Do we need a massive government program to generate breakthroughs to make solar energy cost-competitive?

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"Do we need a massive government program to generate breakthroughs to make solar energy cost-competitive?"

[UPDATE: DOE link below fixed!]

Almost certainly not and absolutely not. I give two answers here because there are two very different types of solar energy:

  1. pv-vsmall.jpgSolar photovoltaics, PV, which is direct conversion of sunlight to electricity. It is well-known, high-tech, uneconomically expensive in most parts of this country (but poised to resume dropping sharply in price), and intermittent (power only when the sun shines).
  2. csp.jpgSolar thermal electric or concentrated solar power (CSP), which uses mirrors to focus sunlight to heat a fluid to run a turbine or engine to make electricity. It is, as I’ve blogged, “The solar power you don’t hear about.” It is relatively low-tech, competitive today (and poised to drop sharply in price), and can be made load-following (matching the demand curve during the day and evening) and possibly baseload (round-the-clock).

I am writing this post in response to a Wednesday post by Michael Shellenberger (here). It is not entirely civil [but perhaps he didn't get the memo yet.] The headline and opening sentence are:

No Clean Tech Breakthroughs Needed? Think Again
For solar PV to be cost-competitive, the price per ton of CO2 would have to be $220.

The Center for American Progress’s Joe Rom [sic!], like much of the environmental establishment [sic!!], believes that a price on carbon dioxide can do much of the heavy lifting for deploying clean energy technologies. But the price carbon dioxide would have to reach for technologies like solar to be cost competitive is far higher than voters, far more concerned about higher energy prices than global warming, will allow.

Okay guys, you don’t want to be called delayers — I obliged. I am most certainly not part of the environmental establishment. I am not even an environmentalist [yes -- I occasionally write about polar bears -- what can I say, those are by far my most heavily trafficked posts, and polar bears are cute, according to my legion of 'tween readers.]. I am a physicist, an energy technologist, and climate policy analyst.

As for being part of any “establishment” — “a pejorative term used to refer to the traditional ruling class elite and the structures of society which they control” — let me tell you, the elites don’t blog. They don’t have to, they actually control events, which I obviously don’t. Take U.S. energy and climate policy … please! [Sorry, couldn't resist.]

But I digress. The key question is — Does solar energy need technology breakthroughs funded by a major government program of the kind B.I. advocates? The answer is clearly “no.”

SOLAR PV IS A BIG WINNER IN THE MEDIUM-TERM (post-2020)

Absent major subsidies, solar PV is simply not a big-time winner (in terms of kWh delivered cost-effectively) in rich countries with built-out electric grids in the near term. I don’t agree with the Scientific American article (here) that Shellenberger cites (but does not endorse), which calls for a massive $400 billion 40-year plan for solar. I have been meaning to blog that it has many weaknesses, in my mind. No energy efficiency. No wind. Heck nothing but PV and CSP, and it looks to be mostly PV, which needs expensive storage.

That said, I used to be far less bullish on PV, until I heard a number of presentations earlier this year, from the PV industry, the Department of Energy (DOE) office I once helped run, solar financing experts, and academics. Now I think it might make a major contribution post-2020, maybe even more than 1,000,000 MW (peak), which is a half a wedge, by 2050.

The good news: Massive amounts of private sector money — through the stock market, big companies, and venture capital funds — as well as big government subsidies (not R&D) and/or mandates — have juiced up the technology development process as well as the manufacturing learning curve. The SciAm article claims we need a big government program because:

To provide electricity at six cents per kWh by 2020, cadmium telluride modules would have to convert electricity with 14 percent efficiency, and systems would have to be installed at $1.20 per watt of capacity. Current modules have 10 percent efficiency and an installed system cost of about $4 per watt.

Let me tell you what the experts say. First, DOE itself acknowledged that

  • market viability [is] eclipsing ‘science’ results
  • private funding now available for R&D
  • cost trajectories are increasingly secure.

Because of that, DOE now wants to focus on R&D partnerships, technology validation, and market creation/preparation, including improving the regulatory environment for distributed energy.

[You can see a detailed 2008 DOE presentation on solar, mostly PV, here. It is well worth a look if you are interested in PV.]

The industry experts said they will deliver installed PV electricity below ten cents per kWh by 2020 from multiple advanced technologies if we just keep going down in the projected manufacturing learning curve and keep getting better economies of scale from steadily growing deamnd. Mostly what is needed is demand pull from more state renewable standards and, ideally, a federal renewable standard. Continuing the 30% solar investment tax credit (ITC) would help (and not cost a lot of money). As would a serious price for carbon dioxide — but nowhere near an outrageous one like $220/ton. Even $14/ton of CO2 would make a difference. The European price, ~$36/ton would be even better, adding over 3 cents per kwh to coal, which is already getting very pricey (see below)

And we don’t need to be in a hurry to cram overly large amounts of PV into the U.S. economy because …

CSP IS A HUGE WINNER IN THE SHORT-TERM (now!)

CSP is already in much better shape than PV, with half the costs, no production bottlenecks, cheap storage, and near-baseload power — and also massive amounts of private sector money flowing in. So if the PV folks don’t need a big government-funded push for breakthroughs, you can be sure the CSP folks don’t.

As I noted earlier (“Breaking the technology breakthrough myth“), I will be blogging at length about concentrated solar power in a couple of days. None of the industry executives I spoke to believes they need breakthroughs — and they certainly don’t want massive government-funded research and development efforts of the kind B.I. is talking about. They would like the solar ITC renewed this year for eight years (not a lot of money) and a serious price for carbon dioxide as soon as possible. A federal renewable standard would also help.

CSP is competitive with new gas-fired plants now at current gas prices. It should beat new coal by 2015, even without a carbon price, but certainly $30/ton of CO2 would more than do the trick. CSP could provide more than one wedge, if the nationa and the world get serious about beating 450 ppm.

COAL IS VERY EXPENSIVE

Conventional power plants have risen in price “130% since 2000, and 27 percent in the 12 months to October 2007 alone” (see here). New coal plants are going “north of $2,500 per kilowatt” fully installed (see also here). [You would have to add another $2000 per kw for carbon capture and storage, assuming that even proves toll on a wide scale.] And, of course, coal prices have soared. Finally, financing costs are sure to rise as Wall Street increasingly sees the risk of backing coal that doesn’t capture and store carbon dioxide emissions.

Fast, Clean & Cheap,” by Shellenberg et al. says that in 2010 the price for pulverized coal will be 4.84 cents per kWh. They say that cost (and the costs of PV and CSP) come from the Energy Information Administration Annual Energy Outlook 2007. I couldn’t find that number, but I did find the EIA’s assumptions (here), which seem to suggest they were using a capital cost for coal of $1290/kw — maybe half the current cost. I don’t know what coal price they were using, but it was a lot lower than today’s cost.

I think it would hard to finance, build, and deliver fully installed new coal plants for significantly less than 10 cents per kWh today, even with no carbon dioxide charge.

CONCLUSION

So, it looks like CSP now — and PV soon — are in very good shape. They certainly don’t need a a big government spending program aimed at generateing breakthroughs in order to make them cost-competitive in time to play a very large role in beating 450 ppm.

One final note: In the DOE presentation I link to above, they describe the “Solar America Initiative,” launched in fiscal year 2007 whose goal is to “accelerate supply growth & adoption of PV/CSP technologies.” It looks to be well funded as of this year thanks in large part to the new Congress. It is obviously a terrific idea. Steady increases in the future are certainly welcome, but I don’t see the need for some new multi-billion program. Certainly more R&D funds aren’t needed.

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36 Responses to Do we need a massive government program to generate breakthroughs to make solar energy cost-competitive?

  1. Jade A. says:

    Joe you are nothing but a filthy libertarian. Although I don’t believe in socialized capitalism visa vie the bear sterns bailout, I do think that we need to heavily subsidize these renewable technologies in order to make them affordable to consumers. If the government is going to provide (and has provided) subsidies to the coal industry, and the nuclear industry, they should invest twice as much in renewable energy production.

    “They certainly don’t need a a big government spending program to generate breakthroughs to make them cost-competitive in time to play a very large role in staying below 450 ppm.”

    I couldn’t disagree with you more. When all know that when you subsidize something you get more of it. It would be such a sadness for these promising technologies to fall victim to the corporate dogs free market capitalism. The delayers and deniers are trying to prevent the mass industrial scale production and implementation of these technologies in favor of giving billion dollar defense contracts to companies fighting an illegal war.

  2. Paul K says:

    Given how well solar is progressing, would you also say an artificial raising of the cost of carbon is unnecessary for this progress to continue?

  3. John McCormick says:

    A big government spending program aint going to happen soon; not this budget cycle and less likely in the next Congress.

    Since Congress authorizes spending programs and appropriates their funding, it falls on House and Senate Democrats to find budget offsets for new spending.

    Joe, you know this better than most.

    The Senate just passed an extension of the renewable energy tax credits but the House is balking because it does not want to increase the deficit to pay for it and insists that budget offsets first be identified to hold FY2008 spending down. The House threw the challenge to the White House to find the offsets and it should not shock anyone that the House Democrats want the oil company tax credits to pay for the renewable tax credits. Just find the votes and it will be a done deal.

    Given this miniscule appropriation amount and the willingness of the House Democrats to joepardize the renewables tax credit to prevent increasing deficits, how can one imagine the Congress will throw many billions into deployment of technologies already deployable.

    Back to the drawing boarads guys.

    Some dialogue (civil) is being made but the N&S approach is a non-starter; particularly when the FY 2008 deficit is heading towards $600 billion and a recession is here if you have a job and a depression is here if you do not.

    John McCormick

  4. Teryn Norris says:

    “I think it would hard to finance, build, and deliver fully installed new coal plants for significantly less than 10 cents per kWh today, even with no carbon dioxide charge.”

    How much does coal cost in China and India, Joe?

  5. Alex 77 says:

    Joe – I have a question regarding the taxation implications for feedstock-free renewable energy. CSP seems to be just too good to be true at this point, and I quake in anticipation of its large-scale deployment.

    My question – do federal and state governments stand to lose massive tax dollars from the widespread implementation of energy sources which do not require a taxable feedstock? (hence, another component of federal resistance to their deployment) I’m trying to wrap my head around all of the stakeholders here.

  6. Joe says:

    Jade: Me, libertarian? Funny! The spending program envisioned by B.I. is what we don’t need. I have no problem with a tax credit and an RPS (which is much better than a subsidy).

    Paul: CO2 Must be priced equivalent to its damage cost — else we can’t possibly get to 450 ppm. Remember, there is a huge difference between new CSP beating new coal in, say, 2015 and anybody beating OLD coal anytime soon absent a price.

    John: I Couldn’t agree with you more. What I have tried to explain in earlier posts is that huge govt $$$ for clean tech is as anathema to most conservatives — including McCain — as most other climate policies.

    Teryn: I’d love to know — but of course getting a real price is hard in a non-market economy with a non-floating currency.

    Alex: Well, the Western Governors Association actually recommends states give them a state and local tax HOLIDAY!

  7. Paul K says:

    Joe,
    “CO2 Must be priced equivalent to its damage cost ”
    Two questions. Are you proposing a price for carbon and a price for CO2 with perhaps different means of attaining each? And are you familiar with Ross McKitrick’s proposal for basing and adjusting carbon taxes on measured warming?

  8. Joe says:

    1) No
    2) No — sounds like a bad idea to me.

  9. David B. Benson says:

    Paul K — If there were a world government, then the idea of taxing adding fossil carbon to the active carbon cycle based on the measurements of atmospheric CO2mwould make sense. It is important to rmember that we loose ocean bioproductivity via acidification. Its not just temperature.

    Since we do not have a world govrenment, I have no proposal at all. Just a plea that it needs fixing. Now.

  10. Jay Alt says:

    Paul -
    McKittrick’s proposal suggests responding to global warming decades after the GHGs are put into the air. By then it is too late to brake the system, (hence his idea.) Rather than use a global average temperature, he suggests reacting to tropical temps, which respond more slowly.
    So the idea is doubly deadly. It is the climate policy equivalent of mounting your smoke detector inside a toilet tank.

    Nice post Joe, your write;
    You can see a detailed 2008 DOE presentation on solar, mostly PV, here. It is well worth a look if you are interested in PV.]

    The link needs to be fixed.

  11. David B. Benson says:

    Jay Alt — The global warming (so-called greenhouse) gases are well mixed in the atmosphere within about two years.

    Once there, there are methods to remove the carbon to be stored deep underground.

  12. Anonymous says:

    1) “You can see a detailed 2008 DOE presentation on solar, mostly PV, here. It is well worth a look if you are interested in PV.]”

    The “here” link points back at this thread.

    2) Yes to Joe’s comments.

    a) In another thread, I listed the usual stages of classic R&D portfolio management:
    Pure research (1)
    Applied research (2)
    Exploratory or advanced development (3)
    Development (4)
    Deployment (5)

    I live 5 miles from Sand Hill Road and consult for Venture Capitalists. A bunch of them are investing in numerous flavors of solar, among other things.

    For those unfamliar with VC behavior, I assure you that VCs do *not* invest in the first two stages on that list (at least, not on purpose :-) Some may chance a little exploratory, but mostly they want to invest in development (4) that has relatively low technical risk. Some later-stage VCs really want frims ready to go to (5) massively, because that’s how they build huge businesses.

    This is another datapoint: certainly solar doesn’t need massive R&D (especially R) dollars thrown at it. What everybody wants is a reasonably-stable investment environment, rather than subisides that come and go.

    b) Meanwhile, CSP certainly doesn’t need muhc R&D help, merely manufacturing scaleup, and normal cost reductions.

    c) As for PV, I like to cite Applied Materials (AMAT), the large company that makes a lot fo the machinery to make chips, LCds, and now, PV solar. See:
    http://www.appliedmaterials.com/news/solar_strategy.html

    This division is run by Charles gay, a very sharp guy I’ve heard talk. on that page, look at the presentation, which has a wealth of material on cost curves, engineering projections, etc. Note that AMAT is a conservative engineering company, not a startup looking for funding, and they’ve already invested big-time, which is obvious if you look at the (awesome) manufacturing machinery they’re already building.

    3) Anyway, solar is one of the last places I’d put public money for R&D. Deployment yes, by making investment more predictable.

  13. Joe,
    I’m a proponent of CSP with storage and agree with your general optimism. However, I believe that CSP needs more policy drivers in its favor, especially as a coal replacement. CSP with storage needs preferential access to the grid.. Essentially a feed in tariff or similar incentives that allow or require utilities to take dispatchable power from CSP with storage, with some compensation mechanisms for breaking coal contracts. The huge potential for CSP to replace most fossil generation in the Southwest and eventually the country is still “bottled up”.

    To get both PV and CSP on a glide path to lower pricing, they need to achieve economies of scale, which means someone, either the taxpayer or the ratepayer, needs to pay more money now for clean energy and then have those payments scaled down over time in successive generations of plants. This is the mechanism of feed in tariffs, though if someone wants to try to invent something else that bridges the early commercialization gap, they are welcome to try to invent one it. I don’t think it’s going to happen without a push from government or markets structured to favor renewables both monetarily and institutionally. Ted and Michael’s plans focus too much on the wrong end of the technology process; we need the resources concentrated on the commercialization of them (which doesn’t happen without some additional monies).

  14. Joe says:

    Michael:
    I think I’m clear that I support tax subsidies and a strong electric utility renewable portfolio standard (RPS), at least until we have a serious price for CO2.

    A feed-in tariff is just not the way we do business, or policy, in this country, so I doubt it will happen. An RPS lets the market minimize costs.

    But I agree S&N are focused at the wrong end of the problem.

  15. Paul K says:

    While looking for information about 2007 CO2 emissions – don’t know why it takes so long for these numbers to be published – I came across this December 2007 U.S. Greenhouse Gas Abatement Mapping Initiative Executive Summary titled Reducing U.S. Greenhouse Gas Emissions: How Muuch at What Cost? It’s rather long (107 pages) but a quick read indicates a pretty good analysis of the abatement potential by 2030 of currently available efficiencies and technologies. Perhaps someone with more expertise than me could deconstruct it.

    Jay Alt, I appreciate your explanation of McKitrick’s proposal, but are you saying I should move my smoke detector?

  16. Mark Shapiro says:

    A carbon tax is the best accelerator for reducing CO2, because it promotes all clean alternatives: efficiency, simple conservation, and renewables like solar. We know that taxes are almost as unpopular as al Qaeda, (even though taxes are what we use to fight al Qaeda). Taxes support the troops. Of course, I would settle for ending subsidies for oil and coal. (Isn’t that a conservative and libertarian ideal?)

    CSP looks great today, especially after hearing about Ausra (which I think is featured in your picture of CSP above). CSP would be most effective if you could capture the waste heat for hot water, space heating (and even air conditioning).

    PV costs include installation and inverters. Eliminate installation cost by building integration (BIPV. Then eliminate the inverters by integrating the DC supply from PV with DC inputs like computers and other electronics. I thought I was the only one with this crazy idea, but someone pointed me today to Nextek Power systems — they’re doing it!

    Regarding the cost of coal, look at Appalachia on Google Earth from about 400 miles up. Zoom in on any one of the little scars that used to be a mountain. Weeping is optional.

  17. John Mashey says:

    mark:
    CSP is good, but as for capturing the waste heat … unfortunately, big CSP farms seem best-sited in Southwest deserts, and one might as well use every bit of energy one can to generate electricity and just send that off, i.e., this is not like cogeneration plants. I guess it would work for rooftops of some industrial buildings, although I haven’t noticed anybody focussed on that yet. [Ausra is doing big utility-scale.]

    On rooftops, solar hot water is already widely-used, and well-scaled for individual homes.

  18. Joe,
    If we want CSP to take out coal we are talking about an $.10/kWh gap between the 1st generation of CSP baseload and existing coal. Tax credits as they are currently proposed plus the politically acceptable carbon prices are going to push out deployment of these for years. Maybe an extra large tax credit for coal displacement? I think we cannot take any options off the table.

    If you are serious about rolling out these technologies a simple re-iteration of the status quo is not going to get the job done.

  19. Joe says:

    M.H.
    NOTHING can beat existing coal. It’s been paid for. Breakthroughs sure as heck can’t do it, as you know.
    You want to start shutting down existing coal, which, of course, we’ll have to do by 2020 — then you need a mandate or a high price for carbon. Only way to do it.
    But I’d like to get CSP down to 8 cents/kwh first.

  20. Joe,
    The other way is to prioritize building climate friendly technologies through incentives or specified mandates with some financial backing behind them. I think you’re hanging too many hats on the carbon price. Carbon price is good but in boosting it really high you are going to start to make all goods much more expensive and it will lose some of its information value, it’s kind of a blunt instrument in areas where there is currently a large price disparity between clean and dirty technologies.

    It’s a chicken and egg problem…to get CSP down there requires deployment on a massive scale and a secure policy environment. Otherwise you’re sitting around waiting for a breakthrough. As of yet, RPS plus tax credits have not been a secure policy environment. I don’t think the BI approach is right either because of its lack of focus on deployment.

    You might find this video of former Cal. Energy Commissioner John Geesman interesting:
    http://link.brightcove.com/services/player/bcpid1494779482

  21. David B. Benson says:

    People who live in glass houses:

    http://www.sciencedaily.com/releases/2008/04/080410101210.htm

    entitled “Future Of Solar-powered Houses Is Clear: New Windows Could Halve Carbon Emissions”

  22. Earl Killian says:

    A few facts:

    1. Stirling Energy Systems won’t give an exact figure for their CSP technology, but they say it is “less than 10 cents per kWh” today.
    http://www.stirlingenergy.com/faq.asp?Type=all

    2. The National Renewable Energy Laboratory (NREL) estimates CSP cost to reach 7 cents per kWh by 2010.
    http://www.nrel.gov/csp/1000mw_initiative.html

    3. NREL has further estimated CSP cost as reaching around 5 cents per kWh by 2020.
    http://www.nrel.gov/docs/fy04osti/33875.pdf

    Some of these prices may have to be increased for the same reasons that coal power plants have increased in price, but they can be compared to coal costs for the same year as the CSP estimate.

  23. Earl Killian says:

    Michael Hoexter, on what basis do you say Joe is “hanging too many hats on the carbon price.” If you actually read his posts, you’ll see that is not his position.

  24. Earl Killian says:

    Paul K, my experience is that DOE etc. data for the preceding calendar year usually comes out in Q4. You won’t see what you’re looking for until probably October.

  25. Earl Killian says:

    Michael Hoexter, California’s RPS appears to be working. Why do you say “As of yet, RPS plus tax credits have not been a secure policy environment.”?

    Examples of California RPS CSP projects:
    500-850MW SCE with Stirling Energy Systems
    300-900MW SDG&E with Stirling Energy Systems
    177MW PG&E with Ausra
    533MW PG&E with Solel
    500MW PG&E with BrightSource

    SCE also has 1021MW from wind, 892MW from geothermal, and 221MW from biomass.

    The biggest issue in RPS is making the transmission capability available. California has efforts to make that happen. There is an effort for 4500MW of wind energy transmission from Tehachapi, for example.

    I’ve left out a lot. This is just a sampler.

  26. Paul K says:

    Earl Killian,
    Do you have a take on what the grid will have to look like in 2030 and beyond?

  27. Mark Shapiro says:

    I happened to glance back at Joe’s 8/30/2007 post on CSP
    http://climateprogress.org/2007/08/30/the-solar-power-you-dont-hear-about/
    and noted a couple excellent comments from Earl Killian about PV and CSP, including the first mention of Ausra (a CSP startup) I had seen. So it is wonderful to see Mr. Killian commenting here again!

    My favorite comment is his offhand suggestion that instead of including inverters with PV systems that: “all those ugly power bricks (which are AC to DC converters) plugged into the wall could go away if we had a DC standard for homes.”

    And once we integrate PV into roofing systems, the installation cost goes way down (possibly even negative). Put this together with Nanosolar daring to talk about PV at $1/watt and PV looks unstoppable.

  28. Mark Shapiro says:

    Paul K: what should the grid look like in 2030? Here’s my favorite so far: a one megawatt DC grid connects CSP sources, mostly in the desert Southwest, and wind farms, mostly in the Dakotas to Texas wind belt, to all of North America. And all new buildings have integrated PV for onsite power while the sun shines.

    Wind and solar form a diversified portfolio, distributed by a smart grid with near real-time pricing.

    How’s that for starters?

  29. Ronald says:

    I do remember that 20 years ago some efficient freezers and refrigerators did sell with DC powered motors. I don’t know if they still do.

    DC windturbines also have some advantages such as the blades can rotate at variable speeds. But there were disadvantages also.

  30. Earl Killian says:

    Paul K, what the US grid looks like in 2030? That depends on what politicians the US elects in the 2008, 2010, 2012, 2014, …, 2020. I think political predictions say more about the seer than the future, so I think I’ll decline to guess the way those elections go.

  31. The other day I wrote about the road to happiness as a small Indian company called DesiPower sees it. (www.bloganandi.blogspot.com) I also wrote about the way the UNFCCC climate bank will work. Readers are directed to the same blog site for the previous articles about the bank.

    If we get a climate bank to implement the second commitment period of the Kyoto Protocol we can all take that CSP low road to happiness. And it will be the task of our hard working delegates to the UNFCCC to take the high road – selling emission permits to polluters all over the world and disbursing the money to us.

    I look forward to the day when the financing mechanism of the Convention really does meet the objective of the Convention in this way. I do not think the day is far off. Here nonetheless is my short exhortation (again!) to the power that be to do the right thing. May you developed countries please learn from your past mistakes and resolve to do better this time round.

    During negotiations of a Framework Convention on Climate Change, Brazil, China, India, Malaysia, Kenya, Mexico, United Republic of Tanzania, Vanuatu (for AOSIS) and Venezuela wrote a paper called “Mechanism for financial resources and technology transfer.” We said:

    “An international Climate Fund is hereby established under the authority of the Conference of the Parties which shall decide on its overall policies and operations, in particular determining priorities, criteria and selection of projects and activities to be funded. It shall be distinct and independent of other funds and international financial institutions.” This was on the 18th December 1991. By the 7th session of the INC held at New York from 15th to 20th March 1993, you developed countries had hijacked the mechanism for financial resources and thrown out these suggestions by the developing countries and the small island states.

    Instead you, the developed countries, gave us a hodge podge of “principles” cobbled together by the Global Environment Facility of the World Bank and presented on a take it or leave it basis.

    Principle I states that there is “additional grant and concessional funding of agreed incremental costs for achieving agreed global environmental benefits.” This means that we can get money from converting from coal to wind, but only if wind cost more, and only if we already have coal, and only if wind does not provide “national benefits” (see Principle II).

    Principle II states that the GEF finances activities that benefit the global environment. (“it should however be noted that there are many instances where it is difficult to distinguish global and national environmental benefits and therefore some degree of flexibility in interpreting such benefits is required.”). GEF staff are today the gods of “global benefit”. Say no more.

    Principle VI is “avoiding the creation of new institutions”. Amazing! Developed countries refuse to set up a democratic new climate bank by elevating the self-serving institutional momentum of the status quo to the status of a principle!

    And then there is Principle VII ensuring “broad and equitable representation of developed and developing countries” – not “under the authority of the Conference of the Parties” of course, just another gravy train for those who are willing to play the game.

    You can see that the GEF has been a joke. It only has as much money as you developed countries have dribbled into it. It has served the interests of its staff; but no net emission reductions have taken place through the climate funds of the GEF. This is incredible but true. The GEF has not contributed one jot to meeting the objective of the Convention.

    Most observers today recognize the gravity of the situation. The entire text of the fourth review of the financial mechanism of the Convention by the Subsidiary Body for Implementation, which is supposed to be ready for the twenty-ninth session of the SBI to be held later this year, is bracketed. There is no agreement on just how strongly to condemn the past performance of the GEF, or on the future course of action on financing under the Convention and throwing out the GEF.

    The disagreement is about whether a new bank should be created, whether this new bank should create “negative emissions”, (i.e. whether the bank should sell emission permits on the polluter-pays principle), whether the bank should have the right to sell such permits in all countries where pollution is taking place and where polluters must gradually reduce their pollution, and whether the quantum of permits should be limited tightly enough to meet the objectives of the Convention, say a cap of 80% reduction against 1990 levels by 2050. Of course we developing countries all think these ideas are good as we have done since 1991. But there is disagreement because, well, for a start, a new bank would after all be contrary to the GEF principle VI “avoiding the creation of new institutions”! More importantly, you developed countries are not willing to share the fines and sales revenue from your polluters with the non-polluters of this planet.

    The simple fact is that a new bank is the only way to meet the objective of the Convention. Developing countries know this, and welcome it; but you developed countries are scared.

    As you know,

    “The ultimate objective of this Convention and any related legal instruments that the Conference of the Parties may adopt is to achieve, in accordance with the relevant provisions of the Convention, stabilization of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system. Such a level should be achieved within a time-frame sufficient to allow ecosystems to adapt naturally to climate change, to ensure that food production is not threatened and to enable economic development to proceed in a sustainable manner.”

    This is a hugely challenging objective. It is why you developed countries have wasted 18 years of precious time.

    It is my daughter’s entire lifetime.

    In this period you have deprived us of valuable revenue raised by the bank through the polluter-pays principle. We have polluted, as have you. You have not taken the lead and you did not put in place innovative financing mechanisms as we suggested.

    In the second commitment period there simply must be a link now created between abatement and financial resources. The financing mechanism of the Convention must now be based on the polluter-pays principle. We do not at the moment have a financial mechanism under the Convention based on the polluter-pays principle. We just have dribs and drabs as hand-outs through the GEF.

    Your America delegate at the Working Group on Long Term Cooperation recentkly said that the Climate Convention is not a development Convention! Are you all mad? Is energy not about development? Hav eyou not stolen your national development from us by polluting your way to luxury? And now you are not willing to allow the UN to sell permits to your polluters in an effort to reduce your pollution? Are you mad? You have not done anything for 17 years, and yet you do not want to have an internaitonal authority control you?

    And as a consequence pollution has skyrocketed since we first started creating the FCCC.

    We have seen you developed countries fail miserably in meeting your commitments in the first commitment period of the Kyoto Protocol.

    The polluters in your national territories are allowed to create their own emission permit price and this is the reason why the first commitment period is a failure.

    There has been no reason not to pollute. A 20 Euro per tonne of carbon dioxide price has been much too low to deter polluters.

    The simple fact is that there is a reason why the United Nations was invented. The reason is the inherent selfishness of nations. Nations of their own accord do not penalize their own citizens or their own legal entities such as corporations because in a democracy by definition the state is the representative of those very same entities. International laws are therefore there to take care of things that have to be taken care of at a supra-national level where nations must submit to higher authority.

    Today the most important international institutions are the World Trade Organization, the Nuclear Non-Proliferation Treaty and the UNFCCC. Of these the NPT and the UNFCCC are the most important. I believe that if we can reach agreement on the UNFCCC then the NPT may also be possible. If the UNFCCC is taken care of the WTO will anyway automatically fall into place. But if the UNFCCC is not given real authority its objectives cannot be met; and well, in that case I suppose we will not be able to take the high road or the low road to happiness.

    Conclusion: There is an urgent need now for a bank that can enforce the polluter pays principle globally. The climate bank will set emission permit prices (the price would not float as it does in the markets operated by polluters in the EU and the USA and Canada today), and the income from the permits will be distributed to all national governments whether developed or developing on the basis of population.

    In this way developed and developing countries get equal access to the revenue from taxing global polluters and can implement clean technologies such as CSP.

    The SBI text is quite some way from this idea. Developed countries do not agree that there is “the need to explore innovative means to increase the scale of international financing to climate change to enhance actions in developing countries;” or that there is a need to “Underlin(e) the importance of an effective financial mechanism of the Convention for enhanced action on the provision of financial resources and investment to support action on mitigation and adaptation and technology cooperation under the Bali Action Plan”; or that the SBI “decides that the review of the financial mechanism should be comprehensive and oriented to the needs of non-Annex I Parties for funding for mitigation and adaptation activities, as well as technology development and transfer.”

    There is really nothing more to be said. Either you developed countries are interested in meeting the objectives of the Convention or you are not. If you are, you must learn to cooperate.

    It is praiseworthy that United States of America Presidential candidate Obama has committed to an 80% greenhouse gas emission reduction by 2050.

    But is he willing to appoint the new UNFCCC-led climate bank as the only authorized agency to sell emission permits in the sovereign territory of the United States of America?

    If yes we can meet the objective of the Convention because all countries will get a part of the funds raised by selling scarce and valuable pollution permits.

    If not, we have business as usual, with you developed countries continuing to profit unilaterally from your ill-won gains of the past and spending our money on clean technology as and when you want to look good; and we developing countries will continue to struggle to catch up in the global market place with or without climate friendly technologies, as we unilaterally see fit and depending on what we can afford.

    I do think this time round, with a new US President, we will get cooperation. Cooperation is rational, and acting rationally is a wonderful thing. The delegates to the climate bank of the Convention will take the high road to happiness and we will take the low road. We will all get a jobs in clean energy out of this — and I am sure we will even find a niche for the ex-staffers of the GEF somewhere.

  32. sesli chat says:

    The other day I wrote about the road to happiness as a small Indian company called DesiPower sees it. (www.bloganandi.blogspot.com) I also wrote about the way the UNFCCC climate bank will work. Readers are directed to the same blog site for the previous articles about the bank.

    If we get a climate bank to implement the second commitment period of the Kyoto Protocol we can all take that CSP low road to happiness. And it will be the task of our hard working delegates to the UNFCCC to take the high road – selling emission permits to polluters all over the world and disbursing the money to us.

  33. Theodore says:

    Judge current policy by the current result. In the US, we need to be building at least 50 GW of renewable energy per year. We are building approximately none. Conclusion: We need a tax on old energy and a subsidy for new energy adjusted periodically until we get that result. Keep raising both the tax and the subsidy until the construction boom hits the “frantic” level on the crazy scale. Legislating a sense of urgency can be as simple as turning a knob.

  34. I do think this time round, with a new US President, we will get cooperation. Cooperation is rational, and acting rationally is a wonderful thing. The delegates to the climate bank of the Convention will take the high road to happiness and we will take the low road. We will all get a jobs in clean energy out of this — and I am sure we will even find a niche for the ex-staffers of the GEF somewhere.thansk