It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way - in short, the period was so far like the present period, that some of its noisiest authorities insisted on its being received, for good or for evil, in the superlative degree of comparison only.
- A Tale of Two Cities by Charles Dickens
While Dickens published those words more than 150 years ago, they seem eerily descriptive of today’s world. The words popped into my head as I contemplated the many facets of the popularity of the sustainability movement. Sustainability is the “spring of hope,” but the question of how to pay for it is the “winter of despair.” This short column will explore that dilemma with the motive of getting us thinking rather than trying to resolve the issue.
Webster’s defines sustainable as: “Capable of being sustained; of, relating to, or being a method of harvesting or using a resource so that the resource is not depleted or permanently damaged; of correlating to a lifestyle involving the use of sustainable methods.”
Wikipedia, drawing on many academic papers, offers a more complex, but comprehensive definition: “Sustainability has been used more in the sense of human sustainability on planet Earth and this has resulted in the most widely quoted definition of sustainability as a part of the concept sustainable development that meets the needs of the present without compromising the ability of future generations to meet their own needs.”
The wonderful simplicity of sustainability gives birth to many supporting themes such as sustainable agriculture, sustainable transportation, sustainable families and renewable (sustainable) energy.
Sustainable energy is closest to my heart as it promises sources of energy that will minimize resource use and environmental impact, but will still provide the watts to power our modern economy. Governments across the globe also support sustainable energy, offering generous incentives and subsidies to spur sustainable energy development. The
Result has been rapid growth in solar and wind resources with eager proponents congratulating each other. Unfortunately, there is one troubling “gotcha:” how to pay for these sustainable projects and how to make them financially sustainable (see winter of despair)?
The money to provide the incentives for sustainable energy projects comes from either taxes collected by governments or from surcharges levied on utility customers. When times were booming, this money was a minor cost, but as growth slowed, it became more significant and resulted in a reduction of incentives for sustainable energy development, most notably in Spain. And, as history has shown us, any project dependent on tax subsidies or utility surcharges is not sustainable (e.g. Synthetic Fuels Corporation circa 70-80s)
A contrasting positive is that, over the longer term, any short term financial “losses” in sustainable energy development are more than offset by the value of “externalities” that are not included in standard financial calculations. These externalities include estimated values of improvement in air quality and related health benefits, reduction of carbon based energy sources, and climate change impacts, among many others.
The only problem with this concept is that externalities do not generate cash. And, if sustainable projects do not generate positive cash returns, they are not sustainable, regardless of the value of externalities. It takes cash to make payrolls, buy supplies, make capital investments and pay lobbyists to ensure continued political support.
Politicians and policy makers address this concern by allocating limited tax and subsidy dollars to favored technologies or promoters. This is a messy process and generates a few winners and a lot of losers, as would be expected. More importantly, can the process be improved, and limited funds invested better, or are we doomed to business as usual?
President Obama may provide part of the answer by his stated “all of the above” energy policy. I assume he means oil, gas, nuclear, wind, solar, geothermal and host of emerging technologies. Perhaps it would be possible to rank all of the above, including sustainable and fossil energy sources, and develop a better policy framework. Suggested criteria for ranking might include:
1) Profit and loss both basis current and projected with a focus on cash; simply put, is the technology a money maker now and, if not, when?
2) What is the energy produced per unit of incentive/subsidy; this is another way of estimating the value of the tax/ subsidy investment.
3) Is there a distinct probability of technological success? How is it measured?
4) Obviously, each of these criteria deserves more explanation and the weighting of each in any ranking will pre-determine any outcome. However, the objective of this column is to stimulate your thinking on the question of what is sustainable versus what is really sustainable. I hope I succeeded.
Written by Rick Phelps, Executive Director of the High Sierra Energy Foundation. The views expressed in this column are those of the author and not necessarily those of his employer or of SJVCEO.
*If you may have any questions or comments regarding this piece please contact Rick Phelps at (760) 934-4650 or email@example.com.