Session 8 - Back to School

Back to school after a 1 week break...not exactly the best feeling on Earth, but being able to meet some of my TWC classmates brightens up my day. This session is on Energy and World Change- how we are shifting from a fossil-fuel based economy to a green economy. 

Burning question: Is there even a need for change?

I find Daniel's presentation really insightful. In contrast of the typical argument that there is a need for a change in terms of our energy usage, he presented that there is no need for change because of natural capitalism. According to Wikipedia, natural capital is "the extension of the economic notion of capital (manufactured means of production) to goods and services relating to the natural environment." So as long as there is an increase in efficiency in which natural resources are used to produce energy, there is no need for us to switch to alternative energy. By switching the focus from quantity to quality, we can maximize the potential of our current fossil-fuel centered economy and the switch to a world of green technology is not necessary.

In addition, maximizing resources seems to be less time-consuming and more efficient than finding alternative energy. We need to satisfy the increasing market demand for energy, and we need to do it NOW!!! Hence, natural capitalism is the solution.

If we recall one of the concept learnt in session 5, the increase in productivity from our industrial based economy to the current knowledge based economy is only 5 times instead of the usual 25 times at the moment. Hence, there is still room for improvements in efficiency. The same concept can be applied to the energy industry. Politicians, scientists, corporations and civilians should work towards and focus on maximizing what we are currently- the fossil-fuel based economy- and in this case, which rules over the need for alternative energy. 

However, opponents of his idea argues that there is a need for sustainability- Will maximizing current resources today solve our future energy woes? Evidently, not so. No matter how much we maximize our current usage of energy, there will be shortage of it in the long run. 

Moreover, there are much benefits to be reaped if we can fully capture the energy of the Sun. It is interesting that a Sun produces more energy in an hour then humankind use in a year! So why aren't we fully committed to using clean energy such as solar power? I believe one of the most crucial factor is our reluctance to change the old ways of doing things. We are so stuck in the fossil-fuel based economy that we find it hard to adapt to renewable energy, that may be an alien concept to some. Besides, alternative energy may not be reliable sources of energy. 

Wind turbines generating electricity

Ultimately, i believe that we should maximize the potential of our resources for the short run, and at the same time ensure substantial investment in alternative energy for the long run. 

Approaches to encourage alternative energy

There are many different approaches in which politicians can take to encourage the shift in energy market. They can either exercise their reward power or coercive power or both (which is the carrot-and-stick approach.)

Germany's National Renewable Energy Act aptly illustrates the use of incentives to motivate civilians to use clean and green technology. Monetary benefits were given to household, farms and companies who invest in solar panels to power everyday's activities. This led to solar farming- farmers heavily invest in solar panels to earn extra revenue. In fact, solar farming is a potentially highly lucrative market. Based on 5.5 peak sun hours a day, an income of approximately $31K per annum could be expected in Queensland. As a matter of fact, financial incentives seem to work in encouraging people to use renewable energy: currently, 8.5% of energy in Germany is renewable and is expected to grow to 20% in 2020. 

Solar farms

On the contrary, the punishment method also seems to be effective in curbing the use of pollution intensive energy sources and encouraging the use of green technology. Increasing the taxation on non-renewable energy will discourage the use of it while the tax revenue collected can be used to fund and subsidize renewable energy. Companies will also seek to switch to alternative energy to cut cost in the long run. The main objective of this method is to internalize the negative externalities by letting those who pollute the environment pay more, such that the external cost is accounted for. 

Another interesting thing i learnt is on EU exploring the possibility of setting up solar farms in  Africa and Middle East and transmitting the energy produced back to Europe for household usage. While this idea is revolutionary and innovative, I wonder how will the people in Africa feel when stronger countries take advantage of their natural resources and land? Will they feel a loss in sovereignty of their country? I think that this is an issue for further discussion. 

Overall, I rate this lesson an 8.5/10.