Electricity and net zero

The price is wrong: why capitalism won’t save the planet, by Brett Christophers, hardback, 432 pages, ISBN 978-1804292303, Verso, 2024, £22. Kindle and e-book editions available, paperback edition due May 2025.

This book is an interesting read about the economics of energy supply. It starts from the premise that the world’s priority should be to decarbonise electricity generation and examines why that’s not happening.

Capitalist economists, governments and international agencies pronounce that the operation of markets will lead smoothly to decarbonisation, simply because renewables are now cheaper.

The cost of wind and solar power has fallen dramatically. But efforts to decarbonise electricity generation are failing. Christophers says there are no examples of a substantial and zero-support renewable facility anywhere in the world – and explains why. The sector is still utterly dependent on government support. That’s because renewable electricity generation isn’t a very profitable business, unlike oil and gas production.

Britain’s energy sector is one of the most market-driven in the world. The wholesale cost of the bulk of our electricity for the next day is determined by spot market trades, typically in hourly or half-hourly chunks. But these spot markets affect prices worldwide and are volatile. When wind speeds drop necessitating a switch to reserve gas-fired plants, prices can leap – sometimes to an extreme degree.

Volatile

Such a market is hard for solar and wind generators. It’s rare that they can forecast their supply of power 36 hours ahead. This volatility deters renewables investment, but it’s great for speculators.

Investments in oil and gas projects are far more profitable. Exxon CEO Rex Tillerson told the company’s shareholders in 2015, “As to investment in renewables, quite frankly, we choose not to lose money on purpose.”

In sum, capitalism has failed to create a decarbonised electricity sector based on sun and wind.

Despite the recent growth of renewables output, largely government-supported, the global gap between demand and renewable energy supply from sun and wind has widened.

Global electricity demand almost doubled between 2000 and 2022 – from about 15,000 terawatt-hours a year to nearly 30,000. China and India have in recent years accounted for around four-fifths of global growth in electricity use. And population growth, industrialisation, urbanisation and the spread of domestic electrification will continue to increase electricity use right across Asia and Africa.

Every year, the world’s countries are increasing the level of output from fossil fuels, not decreasing it. In 2022, global electricity generation from fossil fuels totalled around 17,400 terawatt-hours, nearly double the 2002 figure.

Countries whose electricity demands have grown the most rely overwhelmingly on fossil fuels to produce power. About 85 per cent of South Africa’s electricity comes from coal, around 61 per cent of China’s, and around 74 per cent of India’s.

To reach net zero by 2050, as demanded by the UN Paris Agreement, would need more than 600 gigawatts of solar capacity and 340 gigawatts of wind capacity every year. The world’s largest solar farm, India’s Bhadla, capacity 2 gigawatts, spans about 50 square kilometres. So the target means adding a total 15,000 square kilometres of solar farms.

So what can be done to change the situation and to reduce fossil fuel use and to meet future demand?

‘Capitalism has failed to create a decarbonised electricity sector based on sun and wind…’

Christophers concludes that “only the state, by which I mean national governments considered collectively, potentially has both the financial wherewithal and the logistical and administrative capacity rapidly to lift annual global investment in solar and wind capacity from a few hundreds of billions of dollars to substantially in excess of one trillion – and keep it there…”.

This is astoundingly unrealistic – does he imagine all national governments will act collectively? And he omits to mention this also means huge tax increases.

And Christophers ignores aspects of his own analysis – for example that only reducing the output from non-renewables, as well as adding renewables, would solve the problem of reducing carbon emissions. Nuclear generation does not merit much mention either.

Earlier in the book he says that “there is not one single energy transition, even within a single sector such as electricity generation…what is unfolding and will unfold is a series of geographically disparate local transitions…each unique.”

But by the end he has forgotten this crucial point too, failing to recognise that energy transition will be different around the world and that it will take time.

Contradictions

The value of this book is that it highlights contradictory and wishful thinking about decarbonisation, including slogans like “Net Zero by 2050” and “45 per cent reduction by 2030”. It also exposes the facile thinking inherent in calls for a “just transition” and “a green new deal”, which portray the problem as greedy energy companies and not capitalism itself.

Adapting to changes in climate and reducing carbon emissions can’t happen without technological development – reduction in consumption alone is not the answer.

Capitalist-serving governments everywhere will have to be forced to invest in research and technology aimed at reducing reliance on fossil fuels – and to move away from economic measures that penalise long term investment.

In Britain, workers have to confront the government and others who treat “net zero emissions” as meaning “no emissions” and use that policy as a reason for decimating manufacturing industry. And they should not accept sacrificing living standards to maintain the capitalist energy markets.