DeepSummary
The episode features an interview with Professor Brett Christophers about his book 'The Price is Wrong: Why Capitalism Won't Save the Planet'. The discussion focuses on why investments in renewable energy sources like solar and wind are not growing as rapidly as needed, despite the fact that the cost of generating electricity from these sources has fallen below that of fossil fuels.
Christophers explains that while the levelized cost of energy (LCOE) for renewables has decreased, profitability remains an issue due to factors like inferior revenue potential, volatility in electricity prices, and the competitive nature of the electricity market. He argues that governments continue to provide subsidies and stability mechanisms to make renewable projects bankable.
The conversation explores various perspectives on addressing this issue, including sticking with the current approach of government subsidies, redesigning electricity markets, increasing public ownership and investment, and focusing on reducing energy demand through concepts like degrowth. Christophers concludes that transformative changes, rather than incremental reforms, may be needed in how electricity is bought and sold.
Key Episodes Takeaways
- The levelized cost of energy (LCOE) for renewable sources like solar and wind has fallen below that of fossil fuels, but investments in renewables are still not growing as rapidly as needed.
- Profitability, not just cost, is a key factor hindering renewable investments, due to issues like inferior revenue potential, price volatility, and competitive market structures.
- Governments continue to provide subsidies and stability mechanisms to make renewable energy projects bankable, as the private sector alone cannot drive the required growth.
- Transformative changes to how electricity is bought and sold, such as increased public ownership or reduced energy demand through degrowth, may be necessary to accelerate the transition to renewables.
- Capitalism and competitive markets, which typically drive down prices for consumers, are hindering the growth of renewables, creating an irony where some degree of monopoly power could be beneficial.
- Addressing energy demand, particularly reducing consumption among the wealthiest segments of the population, is crucial in addition to efforts on the supply side.
- The inability of capitalism to drive the required growth in renewables highlights the need for government intervention or systemic changes in the electricity sector.
- The issues around profitability and market structures discussed undermine the narrative that falling costs alone will enable a rapid transition to renewable energy sources.
Top Episodes Quotes
- βSo there's a vast quantum between them. And from a purely kind of economic standpoint, it makes complete sense that the CEO of Exxon would kind of turn his nose up at renewables because hes a profit maximizing actor.β by Brock Binafil
- βThe only way they can is if governments essentially say we are going to do whatever is required to enable them to, which essentially means the government supporting the market in every country around the world.β by Brock Binafil
- βThere's a huge irony here as I see it, which is that ever since Adam Smith, there's been this sort of idea, a stereotypical idea, but idea nonetheless about capitalism, which is that it's like competitive markets and competing producers bidding prices down in this competitive marketplace to provide a great product for consumers at increasingly low prices. And of course in the real world, that almost never exists because the real world is a real world saturated with oligopoly and monopoly power.β by Brock Binafil
- βBut finally, we've kind of found this industry where it kind of almost exists, the kind of panacea of kind of free market capitalists. But it's in the one industry where we don't want it to exist essentially because it's in the one area where we kind of could do with a little bit of monopoly power to keep pricing up.β by Brock Binafil
- βAnd so I think that there's a lot of work to do on both the demand side and the supply side, and that we should be attempting to rein in emissions of the top 1510 percent of the global population, whatever we do on the supply side.β by Brock Binafil
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Episode Information
The Climate Pod
The Climate Pod
4/3/24
For decades, the biggest pushback against renewable energy was that it was more expensive to generate than electricity that came from the burning of fossil fuels. But all that changed in 2016 when both solar and wind-generated electricity became cheaper than electricity generated by coal and natural gas, at least when using the industry-standard metric, Levelized Cost of Energy. Despite the fact that renewable energy has overcome its biggest obstacle and can now be generated cheaper than fossil fuels, investments in fossil fuels continue to increase and new renewable generation development is not keeping pace with increases in demand. What happened?
Brett Christophers is a Professor at the Institute for Housing and Urban Research at Uppsala University. He joined the podcast this week to explain why price isn't the most important metric to look at when determining the prospects for the development of clean energy projects. His new book, "The Price is Wrong: Why Capitalism Won't Save the Planet", provides some answers to the question of why renewables aren't growing as quickly as we need them to, given that the price of renewables have fallen well below their fossil fuel counterparts. His critiques of capitalism, energy markets, and our fascination with the Levelized Cost of Energy are some of the most compelling arguments you're likely to hear on why we need transformative changes instead of incremental reforms to our existing economic system, especially when it comes to how electricity is bought and sold.
Read "The Price is Wrong"
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