New Year, New President, New Green Deal? In these early days of 2009 there is great hope that a new administration in the White House will reinvigorate not only the US energy policy but also provide the lead for a global revolution.
And yet is this a forlorn hope amidst the current economic malaise? Are we kidding ourselves that renewable energy initiatives will thrive amidst the swift deflation of the credit boom? In fact, far from believing that energy innovation will fall by the wayside, there is a growing constituency that believes it will thrive in the current downturn and lead the global economy out of it.
Here in Abu Dhabi, exactly 7,095 miles from Washington D.C. where President Obama will be sworn in this week, the great and the good of the energy world will be discussing, amongst other things, what for me is the key issue surrounding future energy: who's going to pay for it? Or, in other words, can renewables ever have a foundation based on economic common-sense?
Clearly there has never been a consensus answer to this question and yet when oil was trading last summer at $147 per barrel, alternative investment was a no-brainer, the marginal cost of clean energy stood up well to hydrocarbon cost comparisons. But now, with oil seemingly over-supplied on world markets, the impetus for other energy sources has dimmed.
Let's not get blinded by the immediate economic problems though, the longer-term dynamics that were catalysts for alternative growth before the credit crunch are still there. We still have a long battle against climate change to contend with, we still have an energy-hungry developing world and, the last time I looked, we still had a limited timeframe in which hydrocarbons will satisfy our voracious demand for energy. Yes, oil will still run out one day!
So, back to the money. Barack Obama has promised to invest $150 billion over ten years in renewables as part of the new US energy policy. It is a lot of money but a small step to the kind of levels that the likes of the IEA says needs to be spent. The OECD-backed body is talking in terms of tens of trillions over several decades to provide an infrastructure for the twenty-first century.
Energy initiatives around the globe will provide jobs and economic stimulus, including an expected 500,000 jobs in Obama’s brave new world; a £50 billion market for wind, wave and tidal power equipment in the UK by 2020, and France has plans to multiply by 400 the amount of solar power used in the country in the next 12 years. These are just but a few of the pipeline plans centered on an energy revolution.
And yet many proponents are calling for more investment and freely admit that in terms of pure price comparisons clean energy will only compete on an economic rationale when fossil fuels are subjected to a mechanism for pricing carbon. Then, and only then, will the true cost and economic benefit of cleaner fuel come to the fore.
The economic trough we are continuing to suffer in 2009 will act as a litmus test for the resolve for the clean energy movement. It is essential that the capital is found to continue the process, that governments are brave enough to push through with not only infrastructure investment but also a leveling of the playing field to expose the true cost of polluting alternatives. And then, far from being and economic drag on growth and company performance, cleaner energy could just be the catalyst that gets the global economy out of its malaise and drives forward a new boom cycle.