Green Energy Is Cheaper…So Why Aren’t We Using It?

The sun, often referred to as a massive celestial ball, holds the power to blind, as famously stated by The Beatles. While the sun is known as Earth's biggest and hottest star, it's more than just a cosmic body. It has captured the attention of economists, businessmen, and politicians. In this exploration, we delve into the world of renewables, with a specific focus on solar energy.

Solar energy, harnessed from the sky, has undergone a remarkable transformation in recent years. Once considered expensive, the sustainability movement has tirelessly aimed to reduce the cost of renewables. The price of solar energy over the last half-century tells a compelling story. What was once a costly endeavor has now become more affordable than traditional energy sources such as oil, gas, nuclear, and even coal.

This dramatic change occurred due to various factors. Initially, renewables were considered emerging and small-scale technologies, which translated to higher development and implementation costs. Additionally, they required significant upfront investments, deterring potential investors. Banks deemed renewables a high-risk investment, given the dominance of fossil fuels subsidized by governments.

To address this investment gap, governments worldwide stepped in, working in tandem with continuous improvements in technology efficiency. Key players, notably Germany and China, spearheaded the production of renewables on a massive scale, creating economies of scale. As a result, the price of solar energy plummeted by almost 90 percent between 2009 and 2019, outpacing even the most optimistic projections.

While these cost reductions and experiments with renewable energy are promising, they also reveal deeper challenges within the energy transition. Despite the immense potential of renewables, they struggle to attract substantial investments from major players. This hesitancy from fossil fuel giants like Shell, BP, and Total stems from their insistence on profitability.

These companies have publicly announced their net-zero emissions goals, accompanied by pledges to invest in renewables. However, a closer look reveals that these commitments are often conditional and tied to profit margins. They require a significant return on investment (ROI), typically ranging from 8 to 12 percent. Renewables, despite their affordability, struggle to meet these profit demands.

The core issue lies in the fact that, under capitalism, profit is paramount. While renewable energy may be economically viable and sustainable, its lower profit potential hinders widespread adoption. Despite their promises, fossil fuel companies continue to invest heavily in traditional energy projects, maintaining or expanding their fossil fuel operations. This contradiction between words and actions underscores the fundamental issue: profit-driven motives obstruct meaningful transitions to sustainable energy sources.

The same profit-driven motives extend to major asset management firms like BlackRock, Vanguard, and State Street, which control significant portions of the global economy. Despite introducing ESG (environmental, social, and governance) funds and publicly endorsing sustainability, these firms often oppose shareholder resolutions aimed at improving environmental governance.

This divergence between public commitments and private actions reveals a crucial aspect of capitalism: the pursuit of profit. As long as profitability remains the primary objective, achieving meaningful progress in transitioning to renewables will be challenging.

To comprehend this challenge better, we can draw parallels with historical energy transitions during the Industrial Revolution. Despite the advantages of water power, the profitability of fossil fuels, coupled with their potential for exploitation, led to their dominance in powering factories. Steam engines enabled round-the-clock production, while coal mines facilitated easy privatization.

In contrast, water power, though cheaper and more abundant, faced logistical challenges related to location, dependence on natural flow patterns, and communal management. These factors made water power less profitable and, consequently, less attractive to industrial capitalists.

Fast forward to the present, and we encounter a similar dilemma with renewables. Despite their affordability and environmental benefits, they struggle to meet profit expectations. Moreover, renewables pose challenges for capitalists in terms of privatization, labor conditions, and violence in the extraction of rare earth minerals.

The situation highlights a key limitation of capitalism—it prioritizes profit over sustainability. As long as renewables are seen as less profitable than fossil fuels and other exploitative practices, significant obstacles will persist in transitioning to a sustainable energy system.

Efforts to address this issue must encompass a comprehensive approach. This includes rethinking energy allocation, reducing the need for constant economic growth, empowering workers, and enforcing environmental stewardship norms. By addressing these structural challenges, we can mitigate the exploitation associated with renewable energy production.

In conclusion, the transition to renewables is not merely an economic or technological endeavor; it is fundamentally a societal one. As long as profit remains the driving force, renewables will struggle to fulfill their potential. To achieve meaningful progress, we must confront the profit-driven nature of capitalism and work towards a more equitable and sustainable energy future.