These were two future scenarios debated by industry leaders at an IHT conference in Barcelona recently. Solar, with its soaring global sales and plunging prices, featured as a talisman for the third industrial revolution. Fracked gas featured as a flag carrier for extending the life of the second industrial revolution. As the founder of a fast-growing solar company, set up because of my concerns about dependency on oil, gas and coal, I took part in the debate keen to maximize the good news and find ways around the bad news.
Last week, the good news had a major setback. The U.S. Department of Commerce confirmed punitive tariffs on Chinese manufacturers of cheap solar cells and panels. The premise of the case, brought by U.S. manufacturers, is that Chinese manufacturers have been exporting their panels — cheaper than U.S. equivalents because of Chinese government largesse — at unfair prices. The Europeans are contemplating the same anti-Chinese action. The Chinese seem set to retaliate with punitive tariffs on exports of U.S.-made polysilicon, the raw material for solar cells. A full-scale solar trade war is likely.
Meanwhile, oil- and gas-industry lobbying in multiple countries is succeeding in stalling many of the feed-in tariff subsidies that have been driving the growth of solar and other renewable industries. Many policymakers concerned about climate change talk of gas as a bridge to the low carbon future.
Those enamored of the U.S. shale-gas phenomenon — the widely-unanticipated production of large amounts of unconventional gas in recent years — have begun to see gas as a bridge to a gas future. Feed-in tariffs, which pay premium prices for renewable generation financed by tiny levies on electricity bills, stand in the way. It would be rather inconvenient if solar became cheaper than everything else in a few years.
Nowhere is this more clear than in Britain, where a leaked letter from the chancellor of the Exchequer to the energy secretary essentially exhorts the latter to put a lid on the stimulation of renewables markets so that investors will not be put off pouring capital into the Treasury’s effort to bring the frackers to rural England and turn Britain into a “gas hub.” I am assured by many confidantes in government and industry that this kind of political response is the result of concerted oil- and gas-industry lobbying.
The two problems for solar are of course related. The assault on feed-in tariffs and other subsidies causes the shrinking demand that triggers the dumping of exported solar panels at low prices. Without the lobby-induced mismanagement of the market-building process by governments we would probably not have the solar trade war.
Whether you agree with my analysis of causality or not, the current situation is transparently dysfunctional for all comers except the energy incumbency. If you worry about energy security, the longer we stay dependent on gas and oil the more we become dependent on those who control the pipelines and the tanker routes. If you worry about climate change, we need a low-carbon future that involves a retreat from carbon fuels, not efforts to find and develop more. If you worry about both, on a globe en route to six-degrees warming — a level that threatens the very future of civilization — then an assault on the solar industry becomes akin to sabotaging armaments factories during a mobilization for war.
It could be so different, so easily.
Despite their failure thus far to deliver a meaningful climate treaty, governments in the past have proved themselves capable of complex treaties fostering common security. They could now negotiate a multilateral regime of cooperation for solar market-enablement: a globally coordinated set of feed-in tariffs aiming to accelerate solar’s descent to universal price parity with conventional energy. They could bulk-procure solar panels themselves, to speed the emergence of a mass market.
Working cooperatively, focused on common security, they could greatly accelerate the day solar energy is cheaper than all other forms, and feed-in tariff subsidies are no longer needed. They could all greatly foster their own domestic energy security in so doing. Light shines on all countries, infinitely. Significant oil and gas reserves sit in only a few, and are finite.
Jeremy Leggett is chairman of Solarcentury and convenor of the U.K. Industry Taskforce on Peak Oil and Energy Security.