Toward A Renewable Energy Future
For Benjamin Goldstein, the economic benefits of investing in renewable energy sources are too great to ignore. He says the green market will save money, create jobs and inspire innovation.
Additionally, he says it will reduce the environmental costs that are not considered when gauging the price of coal and oil. Goldstein has served as a policy advisor for the Center for American Progress, a liberal think tank in the United States, and is now working with the U.S. Department of Energy.
Goldstein calls the year he spent studying international affairs and sustainable development at the University of Peace in Costa Rica “a different, but very beneficial, experience.”
During his recent visit to Costa Rica, The Tico Times had a chance to sit down and speak with the expert after a presentation at the Legislative Assembly.
TT: You mentioned in your presentation that switching to a renewable energy economy will triple job opportunities. Can you explain where these extra jobs will come from?
BG: When you increase energy use, you have a choice. You can get your energy from coal, natural gas and oil or you can get it through a variety of renewable sources such as wind, solar and geothermal, and others. And what we found is that an equal amount of investment in renewable sources, or efficiency versus fossil-based energy, creates three times more jobs. By investing in renewable sources and efficiency, you are creating more labor demand.
Renewable energy jobs depend a lot more on infrastructure investment, operation and installation. For example, you get a certain amount of megawatts from a coal-fired power plant but, once the thing is built, you only need a few guys in the control room.
On the other hand, if you are installing solar panels, you need people to build, transport, install and maintain the panels.
Also, using these sources will be cheaper (in the long run) than spending money polluting. There is cost to pollution that is currently not internalized in the market. The costs of climate change are pushed onto the world at large and future generations. The costs of acute air pollution from coal-fired power plants are borne by the communities nearby that have higher cancer and sickness rates. Those are all costs, but they are not factored into the price that we are paying for that amount of electricity every year, or oil. So you’re taking all those expenditures and redirecting that money into job creation in the renewable energy sector.
Energy efficiency and retrofits of buildings create 16.7 jobs per $1 million invested. Rooftop solar provides around 18 jobs. Oil, gas and coal all create under 10 jobs.. When you average it all out, you get that 3-to-1 ratio.
How can investment in renewable resources be made profitable for big companies?
Some of the large companies, like British Petroleum (BP), which apparently now stands for Beyond Petroleum, have diversified their energy mix. They are investing a lot in renewable energy and biofuels. Some of the other large oil companies – such as Shell, Exxon-Mobil and Texaco – all dabbled a little bit, primarily in things like liquid fuels, and I think they ultimately found that they just didn’t have the competitive advantage there. They retracted some of those investments and began to concentrate on oil, even though that’s a dying industry, quite frankly.
Coal is extremely cheap, but that is because none of the environmental damage is internalized in the price. This is called a negative externality. … You can talk to the most conservative economists and they will agree that coal, oil or anything that pollutes and that has a negative external cost that is not shown in the price is a market failure.
All the kids who get asthma, all the mountain tops that are blown up, all the rivers that are polluted and all the communities that are destroyed through coal mining and the burning of coal have an economic cost which is ultimately traceable back to the burning of coal.
How can this presumed market failure be corrected?
Put a cap on carbon emissions – a cap that is representative of the scientific necessity for the global warming imperative that will reduce the amount of emissions that are produced over time. Then you set up the trading system and allow companies to trade carbon credits or buy offsets, like Costa Rica wants to do. That would raise the cost of burning coal and help correct that market failure.
The parallel strategy is to promote renewable energy. It’s healthier, and it’s better for national security over the long term. We want to develop a renewable energy industry because that’s going to be the dominant international driver for innovation and economic growth in the next several decades.
As for the policy fix, we need to create what’s called a renewable electricity grid. This mandates that the utilities produce a certain amount of their electricity from renewable sources by a certain year. Then renewable electricity companies in the private sector have to find the best resources. It unleashes private sector innovation and creates a brand new market for renewable electricity. Renewable companies are researching and finding the best sites and creating a ton of new jobs in the process.
Will that make electricity more expensive?
Technically, yes. It will raise the cost of energy bills. But the cost of producing electricity from renewable sources is going down, and the more we scale down that market the cheaper the technology gets.
Many people talk about the successes of the European renewable energy market. How do those countries compare with countries like the U.S.?
Europe has been more proactive about pursuing clean energy policies. Those countries understand the economic development and environmental benefits.
Germany is one of the best solar generators in the world. It’s not a sunny country, but it has the feed-in-tariff. When you are producing electricity from solar panels and selling that back into the grid, you get a nice premium payment from the utility company.
That’s much more lucrative than paying for normal electricity. It’s an incentive to produce distributed solar. It doesn’t cost the government anything because the additional cost of the remuneration to the producer is distributed over the entire electricity consumer base.
Everybody’s rates go up by two or three cents (per kilowatt hour). But then there’s all this money going into the system to pay folks for selling solar electricity back into the grid.
You mentioned that in the U.S. some of these transformations cost billions of dollars. How can these energy infrastructure conversions be made available to developing countries?
You have to think of the big picture. In the long run, it isn’t actually costly. It just looks that way because we’ve been socialized to think that renewable energy is the luxury of the rich. In a world where fossil fuels are increasingly more expensive, it’s good economics to switch to renewables. In the U.S, where coal is still cheap, we need cap and trade systems and public policy standards to help drive the market. In Costa Rica, you don’t need to convince anyone that the electricity they get from diesel and bunker fuel is an economic drain.
And what about mass transit?
Mass transit is something of an exception because it does require an enormous upfront investment. There is no doubt that over the long-term it is going to save a ton of money. If you can replace Costa Rica’s oil imports with good use of mass transit, then you are talking about $25 to $30 million per year. Over the course of 20 years that will equal $600 million and that’s about enough to fund the mass transit system.
As far as the upfront costs, that’s where government funds come in and that’s where the World Bank should be playing a role. The U.S. import and export bank has begun funding renewable energy projects. A lot of the other institutions, like USAID, are starting to realize that they can’t keep funding coal projects and they need to find clean solutions.
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