Beyond Obama’s Plan: A New Economic Vision for Addressing Climate Change

Written by on June 16, 2014 in Climate Change, Eco-Friendly, Environment with 0 Comments

Jeremy Rifkin | Huffingtonpost | June 15th 2014

climate changeThe White House today released its national climate plan for reducing CO2 emissions, warning that climate change is adversely affecting every region of the United States, with dire consequences for the economy. Unfortunately, the new initiatives by the US government to ward off rising temperatures are weak at best. What's sorely missing from the climate change debate is a new economic vision that can quickly transition the US and global economy out of carbon based energy and into renewable energies, while simultaneously increasing productivity and reducing the amount of the earth's resources used in the economic process, ensuring a more prosperous and sustainable society. That vision is now taking hold.

A powerful new technology revolution is evolving that will allow enterprises and prosumers to make and share their own green electricity, and an increasing array of sustainable physical products and services, at near zero marginal cost, just as billions of prosumers now do with information goods. (Marginal cost is the cost of producing an additional unit of a good or service after the fixed costs have been absorbed). The Communication Internet is converging with a fledgling Energy Internet and nascent automated Transport and Logistics Internet, creating a new technological infrastructure for society–a Third Industrial Revolution–that could fundamentally alter the global economy and usher in an ecological civilization in the first half of the 21st century. Billions of sensors are being attached to resource flows, warehouses, road systems, factory production lines, the electricity transmission grid, offices, homes, stores, and vehicles, continually monitoring their status and performance and feeding big data back to the Internet of Things. By 2030, it is estimated there will be more than 100 trillion sensors connecting the human and natural environment in a global distributed intelligent network.

Enterprises and prosumers will be able to connect to the Internet of Things (IoT) and use Big Data and analytics to develop predictive algorithms that can speed efficiency, increase productivity, reduce the use of natural resources, and lower the marginal cost of producing renewable energy and manufactured products to near zero. They will be able to share what they've made with others on an emerging Collaborative Commons that is beginning to flourish alongside the conventional capitalist marketplace.

Zero Marginal Cost Renewable Energy

For example, the bulk of the energy we use to heat our homes and run our appliances, power our businesses, drive our vehicles, and operate every part of the global economy will be generated at near zero marginal cost and be nearly free in the coming decades. That's already the case for several million early adopters who have transformed their homes and businesses into micro-power plants to harvest renewable energy on-site. Even before the fixed costs for the installation of solar and wind are paid back–often as little as 2 to 8 years–the marginal cost of the harvested energy is nearly free. Unlike fossil fuels and uranium for nuclear power, in which the commodity itself always costs something, the sun collected on rooftops and the wind travelling up the side of buildings are nearly free. The Internet of Things will enable prosumers to monitor their electricity usage in their buildings, optimize their energy efficiency, and share surplus green electricity with others on the Energy Internet.

The same exponential curves that drove the marginal cost of generating and distributing communication to near zero has touched off a similar revolution in the field of renewable energy. Richard Swanson, the founder of SunPower Corporation, observed the same doubling phenomena in solar that IT companies observed in computer chips. Swanson's law holds that the price of solar photovoltaic (PV) cells tends to drop by 20 percent for every doubling of industry capacity. Crystalline silicon photovoltaic cell prices have fallen dramatically, from $60 a watt in 1976 to $0.66 a watt in 2013.

Solar cells are capturing more solar energy that strikes them while reducing the cost of harvesting the energy. Solar efficiencies for triple junction solar cells in the laboratory have reached 41 percent. Thin film has hit 20 percent efficiency in the laboratory. If this trend continues at the current pace–and most studies actually show an acceleration in exponentiality–solar energy will be as cheap as the current average retail price of electricity today by 2020 and half the price of coal electricity today by 2030.

The impact on society of near zero marginal cost solar energy is all the more pronounced when we consider the vast potential of these energy sources. The sun beams 470 exajoules of energy to Earth every 88 minutes–equaling the amount of energy human beings use in a year. If we could grab hold of one-tenth of 1 percent of the sun's energy that reaches Earth, it would give us six times the energy we now use across the global economy.

Like solar radiation, wind is ubiquitous and blows everywhere in the world–although its strength and frequency varies. A Stanford University study on global wind capacity concluded that if 20 percent of the world's available wind was harvested, it would generate seven times more electricity than we currently use to run the entire global economy. Wind capacity has been growing exponentially since the early 1990s and has already reached parity with conventionally generated electricity from fossil fuels and nuclear power in many regions of the world. In the past quarter century, wind-turbine productivity increased 100-fold and the average capacity per turbine grew by more than 1,000 percent. Increased performance and productivity has significantly reduced the cost of production, installation, and maintenance, leading to a growth rate of more than 30 percent per year between 1998 and 2007, or a doubling of capacity every two and a half years. Industry analysts forecast that the harvesting technology for solar and small wind power will be as cheap as cell phones and laptops within fifteen years.

Local, regional, and national governments around the world have instituted feed-in tariffs in the past few years, guaranteeing a premium price for renewable energy above the market value of other energies for a set period of usually 15 to 20 years to encourage early adopters to invest in the installation of wind, solar, geothermal, biomass, and small hydro renewable energy generation and feed the new green electricity back to the transmission grid. Today, millions of business and homeowners in Europe are taking advantage of feed in tariffs and investing their own capital to install renewable energy harvesting technologies on site. While the up-front capital investment is significant, they are beginning to receive low-interest-rate green loans from banks and credit unions. The banks are more than willing to lend money at reduced interest rates because the premium price of the green energy being produced virtually ensures the loan will be honored.

Sixty-five countries have instituted feed-in tariffs, and over half of them are in the developing world. Feed-in tariffs have proven to be a powerful policy instrument in moving renewable energy online. Nearly two-thirds of the global wind and 87 percent of global photovoltaic capacity has been spurred by feed-in tariffs. Unfortunately, in the United States, only California, Vermont, Maine, Oregon, Washington, Hawaii, and Rhode Island have implemented even cursory feed-in tariffs.

Naysayers argue that subsidies for green energy, in the form of feed-in tariffs, are too costly for society. The reality is that they merely speed up adoption and scale, encourage competition, and spur innovation, which further increases the efficiency of renewable energy harvesting technologies and lowers the cost of production and installation.

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