Monday, February 22, 2010

For best policy, first define the goal

Is the goal of energy policy to reduce the costs energy imposes on the US economy and/or the planet, or to create jobs?

As one of my favorite energy-oriented sites points out, the two goals don't necessarily have much to do with each other.

Thin film solar technology, for example, contains a lot of intellectual property. Lots of engineering expertise is required to build the deposition systems, optimize the processes, and keep the whole operation running. Add the skilled electricians who actually build solar farms and connect them to the grid, and you get a lot of high-skill jobs. You also get electricity that is substantially more expensive than that generated by plain old boring low-tech fossil fuel plants.

But if your goal is to reduce the world's (or America's) consumption of fossil fuels and generation of greenhouse gases, whatever alternative technology you pick needs to be as inexpensive as possible. Ideally, it should be simple enough for illiterate subsistence farmers to implement using locally available materials, perhaps with guidance from a handful of engineers.

Not that there's anything wrong with green jobs. I have one myself, since most of my current clients are in the solar space. And certainly the emergence of a renewable energy sector will benefit the communities where those jobs reside.

But the assumption that clean energy will both prevent climate change and revitalize the US manufacturing sector doesn't stand up to close examination. Energy is a commodity product, and as such will always tend to migrate to the lowest cost technologies and least expensive producers. The fewer high-skill manufacturing jobs an energy technology requires, the more likely it is to actually succeed in shifting the world's energy mix.

Disclaimer: My opinions are my own, and do not necessarily represent the views of any particular past or present client.

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