Zane SelvansJul 4, 2024

Thinking about "The Price is Wrong" and the profitability gap between renewables and fossil fuels, I'm reminded of Daniel Yergin's book "The Prize" and how historically, the oil industry has only been profitable when a cartel is in power.

First it was Standard Oil, then the Texas Railroad Commission, and for my entire life: OPEC. But there *is* no renewables cartel so it's race to the bottom. Which is how capitalism is *supposed* to work.

https://www.volts.wtf/p/are-markets-the-right-tool-for-decarbonizing

Are markets the right tool for decarbonizing electricity?

In his book The Price Is Wrong, Brett Christophers argues that, contrary to recent economic triumphalism among renewables advocates, wind and solar are not profitable enough to attract the private capital necessary to scale as fast as they need to scale. He and I dig deep (extremely deep) into the details.

Volts
Show threadZane SelvansJul 11, 2024

Just started reading #ThePriceIsWrong and it strikes me that the core argument that the desire for renewable energy to be cheap through competition is fundamentally in tension with the need to attract investment by offering a profit margin rhymes with this classic post by @danielkayhertz on why housing can't be both affordable and a good investment.

#books #EnergyTransition #ClimateChange #Economics #Housing

Show threadZane SelvansJul 11, 2024
Also, is it reasonable to try and scale one industry through policies that encourage or even enhance competitive pressures, driving prices down, while allowing monopolies to consolidate and extract rents in other industries? Seems like smart money would make have an obvious choice.
Show threadZane SelvansJul 11, 2024

The Energy Gang also reviewed The Price Is Wrong, alongside @akshatrathi's Climate Capitalism a while back (though Climate Capitalism didn't get much airtime unfortunately!)

https://www.woodmac.com/podcasts/the-energy-gang/can-capitalism-save-the-planet/

Can capitalism save the planet? | Wood Mackenzie

Can capitalism save the planet? Join Ed Crooks, Melissa Lott and Joseph Majkut as they debate the role of private investment in tackling climate change. Discover contrasting perspectives in

Show threadZane SelvansJul 11, 2024

And they just had Christophers on this week to talk about the book. It seems to be somewhat disconcerting to the capitalists, in a way that makes them unwilling to just dismiss it out of hand, which is great.

https://www.woodmac.com/podcasts/the-energy-gang/are-low-profits-to-blame-for-energy-transition-lagging/

Are low profits to blame for the energy transition lagging? | Wood Mackenzie

Author Brett Christophers joins host Ed Crooks and guests Melissa Lott and Joseph Majkut for a deep dive into the theories presented in 'The Price Is Wrong'. Is low profitability hindering the energy transition?

Show threadZane SelvansJul 28, 2024
About a third of the way through the book, another (for now latent?) argument seems to be that fossil fuels are both artificially cheap and artificially profitable, because we don't price GHG emissions, and we allow many producers to capture huge land rents -- they're simply liquidating natural capital.
Show threadZane SelvansJul 28, 2024
So if we want renewables to be able to compete we can either remove these subsides for fossil fuels by capturing the land value through high severance taxes, and pricing the emissions, or we can provide even more substantial subsidies to renewables to make them competitive in terms of both price and profit margin.
Show threadZane SelvansJul 28, 2024
Or alternatively, we can raise a pool of patient (public) capital that's happy to take the 5-8% return from renewable energy development because it values the positive externalities.
Show threadJonathan Schofield

@ZaneSelvans there’s another problem too. In economies addicted to growth, growth in renewables is going to be additive to total energy consumption (at least until the price of oil and gas extraction becomes unaffordable and that only comes at way too high an existential cost).

So we *have* to create mechanisms where fossil fuel production is retired so renewables can replace. But markets don’t know how to do that and governments are captured

Aug 4, 2024 at 7:49amIvory for iOS