She is apparently airdropping posts to The Blind Spot as she flies hither and yon.
From TBS—now that Turner Broadcasting System has been merged away there should be no further confusion between the two media properties—March 3:
ALTIF Transcripts: The price is wrong: Why free markets and climate don’t mix
TBS Note: Here’s a one-off transcript from Jonathan Ford and Neil Collins’ “A long time in finance” podcast. We were carrying these weekly in our first year, but had to discontinue them due to insufficient transcription resources (automatic ones just aren’t good enough to post without having to double check them manually). But apparently, the below one is an unmissable episode, so here is an unedited transcript of the show.———————–What if our understanding of capitalism and climate is back to front? What if the problem is not that transitioning to green energy is too expensive, but that saving the planet is not sufficiently profitable? This is the conundrum at the heart of economist Brett Christophers’ provocative new book. Neil and Jonathan joined him to discuss why lower wind and solar costs may not equal a green bonanza.Presented by Jonathan Ford and Neil Collins.
With Brett Christophers.
Produced and edited by Nick Hilton for Podot.
In association with Briefcase.News
Jonathan Ford 00:05
Thanks for listening to a long time in finance with Jonathan Ford and Neil Collins in partnership with briefcase news for service that brings intelligent curation and analysis to your media money. In the decade to 2020, the average cost of electricity generated from offshore wind fell by 56%. And for solar energy, the figure was 87%. So by the turn of the decade, many thought the price of power from wind and solar was actually love flow and fossil fuels for the first time.Surely, they all said that opened the door to a massive crossover. As cheap renewables supplanted fossil fuels, there’d be no more need for subsidies to support them. But then, a funny thing happened. Despite these low prices, there was no massive increase in renewable energy. Instead, it plunged into crisis with developers scrapping projects and demanding more government support, not less on a global level. Meanwhile, renewables have scarcely made a dent in the energy picture in 1985, fossil fuel plants supplied 65% of electricity, and in 2022, it was 61%. Now, our guest today is an old friend of the show, Brett Christopher’s an economics professor from Uppsala in Sweden. Now his new book, The price is wrong claims to explain this paradox why lower renewables prices? If they really are Allah haven’t led to a crossover with renewable energy simply taking over? And I have to say, having read it, it’s a genuine tour de force and explaining the economic dynamics of energy in the energy transition, even if you don’t believe that renewables are the answer. So we thought we’d get Brett on to explain himself. Brett, welcome. Thanks for having me. Well, maybe we should start with this paradox.
And why have these price reductions that you point to at the start of the book, not driven as sort of massive switchover to renewables that people talked about?
Brett Christophers 2:08
That’s the million dollar question. I guess, why is that the case, when a the cost of generating electricity from solar and wind has has come down so much, and B when the expectation, as you also said for such a long time was that once the costs have come down sufficiently, and once it was as cheap or even cheaper to generate electricity from renewables as from gas or coal, that the transition would kind of speed ahead. So despite those price reductions, there are still some very, very fundamental economic obstacles to a faster transition. And in making that argument, what I’m not doing is saying that the other sets of factors that other people typically point to like sclerotic planning, you know, slow permissions for grid connection, all those sorts of things.I’m not saying that they’re not relevant factors. They’re absolutely irrelevant factors. But what I am saying is that the arguments that they are the only relevant factors, which is an argument we increasingly hear, which is that look, the economics have been solved. So now it’s all about politics and planning, and those sorts of obstacles. absolutely not true, there are still some fundamental economic obstacles. And the basic argument I make I make in the book is that we’ve kind of been hoodwinked a little bit in how we think about this price, the price of generating the electricity, whether from gas and coal, or from renewables, or from or whatever else is actually the wrong thing to be focusing on and that what we should be focusing on is the profitability of developing wind and solar. And in particular, it’s the expected profitability of developing wind and solar. So when developers sit down to plan a new wind farm or a new solar farm, what are their expected revenues? What are their expected costs? And in particular, what does that mean, in terms of their ability to raise the necessary finance, which is typically debt financed, typically loans in order to fund the construction and installation of that wind and solar farm? So are they able to raise that finance at a cost that means that they are still able to make profit?
Firstly, profitability in renewables is typically very, very volatile. That’s the first thing and that in and of itself, that has a chilling effect on investment unless means can be found of stabilising expected revenues in particular, and there are all sorts of different mechanisms for doing that. So that is a chilling effect. The second one is that even leaving aside that question of volatility profitability in the business of owning wind and solar farms and generating the electricity and selling that electricity is typically relatively low, and of course that has a significant fact on the private sectors willingness to invest in developing those facilities, I just want to make two other points before coming back to the first one is this, which is to say, none of this is to say that the price of generating it and the fact that that price has come down is insignificant. Of course not. It’s one of the factors that plays into the profitability and the expected profitability. Of course it does, it’s a very significant factor. But it’s not the only relevant factor....
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