Towards the Solar economy

Last month, the San Francisco Chronicle revealed the cost of installing solar panels on homes and businesses in the US has dropped 28 percent in 10 years from 1998 to 2007. While the cost remains high due to the scarcity of silicon in the production of photovoltaic solar panels, the industry has been driving 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 isn’t economical compared to other forms of electricity generation. “What we’re seeing in small-scale solar are incremental declines,” Borenstein said. “In order for solar to really make sense, we’re going to need breakthrough declines.”

In Germany, Dr Hermann Scheer has devoted his life and several books to the study of how we might get those breakthrough declines. One of those books,  “Solare Weltwirtschaft” (1999) was translated into English as “The Solar Economy” in 2002. According to its blurb, the book 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 international conferences don’t discuss the most important subjects. These include global carbon dioxide taxation, abolishing conventional energy subsidies and ending tax exemption for aviation fuel. Scheer identifies the rapid growth in air travel as the single greatest climate danger. When libertarian groups like Spiked attack the environmental anti-flying lobby on the grounds of “increased mobility for all”, they miss the point that what is at stake is not personal freedom, but how it is achieved. The airline industry is heavily subsidised by the lack of aviation fuel duty, zero VAT-rated aircraft purchase, and no airport property taxes. It makes the 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 fossil fuel industry interests. The proposed Australian Emission Trading Scheme is a 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 was a zero-sum game. “The least understood feature of the ETS is that the more effort households put into reducing their energy use,” Denniss said, “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 the disposal and distribution of waste materials. As global trade becomes more liberalised, these supply chains will lengthen. 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 short supply chains of renewable energy can overcome these unholy alliances.

The fossil fuel industries also compromise treaties such as Kyoto with so-called “flexible mechanisms”. The rationale behind these mechanisms is a reasonable one on face value. Emissions are a global problem and the place where reductions are achieved is not important. This allows countries to convert credits with other countries 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 see that in Queensland with its obsession for “clean coal”.

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

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

There are signs 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. They plan to lead $34 billion of solar projects be built by 2020 by companies including BHP Billiton and Rio Tinto.

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

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