Image credit: Canadian Solar
by Joseph Ingram, CGAI Fellow, and Bernard Schutz
June 2023
Table of Contents
- Introduction
- How Cheap Clean Energy Can Power Rapid Decarbonization
- A Brighter Future Is Possible
- End Notes
- About the Authors
- Canadian Global Affairs Institute
Introduction
The most recent report by the UN International Panel on Climate Change (IPCC) is frighteningly clear: the fight against global warming is going so slowly that the world faces potentially devastating social and political consequences as early as 2050 – or sooner. To avoid this catastrophe, we need to significantly accelerate a full conversion to clean energy sources by the 2030s. Pushing the price of solar electricity down dramatically by a factor of 10 in the next 10 years would allow us to make this transition in a timely and cost-efficient way.
Unfortunately, few in the world of public climate policy seem to be seriously considering this approach yet, probably because current expectations are more modest: solar prices going down by factors of two or three within 10 years. Though this would be welcome, the world would still fall well short of the targets recommended by the IPCC, which emphasizes the imperative of dramatically faster decarbonization. To get to that factor of 10, government funding for research into new and cheaper photovoltaic (PV) solutions must be reconfigured to prioritize speed rather than the standard research funding methods that prioritize efficiency so as not to waste money. We need therefore to finance new PV solutions as we did new vaccines at the start of the recent pandemic: funding good ideas even if some don’t work out. We need those that do, and we need them quickly.
We single out PV technology because we believe it is the most amenable to such a rapid change. Some green technologies, like nuclear and fusion, have multi-decade time scales, even just for building new plants. Geothermal could be a good substitute in the limited regions where it can be exploited, but it can’t scale up to global needs. Wind energy is a big component of green electricity provision, but its costs are dominated by the manufacture of well-understood mechanical components, while PV is a solid-state technology closely related to other technologies which are steadily dropping in price, like computer chips and display screens. A drop in the price of any of these would be most welcome, but we believe that laboratory R&D could achieve a PV revolution.
We need such a revolution, since despite the scientific evidence and the declared government commitments and targets, the domestic policies of the world’s largest countries have not yet even begun to reduce global emissions of greenhouse gases (GHGs), let alone push them close to zero. If governments continue to pursue such short-sighted policies, disastrous environmental conditions, which we are now witnessing with increasing frequency, will force them into last-minute responses requiring big mitigation expenditures, major subsidies for clean industries and energy and unpopular taxes and regulation. Focusing sharply now on lowering the price of clean energy can, however, allow us to avoid much of the financial cost and social disruption.
How Cheap Clean Energy Can Power Rapid Decarbonization
Clean energy doesn’t just light houses and power cars. It is essential for what we call the new climate industries which include, inter alia, generating clean hydrogen, desalinating sea water for irrigation and domestic and industrial use and removing carbon from the air. These industries are crucial for reducing GHGs and smoothing the energy transition, and they are all energy intensive, with their products’ prices dominated by the cost of the electricity they use. Clean energy is also essential in helping people cope with higher temperatures, especially for easing the growing desperation of the world’s poorest people, many of whom will be forced to migrate as the only way to survive.
At today’s energy prices, or even if they fell by half, implementing the IPCC’s recommendations quickly enough will be expensive for citizens and governments alike. Clean electricity grids (from solar, wind, tidal, geothermal or other sources) will have to be built faster than the market would normally allow, because it will mean abandoning usable fossil-fuel installations. This would require either subsidies to grid providers or higher consumer electricity prices. Moreover, achieving clean grids does not deal with other important GHG sources: ocean shipping burns cheap and dirty oil; air travel cannot abandon kerosene quickly without compromising safety; electrifying haulage is not possible with current batteries; steel manufacturing and many other industries that use carbon have no economical alternatives. Moreover, to cope with drought and the depletion of underground freshwater sources, widespread use of desalination will be inevitable. Yet it too is prohibitively expensive at today’s energy prices and is another area where subsidies and/or regulations that lead to high prices would be needed; again, politically unpopular.
Quickly lowering the energy price by a factor of 10, however, would completely change this. With a low electricity price, market forces would induce energy providers to switch out of fossil fuels. Hydrogen energy could become cheaper than fossil-fuel energy, allowing truck transport and ships to go green without raising prices. Steel manufacturers would save money by switching to cleaner alternative processes that require more electricity. Air travel could become carbon neutral economically by using kerosene fuel made from carbon dioxide captured from the air. Air carbon capture and sequestration could help other industries go carbon neutral while directly reducing the level of GHGs in the atmosphere. Desalinated water could save farming in regions as disparate as southern California and Africa. By targeting relatively modest R&D investments into cheap PV today, governments would avoid much bigger subsidies and difficult regulatory decisions tomorrow.
A Brighter Future Is Possible
The light reaching our planet from the sun contains immensely more clean energy than we require. The cost of solar electricity is determined primarily by the materials cost, manufacturing cost, efficiency and lifetime of the PV cells. These determining factors must change. Moreover, dropping the price of the electricity coming from PV by a factor of 10 is not as radical as it might sound. Indeed, its price has already dropped by a factor of 10 in the last 10 years.
The problem inhibiting the continuing fall is part technology and part economics. The 10-fold fall in the price of PV electricity in the last decade has spurred the present, albeit slow conversion to clean electricity grids. But the price of PV is now levelling off as the technology of these first-generation silicon PV cells reaches maturity. The U.S. Department of Energy aims to drop the price of PV by a further factor of two by 2030 – far short of what would be needed to power the new climate industries. Green hydrogen or desalinated water are little used today because their input electricity prices are too high, and this is not going to change with just a factor of two. A much more ambitious price goal is needed for PV if it is going to enable the commercialization of these and other climate industries.
The good news is that engineers and scientists have plenty of ideas for both current silicon technology and for second-generation PV cells, which are made of new materials, some of which have the potential to be much cheaper when manufactured at scale.1 The bad news is that these are far from reaching the market and aren’t likely to become available within 10 years unless governments actively target and finance these goals. Though governments do provide research support for such projects, they do so only within the cautious R&D framework which expects that good ideas will eventually become visible to venture capitalists who will gradually take the best ones into production. This is fine if we are prepared to wait another 20-30 years for second-generation PV, which is a typical high-tech generation time scale. Think about the replacement time scales of vacuum-tube TVs by flat screens, or tungsten light bulbs by LEDs. But the most recent IPCC report is frank. To avoid disastrous planetary consequences, energy sources must change much more quickly.
Governments therefore need to work with the private sector in an emergency framework that would expedite the normal bureaucratic process for R&D. They need to proactively seek out promising technological ideas and fund them quickly and generously – including by redirecting existing federal subsidies to the fossil fuel producers – and monitoring them regularly to judge their likelihood of success. When an idea shows real progress, governments then need to work with private funders to build the idea’s industrial applications, while continuing to provide support until the technology is ready for the private sector to commercialize.
There are of course many carbon-reducing technologies that still need to be made more cost-efficient, and current climate-change investment programs in most countries already address a broad spectrum of them. But clean electricity is special because it is a significant cost driver and enabler for all. A 2021 report on green hydrogen concluded that, “The largest single cost component for on-site production of green hydrogen is the cost of the renewable electricity …” Reducing the energy cost not only directly reduces the price of the hydrogen, but it also makes it more cost effective for manufacturers to reduce other costs (in the case of hydrogen, the electrolyser cost) that previously were not as important as the electricity, since this will have a proportionately larger effect than before on the hydrogen price and therefore on the potential sales.
Though some may feel that aiming to change PV technology so dramatically is overly ambitious, this strategy isn’t unprecedented. It is John F. Kennedy’s moon-shot approach which the U.S. used in the 1960s to win the race to the moon. It is how China managed to drop the price of first-generation silicon PV by that factor of 10 within 10 years, producing its current monopoly on PV. It is the strategy that governments have typically adopted in wartime when needing new armaments, and recently when confronting the pandemic emergency. We in Canada, through action rather than rhetoric, must treat global warming as the emergency the IPCC tells us it is.
Investing now in the rapid production of cheap green energy is not only imperative, but also sensible, prudent and cost effective for any country, and it would allow the market itself to propel us in the direction the IPCC report says we must go. Working intensively now to achieve a 10-fold reduction within 10 years is a practical strategy to enable a host of new, clean, climate industries to operate economically and efficiently. This would give Canadians the best chance to avert the catastrophic consequences the planet now faces, while creating the basis for increased productivity and economic growth, both in the medium and longer term.
End Notes
1 A. S. R. Bati et al., “Next-generation Applications for Integrated Perovskite Solar Cells,” Commun Mater 4, 2, 2023, https://doi.org/10.1038/s43246-022-00325-4. Also: W. Lowrie et al., “Organic Photovoltaics: The Current Challenges,” J. Chem. Phys. 158, 110901, 2023, https://doi.org/10.1063/5.0139457.
About the Authors
Joseph Ingram is a Fellow of the Canadian Global Affairs Institute, an expert advisor to the Growth Dialogue, a former president of the North-South Institute and a former World Bank special representative to the United Nations and the World Trade Organization.
Bernard Schutz is a professor of physics and astronomy at Cardiff University, a Fellow of the Royal Society, a member of the U.S. National Academy of Sciences and a retired director of the Max Planck Institute for Gravitational Physics (Albert Einstein Institute) in Germany.
Canadian Global Affairs Institute
The Canadian Global Affairs Institute focuses on the entire range of Canada’s international relations in all its forms including trade investment and international capacity building. Successor to the Canadian Defence and Foreign Affairs Institute (CDFAI, which was established in 2001), the Institute works to inform Canadians about the importance of having a respected and influential voice in those parts of the globe where Canada has significant interests due to trade and investment, origins of Canada’s population, geographic security (and especially security of North America in conjunction with the United States), social development, or the peace and freedom of allied nations. The Institute aims to demonstrate to Canadians the importance of comprehensive foreign, defence and trade policies which both express our values and represent our interests.
The Institute was created to bridge the gap between what Canadians need to know about Canadian international activities and what they do know. Historically Canadians have tended to look abroad out of a search for markets because Canada depends heavily on foreign trade. In the modern post-Cold War world, however, global security and stability have become the bedrocks of global commerce and the free movement of people, goods and ideas across international boundaries. Canada has striven to open the world since the 1930s and was a driving factor behind the adoption of the main structures which underpin globalization such as the International Monetary Fund, the World Bank, the World Trade Organization and emerging free trade networks connecting dozens of international economies. The Canadian Global Affairs Institute recognizes Canada’s contribution to a globalized world and aims to inform Canadians about Canada’s role in that process and the connection between globalization and security.
In all its activities the Institute is a charitable, non-partisan, non-advocacy organization that provides a platform for a variety of viewpoints. It is supported financially by the contributions of individuals, foundations, and corporations. Conclusions or opinions expressed in Institute publications and programs are those of the author(s) and do not necessarily reflect the views of Institute staff, fellows, directors, advisors or any individuals or organizations that provide financial support to, or collaborate with, the Institute.
Showing 1 reaction
Sign in with