Why Cheap Renewables Won't Save Us

00:28:03
https://www.youtube.com/watch?v=mkIMf_hVOfQ

Sintesi

TLDRThe video explores the multifaceted challenges of transitioning to renewable energy within a capitalist framework, using the case of a wind power project in Norway to illustrate the broader systemic issues. Despite significant advancements and price drops in renewable energy sources, the lack of profitability compared to fossil fuels hinders investment and expansion. Factors like unbundled energy markets, volatility in pricing, and reliance on private investment further complicate the transition. The narrative calls for a reevaluation of energy production systems, advocating for state-led, publicly funded renewable projects to ensure a viable path toward sustainable energy solutions.

Punti di forza

  • 🚫 Local dissent halted Fosen wind project.
  • 💰 Renewables struggle with profitability versus fossil fuels.
  • 📉 Falling prices don’t guarantee investment in renewables.
  • 🔄 Need for state intervention for renewable success.
  • 🌍 Shift towards democratic, people-focused energy systems.

Linea temporale

  • 00:00:00 - 00:05:00

    In 2014, Norwegian power companies aimed to build a significant wind power farm in the Fosen Peninsula, overcoming local resistance and bureaucratic hurdles. However, plans changed in 2015, as Statkraft halted the project due to uncertainties in profitability, highlighting an underlying issue in renewable energy development despite falling costs and high capacity expectations.

  • 00:05:00 - 00:10:00

    The global energy landscape emphasizes the need to electrify all sectors and massively expand renewable energy to combat climate change. Despite a surge in renewable construction, fossil fuel reliance persists, hindering a genuine transition to renewable energy. This paradox raises questions about the effectiveness of market-driven green capitalism in addressing climate goals.

  • 00:10:00 - 00:15:00

    Though renewable energy prices have significantly dropped, the anticipated transition away from fossil fuels remains elusive. This stagnation is partly due to lower expected profits from renewables versus fossil fuels, leading investors to favor the latter despite a lower cost of renewable energy generation.

  • 00:15:00 - 00:20:00

    Historical analysis reveals that the shift from water to fossil fuel power was driven by profit potential for factory owners rather than sheer cost. Today’s renewable energy sector similarly grapples with low profitability, with many investors reluctant to finance projects that yield meager returns compared to fossil fuel investments, resulting in a halt in renewable projects.

  • 00:20:00 - 00:28:03

    The landscape of electricity generation has shifted since the 1990s towards privatization and unbundling, creating a competitive environment that drives prices down. This market structure poses challenges for renewable profitability, as the volatility and competitive climate hinder investments, leading to reliance on government subsidies and Power Purchasing Agreements as temporary solutions instead of fostering a holistic renewable revolution.

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Mappa mentale

Video Domande e Risposte

  • What happened to the wind power project on the Fosen peninsula?

    The project was initially set to go ahead but was shuttered in 2015 due to concerns about profitability.

  • Why are renewables not being adopted despite lower prices?

    Investors find renewable energy projects less profitable than fossil fuels, leading to a hesitance in funding.

  • What role do Power Purchasing Agreements (PPAs) play in renewable energy?

    PPAs provide price stability for renewable projects but rely on major corporations, which limits broader impact.

  • How has government influence affected renewable energy projects?

    Government subsidies can boost renewables but are often politically unstable, leading to boom and bust cycles.

  • What is suggested as a solution to promote renewable energy?

    A shift towards state-owned renewable generation and democratic control over energy policy is advocated.

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Scorrimento automatico:
  • 00:00:00
    In 2014, a consortium of Norwegian power  giants set out to develop one of Norway's
  • 00:00:04
    most ambitious wind power farms on the Fosen  peninsula. Despite the continued dissent from
  • 00:00:09
    local Sámi herders, plans were drawn up,  political obstacles were cleared away,
  • 00:00:14
    and permit was acquired. The path seemed  straightforward. Indeed, the state-owned
  • 00:00:18
    power company, Statkraft described it as going  “full steam ahead.” That is until 2015 hit, and
  • 00:00:24
    with it Statkraft pushed hard on the brakes of the  project– shuttering it for the foreseeable future.
  • 00:00:30
    In an era where pundits and headlines  celebrate plummeting wind and solar
  • 00:00:34
    prices and renewable all-time high renewable  capacity, how could this happen? Bureaucracy,
  • 00:00:39
    permitting, and seemingly the cost of materials  were dealt with, so what was stopping these
  • 00:00:44
    Norwegian power companies from building the  massive project? Today we unpack the hidden
  • 00:00:49
    obstacle behind the installation of renewables.  Drawing heavily on Brett Christophers’ essential
  • 00:00:55
    book The Price is Wrong we’ll untangle the  mess and failure of a renewable revolution
  • 00:01:00
    under capitalism. Traveling from the winter  pastures of the Fosen Peninsula in Norway to
  • 00:01:04
    the board rooms of BP to understand why cheap  renewables won’t save us, and what’s really
  • 00:01:10
    holding us back from the rapid renewable and  zero carbon transition we so desperately need.
  • 00:01:15
    If you want to watch an ad-free version of this  video, consider becoming a Nebula member. When
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    you sign up using my link, you directly support  this channel and get access to over 30 bonus
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    and extended Our Changing Climate videos, like  the speculative fiction video I just released
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    envisioning an ecosocialist world running on 100%  renewable energy 100 years in the future that you
  • 00:01:34
    can only watch on Nebula. You can also watch  my next video on microplastics a month early,
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    and much more. Nebula is swimming in awesome  documentaries and deeply informative videos.
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    put in your information, and boom, you  now have access to a massive library
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    of thoughtful ad-free Nebula-exclusive  media from over 200 creators you love.
  • 00:02:15
    Where we’re headed: The path ahead of us
  • 00:02:16
    is clear. If we are to keep global  temperatures below 2.0C of warming,
  • 00:02:20
    which now is the new goal because 1.5C is  pretty much locked in, no new fossil fuel
  • 00:02:27
    infrastructure can be built. Simultaneously,  the world must electrify all sectors everywhere,
  • 00:02:31
    and build out wind and solar generation on a  massive scale to support that energy consumption.
  • 00:02:37
    In recent years, the doom of climate chaos and the  immensity of the task ahead of us looks a little
  • 00:02:41
    more promising in light of a surge in renewable  development. We seem to be on the right track–
  • 00:02:46
    renewable construction has skyrocketed in the last  two decades. Viewed from just the right angle,
  • 00:02:51
    things seem to be working. The market has supplied  the right incentives, renewables are booming,
  • 00:02:56
    and green capitalism will pull us out of the  climate crisis. Unfortunately, this ignores a
  • 00:03:01
    dirty reality. Just as renewables are booming,  so too are fossil fuels. Taken absolutely,
  • 00:03:07
    renewable capacity has gone up, yes, but it hasn’t  eaten into or replaced any fossil fuels, it’s just
  • 00:03:14
    added additional power on top of them. A renewable  transition is nowhere in sight… at least not yet.
  • 00:03:19
    But how could this be? Headlines read that  the price of renewable energy has now dropped
  • 00:03:23
    below fossil fuels. As author David Wallace  Welles notes, “the I.E.A. has been calling
  • 00:03:28
    solar the ‘cheapest electricity in history’ for  several years now, and according to BloombergNEF,
  • 00:03:32
    new renewable energy is now cheaper than new  so-called dirty energy in 96 percent of the
  • 00:03:39
    world’s electricity markets.” Looking deeper,  even graphs of the levelized cost of energy,
  • 00:03:44
    which is the average lifetime cost of generating  energy, reveal that wind and solar have indeed
  • 00:03:49
    plummeted in price. So if renewables are  the cheapest source of energy, why aren’t
  • 00:03:54
    they rapidly being adopted and replacing fossil  fuels as the primary source of fuel? After all,
  • 00:03:59
    this is what we’ve been told for decades was  the barrier to a zero-carbon energy transition.
  • 00:04:04
    Renewables are more costly than fossil fuels  and that’s why they weren’t adopted. The
  • 00:04:09
    International Energy Agency’s asserted as  much in a 2000 paper on the wind industry,
  • 00:04:14
    claiming that “the primary constraint affecting  [wind] development is the comparatively low cost
  • 00:04:18
    of conventional generation.” So, now that we  have reached all-time low renewable energy
  • 00:04:23
    costs why aren’t we witnessing the great renewabl  transition that was promised? Don’t get me wrong,
  • 00:04:28
    renewable construction and capacity has exploded,  but to be blunt, it is nowhere near the pace and
  • 00:04:34
    size we actually need. So, what’s really  stopping us from a renewable transition?
  • 00:04:41
    Renewables Aren’t Profitable In 1824, the Lions of Catrine roared
  • 00:04:44
    with power. Two massive water wheels relentlessly  churned to satiate the growing demand of cotton
  • 00:04:50
    tycoon Kirkman Finlay’s factories. Despite  the increasing popularity of steam power,
  • 00:04:55
    Finlay was enamored with water power, because  unlike coal-powered steam engines, his water
  • 00:05:00
    wheels were cheap. In a transcript from an  1833 parliamentary inquiry, Finlay reveals
  • 00:05:06
    that his massive watermills allowed him to have  “power for nothing, and in abundance.” After the
  • 00:05:12
    initial upfront cost of building the gargantuan  wheels, Finlay could have cheap power at his
  • 00:05:17
    fingertips. Indeed, during the initial stages of  the U.K’s Industrial Revolution, water was king.
  • 00:05:23
    Water-powered electricity was abundant and cheap  and used widely across cotton factories, and yet
  • 00:05:29
    by 1870, water-power was all but extinct. It was  dethroned by the fossil-fueled steam engine. As
  • 00:05:36
    Andreas Malm reveals in his book Fossil Capital,  steam power, and the fossil fuels behind it,
  • 00:05:41
    became the dominant means of producing power not  because it was cheaper or more abundant than water
  • 00:05:46
    power, but instead because coal-powered  steam was much more flexible when it came
  • 00:05:51
    to when and where it produced energy, not to  mention it more easily slotted into concepts
  • 00:05:56
    of private ownership. In essence, factory owners  embraced the more expensive fossil fuel power,
  • 00:06:02
    because it meant greater control of their  production and labor, ultimately leading to
  • 00:06:06
    bigger profits. Malm’s research reveals that  we didn’t adopt fossil fuels because they
  • 00:06:11
    were cheaper, but instead, because they were  more profitable for the owners of production.
  • 00:06:17
    Fast forward to today, and the echoes of the  past seem to haunt us. We are in the midst of
  • 00:06:21
    another energy transition, except this time,  it's in reverse. From fossil fuels to wind and
  • 00:06:28
    solar. At the moment, this transition doesn’t  seem to be happening. Despite, wind and solar
  • 00:06:33
    energy now costing less than fossil fuels over  their lifetime, they are not cutting into fossil
  • 00:06:38
    fuel generation. The answer to this failure is  profit. Specifically expected profit. Renewable
  • 00:06:43
    projects are just not as profitable as other  forms of fuel, and as a result, the investors
  • 00:06:47
    that many claim would flock to the cause once  prices drop, have yet to materialize. You don’t
  • 00:06:53
    have to look far into the energy sector to see  this. A 2023 survey of oil, utility, and chemical
  • 00:06:59
    executives– essentially those that have the most  power when it comes to a renewable transition–
  • 00:07:04
    found that “four out of five executives consider  the ability to create acceptable returns on
  • 00:07:09
    projects a main barrier to decarbonization of the  energy system.” Meanwhile, oil majors are walking
  • 00:07:15
    back their already paltry renewable plans for the  same reason. The CEO of BP told one Wall Street
  • 00:07:22
    Journal reporter that “he is disappointed in the  returns from some of the oil giant’s renewable
  • 00:07:26
    investments,” and they have subsequently stalled  their renewable investments. Meanwhile, Shell
  • 00:07:31
    pulled the brakes on its renewable investment  spending in 2023. Indeed, it’s telling that in
  • 00:07:36
    one of their most profitable years, Big Oil plowed  those profits not into renewables but instead into
  • 00:07:43
    stock buybacks. When you look at the numbers, this  makes sense. According to the chief investment
  • 00:07:48
    officer at Pickering Energy Partners via NPR, the  internal rate of return for fossil fuel companies
  • 00:07:54
    is anywhere from 20% to 50%. For wind and solar  that number is a dismal 5-10%. A number that is
  • 00:08:01
    too low for fossil capitalists to countenance. The  CEO of Shell admitted as much during an earnings
  • 00:08:07
    call with the oil company’s shareholders: [“If  we cannot achieve the double-digit returns in
  • 00:08:12
    a business, we need to question very hard whether  we should continue in that business. ​​Absolutely,
  • 00:08:17
    we want to continue to go for lower and lower  and lower carbon, but it has to be profitable.”]
  • 00:08:22
    Why would a bank, an investor, let alone  a massive fossil fuel company like Shell,
  • 00:08:27
    invest their cash in energy generation that has  an extremely high upfront cost and razor-thin
  • 00:08:32
    return on investments when the alternative is  big profits and secure returns? Under capitalism,
  • 00:08:40
    corporations and investors are not making  decisions based on the goodness of their heart,
  • 00:08:44
    they are doing what makes the company the  most money. So 5-10% returns on a risky
  • 00:08:49
    investment just doesn’t make sense. Indeed, 5%  is the amount of expected return you might get
  • 00:08:54
    from just putting money in a bank right now.  As Brett Christophers argues in an interview
  • 00:08:59
    with Novaro Media: [“when interest rates are like  5% and you can get five six even 7% returns from
  • 00:09:06
    sticking your money in the bank or investing  it in US risk-free US government bonds why on
  • 00:09:13
    Earth would you go to the hassle of building a  wind farm with the major risk that investment
  • 00:09:21
    entails when there are risk-free opportunities  available to make essentially the same returns.”]
  • 00:09:25
    Ultimately, energy transitions under  capitalism are, as Andreas Malm argues,
  • 00:09:30
    a series of “investment decisions, sometimes  with crucial input from certain governments but
  • 00:09:35
    rarely through democratic deliberation.” This is  especially the case with a renewable transition,
  • 00:09:41
    where high upfront costs for building wind  and solar farms require a lot of financing–
  • 00:09:46
    specifically in the form of debt. Under our  current capitalist system, private investors–
  • 00:09:51
    banks, hedge funds, the financial sector–  are the ones who will put up the cash for
  • 00:09:55
    the construction of wind and solar farms. This  means that the opinions of those institutions
  • 00:10:01
    are the most crucial for the prospects of wind and  solar. So if, as we’re seeing play out, investors
  • 00:10:06
    decide not to invest in renewable construction  and generation, then a zero-carbon transition
  • 00:10:13
    will never happen under capitalism. And this is  exactly what happened in 2015 with the proposed
  • 00:10:17
    wind farm on the Fosen Peninsula. After announcing  that the project was going “full steam” ahead, the
  • 00:10:22
    time came to calculate the expected profitability  of the wind farm. And with the projections came
  • 00:10:28
    the cold facts of capitalism. The numbers  were bad. So much so that Statkraft announced
  • 00:10:33
    in a press release that “Updated analyses… show  that the projects in central Norway will not be
  • 00:10:39
    profitable.” Soon after, investors pulled out,  leaving the project on the drawing-room floor.
  • 00:10:45
    Profit, not price, then, is what we need  to pay attention to when it comes to a
  • 00:10:49
    renewable transition under capitalism. But  why exactly are renewables not profitable
  • 00:10:55
    especially when we’ve been told for so long  that cheap renewables will mean they’ll
  • 00:10:59
    get built? Shouldn’t cheaper production  and construction costs translate to better
  • 00:11:03
    profits? To answer those questions and  more, we need to dive into the depths
  • 00:11:07
    of energy markets, the inflection point  where renewable profitability is decided.
  • 00:11:14
    The Failure of the Market: Up until the 1990s,
  • 00:11:16
    electricity generation was a heavily  state-controlled operation. Power generation,
  • 00:11:21
    the transmission of that electricity, and its  distribution were usually all controlled and
  • 00:11:25
    operated by a government-regulated company or  the state itself. As Brett Christophers explains
  • 00:11:30
    quoting a paper on the political economy of  electricity generation, ““the electricity
  • 00:11:34
    sector was dominated by ‘large-scale electricity  companies’ that were ‘vertically integrated’,
  • 00:11:39
    meaning that they ‘owned and controlled all  [industry activities] under a single roof.’”
  • 00:11:44
    The post-WWII era saw the consolidation of  various electricity generation, transmission,
  • 00:11:49
    and into regional, in the case of the U.S.  utility companies, or countrywide entities
  • 00:11:55
    like in the case of France’s Électricité de France  or the Central Electricity Generating Board in
  • 00:11:59
    the U.K. Indeed, most of the electrified world  organized its grid under state-owned utilities
  • 00:12:04
    or heavily regulated private entities. But that  all changed in the 1990s. Neoliberalism and free
  • 00:12:10
    market ideology set their sights on electricity  and tore into the sector with vicious claws. As
  • 00:12:16
    Christophers notes this new era of energy  management has been characterized by the
  • 00:12:21
    “unbundling, de-monopolization, privatization and  marketization” of the electricity sector. Notably,
  • 00:12:28
    unbundling, or the separation of generation,  transmission, and distribution into different
  • 00:12:32
    entities, has grown substantially since 1990s.  Power generation was especially hard hit by
  • 00:12:38
    unbundling. Take, for example, the case of  the United States. According to Christophers,
  • 00:12:42
    in 1997 “the share of independent power producers  (IPPs) increased from less than 2 percent… to
  • 00:12:48
    42 percent by 2020.” Looking more specifically at  U.S. renewables, independent generators produced
  • 00:12:54
    80% of wind and solar energy in 2020. In  short, renewable generation has become a
  • 00:13:00
    highly privatized and unbundled endeavor. But  the imperial core was not satisfied with just
  • 00:13:05
    transforming their own energy systems. Under loan  conditions and reform conditions laid about by the
  • 00:13:10
    International Monetary Fund and World Bank, energy  sectors in the periphery were forced to unbundle
  • 00:13:15
    and privatize their grids. The World Bank’s 1993  policy paper puts it bluntly, claiming that it
  • 00:13:21
    “will aggressively pursue the commercialization  and corporatization of, and private sector
  • 00:13:27
    participation in, developing-country power  sectors.” In short, the last 30-plus years
  • 00:13:32
    of neoliberal rule have separated electricity  generation into its own, privatized entity. And
  • 00:13:38
    with the privatization and unbundling of power  generation has come markets. And it’s here where
  • 00:13:44
    we can begin to see why the renewable transition  is failing despite rock-bottom renewable prices.
  • 00:13:51
    Without getting too far in the weeds, unbundled  generators sell their power through two primary
  • 00:13:56
    markets. On wholesale markets to resellers who  then resell to consumers on retail markets. This
  • 00:14:02
    much akin to a farmer selling their produce to a  grocery store then upcharges and selling it to the
  • 00:14:08
    shopper. The wholesale market, in part, determines  the profitability– or expected profitability– of
  • 00:14:14
    renewable power generation. And many electricity  markets, whether it’s regional U.S. markets like
  • 00:14:19
    the Mid-Atlantic or New England Markets, or the  Nord Pool power exchange which stretches across
  • 00:14:25
    both Sweden and Norway, function in part as spot  markets. Spot markets function to facilitate the
  • 00:14:31
    sale of electricity available for next-day  delivery. Private energy generators place
  • 00:14:36
    bids on the spot market pledging to generate  for a specific period of time, “specifying the
  • 00:14:41
    quantity of electricity they expect to generate  in that period and the price at which they are
  • 00:14:45
    willing to sell it.” These bids are then stacked  from cheapest to most expensive until “pledged
  • 00:14:51
    supply meets expected demand.” Once demand is  met, generators are paid out not by the price
  • 00:14:56
    they bid but instead by the highest-priced bid  on the stack. This market structure has massive
  • 00:15:03
    ramifications for renewable profitability.  Spot markets force a race to the bottom for
  • 00:15:07
    power producers. To assure that their energy is  sold, generators must sell at the lowest price
  • 00:15:13
    possible. Or as a primer on UK spot markets notes,  “bidding higher risks not making the cut-off in
  • 00:15:19
    the stack and hence not being able to make any  income for that [settlement] period.” This means
  • 00:15:24
    that as more and more renewable generators  join these markets, prices will drop. [“ the
  • 00:15:29
    renewable energy generation sector is incredibly  competitive there are thousands of entities in
  • 00:15:35
    that market they compete purely on price selling  into really really competitive wholesale markets
  • 00:15:41
    so what happens when price when cost decline well  they compete those cost gains away and those cost
  • 00:15:50
    gains get passed downstream to transmission  and distribution entities and retailers and
  • 00:15:55
    in in large part.”] Essentially, renewable  generation markets are highly competitive,
  • 00:16:01
    meaning that any cost efficiency that might  be coming from lower price of generating are
  • 00:16:07
    getting passed on to distribution and  transmission and eventually consumers.
  • 00:16:17
    Not only is it a race to the bottom, but  energy spot markets are highly volatile–
  • 00:16:21
    both in the long and short term. If the sun is  shining bright and the wind is blowing hard,
  • 00:16:26
    renewable generators could satisfy all the demand  of the market, and the highest-price would be
  • 00:16:31
    extremely low because renewable generation is  cheap. While on the flip side, when the sun
  • 00:16:36
    isn’t shining and it's a calm day, the price could  be set by the much more expensive gas generators.
  • 00:16:42
    This leads to wild daily fluctuations in price,  resulting in spot market pricing looks like this.
  • 00:16:49
    In short, lower construction and generating  costs of renewables don’t necessarily translate
  • 00:16:54
    to profitability because of the highly  unbundled, privatized, and marketized
  • 00:16:59
    approach to energy systems across the world.  This is why banks, the financial sector,
  • 00:17:04
    and the oil and gas industry are so hesitant to  invest in renewables construction. Its volatility
  • 00:17:09
    makes investing in renewables, whose upfront  costs are 80-90% of the lifetime operating costs,
  • 00:17:16
    a huge gamble. And when coupled with the fact  that more and more renewable generators means
  • 00:17:20
    an even more competitive market, and thus fewer  and fewer profits, the investment calculus just
  • 00:17:26
    isn’t there. [“idea that companies that are  used to 15% plus returns in their core business
  • 00:17:31
    are somehow going to make the decision to  switch to businesses with returns like a
  • 00:17:36
    third of that level is absurd it's economically  madness to think that that's going to happen”]
  • 00:17:39
    In the face of this volatility and  unprofitability, renewable developers
  • 00:17:43
    and generators have increasingly relied on two  different flawed paths to assuage lenders and
  • 00:17:48
    make their projects more investible. The first  is using Power Purchasing Agreements or PPAs.
  • 00:17:54
    These agreements circumvent the volatility of  markets through long-term direct contracts between
  • 00:17:59
    renewable generators and end users like Google  or Amazon. While these agreements make renewables
  • 00:18:05
    more attractive and safer investments, there are  several pitfalls. For one, PPAs, especially in
  • 00:18:12
    the imperial core, are primarily being adopted  by Big Tech. Amazon and Google can lock in cheap
  • 00:18:17
    renewable energy prices for their remote server  warehouses and in return provide price stability
  • 00:18:23
    for renewable developers and investors. But this  means that if we were to rely heavily on PPAs to
  • 00:18:29
    drive a renewable transition, the Amazon’s  of the word would be in the driver's seat–
  • 00:18:34
    controlling where, when, and for whom renewables  are getting built. In addition, corporate PPAs as
  • 00:18:40
    one banker notes are “finite.” Linking servers and  warehouses to renewable power will only take us so
  • 00:18:46
    far. There aren’t enough Amazons in the world and  powering industrial warehouses alone won’t cause a
  • 00:18:52
    transition– especially if it’s just powering new  servers for AI computing power. Not to mention
  • 00:18:57
    the fact that these PPAs often are adding on top  of already existing fossil fuel infrastructure,
  • 00:19:03
    not replacing it. In short, PPAs while allowing  for more renewable profitability and thus
  • 00:19:09
    investment, fall short on the promise  of spearheading an energy transition.
  • 00:19:14
    The second path to some form of profit stability  for renewables has been government subsidies and
  • 00:19:19
    support. These look like subsidizing the cost  of renewable construction through tax credits,
  • 00:19:23
    instigating renewable purchase obligations,  clean electricity certificate programs,
  • 00:19:28
    or price control mechanisms like feed-in tariffs.  To be clear, government intervention is pretty
  • 00:19:33
    much the only reason we’re seeing a noticeable  uptick in renewable capacity. With a large
  • 00:19:38
    part of that influence coming from state-backed  renewable projects and production in China, which
  • 00:19:43
    have dramatically decreased the cost of wind and  solar worldwide. The problem is that these state
  • 00:19:48
    interventions, especially in U.S. and Europe are  constantly under political threat. As a result,
  • 00:19:51
    renewables boom as subsidies are introduced and  then bust when they are scrapped. This is exactly
  • 00:19:57
    what happened in Vietnam in 2020 when renewable  construction boomed right before subsidies would
  • 00:20:02
    expire in 2021. The introduction and subsequent  lapse of government support for renewables left
  • 00:20:08
    Vietnamese wind and solar developers on extremely  shaky ground. As Brett Christophers writes,
  • 00:20:14
    solar and wind developers told one reporter  “that they had been left ‘“in limbo, unclear
  • 00:20:18
    about the future of the country’s electricity  procurement schemes and whether they should even
  • 00:20:23
    stay in business’” Vietnam outlines the reality  of government subsidies in the renewable market.
  • 00:20:28
    Because solar and wind aren’t profitable enough,
  • 00:20:31
    investors don’t want to touch it unless they  have the certainty of subsidies. Yet that
  • 00:20:36
    state support can often, itself be shaky and  uncertain as political regimes come and go.
  • 00:20:42
    At the end of the day, though, both PPAs  and state-backed subsidies are stop-gap
  • 00:20:46
    interventions in a deeply hostile market system  for renewables. To truly build a renewable
  • 00:20:52
    world and escape the grasp of fossil fuels, we  must move past profits and capitalist markets.
  • 00:20:58
    Towards People Power The renewable revolution can’t be
  • 00:21:03
    predicated on profits. Privately-owned renewable  generation– that is to say, a capitalist approach
  • 00:21:08
    to a renewable sector will not work, let alone  work at the speed needed to prevent catastrophic
  • 00:21:14
    climate breakdown. The reason we’re seeing any  sort of uptick in renewables right now is despite,
  • 00:21:19
    not because of, markets, privatization, and  profitability. State incentives and the massive
  • 00:21:25
    production output of China are the primary  driving forces of renewable booms. Whether
  • 00:21:29
    it's feed-in tariffs that help stabilize volatile  renewable energy pricing or direct financing of
  • 00:21:35
    renewable construction, private companies receive  billions of public dollars through policies like
  • 00:21:40
    the Inflation Reduction Act in the U.S. to  incentivize them to build renewables. So then,
  • 00:21:45
    why don’t we just cut out the middleman? If  renewables are so unprofitable in our current
  • 00:21:50
    capitalist system that we have to bend over  backward and manipulate markets to such a degree
  • 00:21:55
    to lure in investment, why doesn’t the state just  start building its own renewables and enjoy the
  • 00:22:00
    5-10% revenue returns from them? This is exactly  what New York state decided in 2023 when it passed
  • 00:22:07
    the Build Public Renewables Act, which mandates  its state-owned power company to build renewable
  • 00:22:11
    capacity to reach the state’s zero-carbon  electricity goal. But this is rare in the U.S.,
  • 00:22:17
    if we need any example of what state-back  renewable construction could look like,
  • 00:22:21
    we only need to turn to countries like China.  There, solar and wind capacity have skyrocketed
  • 00:22:27
    precisely because the corporations and banks  financing the operations are either state-backed
  • 00:22:33
    or state-owned. [“the reason that China can and  is doing things at a much more rapid clip and on
  • 00:22:42
    a much much greater scale than is happening in  the west is simply because it's essentially a
  • 00:22:49
    state project”] While markets do exist in China,  they are heavily controlled by the state. This has
  • 00:22:54
    led to China installing as much wind and solar  capacity in 2022 as the whole world combined.
  • 00:23:00
    But as much as it's easy to say the imperial  core needs to invest in state-owned renewable
  • 00:23:04
    generation that does not function on a market  system, the focus of any energy transition must be
  • 00:23:10
    on the imperial periphery. The unfortunate truth  is that because of centuries of imperial plunder
  • 00:23:20
    and predatory loan schemes the imperial periphery  is in an even more tighter spot in terms of
  • 00:23:25
    building out publicly owned renewable power: [“if  you're if you're talking about those countries
  • 00:23:27
    in the global South that we were talking about  the idea that governments in those parts of the
  • 00:23:27
    world which are you know struggling under you know  infinitely more severe fiscal constraints than the
  • 00:23:28
    governments of the US or Germany or the UK are  going to kind of borrow cheaply on the capital
  • 00:23:29
    markets for investment in public ownership of  Renewables ain't going to happen”]. So, for any
  • 00:23:30
    global clean energy transition to take  place, the imperial periphery needs to
  • 00:23:34
    heavily invest in state-backed renewables, and  the resources for that must come from the core,
  • 00:23:40
    with no strings attached. We need  climate reparations. We need prior
  • 00:23:45
    debt to be written off, the imperial  core must pay its climate debt to
  • 00:23:48
    peripheral countries to spur needed renewable  investment. We need to reverse the plunder.
  • 00:23:54
    At the end of the day, we need a twofold approach  to energy– we need to be dramatically downscaling
  • 00:24:00
    energy consumption through degrowth tactics while  simultaneously investing heavily in state-owned
  • 00:24:05
    renewable capacity and generation. As we’ve  already seen, neither of those are profitable
  • 00:24:11
    enough for private investors. But 5-8% does mean  that the government would be making money on these
  • 00:24:17
    renewable investments– so the question of where  will the money come from is ludicrous– this is
  • 00:24:23
    not a loss, it’s a gain. [“The idea of public  ownership making money absolutely they it's
  • 00:24:25
    only going to be a sinking money losing money  you you're talking about investing in Revenue
  • 00:24:25
    generating assets.”] Renewable investment on the  scale we need will come from placing power into
  • 00:24:29
    the hands of the people and making decisions based  not on profit but on ecology and human well-being.
  • 00:24:35
    In the very short term, this could mean  increasing and guaranteeing long-term
  • 00:24:39
    subsidies and government support to make renewable  generation and development more profitable and
  • 00:24:44
    stable. However, that doesn’t address the core  problem of markets and privatization. We’d just
  • 00:24:48
    be slapping more and more band-aids on a gushing  wound, not to mention that subsidies mean we’d be
  • 00:24:54
    funnelling our tax dollars directly into the  coffers of private owners and capitalists.
  • 00:24:59
    Ultimately we need democratic power systems. One  where we can dramatically upscale and invest in
  • 00:25:04
    renewable generation regardless of whether  they will turn a profit or not. A system
  • 00:25:09
    where the people, not big oil corporations or  venture capitalists or banks control when and
  • 00:25:15
    where renewables get built. After all, energy  and the well-being of the planet are crucial
  • 00:25:20
    necessities for life. So why do we treat  them as commodities to be bought and sold?
  • 00:25:26
    The only path towards this democratic power  system, towards a true renewable energy transition
  • 00:25:31
    away from fossil fuels, then, is a democratically  planned economy. An ecosocialist world.
  • 00:25:38
    But what would that democratically planned  ecosocialist world look like? And how
  • 00:25:42
    would the world function on 100% renewable energy?
  • 00:25:45
    I set out to answer those questions with a  speculative fiction video. [play clip]. You
  • 00:25:57
    can watch that video right now exclusively  on Nebula. I love telling my viewers about
  • 00:26:02
    Nebula because I honestly think it's an  amazing deal. When you sign up for Nebula,
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    you not only support this channel, but you can  also watch more than 30 exclusive Our Changing
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    Climate videos and extended editions. You  also get ad-free access to high-budget Nebula
  • 00:26:17
    original plays, podcasts, and documentaries  from over 200 creators, like Tom Nichols,
  • 00:26:23
    who produced a deeply insightful documentary  on the questionable legacy of the Baby Boomers
  • 00:26:28
    [play clip] or Wendover Production’s Nebula  original on the logistics of coal mining.
  • 00:26:33
    It’s where I publish all my videos a month  early AND release exclusive bonus videos
  • 00:26:38
    regularly like the speculative fiction piece  I just made about an ecosocialist future. I’ve
  • 00:26:39
    already produced over 30 bonus and extended  videos that are only available on Nebula,
  • 00:26:44
    like one on the problems with carbon  capture or another on what it would
  • 00:26:47
    take to build a 100% renewable power grid,  and you can even watch next month’s OCC
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    video on microplastics right now on Nebula,  because on Nebula I’m always one video ahead.
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    If you want to watch and support curated and  meaningful content created by your favorite
  • 00:27:03
    creators Nebula is the place to be. On Nebula, I  don’t have to worry about the view count or video
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    restrictions, which means I get to lean into  awesome creative projects I never would have
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    made otherwise. In part, this is because Nebula  is a creator-owned platform. It’s built for the
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    needs of you and me and not the demands  of private equity or venture capitalists.
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    When you sign up for Nebula using my special  link not ONLY do you get 40% off an annual
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    subscription, but you’re also directly supporting  me, because I get a cut any time you sign up using
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    my link. All Nebula members can now even  gift a week of Nebula to a friend for free
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    using guest passes. Using a pass is super easy.  There’s no payment info required to redeem one,
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    all you have to do is sign up using my link  and enjoy everything the Nebula has to offer.
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    and get 40% off an annual subscription  by going to the link go.nebula.tv/occ.
Tag
  • renewable energy
  • fossil fuels
  • profitability
  • wind power
  • solar power
  • capitalism
  • government subsidies
  • energy transition
  • State-owned energy
  • democratic power