By: Shay Bahramirad, IEEE Power & Energy Society, 2024 President
As the effects of a changing climate continue to impact nearly every corner of the world, the challenges posed to the world’s electric grids and our respective economies will, as every year passes, become increasingly stark. The tens of billions of dollars in devastation associated with record-high temperatures, let alone extreme weather events such as droughts, wildfires, and hurricanes, are unlikely to dissipate anytime soon. Strengthening the global energy system to mitigate against these climate threats and damages while simultaneously transitioning the global energy system toward the adoption of cleaner and more renewable energy, will further add hundreds of billions to the cost of addressing climate change. The inconvenient truth is that the impact of climate change will not just be on the planet, but on the pocketbook.
As Dr. Michael Spence, a Nobel prize-winning economist, emphasized at a recent fireside chat at IEEE Power and Energy Society’s (PES) Transmission & Distribution Conference, the global climate challenge will compel policymakers to confront “very difficult economic, policy, and societal truths.” For example, “sustained economic health is essential for financing the massive infrastructure investments needed to combat climate change, and this will become increasingly put at risk if, as the International Monetary Fund projects, global growth slows to 2% from the pre-pandemic 3.8%.” Adding to this economic pressure, as Dr. Spence highlighted, is that the world is seeing inflation for the first time in four decades, “interest rates are higher [and] there’s an open question about whether the cost of capital is going to be permanently higher.” The financial burden of addressing climate change will, in much of the world, also fall on utilities who will need to – as we are already witnessing – raise consumer electric bills to pay for massive and long-term capital improvement energy projects
The cost of all these economic and policy pressures cannot be ignored. At a time when societal support for addressing climate change is critical, slowing global economic growth, higher interest rates, and persistent consumer economic pain caused by rising energy bills and chronic inflation risks undermining the very public support that will be critical to fulfilling this multiyear energy transition. The good news, according to a recent IEEE PES survey of U.S adults, is that public support in the U.S. for action and embracing experts, specifically engineers, to build a clean and climate-ready energy future, remains very high. The danger, however, is that the economics of this climate action threaten the necessary scope of actions required to address this existential global threat.
Rethinking the economics of climate change will undoubtedly cause enormous political and policy anxiety. While there are no easy answers, what is not advisable nor sustainable is expecting the average citizen to fund this energy revolution. The signs of a backlash against such a model are already emerging around the world. A new model of financing climate action and the energy grids of the future will need to be considered – a model that lessens the financial burden on the average consumer and alleviates the growing anger towards utilities raising rates, while not jeopardizing the tremendous strides in advancing sustainable solutions. Whether the solution is creating a national or global climate to mitigate or eliminate the financial burden on consumers or some other kind of global financing initiative that spreads climate costs over time, now is the time to have these discussions to ensure the progress being made.
From the development of cutting-edge solar and wind technologies to the optimization of grid systems and energy storage solutions to building transmission lines that must carry this energy to meet growing demand, there is a critical need to discuss how to best socialize the costs of the technological revolution that will help save the planet before the issue of cost impedes the progress this nation and the world needs. And while there may be public consensus now on the need for climate action, there is far less consensus on how best to pay for it. This must change. A global and national discussion, coupled with cross-collaboration among thought leaders, is needed to connect the dots between technological advancements, policy reform, investment, and economic cost. The planet is at a critical point in its fight against climate change. We can ill afford to fail in this challenge because our corporate, policy, and elected leaders chose to ignore the economic boogeyman in the room.
24 Responses
Tge US election of Donald Trump can be seen as a repudiation of responsibility for mitigating greenhouse gas emissions. At the same time extreme weather and climate are showing us that the need for clean renewable energy is unavoidable. Fortunately the low cost of solar PV and electric storage provides a clear path forward.
I won’t bother mentioning that your “extreme weather” comment is counterfactual. (Have you even looked at the weather records? I think not.)
Your final sentence is (deliberately?) ambiguous. The seemingly appositive “low cost of solar PV and electric storage […]” could mean that both photovoltaic cells AND the storage necessary to displace the energy so that it may be used when demand increases are BOTH cheap. This NOT TRUE.
The storage cost (and I have heard estimates that there must be as much as 100% reserve to counter fluctuations in available energy from renewable sources) is SIGNIFICANT. (The cheapest reserve is coal; next is natural gas, which has the added advantage that it may be adjusted to meet specific demand quickly; nuclear energy is also an option but requires significant investment before it generates cost savings over the decades of its long production lifespan.) Don’t forget, every time one converts energy to a different form most of it is lost in waste.
Something that is barely spoken about, the current (lithium) battery technology has a very finite duty cycle. Every recharge reduces to capacity of the battery by a small but not-negligible amount; there are only a finite number of recharges possible (approximately a thousand at present) before the battery is useless. There is no methodology to recycle the lithium to make another battery from a dead one. (Have you noticed the price of a second-hand Tesla? Once the battery is dead the car is a write-off.) Hydropower is an option but dams cost a lot to build. (And they need maintenance to manage silting, for instance.)
Finally, all those PV and turbine components are predominantly built in China. Using fossil fuels. The carbon footprint of these short-lived devices (about 20 years for PV) before they become toxic landfill means that they are barely carbon-neutral.
The doomsday economics you write about, comes from wrongly coupling ‘adaptation to climate change’, with ‘combating climate change’. If we concentrate on adaptation rather than combat, the cost will be manageable. You cannot successfully fight cubic miles of volcanic ash by putting diesel exhaust fluid in car/truck mufflers. So many other efforts under the rubric of fighting climate change are similarly futile. We should approach climate change as an opportunity for advancement of technology, not as a challenge to be obstructed. Move your house back from the rising ocean; you have half a century to do that. Let electric vehicles penetrate the market as people see their advantages (or disadvantages) and act accordingly; do not bribe people to go EV by government mandates. We are not at war with nature, as we have already lost. Just adapt to climate change, and place your efforts on other things.
Adaptation to climate change is a short sighted solution and aimed at saving the day. It is putting the burden of combating climate change on our grandchildren and future generations when the effects will be much worse and much more difficult to cope with. Let us not think of adaptation only as humans adapting to 2C or even 3C degree of higher temperature. It involves food shortages, extinctions of many forms of plant and animal life, new forms of viruses and disease vectors, mass migrations etc. Also let us not confuse natural disasters like volcano eruptions -unpredictable and unavoidable- with human induced disasters, predictable and avoidable.
Thanks for a home run comment. Climates always change but we must adapt to it.
We are wasting time and $.
Well, that’s a pretty soft commentary. It doesn’t take much reading between the lines to recognize that the suggested rethinking of climate economics to reduce consumer burdens means reductions in profits and their distribution inequalities. “will cause enormous political and economic anxiety” indeed.
Rethinking inflation is a necessity, as well. It’s critical to understand that a growth rate less than inflation is recession. The current inflation target of 2% is mathematically equal to a loss of 20% in the value of the dollar every ten years. Calling this “price stability” is a remarkable slippage of meaning. However, it fosters an illusion of rising incomes and wealth that is apparently tolerable to many experts as the price of avoiding greater catastrophes. How Japan and Switzerland survived with 0% interest rates is not to be investigated.
The obvious source of funds should be the fossil fuel companies who for many decades made obscene profits and left a degraded local environment (strip mining for coal, fracking for gas, refineries for oil). And for at least 3 decades they knew they were contributing to the carbon emissions leading to climate change. The multinational fossil fuel industries and their stock holders made trillions in profits. They should be obligated by law to finance how to address the worst impacts of their business.
The fuel companies made the fuel, we burned it. The fuel companies are no more or less evil than we are. Pointing fingers divides, division precludes concensus, a lack of concensus spawns inaction. It’s a downward spiral that only we as individuals can stop.
It does not make sense to financially punish an industry that we will need to develop the technologies that are required to progress climate change.
Please define “obscene profits” in a free economy
As usual the boogey man is the oil companies who have been providing what we all demanded they supply- a constant and dependable supply of energy.
Few realise that the link between atmospheric carbon and temperature is that notch at 15 microns, in the Earth’s emissions spectrum. Increasing carbon will widen it very slightly, but the logarithmic relation is falling off. The disadvantages of the 0.2 C per decade are likely to be more than offset by the advantage to photosynthesis and agricultural yield.
Increases in cyclone and tornadoes are just as likely to be caused by the injection of vorticity into the atmosphere, by wind turbines all turning in unison in the same direction. Any possible risk could be removed by requiring pairs of turbines to turn in opposing directions.
Cost?
What is that?…. accounting.
What’s the cost of failure?
We aren’t spending enough.
There was climate change before our use of fossil fuels and there will be climate change in the absence of fossil fuel use. The historic benefits of using fossil fuels far outweigh the purely hypothetical impact of fossil fuel use on climate. Does anyone really believe we can measure an average 1.5C world temperature change between 1850 and 2100? Technology can economically keep up with adaption to climate change if resources are not wasted trying to control Mother Nature. Climate change, AI and cryptocurrency are all competing for large quantities of energy needed for world wide growth and prosperity. IEEE should be more active in informing the public about the true consequences of eliminating the use of fossil fuels.
Most experts agree we need nuclear to fill the gap. But who wants to build a new plant when a $500M one in the 1970s costs $30B today? The NRC needs to streamline its permitting process, and lawyers (who for many decades made obscene profits and caused utility bankruptcies) need to reduce the number of lawsuits against utilities so construction costs are reasonable.
I agree with Mr. Bristol.
I also believe we need nuclear to fill the gap. What we need is baseline power, not more wind and solar that goes dark when the wind quits blowing and sun stops shining. We need to simplify and streamline the NRC’s permitting process. We don’t need more batteries (to store wind and solar energy) for which we don’t have the raw materials and which take much energy (likely from more hydrocarbon) to make. We need to build nuclear power plants beside the aging coal, oil and gas plants we want to (now or eventually) shut down, to the maximum extent possible, so that we don’t have to re-permit and re-build transmission lines (like we are having to do for wind and solar). We need to get on with it and make fusion power a commercially viable reality (it’s been pitched as “doable” in another 30 years for 50 years now). We need to use natural gas as a bridging fuel. We need to encourage hybrids and plug-in hybrids, instead of full EVs, to make further near-term improvements in emissions (without these huge government subsidies). We need to tell the AI developers they need to fund their own power plants (or upgrades), ala Microsoft in at least a couple instances I have heard of, so that we rate payers don’t have to bear the higher electric utility bills. Maybe some of these approaches will reduce the costs? Just a few thoughts…
This in my opinion what Psychologists would label “a cry for help”. A wide spectrum of people ranging from politicians, entrepreneurs looking to get rich quick (“a crisis is a terrible thing to waste”), and executives of corporations established in different facets of energy production and use, to scientists and engineers; have differing opinions about how to solve statements of the climate problem (or if there is a need to do anything).
The IEEE membership will be affected by whatever consensus emerges, but a reasonable statement of the problem and of a long term credible and affordable approach to dealing with it is needed. The IEEE community is being asked for comments, which it is probably hoped, will help the leadership to frame the debate and present credible paths to better defining the climate problem (to allow working scientists and engineers to apply their insights and experience) and the economic impacts of proposed solutions.
The real question is: Is this monumental effort really necessary? The exponential human use of energy and the inevitable generation of huge amounts of “waste heat” (almost never mentioned) must be dealt with first or they will overtake programs likely to be acceptable to the public.
“The dogmas of the quiet past are inadequate to the stormy present” A. Lincoln (so also for models)
I fully concur with Roger Boyell’s comments. It seems to me that climate change predictions are exaggerated, due to worthless climatology modeling, and their potential impacts on society are highly exaggerated. Furthermore, even the most draconian measures to try to combat climate change would be totally futile. The challenges we really need to address are 1) increasing capacity and reliability to meet current and future demands; 2) vulnerability to EMP attacks, terrorist attacks, solar storms. It is irresponsible to fixate on “climate change” while largely ignoring the real problems and threats.
“The signs of a backlash against such a model are already emerging around the world.”
Notably in the comment section of this article! It is disappointing that some IEEE members are denying the realities of the effects of climate change, but they are right that the mitigation strategies could be improved. The idea that governments should fund the transitions is never the most effective route, much better to let the market develop and promote the technologies. My economics teacher taught that the role of government in the economy is to balance the actual costs of production with the social costs, ensuring that producers can’t rob or foul the commons without paying the costs. Now that we know the social cost of carbon, it is the role of government to ensure producers and users of fossil fuels be taxed to balance those costs. This will undoubtably cause some near-term pain, but the alternative is a great deal of future pain.
“Now that we know the social cost of carbon”
But we don’t like paying the cost of our actions on others, so we convince ourselves that we don’t really know the costs and maybe they’re near zero. Maybe climate scientists have it all. Even if you have no expertise in climatology, you can start with what you really wish were true and look for any signs that the experts have it all wrong.
Many of the technologies that reduce carbon dioxide emissions are investments with a positive return. Solar panels with a 25 year lifetime pay back the cost to purchase and install them in 10 years or less. An electric car that costs 20% more to purchase, with batteries that last only the length of an 8 year warranty, returns the cost difference in half that many years due to lower fuel and maintenance costs. An electric heat pump hot water heater returns its additional cost in less than half its projected lifetime.
Looking solely at the cost of emission mitigating technologies is misleading.
A global and national discussion, coupled with cross-collaboration among thought leaders…. There is no such thing as a global and national discussion, only elites and so-called experts who represent their own interests while attending international conferences. People are for mitigating climate change as long as they don’t have to pay any premium and their is no diminishing of their standard of living.
From my reading of the literature we have not gotten past first base – showing that human activitiy is warming the planet. Especially in light of the fact that there have warmups in the past – well before modern (Industrial Revolution) times. We have eliminated or reduced many bona fide pollutants (oxides of nitrogen, sulphur dioxide) and the current press to eliminate carbon dioxide is amusing to me as there is much more “greenhouse effect” from water vapour. As a side note the use of the term “Fossil Fuels” is bad. There are many who look at the “abiogenic” theory which says these fuels are being created today. The proponents of carbon reduction (especially the IPCC) seem hell bent on killing any progress at all – no “fossil”, no nuclear, no hydro, no, no, NO! – except for solar and wind. If you want to have some fun read some of the papers put out by the IPCC – many of them are redistrbutionist claptrap. Also why do their models rarely correctly predict anything? They seem to be always wrong.
Dr. Dr. Shay Bahramirad,
This article is truly a jewel, willing to take all the dissension and potential ridicules liberal global-warming disastrous-climate-change people are so willing to throw at by pointing out the other dark side of the coin of renewal energy. Without any doubt, it is so easy to go along with global warming, climate change, and its predicted doom and groom on the future of humanity. I truly admire your courage and superb technical expertise in standing up and going against the flow. I would like to add my perspective on the subject in addition to the flawless thesis you put forward, the economic impact.
1. Throughout the evolution of lifeforms on the earth over billion years, global cooling is all the time epoch-ending causes, not global warming. Historical records show it conclusively.
2. Higher carbon dioxide concentration and warmer-than-present and predicted global temperature existed hundred million years ago were far more compatible with lifeforms on the earth than glacial periods.
3. Renewal energy does not have and should not have significant impact on the gradual increase of the earth’s global temperature. The sun provides energy to the earth. The earth dissipates or radiates the received energy to space. A higher global temperature due to the increased carbon dioxide concentration increases radiation to space, moderating its rise.
PS. The photo is of Michael Spence, not yours. Is his photo what you wanted?