By: Christina Thomas
As climate change continues to affect social and economic welfare, many have been calling for a “green-energy” revolution. Environmentalists have turned to solar and wind power as our saving grace from fossil fuels but businesses and several economists have said that transitioning completely to renewable energy would not be good for economic growth, causing lost jobs and low profit margins. As this argument continues to rage on, and as people continue to deny climate change, a compromise needs to be reached that can benefit everyone. But what does such a compromise look like? Is it possible to achieve a “green-energy” revolution as technology now stands? Or is further technological development required to ensure renewables are economically competitive with conventional energy sources, such as coal and oil?
Due to heavy oil and gas subsidies in the United States, renewables have been very slow taking off here as opposed to our European neighbors. Due to this, it is evident extensive policy changes are necessary in order to spearhead renewable energy development. Though the Obama administration and other G20 nations propose they “end inefficient fossil fuel subsidies” in 2009, no official policies were proposed and progress was incredibly limited for years (Oil Change International, 2017).
Where the Federal government is lacking as far as renewable energy policy, local and state governments are trying to pick up the slack. One such example is New York and Governor Andrew Cuomo’s renewable energy plan. This plan has 3 goals to achieve by 2030: 1) to achieve a 40% reduction in greenhouse gas emissions from 1990 levels; 2) 50% of New York State’s electricity will come from renewables; and 3) achieve a 23% decrease in energy consumption in buildings from 2012 levels (Cuomo, 2015). Though ambitious, New York has already begun several efforts to achieve this goal, such as planning a wind farm for off the coast of Long Island and investing $1.5 billion in renewable energy projects throughout the state (New York State Office of the Governor, 2017).
However, these are only a couple examples in a country that is behind in environmental policy. As such, it is important to analyze how new policies have affected countries in the European Union, which is a bit more advanced than the United States when it comes to environmental policy, specifically renewable energy policy. Germany is one of the best examples as they have been a leading forerunner in the promotion of renewable energy within the last decade.
The top policy change Germany addressed was through subsidies for the renewable energy industry. From 2006 to 2014, Germany’s total subsidies for renewables nearly quadrupled, “from 5.8 billion to roughly 21.4 billion euros” (Bouhringer, Landis, & Reanos, 2017, p. 189). While these subsidies have led to enormous growth in the industry, this has resulted in higher energy surcharges on electricity bills for consumers, which has led to debate on whether or not Germany’s renewable energy policies are economically efficient. In addition to these high surcharges, the EU-wide emissions trading system has caused costs of Germany’s renewable energy to rise. This is due to the issue that subsidies have lead to such a big expansion of renewables that “renewable power production will simply reallocate emissions across these [trading] sectors while the overall compliance cost to the EU-wide emissions cap will rise due to costly CO2 emission abatement from excessive expansion of renewable energies and too little abatement from other (cheaper) mitigation opportunities such as fuel switching from coal to gas or energy efficiency improvements” (Bouhringer, Landis, & Reanos, 2017, p. 190).
However, as policy-induced expansion of renewable energy is relatively new, its economics impacts are not well known, especially in the long run. While arguments have been made that a renewable energy industry can help grow an economy and provide jobs to help sustain larger markets, there have also been arguments saying that the industry cannot sustain itself and may become less profitable in the economy as a whole. One literature review has actually concluded that, while renewable energy may help promote growth and employment in the short-run, sustained reliance on renewables will cause negative economic growth in the long-run (Jaraite, Karimu, & Kazukauskas, 2017, p. 200). This may not be cause for despair for green-energy promoting environmentalists, however, as this study only relied on the data to date from the EU, which has its own rules and regulations separate from the United States and may thus not be a good indicator of what the market within the States would look like.
Additionally, research has been done to try and determine what the best policy-scenario would be in terms of promoting renewable energy (Papapostolou, Karakosta, & Doukas, 2017, pp. 88-109). These findings have proposed three separate ways in which the EU governs its renewable energy development: 1) through individual countrywide policy requirements; 2) through region-wide requirements; and 3) as a national federation policy approach. Each of these categories is then further broken down into overriding policy requirements and voluntary commitment-based requirements and whether one is more effective over another. According to the findings, most CO2 and renewable energy reduction goals were more successfully reached through indicative regional targets in which each region had its own say in how renewable energy plans were created and managed as opposed to having to follow a strict, overriding national requirement (Papapostolou, Karakosta, & Doukas, 2017, pp. 104). Though the United States is not under the same laws and requirements as the EU, it may be helpful in future policy-proposals to just see what worked and did not work for the EU and attempt to translate it into American policy as best we can.
Renewable energy development will continue to remain an obstacle and an issue until the technology can compete with that of conventional energy sources (Schelly, 2015, p. 66). Until we can better develop battery storage in solar panels and more efficiently harness wind power, it is likely that oil and gas will continue to remain our primary sources of energy and drivers of our economy.
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Cuomo, A. (2015). 2015 New York state energy plan. Retrieved November 3, 2017, from https://energyplan.ny.gov/Plans/2015.aspx
Jaraite, J., Karimu, A., & Kazukauskas, A. (2017). Policy-induced expansion of solar and wind power capacity: Economic growth and employment in EU countries. Energy Journal, 38(5), 197-222. Retrieved from Environment Complete database. (Accession No. 124674951)
New York State Office of the Governor. (2017, June 2). Governor Cuomo announces major climate and jobs initiative in partnership with the Worker Institute at Cornell University ILR’s school and climate jobs NY to help create 40,000 clean energy jobs by 2020. Retrieved November 3, 2017, from https://www.governor.ny.gov/news/governor-cuomo-announces-major-climate-and-jobs-initiative-partnership-worker-institute-cornell
Oil Change International. (2017). Fossil fuel subsidies: Overview. Retrieved November 3, 2017, from http://priceofoil.org/fossil-fuel-subsidies/
Papapostolou, A., Karakosta, C., & Doukas, H. (2017). Analysis of policy scenarios for achieving renewable energy sources targets: A fuzzy TOPSIS approach. Energy & Environment, 28(1/2), 88-109. Retrieved from Environment Complete database. (Accession No. 121641110)
Schelly, C. (2015). Frameworks for understanding and promoting solar energy technology development. Resources, 4(1), 55-69. https://doi.org/10.3390/resources4010055
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