March 31, 2014

Commentary in Nature Urges Public Sector to “Back the Renewables Boom”

Contradicting conservatives, Jessika Trancik declares “government support for energy-technology development is paying off.”

Jessika Trancik, a former Rhodes Scholar holding a 2002 Oxford PhD in materials science, has two main affiliations and one main research interest. The MIT website’s first line about her says she focuses on accelerating the development of energy technologies. The Santa Fe Institute’s first line about her cites “performance trajectories of energy systems.” In the 20 March issue of Nature, she forcefully challenges political conservatives on renewable-energy policy.

Trancik acknowledges the “mixed record of governments in picking winners and losers among technologies,” but laments a “widespread lack of confidence in public-sector efforts to spur innovation.” She never directly mentions Wall Street Journal editorials or the syndicated Washington Post columnist George F. Will, but consider two contrasts.

First, a WSJ editorial two years ago, just one example of that opinion page’s hostility to federal renewable-energy incentives, urged, “Kill all [federal] energy subsidies—renewable and nonrenewable, starting with the wind tax credit, and use the savings to shave two or three percentage points off America’s corporate income tax.” Trancik now writes:

The response of the global energy industry to even modest policy interventions has been remarkable. Led by China, Europe, the United States and Japan, the alternative-energy sector is booming worldwide. Solar and wind technologies have improved most rapidly in the past three decades, with photovoltaics a hundred times cheaper today than in 1975.

Governments should help to maintain this progress. Research funds and policies to boost markets will mature new energy industries and promote the next generation of low-carbon technologies.

Second, just last month, Will mocked “Solyndra-scale crony-capitalism debacles.” In a 2011column criticizing government support of that failed solar photovoltaic venture, he wrote the following: “Government can foster clean energy by subsidizing basic research, whose fruits become available to a variety of entrepreneurs, and by setting broad incentives that shift demand in favor of alternative energy. Subsidizing selected technologies or companies, by contrast, is a game that taxpayers often lose, as the history of boondoggles from synthetic fuels to the fast breeder reactor suggests.”

Trancik now writes:
The speed of energy-technology innovation is only just coming to light as long-term data sets become available. My analyses of 30 or more years of data show that the costs of renewable-energy technologies have fallen steeply. Photovoltaic module costs have plunged by about 10% per year over the past 30 years and the costs of wind turbines have fallen by roughly 5% per year. Production levels for both technologies have risen by about 30% per year on average.

The technical advances responsible have been driven by public policies and industry’s responses to them. Governments spend a relatively modest amount on renewable-energy research, roughly US$5 billion per year globally, which is less than one-tenth the amount allocated to health research. But government incentives are essential for market growth; they drive private-sector investments in clean-energy technologies of about $250 billion per year globally.

Despite this success, lawmakers in many countries are questioning public support for clean energy. Some in the United States are urging that such support should be limited to funding basic research and development in universities and government labs. They cite the recent failure of a few prominent energy companies, such as Solyndra, which received government grants or loans in their early days. Critics forget that game-changing technologies are high-risk ventures; some failures are inevitable.

Will appealed to the lessons of history. In her ending, so does Trancik:
Governments should recognize the boom in energy-technology development and continue to support it. As history suggests, the resulting momentum could be enough to largely decarbonize the world’s energy supply by mid-century.

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