The market recipe for cooking the planet

The economic logic of the capitalist system is obstructing the critical transition from fossil fuels to alternative energy sources.

Though nothing could be more urgent than curbing the amount of coal, oil, and gas which is burnt, the market demand for the solar photovoltaic (PV) goods is far lower than the industry’s capacity to make them.

Last year the world had 60 gigawatts of PV manufacturing capacity, but fewer than 30 gigawatts were produced.

Far from a green revolution leading to growth and jobs induced by the scent of profit, hundreds of small German installers are now closing down, with the consequent loss of thousands of jobs.

After a period of expansion, the number of new solar power installed in Europe fell sharply for the first time in a decade last year. Globally, the solar photovoltaic (PV) industry had installed a total of 102 gigawatts by the end of 2012, up from less than two in 2001.

But new installation fell dramatically in 2012, taking Europe’s share of new capacity down from 74 per cent to 55 per cent in what the solar industry said was a “turning point in the global PV market that will have profound implications in coming years”.

Now European solar panel makers battered by a declining market have persuaded the European Union to propose import tariffs ranging as high as 68% to reduce cheaper imports from Chinese companies. This European initiative follows a similar US move last year.

Solar entrepreneur Jeremy Leggett places the blame for the developing, protectionist trade war on ‘a campaign by the companies that dominate energy markets, seeking to hold back renewables in defence of their interests’, leading to severe cuts in government support for alternative energy.

Leggett says ‘the incumbents in carbon fuels and nuclear are the root cause of the trade war. They have managed to curb soaring demand for solar, accelerating global price-cutting beyond what manufacturing economies of scale would have produced.’

A key contribution to the declining European PV market is to be found across the Atlantic in the USA where the relatively cheaper gas released by fracking has in turn reduced the demand for, and hence the price of coal.

North America’s turn to fracking pushed down US natural gas prices to 10-year lows last spring, prompting electricity generators to switch to gas from coal. Unwanted at home, US coal increasingly found its way on to European markets, where it has displaced more expensive gas as a fuel for power stations.

American coal exports to Europe increased by 29 per cent last year. The resulting oversupply, exacerbated by a slowdown in Chinese demand, sent European coal prices plummeting from $130 a tonne in March 2011 to around $86 now.

So there was a sharp increase in the level of the greenhouse gases blamed for global warming emitted by the European Union’s coal-fired power stations in 2012, as plant owners rushed to take advantage of high profits.

The rise was as high as 17 per cent according to Brian Potskowski of the Bloomberg New Energy Finance research group, while Europe’s total power plant emissions rose 3 per cent over the same period.

“I would say that the increase in power emissions is due in large part to the increased attractiveness of burning coal relative to gas in 2012,” he said.

In the capitalist dream world inside Leggett’s entrepreneurial head, the leaders of the countries where solar panel production takes place will issue ‘instructions to their ministries to think of common global energy security rather than narrow national energy insecurity.’

The rise in burning dirty fuels confirms a recent International Energy Agency’s report which showed that, “despite a boom in renewable energy over the last decade, the average unit of energy produced today is basically as dirty as it was 20 years ago”.

In the harsh reality of capitalist economics, the search for the highest profits determines the retreat to coal and accelerating climate change. The notion that market mechanisms, or indeed consumer choice, can even begin to solve the eco-crisis is a non-runner if there ever was one.

Gerry Gold

Economics editor

Should energy go local?

There are many problems associated with retooling how America obtains its energy, more specifically, how it is generated and transmitted to the consumer. Obama is faced with some energy decisions that will affect the shape of the country indefinitely. We created a vast federal highway system that only created suburbia, and more cars, more development, and more “stuff”. The question is: should energy be generated and distributed locally? Or should it follow the same ethos of our current energy infrastructure and build a large energy “back bone” across the country to distribute energy from mega-sources?

These very questions arose in the state of Minnesota. Regulators were considering the construction of new power lines that connected with proposed solar farms in the Dakotas at a cost of $1.7 billion. The thought of all that copper wire and disrupted landscapes makes my head spin. Of course, wind energy investors like T. Boone Pickens were delighted by this prospect, as if his life depends on socking away another billion this year hiding under the cloak of “going green”.

Thankfully, the Minnesota regulators took a step backward and looked at the issue from a different angle. Considering that in modes of bulk transmission around 7% of the energy is lost, and the unbelievable cost of the project, the regulators found a more simple and economic solution. They decided to develop a bunch of small 10-40 megawatt wind farms located within the state, producing about 600 megawatts and able to use their existing grid system.

This model poses an interesting solution to the energy woes in America. Perhaps we have been thinking about energy in the wrong way with large projects that are located in rural areas. We are in the habit of pushing the most unsightly and polluting aspects of urban life into rural or wilderness areas, which raises many social and environmental justice issues. We are not shy about building coal-fired power plants on sovereign Native American lands, while they live without power and sometimes no running water.

In Arizona, for example, it would seem reasonable to build a large solar facility, like the one being constructed south of the Phoenix metro area. It would create jobs and provide a clean source of energy. But on what land is it being built, and how far away is it from the consumer? Conversely, it would also be possible to place those panels on rooftops, so that the citizen has direct access to their energy, almost wirelessly. In this scenario, little to no energy is lost in transmission, and precious metals do not have to be mined from the ground to construct the proposed gargantuan transmission lines. In addition, local economies benefit directly as jobs are created, and not in another state or region.

Although the Minnesota model transcends scale in a way, it is important to acknowledge that this model does not apply to every situation. Some localities, and even some states, do not have the climate or geological conditions conducive to small-scale (or even large scale) renewable energy sources. But overall, the United States has hit the lottery in potential for renewable energy. We have a wide variety of renewable energy potentials. Pushing for our energy to be in the complete control of local entities, or more desirably at the personal level, is a scary thought for many government agencies and energy companies. Imagine taking away the power (social that is) from these companies to operate energy monopolies. There is of course no end of political resistance to such a scenario.

The prospect of the people having the power and not corporate or government interests is heart warming. It is important to resist these pervasive neoliberal agendas. We do not have to commoditise everything, and we do not have to profit from everything. We all have the right to gaze up at the Sun and absorb its benefits.

Colin J. Gardner
A World to Win’s US correspondent