Author: Ricardo Fuentes-Nieva (@rivefuentes)
Larry Elliot, the economics editor at The Guardian, has a rather interesting piece on the hitherto unshakable dependence of the world economy on fossil fuels.
It’s a long read, but it’s worth the time. Elliot’s main point is this poignant question.
“Can we imagine a future that is cleaner, greener and sustainable – one that avoids climate armageddon – without abandoning the idea of growth and, thus, forcing living standards into decline?
He is not overtly optimistic, but he’s got hope.
“The answer is that it will be hellishly difficult, but it is just about feasible if we make the right choices – and start making them now.”
There has been recent news about the rapid rise of renewable energy in different settings. A few weeks ago, the Financial Times reported that, for the first time in 40 years, the world economy expanded while carbon dioxide emissions remained flat – a one data point sort-of-proof to respond to Elliot’s question.
There is more good news: there are reports that Costa Rica produced all of its electricity for the first 75 days of 2015 from renewable sources. Neighbouring Nicaragua already generates about half of their electricity from renewable sources – a figure that’s projected to rise to 80% in a few years.
Elliot recognizes the development in green energy, but is unconvinced given the low starting point. He says,
“Renewable technology is moving on apace. Investment in clean energy is growing at a double-digit rate. That is the good news. The bad news is that renewables will still only meet around 20% of energy demand by 2035, even using optimistic assumptions about future growth rates.”
Is Elliot missing something? In the fascinating book The Second Machine Age, Erik Brynjolfsson and Andrew McAfee argue that absolute future changes in technology will happen faster than in the recent past because of the exponential nature of technological progress – “We Ain’t Seen Nothing Yet” should be the subtitle of their book. Brynjolfsson and McAfee explain that, while the rate of technological growth might be constant, the large existing capacity will turn the next few years into the realm of science fiction – self-driving cars, digital 24/7 doctors, and financial analyst/robots are among the least imaginative predictions.
It occurs to me that technological change in energy production is what is needed to decouple economic progress from carbon emissions and fossil fuels – something they don’t explore and something that Elliot seems to miss in his article.
Could it be possible that there is already an explosion in renewable capacity, technology and investment underway that is not really being picked up by policy makers and media?
The depicted Swanson effect is akin to the Moore law – the rule of thumb that states that the cost and size of transistors halves every 18 months. The Swanson law suggest that, every time the production and shipment of solar doubles, the cost of these panels falls by 20%. And also this week, Noah Smith discussed a paper on similar progress on batteries for electric cars. He says,
“A new study in Nature Climate Change, by Bjorn Nykvist and Mans Nilsson of the Stockholm Environment Institute, shows that electric vehicle batteries have been getting cheaper much faster than expected. From 2007 to 2011, average battery costs for battery-powered electric vehicles fell by about 14 percent a year.”
This progress has been faster than previously anticipated by the International Energy Agency (IEA). As Smith points out, we are six years ahead of the curve.
Not a bad situation when you think about it: Solar power is becoming cheaper, storage is improving and investment in renewables is increasing. And this progress is (so far) exponential.
People are notoriously bad at evaluating exponential growth. In his article, Larry Elliot indicates that, “We could be living through the green technological revolution, in which energy has been decarbonised”. After looking at the evidence, it seems clear that we are. Now the real policy choice is how to support and enhance these rapid changes in clean technology while dismantling fossil fuel subsidies, providing access to electricity for poor people and making sure the new energy system is progressive. But it’s hard to argue that technology and technological change will not be an important part of the solution.