Making clean energy cheaper

In the war between reducing emissions and economic growth, the winner so far has been the latter. The reason is simple - too many people are far below the development index to ignore. As Yu Quingtai, China’s top climate negotiator through the Copenhagen climate conference, said during a recent speech at Peking University’s School of International Studies: “There are 600 million people in India without electricity — the country has to develop and meet that need. And if that increases emissions, I say, ‘So what?’ The people have a right to a better life." (Chinese champion for India!)

An analysis on the emissions scenario notes how climate policies should flow with the current of public opinion rather than against it, and efforts to sell the public on policies that will create short-term economic discomfort cannot succeed if that discomfort is perceived to be too great.

Any policy focused on decarbonizing economies will necessarily have to offer short-term benefits that are in some manner proportional to the short-term costs. In practice, this means that efforts to make dirty energy appreciably more expensive will face limited success. So, why not look at the alternative tomake clean energy cheaper, asks the author.

How can that be done? Consider that a $5-per-ton carbon tax or a $3-per-barrel oil tax would each raise about $100 billion per year worldwide, funds that could be invested in energy innovation. Some of the money raised could be spent in countries such as India on energy infrastructure deployment, with the result being expanded access to energy and potentially driving down costs through scale.

Governments must foster competition, pursue energy innovation using a public works model, and recognize the crucial role of demonstration projects. Governments should also become a major consumer of innovative energy-technology products and systems.