SIZE MATTERS

The New Greens Like It Big, Stanford Professor David Victor’s think-piece in Newsweek, posits an assumption: A previous era of “green” energy “…was based on many small, decentralized sources of power and a green economy that harnessed the power of the marketplace…” It then posits 2 supposed insights about current “green” energy: It relies on “regulation and subsidies” and embraces “bigger is better…”

The assumption is fallacious and the insights are afterthoughts that only the most unaware and uninformed observer could offer up as having any value.

Professor Victor delivers the "news" that the market “…is not a reliable force for driving the adoption of green technologies. Just as the role of government is rising across banking and other sectors of the economy, new green will be much more wary of market forces…”

Victor seems not to have noticed that advanced economies almost NEVER leave energy to the vagaries of an uunregulated, uninfluenced marketplace. Energy is far too important for such risk.

The fossil fuels and nuclear energy have long been subsidized in the U.S., just as nuclear energy is subsidized in France and Japan and oil is subsidized in Russia and Iran.

Victor implies that wind and solar, unable to compete with coal and nuclear, exerted some kind of undue influence on governments to get subsidies and mandates for what would be otherwise uneconomic. New Energy WISHES it had such influence. The opposite is actually the case.

Oil, coal and nuclear energy have benefited from federal subsidies and mandates that externalize to the consumer all sorts of deleterious effects, from health to environmental, caused by using them.

New Energy has finally begun obtaining its fair share of such supports through Renewable Electricity Standards (RESs), mandating the use of New Energy, and tax breaks that match the federal loan guarantees and insurance given to the nuclear energy industry and the special tax protections given to the fossil fuel industries.

Victor describes some of the most progressive ideas from New Energy advocates – a cap and trade system to cut greenhouse gas emissions (GhGs) and a pollution tax to generate revenues with which to build New Energy infrastructure – as if they were fascistic proposals to destroy energy markets and taxation systems. In fact, these ideas are efforts to re-orient an economy tilted toward Old Energy so as to give New Energy something like a level playing field on which to prove its worthiness.

Victor’s suggestion that New Energy has suddenly changed its perspective to large-scale installations is so poorly informed as to be laughable. The first large-scale wind installations were in the early 1980s and the first solar power plants were built in the late 1980s. Even the California “Million Solar Roofs” initiative predates Victor’s description of solar energy’s “new” trend to a larger scale.

The whole idea behind growing New Energy is to create economies of scale to bring costs down. This is necessary in wind, solar, biomass and hydrokinetic (wave/tide/current) energies.

There is no alternative, in today's energy-hungry world, to large scale generation.

Another point Victor overlooked: Distributed generation in the form of home and small business rooftop solar, small wind and geothermal systems are more popular than ever.

Finally, after displaying his complete lack of understanding of New Energy, Professor Victor sits in judgment of the incoming Obama administration’s plans to use part of the economic stimulus funds to create a Green New Deal.

He contends (without evidence) that economic efficiency precludes the development of millions of green collar jobs. In fact, a plethora of studies (from the International Energy Agency (IEA), the University of California, GE Financial Services, the Apollo Alliance, the U.S. Mayors Conference and the Center for American Progress) have shown that building New Energy and Energy Efficiency is one of the fastest, surest ways to create a new economic boom.

Perhpas Prof. Victor would be pleased to see that New Energy remains small in the grand scheme of things but...(click to enlarge)

The New Greens Like It Big; The green view based on small sources and market power will give way to one based on scale and subsidies.
David Victor, November 29, 2008 (Newsweek)

WHO
David Victor, professor, Stanford Law School and director, Program on Energy and Sustainable Development

WHAT
Victor suggests a new and different kind of New Energy economy is emerging when, in fact, what is emerging is the fulfillment of New Energy’s potential.

...the marketplace clearly sees it is the right place to invest. (click to enlarge)

WHEN
Victor posits that New Energy was once based on “small, decentralized sources of power” but today’s New Energy economy will be based on regulation and subsidies and a “bigger is better” attitude that didn’t exist before. In fact, big wind and solar installations date back to the 1980s. Big hydro projects date to the 1930s. And distributed generation in the form of home and small business rooftop solar, small wind and geothermal systems are more popular than ever.

WHERE
- Contrary to the essay’s assertions, the European cap and trade system and EU New Energy and GhG-cutting goals have motivated Europe to develop a world-leading wind industry, a world leading solar industry and to be on the verge of becoming the first to create a hydrokinetics (wave/tide/current) energies industry.
- Europe’s feed-in tariffs, the subsidies the essay belittles, have significantly contributed to the development of the New Energy capacities developed in Germany, Denmark, Spain, Portugal, the UK and other countries on the continent. But without the motivation of GhG-cutting goals, it is not clear the feed-in tariffs would have been instituted or developed.
- Japan developed a world-leading solar energy production capacity as a result of government subsidies and only faltered when its solar energy industry failed to read the market correctly.

WHY
- The essay suggests that the exertion of extraordinary measures by the federal government to right the current financial crisis is comparable to the pre-existing mandates and subsidies for New Energy. Wrong! The former are heroic intervention in a time of extreme need; the latter are programs to bring New Energy into balance with Old Energy.
- The essay pronounces a failure Google’s RE < C, its effort to help New Energy become cost competitive with coal as a source of grid power by investing in some of the more promising New Energy technologies. The essay says new commodity costs make coal cheaper than ever. In fact, EXISTING coal is cheap. NEW coal plants are so expensive they can’t get built because of the cost of capital, the unpredictable price of emissions and the anticipated HUMUNGOUS price of emissions-capture technology (IF it ever gets created). Meanwhile, Google’s investments have barely had time to get started but at least one – eSolar’s solar power plants – are already showing promise of beating the cost of coal.
- The essay suggests New Energy has somehow changed its nature by achieving some of the economies of scale it has always sought. In fact, there is no other way to save the world than by being big enough to capture the energy of the sun and the wind and the waves and the deep earth before Old Energy destroys civilization as we know it with poisonous spew and radioactivity and climate change.

Distributed sources of New Energy remain vibrant market players. (click to enlarge)

QUOTES
- From the essay: “The paragon of old green was a Lilliputian solar panel on every rooftop linked by local lines to households and even electric vehicles. But "small is beautiful" isn't working because people don't like to live near industrial facilities, even very small ones.”
- From the essay: “A future with large amounts of intermittent wind and solar supplies will lead to more big industry, not less: the grid, for instance, will require storage (think batteries) to ride out periods when the wind isn't blowing. In such a world, big operators are more likely to thrive than mom-and-pop green power providers.”
- From the essay: “Green will look much different than what most people imagine.” (Only much different than what the ignorant imagine, Professor Victor.)