Sustainovation in Europe: Report

Last week, I led a trade and investment mission to the UK and Europe for the Los Angeles County Economic Development Corporation (“LAEDC”), which focused on looking at renewable energy, e-vehicles and other aspects of the transition to a lower-carbon, sustainable way of living.   We had several local companies and leaders participate, including Haig Barrett (from whom I’ve borrowed the neologism “Sustainovation”), ReGreen Incorporated, AECOM, Southern California Edison (which is currently the biggest buyer of energy from renewable sources in the US), HSBC and VerdeXchange.

We initiated the mission as a way to both learn what was going on in Europe and Germany, and to develop contacts between Southern California companies and European companies interested in working together to move towards a more sustainable future.  Among other activities, we attended the EcoSummitII Conference in Berlin to listen to many European experts talk about what’s happening in renewable energy in Europe.  Here are a few notes on some of the ideas that stood out, and how they might apply in the US, particularly in California.

In the big picture, the UK is developing a lot of offshore wind energy, and the Germans have become (along with the Chinese) leaders in solar and onshore wind energy  -- even though there are obvious limitations caused by the German climate, which is not that warm.  The US has not yet done much, as a practical matter, to promote the transition away from polluting forms of energy to renewable forms despite some recent statements by President Obama that the US will derive 80 percent of its energy needs from clean power sources by 2035.  However, California has enacted several laws, including among others Assembly Bill 32, that collectively will mandate the transition to cleaner, renewable forms of energy, including aggressive goals for its public utilities, and requirements that new projects be built in a sustainable way.  

Generally, renewable energy is still more expensive than conventional energy (such as the electricity generated by carbon-releasing coal fired energy plants), in part because such energy sources do not pay the environmental and other costs caused by their production of energy.  This means that governmental mandates or incentives are needed to develop the market for energy from renewable sources, otherwise people will simply not buy more expensive renewable energy, particularly in the current difficult economic climate.

 There is a lot of discussion about the possibility of California, like Germany, enacting a “feed in tariff”:  a program that mandates that utilities pay for renewable energy generated by producers of renewable energy – so, for example, if you installed solar panels on your roof and generated more energy than you could use on a particular day, your energy generation would be metered and you’d either get a credit against your bill, or a payment from the energy utility company.  The German experts we talked to opined that Germany’s feed in tariff had been successful in spurring interest and investment in renewable energy, but noted that the German government had originally expected its tariff to promote smaller, residential-scale renewable energy.  Instead, the German  government  found that the budgeted funds were quickly taken up by large-scale producers.  As a result, it has restructured this program, to the dismay of many in the industry, who are understandably reluctant to commit to major investments unless they are reasonably certain of generating a return on their investment.  The folks we heard at the EcoSummit II conference suggested strongly that such a feed in tariff must be very carefully tailored to spur the type of investment that is desired (e.g., large v. small generated power, locally generated vs. those generated farther away from where used, etc.) 

They also highlighted some of the challenges of getting renewable power to the end users:  the limitations of existing battery and other forms of storage for power, the fact that both solar and wind power generate power unevenly over the course of a day, requiring serious attention be paid to balancing the load of electricity in the transmission system, and the need for extensive transmission line infrastructure to be built to serve these new forms of energy – which frequently is the slowest part of the process in California, where such new transmission line projects frequently take ages to get approved.

The Europeans also noted that the growth of green energy in Germany has led to growth in green economy jobs:  Germany has about 1.8 million such green economy jobs, which are expected to double in number by 2020.  Generating such jobs should ease the transition from the old economy to a new greener future, and there is a lot of discussion about expressly working towards a “green New Deal” to make sure the monetary and other benefits are distributed fairly across the citizenry.  A move to a sustainable worldwide economy will have to allow for the economic development of less developed nations (and to economic growth generally) in order to be accepted, according to many of the experts we heard.

Interestingly, we heard much more concern expressed by the Europeans we talked with about “energy security” than we typically hear at similar discussions in the US.  Perhaps because oil, gas and coal are more expensive in Europe, or perhaps because they are physically closer to the areas where wars over resources are now and often have been fought, the European folks we talked with were focused on the fact that if we collectively could drastically reduce or eliminate the amount of oil imported from the Middle East, there would likely be many fewer wars and much less strife between the industrialized West and Middle Eastern and other oil-producing countries.  (As far as I am concerned, such energy independence cannot come too soon, though at best, it will take decades.)

Another, more visionary, idea was that Western nations should pay for the transition to a sustainable, carbon-free energy system by radically changing their tax structures from charging taxes based on money earned through their citizens’ labor (income tax) to instead charging carbon-generation use taxes.  This idea, advocated by Ralf Fuchs, Director of the Heinrich Boll Foundation, is that this would put more of the costs of pollution directly onto those people and companies who are discharging it, and would lighten the load of the average person.  I don’t know if this is practical, or politically feasible in the US, but it’s certainly a creative way of thinking about how to make the invisible costs of our current energy generation system.

Finally, we heard some politely-expressed dismay about the US’s lack of leadership in transitioning to green energy, as well as hope that the US will do so.  The need to clean up our own environmental mess, and to live well and sustainably, are becoming more and more recognized, but also have been frequently used as political footballs.  Many of the technologies being developed should provide us with the ability to grow economically while also growing sustainably and reasonably equitably – if we can invest some time, money and thought to create infrastructure that lets us and our children live without destroying the planet, and if we can focus on finding practical solutions to the challenges presented by the transition from carbon-based energy production to carbon-neutral energy production.