Towards the Solar economy

Last month, the San Francisco Chronicle revealed that the cost of installing solar panels on homes and businesses in the US has dropped by almost 28 percent from in the decade from 1998 through 2007. While the cost remains high due to the scarcity of silicon used in the production of photovoltaic solar panels, the industry has been trying hard to drive down the cost, using new materials, new production processes and streamlined installation techniques. Severin Borenstein, director of the UC Energy Institute, says photovoltaic solar power still isn't economical compared to other forms of electricity generation. "What we're seeing in small-scale solar are incremental declines, not breakthrough declines," Borenstein said. "And in order for solar to really make sense, we're going to need breakthrough declines."

Over in Germany, Dr Hermann Scheer has devoted his life and several books to the study of how we might get to those breakthrough declines. One of those books, written in 1999, is called “Solare Weltwirtschaft” which was translated into English as “The Solar Economy” in 2002. According to the book’s own blurb, it lays out “the blueprints of how political, economic and technological challenges of sustainable energy can be met using indigenous, renewable and universally available resources, and the enormous opportunities and benefits that will flow from doing so.”

Scheer says that international conferences don’t discuss the most important subjects. These include global carbon dioxide taxation, an abolition of conventional energy subsidies and an end to tax exemption for aviation fuel. Scheer identifies the rapid growth in air travel as the single greatest climate danger. (When libertarian groups such as Spiked attack the environmental anti-flying lobby on the grounds of “increased mobility for all”, they miss the point that what is at stake here is not personal freedom, but the method of how it is achieved). The problem is that the airline industry is heavily subsidised. Subsidies including the lack of aviation fuel duty, zero VAT-rated aircraft purchase, and no airport property taxes, make the aviation industry a giant global tax free zone.

Scheer says global conferences such as Kyoto have also become “fixated” on policy instruments such as tradable emission permits which attempt to reconcile climate change prevention with the interests of the fossil fuel industry. The proposed Australian Emission Trading Scheme (ETS) is a deeply flawed example of this as John Stapleton noted in The Australian last month. Under the scheme, the more individuals save on their emissions the more corporate polluters such as coal stations and aluminium smelters are allowed to emit. As Australia Institute head Richard Denniss told Stapleton It is a zero-sum game. “The least understood feature of the ETS is that the more effort households put into reducing their energy use,” said Denniss, “the more spare permits they are freeing up for the big polluters.”

Scheer says Kyoto does not take into account the full supply chain of electricity production. ETS credits are earned by improving one link in the chain, the ratio of energy input to energy output. It does not take into account supply chain losses and emissions in extraction, processing, shipping, and storage of primary energy nor in the disposal and distribution of waste materials. And as global trade becomes more liberalised, these supply chains (pdf) are only likely to lengthen. And every player in the chain has a vested interest in keeping the chain afloat. Bankers who invest in these massive resource-intensive projects are also biased stakeholders. Scheer says that only the short supply chains of renewable energy can overcome these unholy alliances.

The vested fossil fuel industries also compromise treaties such as Kyoto by virtue of the so-called “flexible mechanisms”. The rationale behind these mechanisms is a reasonable one on face value. The idea is that emissions are a global problem and that the place where reductions are achieved is not important. This allows countries to convert credits with other countries for use towards meeting commitments under the trading system. But Scheer says participating countries are tacitly banking on a more efficient fossil energy system to bail them out. We can see that here in Queensland with its obsession for that foolish paradox called “clean coal”.

Scheer says there is little point in building a global climate change strategy if renewable energy is seen as a secondary issue. He says a radically different approach is needed if we are to emerge from the “tangled web of vested interests” that make global climate change negotiations so fraught. Scheer believes that only a technological revolution can achieve the quantum shift in thinking towards renewables. But such a revolution needs incentives towards investments that bring sustainable improvement.

There are many examples of technological revolutions (aviation, telecommunications, the car society, electricity grids) but none of them have run their course without encountering massive resistance. What they all needed at the outset was targeted help and a positive political framework until they become self-sustaining. Scheer says we do not need a global treaty to achieve this for renewable energy. What is required, he writes, is that “first one and then ever more states and companies must be prepared to seize new opportunities without pandering to the fossil fuel industry”. That vision should be remembered next time any pro-status quo voice condemns Australia’s supposed “unilateral” move towards a fossil-free economy.

There are signs that industry is heeding his message. Australia’s biggest engineering company, WorleyParsons, is determined to lead what The Age called the world's biggest solar project. By 2011, the company wants to set up an initial $1 billion 250-megawatt unit in WA’s Pilbara region. They plan to lead $34 billion of solar projects be built by 2020 by companies including BHP Billiton and Rio Tinto.

But while private enterprise can show the way, Australia needs strong government action to be a truly successful post greenhouse economy. Ontario’s new Green Energy Act is a good starting place, and one that local legislators would do well to study. As Ontario energy minister George Smitherman notes, the jurisdictions that get there first are going to benefit first.