Energy Ministers: Don’t Panic. Don’t Declare Victory. Accelerate Innovation.

David M. Hart May 24, 2019
May 24, 2019

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As the energy and technology ministers of many of the world’s largest economies gather May 29 in Vancouver, Canada, for the latest in an ongoing series of forums intended to advance clean-energy technology, it is vital that they not fall prey to magical thinking about the global transition to a low-carbon economy. Carbon pollution from energy use, the main driver of climate change, is still rising. The reason is simple: dirty energy is still cheaper than clean energy for most purposes. And the solution is clear: innovation that reverses this equation. It’s long past time for the ministers to go beyond lip service, talking points, and post-conference back-slapping and fulfill the promises their countries made in Paris four years ago to radically accelerate innovation.

First, the good news. Some forms of clean energy have become cheaper than dirty energy. Electricity generated by wind and solar power is on track to beat coal- and even natural gas-generated power on a levelized cost basis without subsidies within five years in many places and at many times. Electric vehicles (EVs) propelled by lithium-ion batteries are following renewables down the cost curve, and they may defeat their gas-guzzling competitors in the market during 2020s. As long as EV batteries are charged by low-carbon resources, this transition would be a big win for the climate.

But these successes should not lead us to declare victory—that would be extremely premature. The shocking fact is that at least seven of the countries represented in Vancouver still subsidize fossil fuel consumption. Many still invest in research, development, and demonstration (RD&D) aimed at improving technologies that pour carbon into the atmosphere. The world is in a deep carbon hole, and the first law of holes is “stop digging.” The ministers should begin their work by obeying that law.

Yet, even if fossil fuel subsidies are eliminated and renewables and EVs stay on their current trajectories of exponential growth, the carbon hole will not be filled quickly enough to prevent climate change from imposing terrible damage on human society and natural ecosystems. No cheap, low-carbon solutions are yet available for huge carbon-polluting industries like cement and steel. No such solutions are yet available for big, essential transportation sectors like aviation, shipping, and long-distance trucking. Even the electricity sector, where the most progress has been made, still lacks projected long-term solutions for a large chunk of emissions.

If such solutions are to be found, and to ensure that maturing technologies like renewables and EVs realize their carbon-cutting potential by beating fossil fuels on cost and performance, the world must invest much more in innovation. The nations represented in Vancouver agreed in Paris in 2015 to double their investments in clean energy RD&D within five years. Four years later, they are still far from this goal and will be lucky to get halfway there by next year.

In addition to investing more, the energy and technology ministers need to invest smarter. Although weaknesses in data reporting make it hard to be certain, participating nations seem to be spending far too little both on basic energy research, which underpins the development of new technology options, and on demonstration, which allows technologies to prove their value to potential adopters under real-world conditions. National energy innovation policies should also focus more sharply on cross-cutting challenges, like long-duration energy storage, which must be solved if the grid is to be fully weaned off fossil fuels and the industrial sector is to be decarbonized.

More and smarter RD&D spending must be augmented by other innovation policy tools as well. Well-designed regulatory reforms, particularly in the electricity sector, would accelerate innovation in many countries. Infrastructure development, such as smart grids and EV chargers, would enable new low-carbon technologies to move from niche applications to mass adoption in many places.

Tax reforms, including the imposition of a price on carbon, would provide incentives for this kind of scale-up in many nations as well. But carbon pricing by itself is far from sufficient to drive the kind of fundamental innovation and widespread adoption the world needs. And, as the recent “yellow vest” protests in France against a gasoline tax increase show, they could trigger a counterproductive backlash. Clean energy has to become cheaper across the board, and it just isn’t yet.

The ministers have much to discuss in Vancouver and much to do when they return to their homes. The climate crisis is real and growing worse. Complacency would be disastrous. But so too would panic. Everyone in the world deserves affordable, reliable energy services: light, heat, cooling, and mobility for starters. These services must be provided without adding carbon to the atmosphere within the next few decades. Without a rapid acceleration of technological innovation (including methods to capture greenhouse gases from the air if concentrations rise too high), this goal will remain out of reach. Serious, aggressive innovation policies must be enacted and implemented by the world’s leading nations now.