Martin Wolf makes what I think is a really bad argument in the Financial Times:
We live in a positive-sum world economy and have done so for about two centuries. This, I believe, is why democracy has become a political norm, empires have largely vanished, legal slavery and serfdom have disappeared and measures of well-being have risen almost everywhere. What then do I mean by a positive-sum economy? It is one in which everybody can become better off. It is one in which real incomes per head are able to rise indefinitely …
This is why climate change and energy security are such geopolitically significant issues. For if there are limits to emissions, there may also be limits to growth. But if there are indeed limits to growth, the political underpinnings of our world fall apart. Intense distributional conflicts must then re-emerge — indeed, they are already emerging — within and among countries.
There are two mistakes here: one is framing the fossil-fuel driven economy as a world without limits — the reality is there is no positive-sum game when you live off of oil and coal. You are, in fact, a double plunderer: you’re robbing from the finite bounty of the past (the immense stores of fossilized solar energy weren’t put there for us to use, really) and you’re robbing from the future by making sure your children’s climate will be dirtier and more erratic than your own.
Wolf makes the mistake of the bacterium at noon on Monday: thinking that if the petri dish is empty, then the size of the vessel doesn’t matter. Except, by close to noon on Wednesday, the size of the petri dish matters quite a bit. If there are limits to fossil fuel use — whether imposed by physical limits or political ones — then the best bet is to avoid fossil fuels altogether.
Having assumed that the fossil-fuel economy is one "without limits", Wolf then assumes that the methods to solve our current crisis will be ones that impose limits on an unbounded system, when the reverse is true: unlike coal and oil, renewable energy actually is positive-sum: the “wells” from which wind, solar, and other forms of green energy can be drawn are immense and essentially bottomless: everyone at Grist knows that enough solar energy hits the Earth in 40 minutes to power the world for a year, right?
Gregory Clark, economist at UC-Berkeley, makes this point rather well:
If we had no fossil energy, then we would be forced to rely on an essentially unlimited amount of solar power, available at five times current energy costs. With energy five times as expensive as at present we would take a substantial hit to incomes. Our living standard would decline by about 11 percent….
Our income would still be above the current living standards in Canada, Sweden or England. Oh, the suffering humanity! At current rates of economic growth we would gain back the income losses from having to convert to solar power in less than six years. And then onward on our march to ever greater prosperity.
Speaking as someone who lives in the poor, backward, benighted country of Canada, I can only implore Americans to not make the mistake of completely converting your economy to solar energy and thus reduce yourselves to our level of poverty! Why, we can only afford slightly better health care than yourselves, and provide it to all of our citizens for half the cost! And our poor, sclerotic economy only provides substantially better income mobility, allowing the poor in Canada to eventually become richer than they would be if they’d been born in the US! Whatever you do, America, don’t become more like Canada!
Okay, sarcasm off now. The point is that while energy extraction, transformation, and consumption make up a huge absolute chunk of economic activity, the cost of energy to the individual is so low that it could be doubled or tripled — or yes, quintupled — and the temporary, one-time economic hurt would be trivial. To use Clark’s example, the misery and poverty caused by America’s transition to solar energy would still leave America the richest country in the world. Indeed, given the powers of the US government (progressive taxation, subsidies, etc.) you could potentially engineer a transition that posed even less economic hurt to the poor.
And all this assumes that a transition to solar energy needs to be more expensive than the alternatives, an assumption that is increasingly unrealistic: Dave noted the great news about Nanosolar, HelioVolt, and Ausra, all of which promise electricity costs comparable to current prices. To add to that, we have this article from Scientific American about how solar, wind, energy storage, and high-voltage direct current transmission work together to provide almost 70% US electricity by 2050 — at prices equal to current ones. And just so it’s clear, this model includes a growth factor, assuming that energy consumption increases 1% per year. The investment cost? $420 billion, or about 45% of what the US spent on all its defense obligations in 2006.
The idea that a world based around solar energy and other renewables needs to be one of scarcity or material poverty is an idea long passed its time. That is, Martin Wolf is as wrong as you can be and still be allowed a column in the Financial Times: the green future is one where we escape the limits of the fossil-fuel economy, not where we impose new limits. And we clearly have no need for coal, oil, or the rest of the fossil-fuel economy: shoot it, bury it, and if it comes back cut its head off to be sure.
