Picture the good news: a third industrial revolution,powered by decentralized energy and massive digital connectivity. Picture thebad news: the residual institutions of the second industrial revolution,powered by oil and 20th-century transportation habits, threatening to hold thisthird revolution back, perhaps even kill it.
These were two future scenarios debated by industry leadersat an IHT conference in Barcelona recently. Solar, with its soaring globalsales and plunging prices, featured as a talisman for the third industrialrevolution. Fracked gas featured as a standard-bearer for extending the life ofthe second industrial revolution. As the founder of a fast-growing solarcompany, set up because of my concerns about dependency on oil, gas and coal, Itook part in the debate keen to maximize the good news and find ways around thebad news.
Last week, the good news had a major setback. The USDepartment of Commerce confirmed punitive tariffs on Chinese manufacturers ofcheap solar cells and panels. The premise of the case, brought by USmanufacturers, is that Chinese manufacturers have been exporting their panels “cheaper than U.S. equivalents because of Chinese government largesse “ atunfair prices. The Europeans are contemplating the same anti-Chinese action.The Chinese seem set to retaliate with punitive tariffs on exports of U.S.-madepolysilicon, the raw material for solar cells. A full-scale solar trade war islikely.
Meanwhile, oil- and gas-industry lobbying in multiplecountries is succeeding in stalling many of the feed-in tariff subsidies thathave been driving the growth of solar and other renewable industries. Manypolicymakers concerned about climate change talk of gas as a bridge to the lowcarbon future.
Those enamored of the U.S. shale gas phenomenon “ the widelyunanticipated production of large amounts of unconventional gas in recent years“ have begun to see gas as a bridge to a gas future. Feed-in tariffs, which paypremium prices for renewable generation financed by tiny levies on electricitybills, stand in the way. It would be rather inconvenient if solar becamecheaper than everything else in a few years.
Nowhere is this more clear than in Britain, where a leakedletter from the chancellor of the Exchequer to the energy secretary essentiallyexhorts the latter to put a lid on the stimulation of renewables markets sothat investors will not be put off pouring capital into the Treasury’s effort tobring the frackers to rural England and turn Britain into a “gas hub.” I amassured by many confidantes in government and industry that this kind ofpolitical response is the result of concerted oil- and gas-industry lobbying.
The two problems for solar are of course related. Theassault on feed-in tariffs and other subsidies causes the shrinking demand thattriggers the dumping of exported solar panels at low prices. Without thelobby-induced mismanagement of the market-building process by governments, wewould probably not have the solar trade war.
Whether you agree with my analysis of causality or not, thecurrent situation is transparently dysfunctional for all comers except theenergy incumbency. If you worry about energy security, the longer we staydependent on gas and oil, the more we become dependent on those who control thepipelines and the tanker routes. If you worry about climate change, we need alow-carbon future that involves a retreat from carbon fuels, not efforts tofind and develop more. If you worry about both, on a globe en route to 6-degreewarming “ a level that threatens the very future of civilization “ then anassault on the solar industry becomes akin to sabotaging armaments factoriesduring a mobilization for war.
It could be so different, so easily. Despite their failurethus far to deliver a meaningful climate treaty, governments in the past haveproven themselves capable of complex treaties fostering common security. Theycould now negotiate a multilateral regime of cooperation for solarmarket-enablement: a globally coordinated set of feed-in tariffs aiming toaccelerate solar’s descent to universal price parity with conventional energy.They could bulk-procure solar panels themselves, to speed the emergence of amass market.
Working cooperatively, focused on common security, theycould greatly accelerate the day solar energy is cheaper than all other forms,and feed-in tariff subsidies are no longer needed. They could all greatlyfoster their own domestic energy security in so doing. Light shines on allcountries, infinitely. Significant oil and gas reserves sit in only a few, andare finite.
Jeremy Leggett ischairman of Solarcentury and convenor of the UK Industry Taskforce on Peak Oiland Energy Security
