Powering Consumerism With Renewables…A Contradiction in Terms?

by Nelson Harvey

Even if we exploited all of our renewable energy options completely, they could not entirely support our growth-based and industrialized society, according to a recent book by Australian professor Ted Trainer. Trainer, a part-time professor at the University of New South Wales, argues that between intermittent wind and solar supply, power plant siting issues, and lack of arable land for biofuels, renewables are not up to the task of meeting all of our energy needs.

Since I haven’t read the book, I won’t pass judgement on whether Trainer’s calculations are correct. Certainly, I approach any projections about the future of complex energy systems with a high degree of skepticism, since one faulty assumption can gravely skew the results. For example, a few months ago scientist Jesse Ausubel published a paper claiming that using renewables to meet all of our power demand require so much space that it would “rape” much of our current arable and wild land. As it turned out, he made the colossal error of not considering dual-use wind and solar, the idea (already widely employed) of siting turbines and panels on top of existing buildings.

But Trainer’s argument goes deeper than the simple number-crunching of energy supply. His larger point, which evidently he spends the second half of the book on, is essentially this: so long as our economic system accepts unlimited consumption and growth as natural and desirable, it would be an exercise in futility to try to power it with renewable and sustainable resources. Bringing our energy demand down to meet the supply that renewables can provide will require shifting the orientation of our values toward consuming less.

Having just begun a course in introductory economics, I was drawn to Trainer’s view that we must re-define “acceptable economic behavior” if we are to rely exclusively on renewable power. Like all systems, our economy is based on a certain set of critical assumptions, that is, assumptions that have an important impact on what we consider to be “good,” and thus how we act economically. For example, one assumption built into many economic models is that business firms will always try to earn the highest possible profit for their owners. Clearly, this is overly simplistic and ignores many types of enterprises, like businesses that shut down for part of the year while the owners are on vacation, or that operate for other, social purposes. If you build a school of thought on assumptions like these, you might end up with a structure that looks remakably similar to the one we have now.

Since Adam Smith penned his seminal work “The Wealth of Nations” in 1776, economics has worked its way into every aspect of society. We worship at the altar of efficiency in planning our daily lives, and we conduct cost-benefit analyses of our relationships. In an increasingly diverse nation, it could almost be said that economics has become the true first language of the United States.

On the first day of my economics class, we heard the subject defined as the social science “which examines the part of individual and social action most closely connected to the material requisites for well-being.” I think part of the reason that economics has become our language of choice is because the economists have done their jobs so well. In rich nations, they have provided us with far more than the material requisites for well being. Capitalizing on the limitless nature of human desires, the market now over-produces millions of luxury goods.

The problem, as I see it, is that the economic theories which brought us here are out of date in light of our current situation. Take the term “material requisites,” the things which economists try to make as cheap and plentiful as possible. To address our environmental problems, we need to redefine both of these words, radically de-materializing our goods while thinking hard about which ones are “requisites” and which are luxuries.

I’ll be posting much more on reforming economics in the future, but Trainer’s book on renewable energy provides an interesting jumping-off point. Unlimited consumption is not “renewable,” so why would we want to fuel it with power that is?

Photo credit: flickr/harshadsharma

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3 thoughts on “Powering Consumerism With Renewables…A Contradiction in Terms?

  1. Dave Aakhus says:

    While I agree with you Nelson that economic models are often too simplified to accurately explain the real world (god knows it’s anything but a piece of pie), the definition of a model is exactly that: a simplified abstraction of reality. Economists use models because they are helpful at explaining a wide array of phenomena – the economy – and have proven very accurate (if imprecise) in describing and forecasting various economic activities, such as financial markets and perfectly competitive markets.

    And although many economists do seem to narrow-mindedly pursue the relevancy of their models’ outcomes, the more intelligent (and respected) ones take a step back and acknowledge the model’s limitations. In many areas of economic activities, especially international trade and oligopolistic and monopolistic competition, the number of critical assumptions is dizzying and is often best explained through the perspective of Political Economy – gray area decision making at its best.

    I don’t mean to be a free market banner boy or trumpeter of classical economics, but I do see the value in the theories they propose. I personally have a difficult time accepting such simplistic assumptions when making a model, but then again if you *must* quantify something, you need to make it manageable. It does noone any good to simply qualitatively describe the projected cost of wind-generated electricity in 2010 to be “a lot less per kilowatt hour.”

    But to respond to the initial observation about Trainer’s book and the main argument it makes, I concur with your skepticism about seriously projecting energy supply and its super dooper complex multilateral effects on the global economy, inividuals’ incomes, and consumption behavior. I think, as a simplifying assumption :), that if consumers (meaning basically everyone) have increasing disposable income, then they will most likely consume more of whatever gives them the greatest utility. But, I think the big thing to take note of here is energy costs. If electricity gets cheaper, homes and office buildings will be able to consume more the same cost, but if costs fuels for transportation – cars, trucks, airplanes – and for major industries increase, then we’ll see a rising of prices on the consumers end since every intermediary step to produce a good with cost that much more. This is what you’d see as a leftward shift of the supply curve because of more expensive inputs. And as a result, there would be less goods consumed – ceteris paribus, all other things being equal. So to bring it all the way back to the point that consumers would have to change their consumption behavior and therefore demand is not necessarily influenced by values, such as a shift to more altruistic or enlightened ideas of life-earth-happiness equilibrium, but self-concerned utility maximization.

    In the end, it’s really fruitless to attempt such a projection without committing an intense research and calculation effort. But I did want to point out that I have faith in people changing their behavior around self-interest – I think history proves that pretty well – than to change a very ingraned and fundamental aspect of being human, your desired lifestyle, to meet a newfound altruism.

  2. Nelson Harvey says:

    Hey Dave, thanks for the comment. The truth is, as you can probably tell, I have little formal training in economics, and am working to expand my knowledge there, so hearing from someone with a more extensive knowledge of the subject and all its assumptions is definitely valuable.

    To start, I certainly agree with your point that economic models are valuable, and I make the point in my post that this is probably one reason for our respect for economics. Those very models have informed policies that have made a great many of us (at least in the West), fairly prosperous.

    However, we both agree that they are imperfect, and my interest lies in two questions. First, how so? And second, how do we make them better?

    As you note, the largest underlying assumption of the free market system is that people operate according to “enlightened self-interest,” what our man Adam Smith called “The Invisible Hand.” However, it is my belief that the absence or incompleteness of certain economic policies is pushing people to act against that interest, even when they percieve themselves to be doing the opposite. The classic example of this is the fisherman who, interested in boosting his own bottom line, takes all the catch he can from a given fishing area, and exausts the collective fish stocks in the process. Why would he do that? Because he encounters no price signals related to the ecological degradation he inflicts while fishing, or the relative scarcity of fish compared to the number of fisherman. If he did, he might revise his fishing strategy.

    You’re right to say that if electricity is cheap, people will buy more of it. But this begs the question: what do we mean by cheap? Are we talking about the loss of public lands and wildlife habitat from coal mining? About the medical bills from respiratory ailments related to pollution? No, we’re talking about the utility bill, and right now, the utility bill ignores all of these things.

    My central point is this: I am not asking for altruism. Rather, I am asking for an expanded definition of the term self-interest. I suspect that in the case of global warming, altruism toward the climate (i.e. emitting as little as we can), may be the most profound expression of self-interest that we are capable of. If reducing emissions doesn’t help us, it may well help our children. But this is a hard connection for us to make when energy remains cheap and costs remain hidden. That’s where effective economic policy comes in.

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