Thursday, August 14, 2014

We need to rethink how we support renewable energy

Chris Goodall
11th August 2014

Feed-in tariffs are a great way to kick start renewable technologies, writes Chris Goodall. But they suffer from a law of exponentially diminishing returns. It's time for governments to move to direct R&D funding to achieve the transformational changes the world needs.

The renewable industries are now addicted to their own guaranteed cash streams from government and have growing lobbying power. The genuine innovation that we need is in danger of never happening.
Is it right to drive cost reductions in renewable technologies by use of direct production subsidies that are adding increasing amounts to domestic bills?
Or should we be spending more, much more, on fundamental research and development?
The argument is this. Broadly speaking, we can achieve cost improvements in any technology either by accumulating production experience (usually called 'the learning curve') or by targeting improvements in technology.
It is often difficult to disentangle the two phenomena but I still think the distinction is useful. Put another way, should we trying to cut prices by 'learning by doing' or by 'learning by research'?
Feed-in Tariffs emerged as the popular solution
Governments around the world have backed away from energy research. In the 1970's administrations that had been frightened by the OPEC oil embargo put big sums into R&D, particularly into nuclear but also into wind.

Outside France, that investment largely failed, and failed catastrophically. Energy R&D then plummeted around the world. A decade ago, UK energy research was costing just a few tens of millions a year. (It has gone up somewhat since).

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