Environmental Engineering Reference
In-Depth Information
owning an early mobile phone in the 1980s. Typically, to get their costs
down, energy technologies need to take time refining their manufactur-
ing and testing the marketplace, which allows imitators to get to work.
There are few prizes for being first across the line. As if to underline this
very point, Senator John McCain proposed, as part of his unsuccessful
Republican bid for the White House in 2008, a $300m prize for the inven-
tor of a really strong car battery, one capable of delivering the same or
more power as current batteries at 30 percent of current costs.
Research
This is relatively feeble. Because the status quo in the rich nations is
satisfactory in terms of delivering energy, leaving climate aside, and the
rewards for altering it are slender, little public and private money has gone
into energy research and development.
By the mid-1980s, once the scare of the 1979-80 oil shock had worn
off, both governments and companies in the industrialized oil-consuming
countries virtually ceased investing in energy R&D. Over thirty years,
from 1974 to 2004, energy accounted for only six percent of US federal
R&D spending. This is a trend President Obama is seeking to reverse.
But most industrialized countries spend less than 0.03 percent of GDP on
energy research; only Japan surpasses this, with a still meagre 0.08 percent.
Carbon penalties: the great equalizer?
The best way to level the playing field is a penalty on carbon: either a car-
bon tax, or a price rationing of carbon through tradeable carbon-emission
permits. (Trading is a form of taxation, because the price carbon permits
are traded at effectively constitutes a rate of tax.) The higher the carbon
penalty, the quicker renewables can come on to the energy market. This is
because new technology becomes cheaper through a series of what econo-
mists call learning curves: learning-by-searching, via R&D; learning-by-
doing, via manufacturing; and learning-by-using, via consumer feedback.
These curves (sloping downwards to the right on a typical graph) plot the
way the price of a technology falls over time. The heavier the carbon pen-
alty handicapping fossil fuels, the less the price of renewable technologies
needs to fall to match fossil fuels in the marketplace.
Is this rigging the market in favour of renewables? Absolutely. “None
of this [renewable technology] works except in a rigged market”, says Dr
Alex Buchan, technology director for North Star Equity Investors, a firm
