Unearthing the true cost of fossil fuels and the true value of photovoltaics

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Two new studies published by Carol Olson and Frank Lenzmann in MRS Energy and Sustainability—A Review Journal (MRS E&S) shed light on the true economic, social and environmental impacts of photovoltaics as compared to those of the fossil fuel supply chain.
Olson and Lenzmann, who work at the Energy Research Centre of the Netherlands, compared the economics associated with all the major fuel supply chains, including oil and gas, coal and nuclear. They conclude that the current system is weighted heavily in favor of fossil and nuclear fuels at the expense of more sustainable energy sources—revealing that support for renewable energy sources is dwarfed in magnitude as well as in duration in comparison to the subsidies shoring up fossil and nuclear fuels.
The authors’ timely analysis of the historical and current fossil fuel supply chain provides a useful perspective that challenges what they refer to as “limited frames of reference when addressing the consequences of business-as-usual operation of fossil fuel supply chains.” Their extensive commentary looks at the complete subsidy chain both for production and consumption of fossil and nuclear fuels so that it is now possible, for the first time, to compare all the energy options fairly, revealing costs that have historically been hidden along the supply chain.
“The entanglement of the fossil fuel supply industry, banks, commodity traders, and the financialization of commodities currently allows fossil fuel supply transactions to be made in non-competitive ways,” they write.
“The immense capital available to those operating the fossil fuel supply chain affords not only economic advantages, but also allows them to side-step regulation.”
In a context where there is broad consensus in the scientific community that fossil fuels are largely responsible for global warming—with 85% of CO2 emissions coming from fossil fuel combustion—the authors argue that there needs to be a fundamental redesign of the energy market to make it fit for purpose.
“The electricity market, which is unnecessarily complex, is fundamentally only suited for a small club of fuel-conversion electricity providers,” they write, “not for the large number of providers, the public engagement, or the renewable electricity generation required in the 21st century.”
They argue that the price tag of failing to address this issue is too high to ignore: “While [it is] a starting point, an incremental approach is not sufficient to address the systemic changes required to decarbonize the electricity supply in line with the recent Paris Agreement,” a deal signed by all 196 of the world’s countries to pursue efforts to keep global warming below 1.5°C.
“The ‘true cost’ of electricity generation, including the environmental impacts, must be kept in sight,” Olson and Lenzmann write.
Consumers are currently over-paying for fossil fuel infrastructure through a large variety of subsidies even though fossil fuel electricity prices are often kept artificially low. The cost savings of renewable energy generation for consumers, especially with wind and photovoltaics, is extremely competitive especially with a level comparison. When consumers steer decisions themselves, as evidenced in many regional and community-based actions, they more and more frequently choose for renewable wind and photovoltaics not only because of the economic benefits, but also because of the resilience these electricity generation technologies bring to the energy supply. Policy makers should find ways to address the imbalance of subsidized infrastructure, including the energy market, which gives advantages to the fossil fuel supply chain, and which may obscure the economic advantages of renewable energy technologies, such as photovoltaics.
MRS E&S, a journal of the Materials Research Society and Cambridge University Press, encourages contributions that provide viewpoints and perspectives on the all-important issue of how humankind can work towards, and build, a sustainable future.

 


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