In his book The Price Is Wrong, Brett Christophers argues that, contrary to recent economic triumphalism among renewables advocates, wind and solar are not profitable enough to attract the private capital necessary to scale as fast as they need to scale. He and I dig deep (extremely deep) into the details.
Interesting discussion. David, when you mention a carbon tax, please also always remind people about the Economist's most-recommend carbon tax: a fully rebated carbon fee. Specifically, a steadily rising carbon fee on fossil fuel production and imports with all proceeds rebated to all citizens in equal shares each month. This solves the potential equity issue - nearly all low- and middle-income households receive more in their cash-back carbon dividend each month than they pay in higher prices. A carbon producers polluter fee in the US will also harmonize our climate policy with our major trading partners, as necessary to avoid paying CBAM tariffs on our exports to those countries. And an associated US CBAM will push our price around the world as we need for our own safety. We must close the US carbon price gap: https://bit.ly/carbon-price-gap-pdf.
Check out MIT's En-ROADS to explore the range of policies that can enable us to achieve a 1.5C future. Here's a recording of an En-ROADS demonstration by the Director of Modeling at Climate Interactive, Josh Loughman: https://www.newhampshirenetwork.org/events#h.7wbbvnaii55u.
Cash-back carbon pricing is popular (see Yale Climate Communications polling), viable (Canada did it) , necessary and equitable (IPCC: https://carboncashback.org/carbon-cash-back).
I would also point out that as there are more and more carbon alternatives, carbon tax will become a less bitter pill to swallow. Right now it could feel like a tax on existing, in 10 years it could feel like a tax on (bad) decisions.
That's true Paul, but we don't have time on our side if we want to achieve important climate goals. This Hamilton Project report shows several potential US policy pathways starting in 2025. Only a carbon fee gets us close to meeting the 50% GHG emissions reduction by 2030 goal: https://drive.google.com/file/d/1A_lab-AcR8F4qgA9VGFSbzaHlpiDLKi7/view?usp=drivesdk
The report only considered a modest price. With a stronger price, such as that which can be achieved when all the money collected is rebated to everyone in equal shares, we can still achieve the 50% reduction goal.
Two other important points to note are that any viable implementation of a carbon fee would start low and rise steady over time, giving businesses and people time to adjust to avoid a sting. And if we rebate all the money collected to all households on an equal basis each month, nearly all low and middle income households will come out ahead: http://citizensclimatelobby.org/household-impact-study/.
John ….Are you sure a CT is a good idea.. all its going to do is make us poor and everywhere its been tried its failed. I don’t think the average person in the “west” will trade prosperity for a climate goal that cannot be met while the “rest” get on with growing prosperity without the burden. Take a look at how politics are shaping up.. hard to believe its going to fly.
Jake, did you know that every developed nation other than the US already has some form of carbon price (ETS or CT) on fossil fuels?
Also, did you know that Carbon Fee and Dividend puts more money in most people’s pockets than they have now, even after accounting for the trickle-down higher prices: http://citizensclimatelobby.org/household-impact-study/.
Globally, carbon pricing is spreading rapidly (it's tripled in 12 years and is now in 73 countries and regions), prices are rising (eg. EU tripped in the last several years, Canada is rising $15/tCO2 a year), and CBAMs will start applying those prices on US exports in trade (eg. EU in 2026, UK in 2027).
Why are so many countries pricing carbon? Because it's the most cost-effective and comprehensive policy to reduce climate pollution. What's the popular and equitable way to do it? Rebate the money collected from a carbon fee paid by fossil fuel producers and importers to all citizens on an equal basis each month: https://bit.ly/cfdresources
The US is rapidly falling behind our major trading partners, and we will pay dearly for this carbon price gap in trade as we will have to pay them the difference between our price and theirs in border carbon tariffs. It's time to close the growing US carbon price gap: https://bit.ly/carbon-price-gap-pdf.
As for whether or not Congress and the President will do it for us, that's up to all of us. Watch the "take action" segment at the end of this En-ROADS climate policy workshop for how to help: http://newhampshirenetwork.org/events#h.7wbbvnaii55u
Hmmm .. John I don’t know… seems highly bureaucratic to collect tax and then give it back.
I know Canada will see the tax dropped at the next election, and I don’t think the US will care about the carbon trade tariffs once Trump gets in, and anyway its hard to see a vote for the tax across the isle.
Plus its very clear that the politics across the western world is under change with many citizens fed up with the NetZero direction.. I suspect the whole climate emergency initiative will get unwound as its clear that the science is not settled in many peoples mind.. Many people think we are wasting our time in the west with the rest ramping up the use of fossil fuels.. so why should we screw up our economies over it when others wont participate. ….. I see many articles on this opinion.
I don’t think people are prepared to be a boy scout on a losing team and they will vote prosperity before climate
Putting a price on pollution at the source so that the price signal is seen throughout the economy is the most efficient policy to reduce pollution. Any other policy (regulations, subsidies, etc) is more bureaucratic and less cost-effective.
We could do many other things with the money other than give it back in equal shares, but that is simply the most equitable thing to do and it doesn't reduce the emissions reducing power of the carbon fee one bit. So why not give it all back?
It sounds like you are fed up with netzero, Jake. But most people are not. Most people around the world take the warnings of science very seriously (https://carboncashback.org/science), and want their governments to pass good climate policies.
Until you read about CBAMS and understand that other countries will charge us their carbon prices when we export into their markets until we match their carbon prices here, you will likely not understand why not pricing carbon is what will hurt the US economy and jobs.
I keep asking the question... could the NetZero journey be unnecessary, with scientific show downs with the UN IPCC not far away.
Many are concerned that we are forcing people to change lifestyle over the climate change emergency.
But lets also look at the strong facts that the NetZero process is technologically unattainable, and economically unviable with a huge part of the global population far from ready or able to participate or ready to sign up as they fight poverty by increasing their use of fossil fuels.
Here is some materials that supports this statement….
The so-called renewables technologies will create far worse environmental problems than our existing fossil fuel technologies due to underdeveloped supply-chains that will require extensive resources that will drive drastically expensive and dirty mining and refining projects for raw materials that are already in scarce supply.
Mark Mills: The energy transition delusion inescapable mineral realities (youtube.com)
Mark Mills? The oil man? Come on Jake, he has no credibility about clean energy - he's a dirty energy guy! Read about him at https://www.desmog.com/mark-p-mills/
An efficient market produces far more net benefits to everyone than letting pollution be free. This is fundamental economics. Rebating to all households on an equal basis each month the money collected from a carbon polluters fee paid only by the fossil fuel industry will put most families ahead of where they are now financially.
The other reason to do this is to protect US competitiveness in a world where carbon pricing is rapidly spreading, prices are rising, and CBAMs are coming. If we don't do it soon, we'll end up paying others for our climate pollution in trade rather than rebating the money collected to US families.
Just an FYI that Jake (and others) have been banned from further discussion on Volts. Diverse perspectives are welcome but one of our community's guidelines is that discussion participants accept the basic premise of Volts (that decarbonizing is essential).
Everyone, just ignore Nigel. He is the resident anti-solutions troll on Emily's fantastic site (HEATED). The fossil fuel industry works hard to delay addressing its pollution so Nigel keeps busy.
Nigel, try watching the En-roads video I linked above. There's no policy nearly as powerful at reducing climate pollution from fossil fuels as carbon pricing, and when we return all the money collected to all households, most people come out ahead with a strongly progressive impact (80% come out ahead in Canada).
Why is there any question of its continued durability in Canada? Disinformation funded by the fossil fuel industry. So the thing being tested in Canada is whether people can think for themselves and vote in their own best interests (more personal income, less pollution), or is money in politics and fossil fuel PR and disinformation strong enough to overwhelm that.
It will be interesting to watch.
However that turns out, the fact remains: it's time to hold big oil accountable.
Meanwhile Canada pretends it's a leader with it's carbon tax and just spent $34 billion on the Trans Mountain pipeline expansion. Notice that carbon emission reductions in Canada are the worst of the G7 by far. If Ontario didn't shutdown its coal plants years ago we would be in an even worse situation. Ontario didn't need a carbon tax for that. Canada needs to shutdown the tarsands.
There's a carbon price for that. Canada’s price started low several years ago, and is US$50 now and will be $135 in 2030. Tarsands oil is very carbon intensive, so if Canada can keep it's rising price this decade, the tarsands will become no longer profitable. Basic economics will shut it down. That's why the fossil fuel industry (and Koch Network) is working so hard to manipulate politicians and spread disinformation about it to try to get it reversed. See Nigel above.
This is dependent on a government in 2030 that still is in favor of the carbon tax which is very wishful thinking at this point. Meanwhile Canada could have been spending it's money on the demand side. Just think of how many solar panels, electric vehicles, wind turbines and heat pumps could have be purchased with that $34 billion. The tar sands will die as everything electrifies. The carbon tax has been a distraction.
We'll need both carrots and sticks to achieve our climate goals. Neither is a distraction.
The US is spending $370 billion (IRA) this decade on carrots, and it's only reducing US emissions by 10%. Carbon Fee and Dividend would reduce emissions 20% by 2030, letting us reach our 50% by 2030 goal. And it doesn't add to the deficit or increase taxes, it puts more money in most people’s pockets, and with its CBAM it will motivate other countries to follow our lead. It will also harmonize US climate policy with Canada and the EU. Good for everyone but the fossil fuel industry!
Try running your preferred policy scenarios through En-ROADS to see if they are enough for a 1.5°C future. Carbon pricing is the most powerful of all the policies, but only if the price rises high enough and only if the market believes it will stick.
Classic Nigel regurgitation of the basist of fossil fuel industry propaganda!
As for the world, that's why we need a carbon price. The EU and UK are starting their CBAMs soon. Canada will likely join that carbon club. When the US does it too, the rest of the world will have no choice other than matching our carbon price to remain competitive.
If you truly cared about pollution from China, India, and Russia, you would investigate Carbon Border Adjustment Mechanisms (CBAMs) more thoroughly.
But you don't care, do you Nigel. You don't use critical thinking at all. You've internalized the Koch Network's myths and lies, and regurgitate them all over.
Got a single scientific organization anywhere in the world that supports your opinion, or just blogs and YouTube? No, just PR and propaganda on blogs and YouTube.
Thanks David - this was a great discussion, and I have been looking at the question of how renewable growth could continue in energy only markets where their capture rate drops as more renewables are added to the grid.
I did think the discussion between vertically integrated utilities vs. more open electricity markets interesting. Especially how pessimistic Brett was towards tweaking the market - but we also need an ideal vertically integrated system too... it showed some bias :D. Especially when he picked a heavily nuclear depended grid - the reliability is already baked in there. Fossil fuel based grids are harder to convert. I've looked at the renewable uptake between Alberta/Saskatchewan, similar ideologies, similar fossil fuel grids -- and the market wins hands down. If you can harness private investment with profit motives I think that is the fastest path forward - but yes the market needs to address dropping energy prices.
Renewable gets paid at least the fossil fuel marginal price for it's generation, and our reliability is taken care of by a forward contracting market that doesn't favour any one firm capacity type.
This comment is more of a general question or wish: I assign a whole lot of your pods to my college students (poli sci)and I hear many of them keep listening afterwards. Do you have (any intention of making) a curated list like “the politics and tech of clean energy: start here?” with episodes listed in an order that you would suggest to a noob? That would be so useful for someone like me/my students.
One thing that confuses me is the spot market bidding. I thought I understood that if the demand required a bid be honored from a more expensive resource in order to meet demand, then all bidders (including low bidders) would receive that price. Therefore, it would seem that renewables with a closer to zero operating cost would simply get a bump in profitability during those times.
I'm hesitant to comment without having read the book, but it sounds like David absolutely hit the nail on the head right near the beginning: this sounds like a great book with an enormously misleading subtitle. Based on this conversation, I would summarize the book's true thesis statement as: "Renewable electricity production will have difficulty generating as much profit as fossil fuels within the system of spot markets with merit-order dispatch and a single clearing price mechanism that *governments* have designed." Bringing "capitalism" into it seems like a total non sequitur.
To paraphrase that line in The Graduate, "There's a great future in batteries. Think about it. Will you think about it?"
Aren't low/negative prices followed by high prices how batteries make money? A lot of batteries bidding to take generation over the grid demand will raise the prices during VRE over-supply, decreasing the volatility. Hopefully raising the overall average price that renewables get, and profitability. Seems like the batteries which are being added like crazy in T,X and CA and AU & UK and are needed to increase renewable fractions in any case, and then help this renewable pricing problem?
I think I heard on an AU podcast, some mention that rapid addition of batteries had decreased volatility in their electric market.
I bought the book to see what it said about storage/batteries, and it just says they are "too expensive." So I think Brett needs to do a brief revision, because just CA now has 10 GW/40 GWh, with 8 GW in the next year.
Interest rates are mentioned a fair bit. Clearly the spike in interest rates is a huge setback for high-capital cost/no-fuel cost operations. Saul Griffith makes the point over and over that low-interest loans should be incentive #1. Texas just raised $10B in low interest loans for gas generation, and the program was instantly over-subscribed. (Sigh & Scream!)
Maybe I missed it, but I just listened to this podcast on the economics of RE, including the US, and I did not hear the terms Renewable Energy Credits, RECs, or Renewable Portfolio Standards one time. The same day that this podcast was released I was in a meeting of our small New England town's energy committee with executives from an international solar farm developer who was exploring expanding into our state. When asked about their financial model, they stated that RECs play an important part in making the projects work. How is this not factored into profitability in Brett Christophers' analysis?
RE: Who’s going to develop renewable energy resources for economically challenged countries? In the near term, most likely China, especially if their prodigious solar, BEV & wind technology production is tariffed out of North America & European markets.
RE: What’s in the near-term future for 24/7 firm power? It looks like strategically distributed closed-loop Advanced Geothermal Systems will be the Go-To answer in North America & Europe. Near-surface resources have already been globally mapped, and existing BigOil&Gas technology, resources & trained work forces can be efficiently re-deployed. Probably requires shifting current subsidies & other incentives BO&G enjoys from fossil fuel extraction to geothermal development.
RE: What’s in the near-term future for widely distributed community solar in North America & Europe? The synergy of solar parking lot canopies +stationary storage batteries +V2G chargers at large apartments & condos, neighborhood shopping centers, business parks, & various public facilities like schools & hospitals is obvious. They’ll last for 75 years with minimal maintenance, make cleaning & maintaining solar systems easy, provide area for much larger neighborhood micro grids than rooftops alone, & don’t require any new land acquisition, site improvements, time-consuming permits, or legal fights with NIMBYS.
As an economist, the discussion came across a polemic against capitalism.
Socialism gets thrown around a lot to mean sort of, "like Europe" but it's a description of when the government owns the means of production--so factories. I think that is what was being advocated for here. It has some nice benefits in ones mind because, when we think about it, everything is very well run, exactly as we would have it done.
The grass is always greener, so lets hop over the fence. My city of Madison Wisconsin identified and area as having a food desert and wanted to put a grocery store. So the city purchased land and tried to build a grocery store. They own the building and want an operator for the building. The first operator dropped out, overwhelmed by the project. Then the city discovered the loading dock they built cannot be used for a grocery store and they hadn't gotten a large enough power panel for all the needs of a grocery store. The current operator just announced they will not use the facility unless the city throws in $1M in capital, a new condition. they've been working on the project since 2024.
So, if you are willing to do it at far more cost, and have it delayed indefinitely, not built quite right... but exactly as you imagined, sure, it's great. I'd rather have my low-CO2 energy sooner and costing me less, thanks.
Paul you gave one anecdote of why you think government owned entities don't work. Do you want me to list all the planet destroying things the current crony capitalism has brought us?
Yes, anecdotes are one offs. For data, compare the happiness of people in North Korea, or Venezuela to their capitalist neighbors. I'd also recommend talking to people who lived in socialist countries about their experiences.
The stories in this episode are stories of why capitalism works, but told in a tone of disgust--only Dave can't smell the polemic, I guess. The author argues that the bidding process results in the firm that bids the least to build a plant winning. This is a good thing. It's how capitalist systems allocate resources efficiently. The firm that can get you there with the least number of person hours/least resources wins the bid and so we get more efficient and we drive costs down.
You can see this in launch costs for rockets, batteries, solar panels, computers, ... squeezing out profit and costs is the idea and what makes things more affordable as time goes on and firms figure out ways to do things with less.
The only good point made, and it is a very, very good point, is that a marginal-cost-based market is basically setup to favor produces with rising marginal costs. When you're selling renewables you're just leasing capital. They really need a long run market--and having a day ahead market separate from a 10-year capital rental market is not ideal, but should work if the buyers are allowed to bid in both markets.
Another way out of this is having an alternative electrical demand on site, such as a battery, hydrogen, desalination plant.
Paul do you really think anyone was idolizing North Korea or Venezuela? It's interesting you bring up happiness. Places like the Scandinavian countries usually are at the top of the happiness surveys. You know what they have the US doesn't more social programs.
Capitalism in theory should work, if democrat systems can tame the excesses but democracies like the US are corrupted by money. The only point is to increase profits at all cost. If you go with that model you end up destroying the planet as is currently happening.
I can provide a perfect example. As a financial guy, 6 yrs ago II put a client into a renewable energy Limited Partnership called Greenbacker. They have solar and wind commercial scale projects all over the country with long term power purchase agreements with end users. Over 6 yrs they spit out a 6% annual dividend, but NEVER were able to increase the share price/value. AND they just stopped the dividend AND won't give anyone back their money. Recent high interest rates have not helped. But their explanation was simply that it was hard/next to impossible as operator/owner to be profitable, and their new strategy will be BUILDING the renewable power plants AND ooerating them....which means that they won't be generating revenue from assets deployed to do the building, thus they decided to use their capital to fund the building instead of paying dividends. Yes, this is anecdotal, but they are a pretty big national player and have raised a lot of money.
Love that there was a discussion about this book and Askhat Rathi’s "Climate Capitalism – Winning the Global Race to Zero Emissions" on The Energy Gang yesterday and here David has Brett Christophers on for 90 minutes of convo. Not sure what my observation may mean, but I'm glad these conversations are taking place!
Interesting discussion. David, when you mention a carbon tax, please also always remind people about the Economist's most-recommend carbon tax: a fully rebated carbon fee. Specifically, a steadily rising carbon fee on fossil fuel production and imports with all proceeds rebated to all citizens in equal shares each month. This solves the potential equity issue - nearly all low- and middle-income households receive more in their cash-back carbon dividend each month than they pay in higher prices. A carbon producers polluter fee in the US will also harmonize our climate policy with our major trading partners, as necessary to avoid paying CBAM tariffs on our exports to those countries. And an associated US CBAM will push our price around the world as we need for our own safety. We must close the US carbon price gap: https://bit.ly/carbon-price-gap-pdf.
Check out MIT's En-ROADS to explore the range of policies that can enable us to achieve a 1.5C future. Here's a recording of an En-ROADS demonstration by the Director of Modeling at Climate Interactive, Josh Loughman: https://www.newhampshirenetwork.org/events#h.7wbbvnaii55u.
Cash-back carbon pricing is popular (see Yale Climate Communications polling), viable (Canada did it) , necessary and equitable (IPCC: https://carboncashback.org/carbon-cash-back).
I would also point out that as there are more and more carbon alternatives, carbon tax will become a less bitter pill to swallow. Right now it could feel like a tax on existing, in 10 years it could feel like a tax on (bad) decisions.
That's true Paul, but we don't have time on our side if we want to achieve important climate goals. This Hamilton Project report shows several potential US policy pathways starting in 2025. Only a carbon fee gets us close to meeting the 50% GHG emissions reduction by 2030 goal: https://drive.google.com/file/d/1A_lab-AcR8F4qgA9VGFSbzaHlpiDLKi7/view?usp=drivesdk
The report only considered a modest price. With a stronger price, such as that which can be achieved when all the money collected is rebated to everyone in equal shares, we can still achieve the 50% reduction goal.
Two other important points to note are that any viable implementation of a carbon fee would start low and rise steady over time, giving businesses and people time to adjust to avoid a sting. And if we rebate all the money collected to all households on an equal basis each month, nearly all low and middle income households will come out ahead: http://citizensclimatelobby.org/household-impact-study/.
John ….Are you sure a CT is a good idea.. all its going to do is make us poor and everywhere its been tried its failed. I don’t think the average person in the “west” will trade prosperity for a climate goal that cannot be met while the “rest” get on with growing prosperity without the burden. Take a look at how politics are shaping up.. hard to believe its going to fly.
Jake, did you know that every developed nation other than the US already has some form of carbon price (ETS or CT) on fossil fuels?
Also, did you know that Carbon Fee and Dividend puts more money in most people’s pockets than they have now, even after accounting for the trickle-down higher prices: http://citizensclimatelobby.org/household-impact-study/.
Globally, carbon pricing is spreading rapidly (it's tripled in 12 years and is now in 73 countries and regions), prices are rising (eg. EU tripped in the last several years, Canada is rising $15/tCO2 a year), and CBAMs will start applying those prices on US exports in trade (eg. EU in 2026, UK in 2027).
Why are so many countries pricing carbon? Because it's the most cost-effective and comprehensive policy to reduce climate pollution. What's the popular and equitable way to do it? Rebate the money collected from a carbon fee paid by fossil fuel producers and importers to all citizens on an equal basis each month: https://bit.ly/cfdresources
The US is rapidly falling behind our major trading partners, and we will pay dearly for this carbon price gap in trade as we will have to pay them the difference between our price and theirs in border carbon tariffs. It's time to close the growing US carbon price gap: https://bit.ly/carbon-price-gap-pdf.
The IPCC and others warn we can't meet our climate goals without putting a price on climate pollution: https://carboncashback.org/carbon-cash-back
As for whether or not Congress and the President will do it for us, that's up to all of us. Watch the "take action" segment at the end of this En-ROADS climate policy workshop for how to help: http://newhampshirenetwork.org/events#h.7wbbvnaii55u
.
Hmmm .. John I don’t know… seems highly bureaucratic to collect tax and then give it back.
I know Canada will see the tax dropped at the next election, and I don’t think the US will care about the carbon trade tariffs once Trump gets in, and anyway its hard to see a vote for the tax across the isle.
Plus its very clear that the politics across the western world is under change with many citizens fed up with the NetZero direction.. I suspect the whole climate emergency initiative will get unwound as its clear that the science is not settled in many peoples mind.. Many people think we are wasting our time in the west with the rest ramping up the use of fossil fuels.. so why should we screw up our economies over it when others wont participate. ….. I see many articles on this opinion.
I don’t think people are prepared to be a boy scout on a losing team and they will vote prosperity before climate
Putting a price on pollution at the source so that the price signal is seen throughout the economy is the most efficient policy to reduce pollution. Any other policy (regulations, subsidies, etc) is more bureaucratic and less cost-effective.
We could do many other things with the money other than give it back in equal shares, but that is simply the most equitable thing to do and it doesn't reduce the emissions reducing power of the carbon fee one bit. So why not give it all back?
It sounds like you are fed up with netzero, Jake. But most people are not. Most people around the world take the warnings of science very seriously (https://carboncashback.org/science), and want their governments to pass good climate policies.
Until you read about CBAMS and understand that other countries will charge us their carbon prices when we export into their markets until we match their carbon prices here, you will likely not understand why not pricing carbon is what will hurt the US economy and jobs.
Read about CBAMS and follow the links about them here: https://bit.ly/carbon-price-gap-pdf.
I keep asking the question... could the NetZero journey be unnecessary, with scientific show downs with the UN IPCC not far away.
Many are concerned that we are forcing people to change lifestyle over the climate change emergency.
But lets also look at the strong facts that the NetZero process is technologically unattainable, and economically unviable with a huge part of the global population far from ready or able to participate or ready to sign up as they fight poverty by increasing their use of fossil fuels.
Here is some materials that supports this statement….
The so-called renewables technologies will create far worse environmental problems than our existing fossil fuel technologies due to underdeveloped supply-chains that will require extensive resources that will drive drastically expensive and dirty mining and refining projects for raw materials that are already in scarce supply.
Mark Mills: The energy transition delusion inescapable mineral realities (youtube.com)
https://www.youtube.com/watch?v=PrNdJAZ75h4
The Energy Transition Delusion — Mark Mills
https://www.youtube.com/watch?v=nA1hqIPbVr8
(206) Renewable Energy, EVs on Collision Course with Global Anti-Mining Policies - Mark Mills Interview - YouTube
https://www.youtube.com/watch?v=BUnFuz097Gc
Mark Mills? The oil man? Come on Jake, he has no credibility about clean energy - he's a dirty energy guy! Read about him at https://www.desmog.com/mark-p-mills/
An efficient market produces far more net benefits to everyone than letting pollution be free. This is fundamental economics. Rebating to all households on an equal basis each month the money collected from a carbon polluters fee paid only by the fossil fuel industry will put most families ahead of where they are now financially.
The other reason to do this is to protect US competitiveness in a world where carbon pricing is rapidly spreading, prices are rising, and CBAMs are coming. If we don't do it soon, we'll end up paying others for our climate pollution in trade rather than rebating the money collected to US families.
It's time to close the growing US carbon price gap: https://bit.ly/carbon-price-gap-pdf.
Just an FYI that Jake (and others) have been banned from further discussion on Volts. Diverse perspectives are welcome but one of our community's guidelines is that discussion participants accept the basic premise of Volts (that decarbonizing is essential).
Everyone, just ignore Nigel. He is the resident anti-solutions troll on Emily's fantastic site (HEATED). The fossil fuel industry works hard to delay addressing its pollution so Nigel keeps busy.
Nigel, try watching the En-roads video I linked above. There's no policy nearly as powerful at reducing climate pollution from fossil fuels as carbon pricing, and when we return all the money collected to all households, most people come out ahead with a strongly progressive impact (80% come out ahead in Canada).
Why is there any question of its continued durability in Canada? Disinformation funded by the fossil fuel industry. So the thing being tested in Canada is whether people can think for themselves and vote in their own best interests (more personal income, less pollution), or is money in politics and fossil fuel PR and disinformation strong enough to overwhelm that.
It will be interesting to watch.
However that turns out, the fact remains: it's time to hold big oil accountable.
It's time to close the US carbon price gap: https://bit.ly/carbon-price-gap-pdf
Meanwhile Canada pretends it's a leader with it's carbon tax and just spent $34 billion on the Trans Mountain pipeline expansion. Notice that carbon emission reductions in Canada are the worst of the G7 by far. If Ontario didn't shutdown its coal plants years ago we would be in an even worse situation. Ontario didn't need a carbon tax for that. Canada needs to shutdown the tarsands.
There's a carbon price for that. Canada’s price started low several years ago, and is US$50 now and will be $135 in 2030. Tarsands oil is very carbon intensive, so if Canada can keep it's rising price this decade, the tarsands will become no longer profitable. Basic economics will shut it down. That's why the fossil fuel industry (and Koch Network) is working so hard to manipulate politicians and spread disinformation about it to try to get it reversed. See Nigel above.
This is dependent on a government in 2030 that still is in favor of the carbon tax which is very wishful thinking at this point. Meanwhile Canada could have been spending it's money on the demand side. Just think of how many solar panels, electric vehicles, wind turbines and heat pumps could have be purchased with that $34 billion. The tar sands will die as everything electrifies. The carbon tax has been a distraction.
We'll need both carrots and sticks to achieve our climate goals. Neither is a distraction.
The US is spending $370 billion (IRA) this decade on carrots, and it's only reducing US emissions by 10%. Carbon Fee and Dividend would reduce emissions 20% by 2030, letting us reach our 50% by 2030 goal. And it doesn't add to the deficit or increase taxes, it puts more money in most people’s pockets, and with its CBAM it will motivate other countries to follow our lead. It will also harmonize US climate policy with Canada and the EU. Good for everyone but the fossil fuel industry!
Try running your preferred policy scenarios through En-ROADS to see if they are enough for a 1.5°C future. Carbon pricing is the most powerful of all the policies, but only if the price rises high enough and only if the market believes it will stick.
https://en-roads.climateinteractive.org
Nigel is a fossil fuel industry apologist.
What we know through science: carboncashback.org/science
What we know through economics: carboncashback.org/carbon-cash-back
What we know about the fossil fuel industry's 4-decades long efforts to delay addressing its climate pollution: Frontline: The Power of Big Oil:
Part 2 - Doubt: https://youtu.be/qMe-BYUIPLU
Classic Nigel regurgitation of the basist of fossil fuel industry propaganda!
As for the world, that's why we need a carbon price. The EU and UK are starting their CBAMs soon. Canada will likely join that carbon club. When the US does it too, the rest of the world will have no choice other than matching our carbon price to remain competitive.
If you truly cared about pollution from China, India, and Russia, you would investigate Carbon Border Adjustment Mechanisms (CBAMs) more thoroughly.
EU CBAM - https://taxation-customs.ec.europa.eu/carbon-border-adjustment-mechanism_en
But you don't care, do you Nigel. You don't use critical thinking at all. You've internalized the Koch Network's myths and lies, and regurgitate them all over.
Got a single scientific organization anywhere in the world that supports your opinion, or just blogs and YouTube? No, just PR and propaganda on blogs and YouTube.
Turn to scientific organizations for your science, Nigel: carboncashback.org/science
Thanks David - this was a great discussion, and I have been looking at the question of how renewable growth could continue in energy only markets where their capture rate drops as more renewables are added to the grid.
I did think the discussion between vertically integrated utilities vs. more open electricity markets interesting. Especially how pessimistic Brett was towards tweaking the market - but we also need an ideal vertically integrated system too... it showed some bias :D. Especially when he picked a heavily nuclear depended grid - the reliability is already baked in there. Fossil fuel based grids are harder to convert. I've looked at the renewable uptake between Alberta/Saskatchewan, similar ideologies, similar fossil fuel grids -- and the market wins hands down. If you can harness private investment with profit motives I think that is the fastest path forward - but yes the market needs to address dropping energy prices.
This is my favourite market structure recommendation - mandatory forward contracting for reliability, and the ability for generators to pay renewable generation their marginal price to meet their contract obligations when renewable electricity is generating: https://www.policyschool.ca/wp-content/uploads/2024/02/EEP50-ABPowerMarkt.Schaffer.Wolak_.pdf
Renewable gets paid at least the fossil fuel marginal price for it's generation, and our reliability is taken care of by a forward contracting market that doesn't favour any one firm capacity type.
Nuclear is not the most expensive, at least in the states.
'Nuclear has also a low running cost and follows the renewables in the ranking.'
https://www.next-kraftwerke.be/knowledge-hub/merit-order-curve
Enjoyed this discussion. Particularly liked that Brett would sound perfectly at home singing 'I am an anar-chist!'
This comment is more of a general question or wish: I assign a whole lot of your pods to my college students (poli sci)and I hear many of them keep listening afterwards. Do you have (any intention of making) a curated list like “the politics and tech of clean energy: start here?” with episodes listed in an order that you would suggest to a noob? That would be so useful for someone like me/my students.
Yes! Bailey, we have something just like that in the works -- it's on my plate and your note is a good prod for me to stop procrastinating on it.
One thing that confuses me is the spot market bidding. I thought I understood that if the demand required a bid be honored from a more expensive resource in order to meet demand, then all bidders (including low bidders) would receive that price. Therefore, it would seem that renewables with a closer to zero operating cost would simply get a bump in profitability during those times.
I'm hesitant to comment without having read the book, but it sounds like David absolutely hit the nail on the head right near the beginning: this sounds like a great book with an enormously misleading subtitle. Based on this conversation, I would summarize the book's true thesis statement as: "Renewable electricity production will have difficulty generating as much profit as fossil fuels within the system of spot markets with merit-order dispatch and a single clearing price mechanism that *governments* have designed." Bringing "capitalism" into it seems like a total non sequitur.
To paraphrase that line in The Graduate, "There's a great future in batteries. Think about it. Will you think about it?"
Aren't low/negative prices followed by high prices how batteries make money? A lot of batteries bidding to take generation over the grid demand will raise the prices during VRE over-supply, decreasing the volatility. Hopefully raising the overall average price that renewables get, and profitability. Seems like the batteries which are being added like crazy in T,X and CA and AU & UK and are needed to increase renewable fractions in any case, and then help this renewable pricing problem?
I think I heard on an AU podcast, some mention that rapid addition of batteries had decreased volatility in their electric market.
I bought the book to see what it said about storage/batteries, and it just says they are "too expensive." So I think Brett needs to do a brief revision, because just CA now has 10 GW/40 GWh, with 8 GW in the next year.
Interest rates are mentioned a fair bit. Clearly the spike in interest rates is a huge setback for high-capital cost/no-fuel cost operations. Saul Griffith makes the point over and over that low-interest loans should be incentive #1. Texas just raised $10B in low interest loans for gas generation, and the program was instantly over-subscribed. (Sigh & Scream!)
Maybe I missed it, but I just listened to this podcast on the economics of RE, including the US, and I did not hear the terms Renewable Energy Credits, RECs, or Renewable Portfolio Standards one time. The same day that this podcast was released I was in a meeting of our small New England town's energy committee with executives from an international solar farm developer who was exploring expanding into our state. When asked about their financial model, they stated that RECs play an important part in making the projects work. How is this not factored into profitability in Brett Christophers' analysis?
"Cement that cleans the air" A new podcast from Stockholm Resilience Center – “How We Fix This”, a new podcast series from Spotify and Norrsken, delves into concrete solutions to some of the world's most pressing sustainability issues. It is hosted by Emmy and Golden Globe award-winning actor Alexander Skarsgård and features several Centre researchers. https://www.stockholmresilience.org/news--events/general-news/2024-06-12-centre-science-featured-in-new-spotify-podcast-hosted-by-alexander-skarsgard.html
More relevant data about markets & LCOE to chew on from Lazard:
https://www.lazard.com/media/gjyffoqd/lazards-lcoeplus-june-2024.pdf
RE: Who’s going to develop renewable energy resources for economically challenged countries? In the near term, most likely China, especially if their prodigious solar, BEV & wind technology production is tariffed out of North America & European markets.
RE: What’s in the near-term future for 24/7 firm power? It looks like strategically distributed closed-loop Advanced Geothermal Systems will be the Go-To answer in North America & Europe. Near-surface resources have already been globally mapped, and existing BigOil&Gas technology, resources & trained work forces can be efficiently re-deployed. Probably requires shifting current subsidies & other incentives BO&G enjoys from fossil fuel extraction to geothermal development.
RE: What’s in the near-term future for widely distributed community solar in North America & Europe? The synergy of solar parking lot canopies +stationary storage batteries +V2G chargers at large apartments & condos, neighborhood shopping centers, business parks, & various public facilities like schools & hospitals is obvious. They’ll last for 75 years with minimal maintenance, make cleaning & maintaining solar systems easy, provide area for much larger neighborhood micro grids than rooftops alone, & don’t require any new land acquisition, site improvements, time-consuming permits, or legal fights with NIMBYS.
As an economist, the discussion came across a polemic against capitalism.
Socialism gets thrown around a lot to mean sort of, "like Europe" but it's a description of when the government owns the means of production--so factories. I think that is what was being advocated for here. It has some nice benefits in ones mind because, when we think about it, everything is very well run, exactly as we would have it done.
The grass is always greener, so lets hop over the fence. My city of Madison Wisconsin identified and area as having a food desert and wanted to put a grocery store. So the city purchased land and tried to build a grocery store. They own the building and want an operator for the building. The first operator dropped out, overwhelmed by the project. Then the city discovered the loading dock they built cannot be used for a grocery store and they hadn't gotten a large enough power panel for all the needs of a grocery store. The current operator just announced they will not use the facility unless the city throws in $1M in capital, a new condition. they've been working on the project since 2024.
So, if you are willing to do it at far more cost, and have it delayed indefinitely, not built quite right... but exactly as you imagined, sure, it's great. I'd rather have my low-CO2 energy sooner and costing me less, thanks.
Paul you gave one anecdote of why you think government owned entities don't work. Do you want me to list all the planet destroying things the current crony capitalism has brought us?
Yes, anecdotes are one offs. For data, compare the happiness of people in North Korea, or Venezuela to their capitalist neighbors. I'd also recommend talking to people who lived in socialist countries about their experiences.
The stories in this episode are stories of why capitalism works, but told in a tone of disgust--only Dave can't smell the polemic, I guess. The author argues that the bidding process results in the firm that bids the least to build a plant winning. This is a good thing. It's how capitalist systems allocate resources efficiently. The firm that can get you there with the least number of person hours/least resources wins the bid and so we get more efficient and we drive costs down.
You can see this in launch costs for rockets, batteries, solar panels, computers, ... squeezing out profit and costs is the idea and what makes things more affordable as time goes on and firms figure out ways to do things with less.
The only good point made, and it is a very, very good point, is that a marginal-cost-based market is basically setup to favor produces with rising marginal costs. When you're selling renewables you're just leasing capital. They really need a long run market--and having a day ahead market separate from a 10-year capital rental market is not ideal, but should work if the buyers are allowed to bid in both markets.
Another way out of this is having an alternative electrical demand on site, such as a battery, hydrogen, desalination plant.
Paul do you really think anyone was idolizing North Korea or Venezuela? It's interesting you bring up happiness. Places like the Scandinavian countries usually are at the top of the happiness surveys. You know what they have the US doesn't more social programs.
Capitalism in theory should work, if democrat systems can tame the excesses but democracies like the US are corrupted by money. The only point is to increase profits at all cost. If you go with that model you end up destroying the planet as is currently happening.
I can provide a perfect example. As a financial guy, 6 yrs ago II put a client into a renewable energy Limited Partnership called Greenbacker. They have solar and wind commercial scale projects all over the country with long term power purchase agreements with end users. Over 6 yrs they spit out a 6% annual dividend, but NEVER were able to increase the share price/value. AND they just stopped the dividend AND won't give anyone back their money. Recent high interest rates have not helped. But their explanation was simply that it was hard/next to impossible as operator/owner to be profitable, and their new strategy will be BUILDING the renewable power plants AND ooerating them....which means that they won't be generating revenue from assets deployed to do the building, thus they decided to use their capital to fund the building instead of paying dividends. Yes, this is anecdotal, but they are a pretty big national player and have raised a lot of money.
Love that there was a discussion about this book and Askhat Rathi’s "Climate Capitalism – Winning the Global Race to Zero Emissions" on The Energy Gang yesterday and here David has Brett Christophers on for 90 minutes of convo. Not sure what my observation may mean, but I'm glad these conversations are taking place!