we move closer towards the Paris climate talks, something interesting is happening. Ever more stakeholders seem to be ready to be part of the solution. Negotiations that were earlier bogged down in zero-sum confrontations suddenly have a new fluidity and a ring of can-do optimism about them. Why? … Actually, the new question seems to be: “Why not?” Creating a low-carbon world is seen less as a burden and more as an opportunity.

In developed economies, we are ready to revamp existing industrial and resource infrastructures. In developing economies, we are realising the incredible opportunity of directly building a low-carbon infrastructure. What is clear now is that we have achieved technological as well economic convergence: building a low-carbon world is both technologically feasible and economically attractive. In addition, now we finally seem to reach cognitive convergence: recognising that changing now is a smart choice.

We have all the technologies we need to combat climate change: resource efficiency, renewable energies, and carbon sequestration. There are, of course, challenges. For example, maintaining grid stability when using large amounts of fluctuating renewable energy sources is tricky. However, these challenges are procedural, not fundamental. They can be addressed and solved as we move along. It is worth remembering, that such a piecemeal approach is the very essence of what we know as progress. We expand the Internet, we conquer space, we improve agriculture, and we speed up communication and movement. Transitioning to a low-carbon future is just one more area of progress that is already happening.

Economically, the story is more complicated. On a macro scale, a transition to a low-carbon economy is a good choice. The IEA estimates that switching from the current fossil fuel energy system to a low-carbon system by 2050 would cost $44 trillion. That sounds like a lot of money. But consider this: it would be less than 1% of global GDP until then, and associated efficiency gains would actually make this a positive investment choice. This is without taking into consideration the economic benefits of not having climate change – which are certainly very, very large but difficult to reliably predict. What is clearly lacking is a global political solution such as the Montreal Protocol provided for Ozone Layer depleting gases in 1987.

Without a political framework that offers a long-term approach and puts a price on externalities, the economic case for low-carbon solutions was too weak in the past. The returns were not attractive enough for consumers and investors to accelerate the required transition. Governments stepped in with technology-targeted subsidies (e.g., for renewables). They also tried to price carbon (through cap-and-trade systems or taxation). The results seemed disappointing: these efforts did not alter the global emissions trajectory. However, at a second glance, the results were actually very good: governments created sufficiently large (albeit niche) low-carbon markets to help reduce the cost of technologies rapidly.

As a result, politics now matters far less. We are reaching economic convergence at the micro level. Falling low-carbon technology costs (they are falling much faster and, more importantly, more predictably than those of fossil fuels), now make investing into an energy transition an attractive choice for investors, companies, consumers, and countries alike – just based on the economics and strategy of energy and resource use, leaving aside climate or even local pollution externalities.

That is very big news. It is the opportunity of a lifetime. Now the question is: how to make this known and understood as rapidly as possible? This is the last required convergence – the cognitive convergence: an understanding that low-carbon solutions are not only needed from a global survival point of view, but offer immediate, tangible, and specifically attributable benefits to those deploying them. This sets in motion a cultural shift. To accelerate it, we need to unlearn old “truths” and open up to new possibilities. Our path dependencies are mental more than structural. Companies (and countries) that are heavily invested into the high-carbon economy might not be able to change fast enough. New players will emerge.

Here are three examples of how this cognitive convergence is already happening, from the point of view of a country, a company, and investors/consumers:

India has long held the view that it needs an unrestricted right to emit in order to develop, and that it has a moral right to do so because of its low per capita and historical emissions. Any attempt to reduce emissions was seen as a cost that would delay the economic advancement of its overwhelmingly poor population.

This position is now changing: India is turning into a constructive partner at global climate negotiations with ambitious Intended Nationally Determined Contributions (INDCs) for greenhouse gas reduction. The country commits itself to reducing the carbon intensity of its GDP by 33–35% by 2030 (against the 2005 levels). A key lever to achieving this is to shift towards 40% clean energy sources, including as much as 250 GW of solar power and improved energy efficiency.

India’s main goal is not to stop climate change (despite the fact that it is one of the most vulnerable countries to the effects of climate change). It is shifting to a low-carbon economy because it makes economic sense. With rising energy demand and few viable supply options, energy efficiency and competitive solar power are very sensible choices. The fact that such a strategy also reduces local pollution and global emissions is welcome and can be used on the international stage, but it is not the driver behind it. The same can be said of the recent shift in Chinese and US climate positions.

Now, look at a company: the German industrial conglomerate Siemens. Its CEO, Joe Kaeser, has recently announced that “taking [climate] action is not just prudent – it’s profitable.” The company declared that it will become carbon neutral by 2030 (relating to emissions directly linked to own economic activities, equivalent to 2.2 million metric tons of carbon in 2014). It will start by investing $110 million into energy efficiency – with many of its own technologies. It expects a 5-year payback time, with savings of $20 per annum. In addition, Siemens will invest into distributed energy and buy clean power from the market. Kaeser writes that “the opportunity is clear: We have the technologies, we have the business incentive, and we have the responsibility. Now all we need is the commitment.”

A third example are the choices made by investors and consumers around the world in unsubsidised energy markets: Chinese manufacturers are investing into energy efficiency, Indian businesses are buying into renewable energy plants, German power consumers are spending on solar batteries. These unsubsidised markets are propelled by a global investment community that is beginning to understand the opportunities of low-carbon business and the risks around high-carbon businesses. Elon Musk, seeking to disrupt entire industries with electric cars, solar business models, and cheap battery storage; European utilities investing into renewable energy projects around the world; the $900 billion Norwegian Sovereign Wealth Fund divesting from high-carbon businesses; and Japan’s Softbank investing $20 billion into the Indian solar market are just some examples.

As governments, companies, consumers, and investors around the world make that cognitive shift and understand the specific benefits of low-carbon technologies, there is now a good chance of an urgently needed global energy transition. And the best news is: if we get it on track, it will accelerate all by itself.





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About the Author

is working towards a low carbon world. He believes that this is a great opportunity rather than a sacrifice and that it will be driven by business and economic fundamentals rather than by political directive. Developing countries, who can still make a choice about their future energy infrastructure, are in a particularly good position to get the most out of the renewable energy and energy efficiency solutions available. The good news is: A global energy transition is inevitable. The bad news is: current market designs in most countries are not conducive enough and could delay this inevitable transition for just too long to save our climate. So that is what we need to work on: better market designs. (Disclaimer: views in motion...) Companies I am involved with: TFE Consulting (www.tfeconsulting.com) www.bridgetoindia.com (sustainability solutions for India), www.indiagoessolar.com (helping consumer go solar in India), www.gridhub.com (the business platform for the global renewables industry).



  • heinbloed
  • Ian

    I agree with your main point that mostly what is needed now is a ‘cognitive convergence’. But there are other big impediments. Backlash from the imcumbents, for one. Here in Spain (a country which should be a perfect environment for renewables- lots of sun and wind and high electrict rates) the government has imposed a special tax on solar rooftop production- even the power you use on site you have to pay a high tax on. And your excess power has to be given to the utility for free. It is also illegal to have solar pv not hooked up to the grid. Why did the government do this? Because they are in the pocket of the big electric and gas utilities. There is a revolving door between government and these big utilities. And in Spain the utilities are feeling the pinch of the huge amounts of wind and solar installed under the previous government. This kind backlash is going on elsewhere too.

    Another thing impeding progress is the long lifetime of existing power plants and sunk cost into the overbuilt grids that support them. Ratepayers are on the hook for a lot of this infrastructure under regulations. No matter how cheap solar and wind become, it will be close to impossible close down these existing facilities much before their rated lifetimes.

    To really get the job done in good time, a lot of losses are going to have to be written off, and governments are going to have to make tough choices about forcing some existing plants to shut down.

    • Epicurus

      “Here in Spain . . . the government has imposed a special tax on solar rooftop production- even the power you use on site you have to pay a high tax on. And your excess power has to be given to the utility for free.”

      Even the Republicans in the U.S. aren’t that bad. Here people scream if the utility doesn’t pay them the retail electricity price for their excess solar power. I sometimes wonder why so many people want to emigrate to the U.S. when our government seems so corrupt. Apparently, the answer is it’s even worse elsewhere. I never thought a Western European country could be so transparently corrupt. Shocking.

  • Matt

    “The IEA estimates that switching from the current fossil fuel energy system to a low-carbon system by 2050 would cost $44 trillion.” I’m pulling my hair out. Can’t they you at least include what the cost would have been if we did coal instead. Say a study the other day saying that with price improvements already “in the bank” building as RE is now cheaper than stay with coal. And that doesn’t include health savings/improvements or climate impacts. Here is one http://phys.org/news/2015-09-fuel-green-energy-shift.html
    So everyone needs to be screaming that switch to RE by 2050 will save work GDP. And good health, lower health care cost, livable world are just a little side benefit.

    • Bob_Wallace

      Just global health costs due to coal pollution and mining accidents would likely cover half that $44 trillion. Plus, over the next 35 years we would have to replace almost all coal plants, they only have about a 40 year lifespan.

    • mike_dyke

      I agree. I think the turning point was the way people have been persuaded to buy into the changes.
      It started off as “We need to save the planet, it will cost you $x” and people kept wanting good reasons for spending that extra money (which is always tight).
      It’s now “Do you want to save money on your electricity bill? It will cost you $x but once it’s paid off (a few years) you’ll keep reaping the benefits. Oh, it will also save the planet as well as a bonus”
      People respond better when they can see the benefits for themselves in their pocket..

      • nakedChimp

        So it should be changed to “Do you want to save money on your energy costs? Take RE, it’s cheaper than any FF alternative from here on forever”

        • mike_dyke

          I wouldn’t go so far as to say forever as there may be circumstances where it is actually better to use FF (e.g. being too far from the Sun) but essentially – Yes!

  • Epicurus

    Did we get started 10 or 15 years too late?

    If Exxon had alerted the world of its research findings in the late 70’s, we would be way ahead of where we are now. Should it be lawful for corporations to hide research that affects the lives and health of millions?

    • nakedChimp

      no question, but with them corporations making the rules, how do you think you’d go about changing this?

      • Epicurus

        We have to change our corrupted electoral system first so we have “representatives” who actually represent us. Watch “Fixing Congress with Fair Representation Voting” on YouTube.

  • Kaslo

    I realize this is Cleantechnia, but we can’t truly talk about finally getting it, until we also address agriculture. Technology plays a role here too. But we also need to diversify our farmland, move away from growing primary three or four monoculture crops, and *reduce* meat consumption.

    • nakedChimp

      We won’t be touching that as long as we have any sort of monopoly supporting construct in our society (money, soil, information, etc. pp).
      So sorry to have to say this but – dream on.

      • Martin

        We may not have to “touch” that issue because it may resolve itself, as in people learning more and buying more local, more organic foods. (big corps have been losing market share and Monsanto will be laying off over 2000 people due to less sales).

        • Epicurus

          Great news. Hadn’t heard that.

  • Marion Meads

    I’m now more upbeat with the future of mankind!

  • JamesWimberley

    I think this optimistic analysis is basically correct. It leaves out two major factors, one upside and one downside.

    The upside is the realisation of the colossal health costs of air pollution from fossil fuels: millions of premature deaths and trillions of dollars a year. These make the net costs of a successful energy transition greatly negative. Dieselgate is more an aha! moment than a scandal, which it of course also is.

    The downside is the ruthless and unprincipled defence being put up by the losing fossil fuel interests. The majority of Republican voters in the US accept the reality of climate change and want action, but Republican politicians are denialists: their whole party has been suborned. India is lucky in that it doesn’t have a domestic oil industry and the coal one is mainly state-owned, so the institutional obstacles to change are much weaker.

    • Martin

      Yes but on the down side ones you point out how many new jobs are created and how much profit is to be made it will be game over for the deniers (and part of the Republican Party in the US as well?).
      Can you tell I am an optimist?

    • Frank

      Well, here is my hope on that one. I think for politicians it’s about the votes, and the money to get the votes. My hope is the fossil industries make less money, and spend less on buying “friends”, and the voters realize that going renewable isn’t going to hurt, and staying with fossil stuff will, and at the same time renewables get bigger and stronger and start pushing too. Not too difficult to find a republican that likes wind power in say Iowa.

    • Epicurus

      “Republican politicians are denialists”

      Apparently, they deny the healthcare costs of air pollution too, but they don’t talk about it. They are probably too embarrassed to appear that stupid.

      • JamesWimberley

        A good wedge issue for Democrats?

        • Epicurus

          Yes. I wonder why none of the Demos talk about the health care costs of air pollution either. Of course Hillary has probably taken polluter money. Even most of the climate change denier base probably isn’t in favor of air pollution.

          • Richard Poore

            Probably the air pollution issue isnt a big factor because air pollution itself is no longer such a big factor in the US. There has been so much visible improvement that it has dropped in relative importance.

            Before people start screaming, stop and think please.

            Yes we still have major air pollution issues in the US. But also yes things have already improved a great deal. The easily observed obvious problems are much rarer than they once were. Environmental efforts have become far more fragmented now as well, so there is less push behind any one issue.

            Air pollution is a much larger problem now in China and looks to be helping drive part of their interest in cleaner tech.

          • Bob_Wallace

            Looks to me as if we have two good candidates. We do ourselves no good by running either down. Check your facts.

            I doubt there is any significant difference between the values of the two. I think both would work hard as they could to move the country forward.

            The most important issue, IMHO, is to make sure that the one picked can win. Not that I’m saying that either can’t.

            Just keep your eye on the prize. With any luck there will be some Supreme Court vacancies over the next few years. Fat Tony should blow a gasket before too long.

          • Bob_Wallace

            “ The unprecedented action that President Obama has taken must be protected at all costs. ” —Hillary Clinton backs the Obama administration’s plan to cut carbon pollution from power plants this week during a speech before the League of Conservation Voters

            —-

            You might want to read her position on her website.

            Factsheets

            Hillary Clinton’s Vision for Renewable Power

            Hillary Clinton announced two bold national goals that she will set as president to combat climate change, create jobs, protect the health of American families and communities, and make the United States the world’s clean energy superpower:

            The United States will have more than half a billion solar panels installed across the country by the end of Hillary Clinton’s first term.

            The United States will generate enough clean renewable energy to power every home in America within ten years of Hillary Clinton taking office.

            The next decade will be decisive for our transition to a clean energy economy and our ability to meet the global climate crisis. The two goals Clinton announced are part of a comprehensive energy and climate agenda that she will lay out over the coming months.

            By achieving these goals we will:

            Expand the amount of installed solar capacity to 140 gigawatts by the end of 2020, a 700% increase from current levels. That is the equivalent of having rooftop solar systems onover 25 million homes.

            Add more power generation capacity to the grid than during any decade in American history, from a combination of wind, solar, hydro, geothermal, and other forms of renewable electricity.

            Prevent thousands of premature deaths and tens of thousands of asthma attacks each year, meet our national and international climate targets, and move our economy along a path towards deep decarbonization by 2050.”

            https://www.hillaryclinton.com/p/briefing/factsheets/2015/07/26/renewable-power-vision/

          • Bob_Wallace

            And Bernie has spoken to the problem of air polluion –

            “How about pollution? What does Bernie’s record show in fighting that?

            In April 2015, Bernie spoke out against black carbon pollution along with Senators Schatz, Whitehouse, King, Markey, Boxer, and Warren. The letter they release stated:

            “Black carbon pollution, or soot, a type of particulate matter that results from the incomplete combustion of fossil fuels, is a significant contributor to global warming. The Arctic is especially sensitive to black carbon pollution. When it covers highly reflective snow and ice, the darker surface absorbs more heat, accelerating the melting of snow, glaciers, ice sheets, and sea ice.””

            And from his campaign site –

            “The United States must lead the world in tackling climate change, if we are to make certain that this planet is habitable for our children and grandchildren. We must transform our energy system away from polluting fossil fuels, and towards energy efficiency and sustainability. Millions of homes and buildings need to be weatherized, and we need to greatly accelerate technological progress in wind and solar power generation.Unless we take bold action to address climate change, our children, grandchildren and great-grandchildren are going to look back on this period in history and ask a very simple question: Where were they? Why didn’t the United States of America, the most powerful nation on earth, lead the international community in cutting greenhouse gas emissions and preventing the devastating damage that the scientific community told us would surely come?

            KEY ACTIONS

            Introduced the gold standard for climate change legislation with Sen. Barbara Boxer to tax carbon and methane emissions.

            Led the opposition to the Keystone XL pipeline.

            Secured $3.2 billion in the economic stimulus package for grants to reduce greenhouse gas emissions, in a program that has funded upgrades for more than 86,000 buildings and installed more than 9,500 solar energy systems.”

            https://berniesanders.com/issues/climate-change/

          • Epicurus

            Yep, it says all the right things.

            I have watched and read a lot of news over the last several years, and I have never read or heard her preach about these things. On the other hand, I have heard her support the TPP on numerous occasions and express no opinion on the Keystone pipeline.

            https://www.youtube.com/watch?v=CT6K_YncWoU

          • Bob_Wallace

            What does the TPP have to do with coal pollution?

            “Clinton has repeatedly refused this week to take a stand on the controversial Keystone pipeline, saying that she will not comment on a decision the White House still must make.”

            Are you just looking for reasons to dislike Clinton?

          • Epicurus

            Video: begin at 2:50 for Keystone.

            I already have all the reasons I need to dislike Clinton. Her record is deplorable. She has been on the wrong side of too many issues, at least until she changes her position to conform with the latest polls.

            http://www.truth-out.org/opinion/item/29052-five-reasons-no-progressive-should-support-hillary-clinton

          • Bob_Wallace

            Lord, spare me of progressive purists.

            Vote for Bernie or Ralph or whomever you like in the primary but don’t help Trump/Cruz/Bush win the general.

          • Epicurus

            Spare me of power hungry sociopaths who say whatever they have to say at the moment to get elected.

            “She is the arch Wall Street corporatist, who hobnobs with criminal firms like Goldman Sachs for $250,000 a speech, and goes around the country telling closed-door business conventions what they want to hear for $5,000 a minute. As a senator, she did not challenge the large banks and insurance companies . . . . . In fact she supported Bill Clinton’s deregulation of Wall Street . . . . As an embedded militarist, during her tenure as Senator and Secretary of State, Hillary Clinton never saw a boondoggle, obsolete weapons system, or boomeranging war she didn’t like. She delivered belligerent speeches against China, and scared Secretary of Defense Robert Gates by overruling his opposition . . . to overthrow the Libyan dictator.”

            Pray to your god that once elected she doesn’t support key Republican policies like her husband did.

          • Bob_Wallace

            You either find a way to appeal to a majority of the voters or you lose.

            It’s very simple.

            You either raise the money to campaign or you lose.

            Again, simple.

            In politics sometimes you have to go along with things you don’t like a lot in order to get things you really, really want.

            Real world.

            If you want a president significantly left of what can be elected today then you should be working on the voters and trying to convince them you’ve got better ideas. Only by shifting the greater population left do we move the government to the left.

            If you think Bernie is a better candidate, then support him. Right up until the day after the primary is over. And then vote your self interest by voting against Trump, Cruz, Bush or whoever turns out to be the Republican candidate.

            A lot of progressives were unhappy with Obama. Too much of a centrist for them. Imagine where we’d be today after almost seven years of the McCain/Palin administration.

          • Coley

            if she loses (in which case we’d face the terrifying possibility of an ultra-reactionary Republican Party in control of the White House and both houses of Congress), or 2024,

            Your link makes some odd points? Seems to say don’t vote for Clinton but then offers the alternative ( above) if you don’t ?

          • Calamity_Jean

            Back in 2008 I thought that she was somewhat better than Obama on the global warming/renewable energy issue. I doubt that she’s gotten worse since then.

          • Bob_Wallace

            None of our choices are single issue candidates. Each has a list of issues that they feel they have to address and a list of things they would like to accomplish. I have no doubt that both leading Democratic candidates know they have to work on climate change and want to work on climate change.

            Both, I suspect, have almost the same “Do List”. They probably have the items listed in a different order. Some items like keeping the economy from crashing, protecting the country, and working on climate change are starred as “Must Do”.

            Here’s my take.

            1) Both are extremely better than any of the Republicans. The most important chore is to make sure our candidate is electable.

            2) We should take the next several months to learn more about the candidates and see if we can determine which, if either, is more likely to accomplish more. (Keeping #1 in mind.)

            Here’s my ‘very early in the process’ take. Clinton is more likely to prioritize individual rights, Sanders is more likely to prioritize financial reform. The first priority of each is likely the second priority of the other.

            Past that, I got nuttin’.

            Both seem to be very competent people. Both seem to be quality human beings. Both seem to be serious people who really want to make the country and world better.

          • Calamity_Jean

            “Both seem to be very competent people. Both seem to be quality human beings. Both seem to be serious people who really want to make the country and world better.”

            I agree. I plan to vote for Sanders in the primary, but would happily vote for Clinton in the general if she’s the nominee.

            “Both are extremely better than any of the Republicans.”

            So true!

        • Ian

          The perfect wedge issue. There is already a teaparty movement for distributed solar. They like to ruggedly and independently produce their own electrons. It’s also an issue where our side wins a lot in legislatures in both red and blue states. The libertarian wing is pro solar too. There is a huge, populist, anti-authority, anti-government, pro free-market base of the party that see the regulated utility- monopolies as the enemy. But what makes it really effective is that the party’s money comes from the Koch brothers and the fossil fuel industry- splitting the base from the money.

    • NRG4All

      I agree. I just hope that if we reach some sort of agreement at the Paris climate talks that the Republicans don’t send a letter out to all of the attendees saying that when the Administration changes they have the power to tear up any agreement.

  • I get confused when business consultants and economists put a “cost” to a new industry. Specifically the $44 trillion number being bandied about. One man’s cost is another man’s revenue. We humans don’t bat an eye about cost of defense. We think of it simply as revenue for the military industrial complex or security for our children – depending how one likes one’s spin. The information technology and communications industry costed trillions to deploy and maintain and nobody freaked. We just bought our computers, smartphones and various Microsoft office suite versions back in the day. Frankly, renewables and whatnots really don’t cost anything more than any other new industry that didn’t exist before.

    • Ronald Brakels

      $44 trillion is over $6,000 per person in the world. With both wind and solar now cheaper than new fossil fuel capacity, and the cost of electrified transport declining, the $44 trillion figures is grass after it has passed through the digestive tract of a male cow even before any accounting of externalities such as negative health effects or climate change are taken into account.

    • Epicurus

      “One man’s cost is another man’s revenue. We humans don’t bat an eye about cost of defense. We think of it simply
      as revenue for the military industrial complex or security for our
      children”

      Great point. Have the Republicans ever complained about the cost of invading some foreign country in Africa or Asia which poses no threat to us?

      Why aren’t our politicians willing to pay for clean air, clean water, or a stable climate like they spend our money establishing a corrupt “democracy” in some third world country?

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