Hidden Costs Constrain the Benefits of Transitioning to Renewable Energy

It seems that little effort to understand fully the costs and benefits of the transition from fossil fuel to PV energy production has accompanied the rush to install utility scale solar and wind farms. However, it is very important to examine the environmental costs of achieving the environmental benefits of low carbon emissions energy production, especially at industrial scale. Moreover, that transition must involve so far largely ignored major societal transformations if humanity is actually to achieve the goals of zero carbon emissions, ecological restoration, and climate stabilization.


Paris Agreement Celebration

Given the accelerating trajectory of ecosystems collapse and climate destabilization well underway, achieving those goals is simply imperative. Yet, despite the importance of the technical, economic, and social complexities inherent in such a comprehensive transition to “sustainability,” utilities, governments, and corporations pursue the quest mostly in a business-as-usual format.The COP-21 Paris Climate Agreements, so difficult to implement, nevertheless fall short of needed international action.

Even before reading Ozzie Zehner’s book, Green Illusions, I worried about the carbon costs of the production of renewables. Zehner raised many questions but did not provide the kind of data-driven findings we need to optimize renewables deployment, though he rightly asserted the primacy of the problem of overconsumption.

Optimization Imperative

Importantly, the choices are difficult and the optimal solutions very hard to achieve.  In several ways, international trade is an important culprit. Not only does it add immensely to carbon costs; it also amplifies the waste resulting from not keeping manufacturing domestic in all PV markets. Corporate financial optimization conflicts with ecological and climate imperatives.

Clearly, we need an international agreement that works in the exact opposite direction from the extant NAFTA or delayed TTP regimes. No approximation of net-zero emissions will be possible in the near future without severely curtailing international trade and minimizing the distance between materials extraction, and the manufacture, installation and operation of near carbon-neutral energy systems. The same goes for all industrial production.

COP-21-Paris-Climate-Conference-Summit co2 chart

Only Deep Industrial Contraction can Achieve Adequate Reduction in Carbon Emissions.

We must accelerate the transition, but we must do so consistent with the goal of minimizing net carbon emissions in the process as well as in the outcome.  In that context, it is interesting to note that so little mention is made of energy conservation in the literature of emissions reduction and “sustainability” — except indirectly, in terms of improving production efficiency. The immensity of the task escapes most analysts.

DeGrowth and Consumption

One of Zehner’s core arguments is that the renewable energy transition not only consumes a lot of fossil-fueled energy production and depletes increasingly scarce mineral resources. It also encourages more energy consumption and waste.  It is not surprising to find the old pattern of “unanticipated consequences of social action” in this context.

The core consequence in this case is that the goal of zero carbon emissions to stabilize ecosystems and climate must entail significant contraction of industrial economies themselves – “degrowth.” Most government officials and policy wonks do not anticipate that deeply transformative consequence. It contravenes their deeply held beliefs in economic growth as the primary societal goal.

Two Kinds of “Grass Roots”

Most analysts and even political leaders agree on the need for large-scale highly rational international agreements to optimize the transition to a low-carbon renewable-energy-based economy. Yet little prospect for such large-scale political solutions is in sight. At one level, local community efforts to fight global warming are essential. However, some sort of “grass-roots” effort also must arise within the PV and wind industries, in order to optimize the extraction-production-distribution-installation matrix, despite the difficulty. Maybe the industry could form cooperatives to trade or share elements of the cycle in order to minimize distance between these elements in order to optimize carbon-reduction benefits. At this point, micro-economic incentives are lacking.

As Kris De Decker documented as early as 2015, based on diverse research findings, net-positive life-cycle carbon-reduction benefits from renewables are far from automatic. They only occur with localized optimization of supply chains. An important step is to bring awareness to the players — and to environmentalists too. However, some form of leverage on the industry is also needed, or it’s not likely to happen. Time is short, and the cost of time in this instance is very high.

Renewables Transition: It’s Happening, But How, and is it Enough?

The report of the latest “Bloomberg New Energy Finance” (BNEF) annual summit in New York proclaimed on April 14, 2015 that fossil fuels had already lost the race against renewables. “The race for renewable energy has passed a turning point. The world is now adding more capacity for renewable power each year than coal, natural gas, and oil combined. And there’s no going back.” The report by Tom Randall, published on the Bloomberg Web site, hedged no bets. It touted “the beginning of the end” for fossil fuel. The trends and forecasts clearly indicate a slow death for the buildout of new oil, gas, and coal fired energy capacity as “clean energy” capacity surges ahead over the next fifteen years. End of story? Well, not quite.

Not surprisingly, the Bloomberg forecast includes nuclear power in the clean energy category. Nuclear power advocates never do count the high environmental costs of uranium extraction, equipment manufacturing, or facility construction involved in nuclear installations. Not to mention the fact that the risks of nuclear power generation make such installations uninsurable unless the insurance is subsidized and guaranteed by the federal government. That is precisely because of the catastrophic proportions of a reactor meltdown and other risks. Nor do they consider maintenance and repair costs or the massive expenses associated with decommissioning worn out facilities.  Issues of storing the growing backlog of nuclear waste and its risks remain chronically unresolved. What’s clean about that?

At least the Bloomberg report implicitly acknowledges the complexities and time involved in building out nuclear energy capacity. It shows future nuclear buildout as rather small compared to that of new solar and wind capacity. However, we should also be concerned about the Bloomberg forecast for new gas-fired energy capacity. From 2015 to 2030 it is forecast to slow only slightly. Most new gas production results from fracking, with the result that total carbon emission is at least as bad as that for coal. The methane leaks alone should make it an unacceptable technology. So should the demonstrated damage to critical aquafers.  What’s clean about that? But wait, there is so much more.

New Economics of Energy Production

As we all know by now, the prices of wind and solar power continue to plummet, making them economically competitive with fossil-fuel sources. But the political economy is never that simple. Unfortunately, our future is not just about making rational decisions based on the evidence at hand. The myth of renewable energy sources being uncompetitive continues to be promoted, even by Bill Gates, who should know better. Entrenched corporate interests of investor owned utilities as well as the fossil fuel industry constitute a major drag on progress in converting energy production to low-emissions technologies.

Big investor-owned utilities continue to resist conversion to solar and wind sources of energy; their policy and planning criteria do not include the public interest.  Distributed solar photo-voltaic generation by residential and business customers is a threat to their monopoly power. They resist any loss of financial control of the energy markets over which, unfortunately for the public, they have been given legal monopoly power. The euphemism, “public utility” becomes absurd. They operate to maximize the guaranteed monopoly profits from expanded investments. The larger the investment, regardless of public need, the larger the profit. Nevada and New Mexico present particularly nefarious cases of obstructionism by investor-owned utility companies. Public utility “regulation,” agencies have failed to serve the public interest. They are embarrassingly compliant with the demands of the utilities they are supposed to oversee in the public interest. Energy is in its nature part of the nation’s commonwealth, but it is treated by “regulatory” agencies primarily as a legitimate source of private corporate profit.

In Nevada, NV Energy Inc., controlled by Warren Buffet’s giant holding company, Berkshire Hathaway, was successful in its heavily funded political campaign to dismantle the state’s net metering policy. Forty-two states have offered some form of net metering for residents who install solar panels to produce most of the electricity they use and “reverse meter” any surplus back into the grid. Many are now under attack.  Nevada’s elimination of its renewable energy credits resulted in 17,000 residents losing the economic benefits of having invested in renewable energy. The move has also cost the state some 8,000 solar jobs.

In New Mexico, Public Services of New Mexico (PNM) has been engaged in a public foot dragging exercise with regard to transitioning to renewables. It has received implicit and sometimes explicit support of most of commissioners on the state’s Public Regulatory Commission (PRC). PNM operates coal fired energy generating plants in the four corners area, where lung diseases and cancer – along with poverty – run rampant among Navajo residents. The Four Corners methane plume has been observed by orbiting satellites. Federal emissions requirements have led PNM to propose closing one of the obsolete coal-fired generators. But for their own financial reasons, PNM would keep the other operating, then “review” its continuation a few years down the line. Even if it were decommissioned after that review, the process would probably take a few more years before its environmental damage could be stopped.

The PNM plan also includes new long-term coal and nuclear commitments. Thus, the state of New Mexico and its people would be bound to continued high levels of carbon emissions and potentially huge legal liabilities resulting from PNM’s nuclear deal. A trivial gesture of adding little solar and wind capacity is also included in the plan. All but one of the commissioners either have engaged in behavior that any ethicist would call, at minimum, an “appearance of impropriety,” or have publicly indicated their political support for PNM prior to reviewing the case. The commission voted to approve the plan. Only one environmental group, New Energy Economy, has made serious attempts to stop the regressive proposal from being realized. The rest were coopted in secret negotiations with PNM and some state officials.

Renewable Energy Is Not Enough

The Bloomberg report rightly concludes that it “is no longer a matter of if the world will transition to cleaner energy, but how long will it take.” Therein lies the rub. Finance is a very big problem, and it is acknowledged by the BNEF report. Hundreds of billions of dollars are needed each year to finance just the amount of new renewable energy capacity sufficient to theoretically hold global warming to the demonstrably inadequate benchmark of 2 degrees Celsius.  Each year from 2008 to 2014, a decreasing proportion of the increasing billions in needed capital has been applied to new renewable energy buildout. The International Energy Agency (IEA) forecasts a decline in new capacity from 2014 to 2020, or a paltry increase under an optimistic “accelerated case” scenario. Meanwhile, we find out that methane emissions, 90 times as potent a greenhouse gas as CO2, have been undercounted for a long time. The Environmental Protection Agency has drastically increased its estimates of methane emissions in its draft 2016 Greenhouse Gas Inventory.

In all this, we find almost no public discussion of conserving energy and reducing waste. New scientific reports of accelerating climate-disruptive effects of global warming keep surfacing. For example, a new report from the University of Cambridge concludes that 78% of remaining wetlands will be wiped out by sea level rise this century. Many of the world’s great cities are on coastlines. Like island nations and delta populations such as those in Bangladesh, they too are at direct risk from rising seas. The result will be mass migrations forced by flooding. Yet, climate action rhetoric continues to be not only inadequate but is also in direct conflict with government economic policies of most nations. The continued promotion by all governments of economic growth of the only kind we have known is a sure path to defeat of any climate action. Only by curtailing growth, combined with energy conservation and suppressed consumerism, will we have a chance to restrain global warming enough to avoid catastrophic climate collapse. Then renewable energy can be part of a real solution. Yet the denial implicit in the omission of conservation and growth reduction from national and international policy discussions continues.

The Great Transformation or Collapse

The public policy priority of almost every nation remains on finding ways to stimulate economic growth, without any reference to the climate consequences. Some important non-conventional economists and others have pointed to the ultimate futility of a never-ending-growth economy: it will end. The accelerated warming of the earth is repeatedly documented in data released by NASA and other scientific sources. Despite the increasingly urgent situation, establishment politicians and economists are not listening. Even so, public awareness that the growth economy must be replaced by an ecological economy – on a planetary scale – is expanding. But nobody knows how to make the transition to zero-carbon/zero-growth ecological economics. Economies must now be developed ecologically, not grown further in the mode of conventional economics. That may be the most complex difficult challenge ever faced by humanity; nothing like it has ever been tried before – its scope is planetary and its urgency is absolute.

Such a complete transformation of national economies and indeed the global economy is an entirely unprecedented prospect. Most unfortunately, this transition must be made very quickly to avoid the gravest consequences of continued industrial civilization as we have it. The focus of every nation’s politicians, economists, and sociologists must be shifted one hundred and eighty degrees to developing strategies to radically transform the global economy. The prospects for widespread chaos are very high, even under conditions of maximum international cooperation and planning. Failing to achieve such a great transformation, we will join the sixth great mass extinction.

It is necessary to face the fact that the transition to an ecological economy will only be achieved by a radical transformation of society itself. The transition to renewable energy production technologies, important as it is, will be only a small part of the necessary New Great Transformation of the global political economy. Far less energy production than the industrial leviathan requires must support a far more constrained consumer economy than we have known.

We face a very hard choice: Best case is a massive social and economic transformation of society that may reduce emissions enough to avoid cataclysmic climate collapse. The ‘alternative’ case is the more likely modest conversion to renewable energy production with the industrial growth machine essentially in place – that would produce full-on climate chaos and societal collapse. Many who recognize the dangers of global warming still cannot wrap their minds around this reality. An ecological society cannot be a mass consumer society; it must hone in on the most essential and meaningful relationship to the natural world and shape social relations and economic behavior to fit that relationship. That will be far more comprehensive than Bernie’s political revolution. It will be a social revolution.

Laws of Nature and “Laws” of Economics

Most people believe that the laws of physics and the laws of chemistry are real and the legitimate facts resulting from scientific investigation over the past few centuries. Most people also believe that economics is a science. Well, it’s not quite that simple. Human behavior often follows consistent patterns – not quite “laws” – but as we all know people “break the law” frequently enough. In fact, people are partly rational, partly irrational, and partly non-rational. Neither economics nor sociology/anthropology, neither political science nor psychology, are entirely scientific.

Recent debates between conventional and behavioral economists testify to the limits of trying to force economics into a purely scientific model of knowledge. The purely “rational actor” conventional economics imagines, demonstrates those limits. The person who always seeks only the most monetarily profitable outcome does not exist. People choose their actions on any of numerous criteria, not just economic rationality. Besides, it’s often not all that easy to make the most economically rational choice.

Even the laws of natural science operate within limited parameters. We observe the laws of Newtonian physics to be entirely consistent within their limits. But they do not explain much in the post-Einstein world of quantum mechanics. The far less reliable “laws” of “free market economics” do not apply when markets are not free – which is most of the time. Yet, a great deal of effort is expended trying to convince government policy makers and the public otherwise. Corporate lobbyists want us all to believe that the corporatist economy must be retained because it is an expression of the laws of free markets – which it is not.

“Laws” of Convenience
In conventional economics, the underlying factual problem is that markets dominated by a few corporations are not free at all. In fact, the influence of the ‘free market’ ideology results in a lot of federal laws that have given more and more power to corporations. But that process is part of a package of claims that help sustain an oligarchy of corporate convenience, in part by perpetuating the fiction of free markets.

Another key ingredient supporting corporatocracy is the ideology of economic growth. The claim that well-being of the population depends on continued growth of the economy serves the economic elites quite well, if nobody else. The bankers get their compound interest; the corporate executives get their bonuses based on increased stock prices; the congressmen get their corporate campaign contributions and ‘dark money’ electoral support. Nature knows no political laws of economic convenience.

We ordinary actors in the economy are anything but free. But our willing participation in the consumerism that enables economic growth increasingly depends on debt. Corporate control and suppression of labor participation in the fruits of production require increased consumer indebtedness to keep consumption and growth going. The increasing concentration of power, income, and wealth in the economic elites, can only continue through debt-based consumerism.

Experiencing the Laws of Nature
In the debt-driven economy, we are constantly bombarded with incentives to consume more and more questionable products. That is what keeps the economy of growth going. But the so-called convenience of the many superfluous but cleverly distracting products ultimately becomes a burden, both physically and economically. Look at all the storage units spread across the suburban landscape. Too much stuff.

The consumerism of the endless growth economy drives continual demand for more energy to drive the factories and factory farms, and run the vehicles, appliances, and various toys of the consumer culture. The result is unequivocally clear. Massive carbon emissions over the 200 years of the industrial era have come home to roost. Drastic reductions in the burning of fossil fuels are necessary for survival. So are reductions in energy consumption. Both are needed to reduce carbon emissions.

Some energy production can be converted from fossil-fuel to renewable sources such as solar and wind. But every energy production technology requires energy to manufacture and install. We must also reduce the wasteful use of energy; that means reduce consumption. As Ozzie Zehner put it, “…the united states doesn’t have an energy crisis. It has a consumption crisis.”*

Most talk of reducing emissions involves replacing fossil-fuel energy production with renewable sources of energy production: solar, wind, and the highly counterproductive nuclear and biomass strategies. But far more efficient and economical strategies are readily available now. Retro-fitting existing buildings and factories to reduce energy consumption would create many jobs and require no new technology research. Local production for local consumption should become the norm. Just doing it is necessary. But whatever the mix of strategies, none of it will work until the consumerist culture recognizes that we will always experience the fruits of our labors in the laws of nature.
* Ozzie Zehner, Green Illusions: The Dirty Secrets of Clean Energy and the Future of Environmentalism. Lincoln, NE: University of Nebraska Press, 2012.