Another perspective on the economic viability of alternative energy

[GliderGuider]

Here, for your delectation, is an excerpt on the economics of alternative energy from an article by the peripherally eminent Charles Eisenstein:

Peak Oil, Peak Debt, and the Concentration of Power

Sunlight, wind, conservation, geothermal energy, and more controversial technologies like cold fusion, Bedini/Bearden devices, and so forth share an important characteristic in common. Their energy source is more or less ubiquitous, so that users needn't be dependent on an ongoing supply of scarce fuel. They are, in an important sense, abundant. This feature puts them at odds with our money system, which depends on the creation and maintenance of scarcity. To profit from something, say energy, it must be scarce: high-tech pharmaceuticals, for example, rather than ubiquitous weeds and folk medicine.

The same is true of information; hence the strenuous efforts of music, book, and film publishers to create artificial scarcity in digital content through copy protections and intellectual property law. They are fighting a losing battle: when the marginal cost of production for any product approaches zero, the natural price point tends toward zero as well. The first copy of Microsoft Word costs hundreds of millions of dollars to produce, but each subsequent copy costs virtually nothing.

Alternative energy sources are similar: the initial cost may (or may not) be high, but once the installation is complete, ongoing costs are extremely low or zero. By returning energy to a non-monetary realm, they actually contribute to economic de-growth. Think about that next time you read economic arguments about how to "stimulate demand" and "reignite economic growth." In the present system, in the absence of growth, unemployment, poverty, and the polarization of wealth intensify. In the present system, economic well-being is incompatible with post-carbon energy technologies.

It's a little controversial, in that it goes against most of the assumptions that drive such discussions here on E/E.

[kristopher]

1. He is confusing the bottleneck for providing energy with the work that energy enables.

So while the utilities and the traditional fuel providers will not profit as much from their product there will be others who do - solar panel manufacturers, wind turbine mfgs etc. Then there is the work that the stable supply of energy collected by those devices will enable. That too is able to drive prosperity and create wealth - it will just be distributed in a more equitable fashion.

The second paragraph is total balderdash as it takes a true statement that is a small part of the picture and in error extrapolates it to the whole. Sodas are a better example, the liquid costs very little but the cost of marketing delivery and packaging sums to the price you pay at the supermarket, the vending machine, the fast food joint or the high-line bar.

Since the premise is false, the conclusion "Alternative energy sources are similar" is also false.

It isn't controversial, it is ignorance.

ETA:
What he is trying to say is that because renewable energy sources are harvested by commodities whose cost will be, in a mature market, unrelated to the value of energy as established by fossil fuels, then the transition to a noncarbon renewable energy economy can't ""stimulate demand" and "reignite economic growth"". To the author, this translates to this conclusion "in the absence of growth, unemployment, poverty, and the polarization of wealth intensify. In the present system, economic well-being is incompatible with post-carbon energy technologies".

That completely ignores the fact that the transition itself is the engine that drives positive economic activity. Manufacturing and installing the requisite infrastructure is a huge economic task that has associated long-term, positive economic benefits related both to the amount of wealth in society and the more equitable distribution of that wealth.

But he did get one thing right - renewable resources are abundant.

[GliderGuider]

4. He is of course invoking the "Razor and Blade" business model attributed to King Camp Gillette

http://tbmdb.blogspot.com/2009/09/razor-and-blade-business-model.html

Replacing FF power sources with their low construction costs and high, ongoing fuel costs with renewables with higher capital costs but no fuel requirements is of course good for the consumer. On the other hand, the entrenched FF businesses have every reason to oppose such a shift, which would reduce them to being equipment manufacturers with relatively low margins compared to supplying coal, oil and gas.

Wind and sunlight is hard to package and market like soda - there is no comparable branding or packaging possibility, and no delivery effort that one can charge for.

Manufacturing and installing the infrastructure is indeed a huge task, with no payoff for the existing industries, which makes it a (very) tough sell.

In the end though, I utterly oppose any increase in the emergy available to our global industrial civilization, because of the impact it has on non-human interests.

[hunter]

2. "De-growth" is inevitable.

Structural changes to our economic system could make de-growth very desirable.

First we must assure food, permanent shelter, health care, and education for everyone.

Modern technology is such that we could probably afford a twenty hour work week if we abandon automobiles and build walkable cities of extremely durable, low energy housing.

Economic "productivity" as we now define it is harmful to the environment and poisonous to the human spirit.

[GliderGuider]

3. Overshoot always self-corrects. Always.

"First we must assure food, permanent shelter, health care, and education for everyone."

It's a noble goal, and striving for it is honourable work. But what if we can't? Or perhaps more to the point, what if we don't? We haven't done it yet, with all the wealth we've torn from the planet in the last 2,000 years and more. If it's not achieved in this century or the next (as it wasn't in the last or the one before that) what learning might we take from that? Who are we, as individuals, communities and a species, that has brought us to this state of imbalance, this koyaanisqatsi?

[bananas]

5. The author supplied a link for more information

In the comments section, someone asked for more details, and the author replied:

Charles Eisenstein on September 8, 2011 - 6:06pm

Due to length considerations it is impossible to both state the context of the problem and describe the solution(s) with any thoroughness, and this site is devoted to discussion of energy, not money. I didn't intend it as a teaser though. The book is being published on line ( http://www.realitysandwich.com/homepage_sacred_economics ) as well as in print, and will be available in its entirety by year's end. If there is sufficient interest though, perhaps I could write a follow-up article.