More ‘radical decarbonizing’ needed? Not in USA, other developed countries

Best candidates for radical decarbonizing are Asian nations planning hundreds of coal power plants, not United States, Canada or Europe

The international Energy Transitions Commission is calling for more radical policies to decarbonize the global economy quicker. This both a bad and a good idea.

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Photo David Dodge, The Pembina Institute.

Decarbonizing more quickly is a bad idea for Western economies like the United States, Canada, and Europe because the transition to clean energy technology is already well under way. [My opinion on this topic is based upon dozens of interviews with economists, engineers, utility executives, policy advisors, etc. Every one of them agrees that a transition to other forms of energy has begun, though not everyone agrees on when the transition started.]

The big changes thus far involve power generation systems.

American greenhouse gas emissions are actually dropping because of the switch from coal to mostly natural gas, augmented by growing amounts of wind and solar. Canada gets 59 per cent of its electricity from hydro and a full 77 per cent from low-carbon sources, and that percentage will increase significantly as Alberta moves to natural gas and wind. Media are full of stories about European countries like Germany and Denmark aggressively decarbonizing power generation.

There is still a sometimes rancorous debate about whether unsubsidized wind and solar are lower cost than natural gas, but this is actually a good sign. During the early stages of technology transitions, the old and new technologies compete vigorously for market share. That competition is healthy, leading to greater efficiencies in the old and declining cost curves in the new.

Governments should refrain from messing with a process that is inherent to technology diffusion and, as history has ably demonstrated over many centuries, actually works pretty damn well.

decarbonizingThe figure on the left illustrates how every new technology diffuses through an economy, generally in 50 to 75 years, though it can be slower or faster depending on the specific technology.

The key axis for this argument is time. Governments can impose policy that compresses the time it takes to diffuse new clean energy technology, but doing so increases risk and cost. For instance, the Canadian province of Ontario significantly subsidized wind power with its 2009 Green Energy Act, but discovered it had committed to buying excess electricity which it had to sell on spot markets at a sizable loss to the public treasury.

Haste really can make for a lot of waste.

Western governments in countries where the energy transition has started should tinker at best and let innovators and markets lead the way. Let the proven model do its job.

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Narendra Modi, prime minister of India.

China, India, and other rapidly developing Asian countries are an entirely different matter and are a very good argument for more radical decarbonizing policies.

For instance, today’s wire stories include this headline: “Modi looks to double coal production by 2020.” India intends to produce 1.5 billion tonnes of coal within only a few short years to feed the coal power plants supporting its rapid industrialization.  Those plants will likely be polluting 1950s-era technology that emit tremendous amounts of GHGs. And they will be designed to last at least 40 or 50 years.

A recent report from environmental groups claims there are the equivalent of 1,500 new coal plants in the pipeline worldwide. At its height, the American coal power plant fleet numbered less than 600. That gives you an idea of the scale of the problem.

So, are radical decarbonizing actions required?

Yes, and they should be directed at avoiding those 1,500 planned new coal plants and phasing out existing plants in countries like China.

But when it comes to countries that are already embarked on the transition to clean energy technology, if it ain’t broke, don’t fix it.

 

Posted in: Markham on Energy

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