Climate Change and The Invisible Reality
Many corporations are not worried or emphasizing the new use of renewable energy or the beneficial possibilities the research and development of these emerging technologies may hold. In this day and age, we see many activists and pseudo activists promoting renewable energy only because it is relevant and an interesting topic (something which at times is also used to stir political conflict). This is dangerous because it puts pressure on markets that are already struggling to provide efficient solutions — using the least amount of resources to produce the most beneficial outcome. Although many benefits exist for renewable energy, we see in economics that every set of benefits come with their own set of trade offs. The benefits describe how to produce viable solutions while also being efficient with the current available resources. However, efficient solutions, especially in the sphere of clean tech, have adverse effects on resource management — primarily in the amount of people hired and insignificant jobs within an economy and society.
The politics and the pseudo experts may demand change from fossil fuels to renewable energy and efficient solutions, but the market will respond with a “No” because there is a cost to pay. The market needs to pay salaries, employ people and make profits to keep everything aligned to succeed and to completely transition a company or a market takes an extraordinary amount of effort, time and resources which is not easy.
This, however, does not mean that society should be hopeless. We must continue pursuing new ideas that will decelerate global warming and eliminate the burden of certain climate changes and mitigate the risk of future catastrophes.
Although, the vast majority of the media are emphasizing on what is not being done, implying the problem is never going to be fixed but in reality the public is not aware of how these climate issues are being approached to begin with. During 2017 alone over $350 billion dollars in global investments went towards clean tech solutions. The following year, the global investments reached around $330 billion dollars. The previous decade, from 2010 to 2019, has accounted for nearly $2.6 trillion dollars of these investments, based on a study done by BloombergNEF for the United Nations Environment Program. These investments are already showing a decrease in costs for solar panel systems, specifically commodities such as multicrystalline polysilicon and monocrystalline silicon ingots. These commodities are key components within the supply chain of the cleantech industry since they are key to producing cheaper, better and more efficient photovoltaic solar cells. Although these components are getting cheaper, the industry is slowly realizing that larger costs arise from installations, maintenance, insurance and operations of solar systems. Furthermore, renewable solution investments will produce close to $322 billion a year through 2025, which is more than triple the amount of investments going into fossil fuel plants which produces about $116 billion. When it comes to implementing sustainable renewable solutions no investor is worried about why they should not pursue these ideas, but as Saudi Aramco Energy Ventures CEO Majid Mufti affirms by saying, “the only thing we were worried about is: can we do it right?”. Doing things correctly must mean being interpreted by a scientist or an engineer by empirically testing a solution repetitively until it can’t fail without a single ounce of doubt. It must also mean that companies have a streamlined process of working with lawmakers to adopt these solutions into the legal framework and easily into our daily lives. This process, however, takes a long time — meaning that we must continue to suffer from these complicated barriers to innovation.
Although renewable solutions may be a noble cause, rapid implementation would cause an increase in unemployment depending on how reliant individual states are on non-renewable solutions such as fossil fuels, oil, natural gas, coal and nuclear energy. The Rhodium Group, an independent research provider that combines economic data and policy insight to analyze global trends, conducted a research experiment combining the skills of both economists and environmental scientists. The research provided insight on how the transitional economic risks could potentially cause more damage to society rather than benefits (Staff, E. & C. (2019, May 9)). Unemployment would increase because these solutions have been implemented for such a long period of time they have had space to develop and settle down to the point of becoming scalable markets. Some of the transitional economic risks that could occur can potentially contribute to negative correlations in median household incomes, and/or increase in unemployment. Scalable markets are more likely to produce positive economic benefits rather than renewable solutions which are not scalable as of right now because they have not had time to commercialize, develop or produce an increase in scalability in comparison to existing non-renewable solutions. The reasoning is due to a number of variables but one of the most impactful is due to public policy and regulations from lobbyists which is why the market for these solutions are taking time.
The Rhodium research Group also explained that if nothing is being done society will also have to suffer the physical risks involved. Physical risks include the investment losses due to an increase in frequency of natural causes, such as hurricanes, droughts, floods, cities being consumed by oceans and other causes. Recently the CEO of BlackRock, the largest investment hedge fund in the world responsible for $7 trillion dollars worth of assets, publicly warned other investment firms that they should address the risks of climate change and pursue solutions before they start losing more capital resources. BlackRock’s response to climate change was to create a fund in investments toward battery storage systems, which is a solution wreaking havoc on clean tech markets. The reasoning for the investment toward better batteries is because technology is not advanced enough to store energy for long term purposes. Regardless of how many efficient ways you can produce energy, if you can’t store the energy then the energy goes to waste, which is why there’s been such a reluctant effort towards specific cleantech investments.
Existing companies are not able to implement renewable solutions due to market constraints. They have other ways of providing help such as capital investments which help entrepreneurs make renewable solutions come to life. We live in an age where there is so much capital investment laying around that all you have to do is create the right idea at the right time and pitch it to genuinely interested people and you increase the probability of living in a world running on complete renewable based solutions. One of these individuals is Bertrand Piccard, he changed the aviation industry by creating the world’s first solar power airplane which he and his Co-Founder and Co-Pilot André Borschberg flew around the world. Piccard in a podcast interview said that “Solar Impulse is the world’s first electric airplane that produces its own fuel through its solar panel wings” because of its modularity which is detrimental to its success. In the podcast Bertrand explained that when he went to all the aerospace and aviation companies with his idea, they laughed at him and said that it would never work due to the many constraints it had. There’s a lot of truth to it because it is practically impossible for one company to create, manufacture and test the endless technologies it takes to bring his ideas to life (highlighted in this article), which is why these aviation companies were so reluctant to pursue this issue but the best part about his solution was the modularity.
This did not stop Bertrand from bringing his dream to life as he approached non-aviation companies with this new plan to approach production by outsourcing materials and technologies. Outsourcing would come from firms around the world which specialize in producing the specific materials and technologies which exponentially reduces the costs and burden of cleantech companies — thus also promoting global collaboration to fight climate change. Piccard describes 50 projects, each with a single goal of producing a key characteristic to attribute to the production of the final solar airplane. The business plan Solar Impulse came up with created efficient solutions while also creating hundreds of jobs for a wide variety of industries, which large corporations do not have the flexibility of implementing within their current corporate ecosystem, it’s practically impossible. These projects brought in investments from chemical firms to pharmaceutical companies and helped grow many other start-ups along the process which led to hundreds of other efficient new technologies, which have other applications that add to the successful implementation of living in a 100% renewable solution based world.
Since Bertrands experience around the world, renewable solutions within the aviation industry have only continued to grow (The third article). One key aspect Bertrand pointed out is that all the technologies that create these cleantech solutions have the possibilities of being implemented in any industry. For this precise reason, many non-aviation companies were so invested (with funds, non-monetary resources, and other forms of support) in Solar Impulse. As for the public, don’t lose hope and definitely don’t bring unnecessary negativity to our fate on this planet. So many intelligent, driven, and passionate people see these issues and are taking action.
Sources:
- Article from 2016: Solar Impulse 2 Shows The Possibilities, And Limitations, Of Movable Solar
- Article from 2016: Business Science of Solar Impulse
- Article from 2019 (Current event): Innovation Takes To The Skies: Electric Planes Are About To Revolutionize The Airline Industry
- Solar Impulse and The Next Phase of Renewable Energy Solutions
- Podcast Interview with Swiss Balloonist, Co-Founder of and Co-Pilot of Solar Impulse, Bertrand Piccard
- Staff, E. & C. (2019, May 9). Clear, Present and Underpriced: The Physical Risks of Climate Change. Retrieved from https://rhg.com/research/physical-risks-climate-blackrock/.
- Bloomberg Business for renewable energy investments Link
- Silicon components for Solar Cells Link
- Saudi Aramco’s Energy Ventures Plan Link
- BlackRock Article Link
- BlackRock Climate Change Reshaping Finance Link
