Despite the shifting political winds in Washington, clean energy continues to deliver substantial economic benefits to communities across America, driven by powerful economic forces that transcend policy changes.
A recent Wall Street Journal essay by Eric Beinhocker, professor of public policy practice at the Blavatnik School of Government at the University of Oxford, and J. Doyne Farmer, Baillie Gifford Professor of Complex Systems Science at the Smith School of Enterprise and Environment at the University of Oxford, says that the clean energy revolution “is being driven by fundamental technological and economic forces that are too strong to stop.”
The pair explain that “once new technologies become established their patterns in terms of cost are surprisingly predictable,” with three possible patterns emerging. In the first pattern, encompassing fossil fuels and minerals, the costs can be volatile in response to short-term economic and political events. However, they remain relatively flat over time due to a balancing out of ever-more innovative technologies working to extract ever-reduced deposits of the resources. In the second pattern, encompassing hydropower and nuclear power, the costs remain flat due to a lack of mass-produced technologies.
The third pattern, which consists of computer processors and clean energy technologies alike, see predictable cost declines alongside performance improvements. For example, solar costs have dropped by 12%, and wind costs have fallen by 4% annually since 1990. The authors also note solar is currently 10,000 times cheaper than its first use in 1958. They estimate that solar will be even more affordable by mid-century, reaching one-tenth of current prices. These technologies benefit from mass production and advancements in related sectors: semiconductor manufacturing has supported the solar industry, while consumer electronics have benefitted battery manufacturing.
Beinhocker and Farmer note that technology adoption follows an S-curve as these costs fall: “When a technology is new, it grows exponentially, but its share is tiny, so in absolute terms its growth looks almost flat. As exponential growth continues, however, its share suddenly becomes large, making its absolute growth large too, until the market eventually becomes saturated and growth starts to flatten. The result is an S-shaped adoption curve.”
Solar power perfectly exemplifies this trend, providing 30% more energy per year for a significant time. While it will not continue at this rate due to its expected S-curve nature, the authors said, “We can predict that renewables, along with pre-existing hydropower and nuclear power, will largely displace fossil fuels by about 2050.” To illustrate this point, Beinhcoker and Farmer compare fossil fuels and landline telephones. While 95% of American residences had a landline in 2000, 75% did not have one by 2023. “In just two decades, a massive, century-old industry virtually disappeared.”
Still, The Wall Street Journal essay insists that government support for clean energy is essential, claiming, “History shows that technology transitions often need a kick-start from government,” and, “Such government actions have played a critical role in virtually every technological transition, from railroads to automobiles to the internet.” The CHIPS and Science Act, the Bipartisan Infrastructure Law, and the Inflation Reduction Act are examples of such support, with funding earmarked to encourage the expansion of clean technologies and manufacturing.
While the current administration has paused many outflows, “the IRA horse is well on its way out of the barn,” Beinhcoker and Farmer assert. At the two-year mark, according to the Clean Investment Monitor, the legislation had spawned more than $242 billion in clean investment, benefitting red states like Texas, Florida, Michigan, Ohio, North Carolina, and Pennsylvania. Essentially, the shrinking of the fossil fuel sector has become inevitable, with bipartisan support: “Very few consumers who buy an electric vehicle will go back to fossil-fuel cars. Once utilities build cheap renewables and storage, they won’t go back to expensive coal plants.” The authors make the case that if America wants to continue to be an economic leader, it must do so with policies that encourage the private sector to continue pushing these technologies forward.
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