Hedging in the Anthropocene: the risks and rewards of a fossil fuel versus a photovoltaic energy supply
Photo credit: EDUARDO MUNOZ
October 30, 2012. REUTERS/Eduardo Munoz
The climate is changing. We have left the Holocene and entered the Anthropocene, the era in which human enterprise is pushing the planetary functioning of essential cycles (e.g. of CO2) into a potentially unstable regime. Human enterprise, by burning fossil fuels for electrical, heat and motive power is the central cause of climate change, and is driven by an economic system that promotes insatiable consumption.
Despite growing awareness, as evidenced by the 2015 Paris Climate Agreement, that action is needed, business-as-usual carries on, defining narrow perspectives, to perpetuate the overuse of fossil fuels. A broader conversation is required, in which the health, environmental, economic and social impacts across the fossil fuel supply chain are brought to light. The entanglement of the fossil fuel supply chain, banks and commodity traders, as well as the industry’s historical advantages need to be taken into account when discussing the economic competitiveness of fossil fuel versus renewable electric power generation technologies.
Despite earlier strides toward the energy transition, European markets are now discouraging renewable power installations. While painted as requiring expensive subsidies, renewable power generation in fact receives only a tiny fraction of the subsidies that fossil fuels receive. Subsidies build infrastructure, and the choice has to be made to steer the subsidies away from fossil fuels and towards renewables, to give clear signals to investors and to avoid paralysis.
Renewable electric power is less expensive than grid power in many markets. Even though their presence on the electricity market lowers the wholesale electricity price, this saving is not passed on to consumers. Indeed, the electricity market is fundamentally not suited to the demands of electricity generation that are required in the 21st century. Photovoltaics, despite their predictable intermittency, bring power management advantages, and can actually improve the resiliency of the grid. While storage will eventually be needed, it is not a current bottleneck.
The papers are published in MRS Energy and Sustainability, by Authors Carol Olson and Frank Lenzmann, and are freely available online for one month: