The European Union has embarked upon the discovery of new tools and technologies for determining progress, wealth and growth in nations. Current measurement of GDP alone is highly focused upon economic factors. However, as most energy producers and energy efficiency industries know, environmental factors and non-economic indicators are considerable contributors toward progress and growth.
The idea is not new, many people have thought about this for quite some time. However, bringing it to action has been a sticking point that has avoided the pursuit of this information more diligently and the development of tools and technologies for assessing efficiency and progress.
The so called ‘new approach‘ has direct implications for many energy producers and energy products, since, they can be further assessed for non-tangible contributions to society, some of which, are often over-looked.
The process of developing energy includes the development of technologies and processes throughout the planning stages that contribute toward an understanding of regional water tables, climates, geology, distribution factors and a host of other information. Some of this information is held in a proprietary sense, however, cases can be made for the contributions of certain types of energy related information to regional policy and understanding. Many of these avenues have not often been explored, but identify valuable contributions toward wider regional development and policy making.
There are a slew of government incentives to subsidize renewable energy development. These incentives go a long way toward making the investment in renewable energy a practical choice. It can be hard to justify an investment when the math might indicate a 10 to 20 year timeline to receive a return on that investment, but incentives drive those return times down with a more practical ‘big picture’ perspective.
The savings from renewable energy include environmental costs, security costs and economic costs. However, in a down economy it’s tough to pull together funds for capital improvements that have long-term returns, especially when the costs for traditional fossil fuel energy sources are low due to complex market forces. Governments have a big role to play toward encouraging capital expenditure on renewables that factor in the long-term benefits that make these choices very beneficial for our global sustainability.
Aggressive Targets
There are increasingly high targets for percentage of renewable energy being passed into law on both federal and regional levels. The government of Australia just passed a target of 20% contribution to electricity production from renewables by 2020, which matches the aggressive goal set by the European Union. The United States doesn’t have a federal mandate, but many states have a goal of 15 to 20 percent renewable energy by 2020.
These aggressive goals create a considerable market for renewable energy action that likely wouldn’t have come about without established targets. The targets provide a sense of urgency and mandate movements from energy providers and large energy consumers.
Taxes Now and Future
Several local entities waive the sales tax on any solar hardware sales for home-based systems. Savings of three to six percent can add up considerably when a whole-home system cost reaches into the tens of thousands of doallars. Similarly, for utility-scale plants the value of the plants are often assessed at a much lower level of property tax than comparable traditional energy plants.
Carbon tax and trade is a growing possibility for power companies and large energy consumers. The incentive to make renewable energy choices now, in order to avoid carbon taxes in the future, is growing. Where carbon cap and trade schemes already exist, there are increasing incentives for companies to drive down their emissions in order to sell their credits for polluting less. Here, the threat of future taxes on emissions provides a powerful incentive for large greenhouse gas emitters to make a change.
Loans, Grants and Rebates
The use of loans, grants and rebates provide a means to incentivize the installation of renewable energy in homes and businesses. There are a great number of creative solutions that have been devised in order to make these investments attainable and practical for all income levels and business sizes.
There’s a growing movement for the creation of third party leasing agents that cover the full cost of the installation of solar panels on a home, and then charge the homeowner a monthly fee to recoup the install cost. The homeowner gets to use the energy generated by the new system, which draws down their utility bill, and they gradually pay off the capital improvement cost of the new system. Here, the monthly bill can equal the cost of the savings, so it provides a good incentive to help quickly proliferate these systems.
Several municipalities have set up special renewable energy grant programs that help to fund the installation of solar water heaters and photovoltaicarrays for low-income or nonprofit entities. The funding mechanism for these grants are often the taxes that would have been collected from their sale and use. Instead of going into the general tax coffers, these funds are instead funneled into a program fund to be disbursed.
One of the most typical incentives provided by power companies is a rebate program that reimburses the homeowner for grid-connected utility installations. The power companies are often saddled with deadlines to meet a specific target of renewable energy generation, and the cost of creating plants is far more expensive than getting homeowners to install their own systems. The power company gains an ally by providing guidance through the installation process, reimbursing the homeowner after the system is online and performing to a set standard.
Through renewable energy quotas, tax credits, rebates and other incentives, the government is going a long way in spurring renewable energy investments for long term benefits for all.
The European Commission has adopted ecodesign regulations that are expected to save the equivalent amount energy that Sweden and Austria together produce. The regulations are also expected to contribute significantly to employment as innovation will result in new jobs.
From the EU – “The European Commission adopted today four ecodesign regulations 1 to improve the energy efficiency of industrial motors, circulators, televisions, refrigerators and freezers. The regulations lay down energy efficiency requirements which will save about 190 TWh per year by 2020, which is comparable to the combined annual electricity consumption of Sweden and Austria.”
With the global recession currently gripping us, there’s a constriction of available funds to invest in clean technology. While governments are spurring an unprecedented level of interest and investment in cleaner energy, there’s also a growing backlash that questions whether now is the time to make these investments. If we simply look at energy costs traditionally, then this expense can easily be questioned. But the enlightened view, in this era of global change, factors in the connections between energy and environment.
In order to look at energy from a sustainability perspective, it’s important to factor in the social and environmental impacts of our energy decisions, in addition to their economic benefits — the so-called “triple bottom line”. Environmentalists have long complained that the true cost of energy aren’t being calculated, because the costs of environmental damage are typically absorbed at a later date by the people rather than providers. The health consequences of our energy choices are also becoming more apparent, particularly in the United States where health costs are on par with energy costs in terms of their ability to disrupt our economy.
Environmental Costs
Damages to the environment are traditionally ignored on our balance sheets, because they don’t represent an immediate expenditure. However, if we look at the long term accumulating impacts, and the cost to clean up our environment, these costs over time are significant. There’s a tangible cost to cleaning up soil and water pollution, but some of the other costs are harder to quantify.
It’s difficult to calculate the loss of productive forests and fisheries, but the long-term harm when these resources go away can be devastating. There are certainly tangible economic values of the resources, and there’s also a value to the jobs and economies that revolve around sustainable resources. Fisheries in New England, the Chesapeake Bay and now in the Pacific Northwest provide the starkest reminder of our reliance on an abundant and sustainable natural resource, for many towns have shriveled up when the resource is no longer available.
The growing threat of climate change could provide an overwhelming connection regarding the delicate balance between energy, environment and economy. The threat of sea level rise is perhaps the greatest danger, with much of the coastline of the world potentially under water should our ice caps continue to melt at a rapid pace.
Health Costs
There is growing evidence that the health care costs of energy are on the rise. Fossil fuels are responsible for air pollution and a rise in respiratory problems. Oil spills have an immediate impact on wildlife and can have long-term impacts on our soil and drinking water. The U.S. Environmental Protection Agency just made a strong proclamation when they recently declared that fossil fuel emissions are a public health threat.
The direct connection between fossil fuels and climate were part of this declaration, with effects on health said to include more droughts, more extreme and more frequent heat waves, more intense storms, rising sea levels and harm to water resources, agriculture, and plants and animals in the wild. The EPA noted that the very young, the elderly and those in poor health could stand to suffer the most harm.
Security Costs
Protecting our nation’s access to fuel supplies in the politically unstable Middle East has the U.S. currently involved in two simultaneous costly wars. The U.S. sends hundreds of millions of dollars each day to the Middle East due to dependence on foreign oil, and that adds up to more than a $100 billion each year. These dollars are going to the OPEC countries that are largely dictatorships that are politically hostile to us.
The American military understands this direct connection between fossil fuel dependence and security. Not only does the American economy depend on exporters with potentially unstable governments, but the U.S. military is highly dependent on oil for their operations. In fact, the pU.S. military is the world’s largest single consumer of oil.
Given this dependence, many branches of the military are exploring and investing in renewable energy to power their bases. The movement of oil during a conflict is one of the military’s most vulnerable supply chain issues, so there’s also research underway to look into biofuels and other means of generating a secure and locally produced fuel source.
A cleaner and cheaper future presents itself when we look toward the development of renewable energy that is produced close to where it is consumed. Solar, hydro, wind, geothermal and biomass each provide viable alternatives to fossil fuel energy sources, and they largely come without environmental, health or security costs. It’s refreshing to see a growing new energy movement underway, and let’s be clear about the costs of the alternatives, so that we can achieve a new energy economy as quickly as possible.
Resources
Cost Works Against Alternative and Renewable Energy Sources in Time of Recession, by Matthew L. Wald, New York Times, March 28, 2009
The True Cost of Oil: $65 Trillion a Year?, by Chris Nelder, Energy & Capital, June 29, 2007
Shai Agassi gave the following talk at TED this year about our need to move toward electric cars. In this talk Agassi explains that it is much cheaper to move toward electric vehicles than to continue dependence on foreign oil.
Thomas L. Friedman writes another one of his provocative editorials. This time, he cautions the Obama administration about the message around carbon cap and trade, seeing that this is quickly being twisted into another tax that we can ill afford. He instead suggests that the message must be about Energy Technology and our need as a country to innovate for energy security, national security, economic security and global respect.
Read the full post here.
Current economic conditions have resulted in a slowing of investment into energy related projects, both non-renewable and renewable. On the clean energy side, about 50% of institutional investor’s in a recent survey, as reported by Reuter’s, are awaiting to invest – continuing growth in these technologies is expected.
With an estimated 1 Trillion USD sitting on the sidelines, held by these investor’s, it is expected that funds would quickly find their way into investments once the economic situation begins to improve. These investments may also occur rapidly. Part of reason for this increase to rise rapidly will be the result of lowering prices for these technologies, since, solar voltaics, as an example, are currently well in over abundance.
Barack Obama placed a good deal of emphasis on energy and the environment in his inauguration speech. These words are backed by an agenda that can be viewed on White House website. The emphasis is on clean energy and a break from our dependence on foreign oil, with the audacious goal of eliminating oil from the Middle East and Venezuela within 10 years.
