A new battery is rarely greeted with as much excitement as the latest
smartphone or a new drug. The energy industry is widely perceived as
sluggish, a provider of basic services and lacking creativity. In fact, a
brighter reality is emerging — government support for energy-technology
development is paying off.
Public policies to encourage the development and adoption of
renewable-energy technologies are essential, because low-carbon
performance is not visible to most consumers and carbon is not priced in
the global market. Yet there is a widespread lack of confidence in
public-sector efforts to spur innovation, as a result of the mixed
record of governments in picking winners and losers among technologies.
Some
governments are considering reducing their support for renewable-energy
projects. The future of the US tax credit for new wind energy is
uncertain; the United Kingdom is debating scaling down subsidies for
some renewables and relaxing its targets for carbon-emissions
reductions, and Spain has abandoned its incentives programme and
electricity-price commitments for renewable-energy power plants. The
countries of the European Union disagree on a common binding target for
the adoption of renewable energy by 2030.
But
now is not the time to cut government support for renewables. Each day
that we delay implementing low-carbon energy technologies we increase
the likelihood of damage from climate change — from storms and floods to
forest fires.
The response of the global
energy industry to even modest policy interventions has been remarkable.
Led by China, Europe, the United States and Japan, the
alternative-energy sector is booming worldwide.
Solar and wind technologies have improved most rapidly in the past
three decades, with photovoltaics a hundred times cheaper today than in
1975.
Rapid innovation
The speed of
energy-technology innovation is only just coming to light as long-term
data sets become available. My analyses of 30 or more years of data
show that the costs of renewable-energy technologies have fallen
steeply. Photovoltaic module costs have plunged by about 10% per year
over the past 30 years and the costs of wind turbines have fallen by
roughly 5% per year. Production levels for both technologies have risen
by about 30% per year on average.
The
technical advances responsible have been driven by public policies and
industry's responses to them. Governments spend a relatively modest
amount on renewable-energy research, roughly US$5 billion per year
globally, which is less than one-tenth the amount allocated to health
research. But government incentives are essential for market growth;
they drive private-sector investments in clean-energy technologies of
about $250 billion per year globally.
Despite
this success, lawmakers in many countries are questioning public support
for clean energy. Some in the United States are urging that such
support should be limited to funding basic research and development in
universities and government labs. They cite the recent failure of a few
prominent energy companies, such as Solyndra, which received government
grants or loans in their early days. Critics forget that game-changing
technologies are high-risk ventures; some failures are inevitable.
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