Green Energy Is Actually Good for the Economy
How can green energy help the economy? Well to answer a question with another question, do you have any idea how much energy we could generate and save if we put the focus and the resources behind it?
That’s the question that Michael Barnard, an associate professor of energy resources at the University of California-Irvine, is trying to answer. He says that the answer could be as high as 50% or even 60% in some places. “That’s the high end of the range we’ve been given,” Barnard says. “If you put the focus and the resources behind it, you could get a very big return.” In a study commissioned by the Energy Department, the use of renewable energy like wind, solar, and other “clean” energy sources like biofuels, wind, and hydropower on the U.S. electric grid could save the United States $3 billion on energy costs over the next 20 years. The study also showed that it could provide an offset to the cost of building new gas-fired power plants during the time it takes to get those wind and solar energy from the ground.
“I think of it as a buffer,” Barnard says. “A lot of people in the renewable energy space are talking about putting a carbon tax and an income tax at the level of the top 20% and the bottom 80% of taxpayers. That’ll get their [fossil fuel companies] attention.”
That would mean focusing on places like California, where lawmakers have passed laws mandating cleaner energy. The federal government, too, could have an opportunity to use its broad power to encourage the development of green energy. “We’re in the state of California where the legislature has taken the lead on the issue of carbon pricing,” Barnard says. “We’ve had a carbon tax for the state of California for a while and it seems to have had an effect… it seems to have spurred a lot of investment in clean energy.”
However, it might be time for the law to change elsewhere. In Texas, the governor, Greg Abbott, has been actively promoting the development of alternative energy like wind and solar. While the state does have a state energy policy that’s focused on reducing carbon emissions, the shift to a more competitive environment has brought unforeseen challenges.
One key challenge is the power grid, the network of electricity generation, high-voltage transmission lines, substations, and distribution lines that bring power to homes and businesses. That’s been undergoing a rapid upgrade in recent years. “The expansion of the high-voltage transmission lines in Texas is testimony to the progress of the state’s economy,” says Mark J. Mitchell, a policy associate with the University of Texas at Austin, which has studied the issue of federal power policy and the emergence of new technologies like quantum computing. “But, frankly, the challenges are real and they come from within the network.”
One vulnerability that experts foresee is that, as renewable power becomes cheaper, some people may opt to curtail its use. For example, in 2014 in California, a company called Sunnova reduced its electricity prices by 5,000% and then had to buy back 2 million of the shares it got, giving it a $5 billion market cap. Sunnova was able to get that kind of money because it had a lot of steady cash flow. “It’s a natural experiment, really, because there are so many variables that can affect the outcome,” says Michael Woodhouse, co-director of the MIT Technology and Policy Program.
Private companies will end up being the ones who bring change to the global economy, and we’ll just have to wait and see what that’ll look like.