Alternative energy policy debate.

Bill Gates is perhaps the most influential public advocate for a "technology led" approach to reducing Green House Gas (GHG) emissions. This article, and this site are strong advocates of the "Policy led" approach. Unfortunately, as this article shows, Bill, by advocating that the funds currently used to support the "Policy led" approach be used instead to fund R&D and the "Technology led" approach is adding to the extreme polarization that marks this debate. Those who agree on the urgent need to reduce GHG emissions don't need to waste their time fighting each other. They need to talk to each other and not at each other.

A reasonable analysis would say that both approaches are necessary. It is clear that on the current path, the technologies supported by the policy led approach are not succeeding in reducing overall CO2 emissions and are unlikely to ever have a sufficiently large impact.  At a global level, the developing world, which accounts for almost all growth in world energy consumption, has resisted policies to reduce GHG emissions since the 90's and continue to do so, based largely on economic concerns. 

When viewed at a global level, alternative energy has gone through a series of local boom and bust cycles as policy support has waxed and waned. Currently, Europe which used to be the leader has slipped back as policy has waned and China and Japan have come forward as policy has waxed. The US has gone up and down as policy has oscillated but has not been a significant player at the global level for decades. Because of declining PV prices driven by China, the Investment Tax Credit (ITC) and low interest rates have made PV investable in the US. The ITC and the US PV boom will probably end next year, a reminder of the fickle "boom and bust" nature of the "policy driven" approach.

The subsidy level for alternative energy investment worldwide is about $100B/year, about half of the $200B/year world investment in alternative energy electricity generation, which in turn is about half of the $400B/year investment in electricity generation. It is going to have a hard time increasing significantly from this already significant level. We need better clean energy technologies, but as Bill Gates points out, the investment level in energy R&D is pitifully low. The "policy led" advocates have to accept this reality. "Policy led" has to accept a change to include significant R&D in a wider range of speculative technologies, not just subsidizing an entrenched status quo.

By Edmund Kelly