Maybe Divestment is the answer

    Princeton University president emeritus William G. Bowen argues in Sunday's Washington Post against those calling for colleges and universities to divest their holdings in fossil fuel companies.  I have done the same here and here.  But after reading Bowen's unconvincing justification for continued investment in the corporations responsible for our planet's ever-worsening climate crisis, I am seriously reconsidering my position.

    Bowen, unlike me, seems unconcerned with the efficacy of divestment strategy which I have concluded is actually counterproductive.  One reason, as set forth in a report from the Nathan Cummings Foundation, is that when an ecology-minded investor sells shares in a fossil fuel company, the practical result is that less altruistic investors select the corporate board.  Rather than sell holdings in bad actors, Cummings became an activist investor prodding and cajoling companies to be better corporate citizens.  This strategy proved successful for Cummings in its telling.

    Bowen does not call for educational and eleemosynary institutions to be green activists - quite the contrary in fact.  First, he rejects claims that colleges are obligated to take stands on issue of broad social import that don't directly impact them.  Second, Bowen expresses fear that taking a stand on divestment would open schools up to charges of hypocrisy since they, being human institutions, will invariably fail purity tests.

    Third, he frets that the intent of donors will be frustrated if universities don't seek out the highest reasonable returns on investments.  Fourth, Bowen questions whether divestment is too easy a solution for colleges and universities.  After divestment, might they not lose the will to reduce consumption and fight for political solutions.  Finally, Bowen worries that universities and colleges will be distracted from their core educational mission.

    Bowen's contention that colleges need not take a stand on issues involving the commonweal that do not directly impact on them is illogical since every issue of broad social import affects the university community.  This is clearly the case with global warming which, inter alia, impacts: 1) the university's budget, e.g., it increases the air conditioning costs and flood insurance premiums, 2) students' long-term career plans, 3) philosophical discussions on the nature of humankind and the meaning of life itself, and, 4) if the worst predicted impacts of climate change come to pass, the continuing viability of Princeton as an institution of higher learning.

    Bowen's claim that divesting opens the divestor up to the charge of hypocrisy if it fails "to reduce consumption of fossil fuels" is the obverse of the hypocrisy fallacy.  Bad actors often employ the hypocrisy fallacy to evade the logical consequences of an opponent's argument.  Hence southern defenders of slavery sometimes claimed that some wealthy northern abolitionists were hypocrites since they didn't always treat their factory workers very well.  Of course, this argument bore no relevance to the essential injustice of the peculiar institution and whether it should be abolished.  Likewise, the fear of being called a hypocrite for divesting because you're still using a diesel-powered Zamboni to clean the hockey rink should carry no weight in the debate over whether to divest.

    Bowen's hypocrisy argument fails for another reason.  Presumably, schools can walk and chew gum at the same time.  They can sell holdings in fossil fuel companies and buy a solar-powered Zamboni.

    At first blush, Bowen's solicitude for the sensibilities of hypothetical donors who will be upset if assets they give for ongoing projects aren't invested profitably enough seems almost legitimate.  After all, if the wildly successful creator of the Princeton Tiger Hedge Fund (not a real thing) decides to endow an economics chair, she may rightly specify that her $100 million gift be invested in a diversified basket of common stocks rather than short-term out-of-the-money pork belly puts.

    Donors know, however, that universities exercise broad discretion in how they invest their endowment and that gifts, by definition, no longer remain in the donor's control.  There is also good reason to believe that fossil fuel investments will underperform the broad market indexes as countries embrace policies incentivizing the production and consumption of clean green energy.

    In any case, Universities and colleges have an ethical duty, that they do not always follow, to reject gifts that contravene what should be their basic goal - an ongoing duty to educate people in a spirit of truly free and open inquiry.  Sadly, the University of Louisville just accepted over $6 million from the ultra-conservative Koch Brothers and "Papa John" Schnatter earmarked to fund a "center for free enterprise".  Plausibly, a cash gift given with the stated or unstated assumption that it will be invested in Massey Coal would contravene the University's mission to educate this and future generations.

    Bowen's final two arguments - divestment is the easy road out and it distracts from the academy's core mission - contradict each other and also can be rejected for the same reason I mentioned in response to the hypocrisy argument.  Universities can walk and chew gum at the same time.

    The two arguments are mutually exclusive.  If divestment supplants more time-consuming, expensive, and labor intensive solutions like retrofitting every structure on campus and installing a giant windmill on top of the library then it will prevent the latter distractions.  In any event, large, powerful, and very rich institutions, like Princeton which has an endowment of $18.8 billion, can surely afford to pay a few professors extra to focus on the best ways for the school to respond to global warming while still providing a world-class education.

    The defining inter-related challenges the world faces today are global warming and economic injustice.  Divestment is a response to these challenges.  Charitable and educational institutions should remove themselves from the ranks of those enriching themselves at the expense of ecological stability say the divestors.   In this light, the only legitimate argument against the divestment movement is the one I have made in the past, namely that it is ineffective.

    William Bowen does not attempt to support this contention and thereby does not unwittingly debunk it.  Nevertheless, I confess to a slight uneasiness as to the rightness of my position in light of his wholly unpersuasive support.  If such a luminous figure, as the president emeritus of the best national university in America cannot conjure up a semi-plausible reason against divesting, maybe it is a good idea after all.


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    I cut Bowen  a lot of slack in gratitude for "The  Shape of The River" , his and Derek Bok's treatise not so much defending "Affirmative Action" as demonstrating that when the opposition case  is factually explored there is no "no" there.

    Thanks Flavius.  In response to your comment, I googled Bowen and found an interview he did for Frontline about "The Shape of the River".  Here's the final Q & A:


    What would you say to someone like Sheryl Hopwood when she turns and says, "Look, I was poor and I worked hard all my life and here I get a certain score and someone who gets a lower score was admitted."

    What I say to Sheryl Hopwood or to any disappointed white applicant is that I understand your disappointment. I really do, and if there were more places for a well-qualified candidate, we would have been happy to have you as many of the minority candidates who were also disappointed and turned away.

    But the fact is, very hard choices have to be made in the admission process. And they have to be made not on the basis of who has achieved a certain test score result at this point in their lives, but on the basis of which set of applicants will really contribute most to the quality of education at this institution and to the larger purposes for American society, to the need of the society for diverse leadership that have got to be taken into account.

    The purpose of admissions is not to confer rewards, not to distribute goodies. It is, rather, to advance broad social objectives. The very objectives that have been used since the beginning to justify public support for these schools. To justify tax exemption because they are thought to serve purposes that are important in a democracy. I believe that they do.


    I'm sorry but I don't find this answer to be the least bit persuasive.  A much more honest response would be:

    Sorry Sherryl but let's face it American society is unfair.  Matriculating at Princeton is, if not quite a golden ticket, pretty darn close to one.  If instead, you attend Rutgers, you will almost certainly make a lot less money and have less for any children you may have.  We in the .1% have decided that economic injustice is more palatable if our ranks include a small number of people of color and the impoverished 25% comprise a racially diverse mix.  Sucks to be you.

    You could be right of course. But until I have some reason to the contrary my habit is to start  by believing that when somebody says Blue , they mean Blue. .

    So right now I believe Bowen meant what he said.


    I believe Bowen believed what he said but that doesn't mean I have to believe it or accept that telling a poor or struggling person that she needs to lose so somebody with a different skin tone, but objectively weaker credentials, can win is an acceptable answer.

    You could also tell her the the graduation rate at Harvard for the minority student with "less credentials" is equivalent to that of white students.

    (See #4)

    Edit to add: here is more data on graduation rates from elite schools

    Flavius - do you believe that SAT scores and GPAs are objective measures of one's college qualifications?  Can you empathize with economically struggling white students who are denied entry into elite institutions in favor of sometimes more affluent minorities with lower scores and grades?  Do you think Bowen's answer is likely to unify or divide poor, working, and middle class people across racial lines?

    I think affirmative action is a very tough issue.  I understand the arguments in favor of it. I do believe our institutions of higher learning should reflect the demographics of society at large.  But I also believe that applying different standards for different groups of people is inherently divisive.  I also believe that places in our elite universities and colleges should be reserved for those who have demonstrated the most academic talent and aptitude.  This can include, of course, overcoming difficult obstacles.  As I understand it, Cal Berkeley's undergraduate community would be 70 to 80% rather than 35-40% Asian if admissions there were truly color-blind.  Perhaps that's the way it should be.

    To me the solution has to be to reduce economic injustice period.  That means, regardless of what college, if any, you attend: You will never be homeless.  You will never be without health care.  You will never be without healthy nutritious food and your children will always be able to attend good schools that will prepare them to be whatever they have the talent and inclination to be.  You will also never become a billionaire.  You can become successful beyond your wildest dreams but that success will never translate into so much aggregated wealth that you can pervert our democratic system.

    There are two separate questions:

    1. How well do SAT scores and GPAs predict success (especially in college)?
    2. Are there other worthwhile criteria for inclusion at the college?

    rmrd000 has addressed the former (which is to say that although they have a positive correlation with success, that correlation can actually be improved by considering other factors, such as race). The latter was what was being discussed. Do other students benefit from diversity? Most academics think the answer is "yes". As a white student with a "typical" background, I benefit from being exposed to minorities, especially if they're from poor backgrounds. And while I would also benefit from white students from poor backgrounds, that benefit differs. I would argue this is even more true for those from rich backgrounds.

    There are legacy students and athletes who gain admission., the fact that graduation rates at Harvard are equal for different groups, some carry the label of "less credentialed" calls into question the credentialing rather than the student. It may be that a set of credentials is racially biased. Why should an ethnic group suffer because the assumption that a set of credentials is a valid measure is, in fact, in error?

    Edit to add: 

    In the past, black were not allowed to play quarterback or middle linebacker based on a set of criteria set by a particular group. Blacks were simply not given an opportunity to be a head coach, when the credentialing criteria was questioned, blacks excelled at those positions.

    The criteria is crap.

    The conversation has gone in a different direction but briefly no one is entitled to admittance at a particular school.Not now nor in the past when "legacies" were readily admitted to schools which were at the same time turning down far better qualified applicants.

    Not fair? "Life isn't fair".as JFK famously said..






    Shame Quinn isn't around to discuss in serious energy policy detail, but there's simply not enough new renewable energy to make a dent in our global energy needs.

    "corporations responsible for our planet's ever-worsening climate crisis" - this is like saying our grocers, or better farmers, are making us get fat. The energy companies don't make us drive cars or heat our homes - they just supply the energy to do that. We know one of the side-effects of this, and we can do some things to help, but short of hara-kiri, we're stuck. The transition to non-fossil fuels will be long & uncomfortable, but hopefully soon faster than the pace of growth and effects of global warming.

    You're partially right but lobbying by major energy corporations is a big reason we're not doing much to push renewables. Hard to say whether the bribee or the briber bears the larger part of the blame but both bear their share.

    Yeah, was going to write that aspect but think my fingers ran out of juice or got distracted by real work. Just like energy companies ginning up our counterprouctive Mideast military ventures.

    The energy companies fund global warming denial "science" and politicians who oppose clean green energy solutions.  They don't simply give the people what we want.  Additionally, your claim that there isn't enough alternative energy is bogus.  Here' an article demonstrating both of my points:

    25Megawatts?  US consumption is 4,686,400,000 MW-h/year. This isn't even a long piss after a night drinking - a drop in the ocean.

    My point was obviously that fossil fuel companies and their bought and paid for politicians stymie clean green energy projects that collectively could satisfy our current energy needs.

    No, they can't.

    You pick a very glossy article that cherry-picks success among a much larger backdrop.

    Despite the huge German subsidies, consumer electric bills increased 50% over 2 years. (this

    Despite the hype and huge subsidies, wind farms have proven a dud investment - lucky if they get original money out after 20 years.

    Coal use has risen since Germany decided to stop nuclear, and heat + fuel (remember cars?) are not addressed in the TPM article. (note it was referring to May, when people aren't heating nor using A/C.). Renewables were listed at 23% of electric production in the same 2014 article. And that's Germany - the most prosperous European country (and one used to absorbing huge costs, such as the annual "Ossi tax" for integrating East Germany - try this in Greece or Portugal)

    One of the articles notes a recent 4 year stagnant period in wind energy. Where I live, huge solar subsidies turned into a major scandal when overhyped installations turned into a massive taxpayer bailout. Caveat emptor - while there have been great improvements in renewables, they're still 30 years away from being a mature energy sector.

    We could sit here and trade, cherry pick, articles from opposite sides for weeks. You act as if you're broadening the conversation and adding depth, but you're just cherry picking as well. You've read the conflicting articles, I've read them, everybody here has read them. While reasonably educated and informed I'm not enough of an expert in the field to draw an independent conclusion as to whether renewables are capable of supplying a majority of our energy needs at a reasonably cost. But like you I could do a internet search to find a dozens of articles I remember reading that make the case that we could transition to getting most of our energy needs from renewables at an equivalent cost.

    Though there is far from any agreement on the issue, if in fact costs must go up as renewables make up a larger and larger share of the energy market there are reasons that might be so and reasons it's a good thing. It would take several long blogs to discuss them all and I don't have time for that. But just a couple of brief thoughts.

    There's a concept discussed in economics called externalities. With corporate influence on government, regulations often privatize the profits while the costs are externalized onto society and the tax payers. What would the cost of oil be if the corporations were required to pay the full cost of oil spills and other environmental destruction? What would oil cost if society didn't bear the health care costs associated with air and water  pollution? What are the costs in life and treasure associated with our military ventures into the middle east that likely would not have happened if the majority of the world's oil wasn't beneath those lands?

    The oil and gas industry also relies on infrastructure built over decades with extensive government subsidies and tax breaks. The price today rests on the massive spending. That infrastructure would need to be modified and upgraded to accommodate a much greater use of renewables.

    The discussion of costs is less important than the question of whether its worth the costs to make a investment in a transition to renewables. Just as we made the investments in years past to create the infrastructure to accommodate oil and gas. For me the improvement in air and water quality alone justifies the costs without even considering the costs of controlling the nations that have the oil and costs of climate change.


    As I noted, I wish Quinn was here who has in-depth grasp on this at a governmental policy level. He's discussed the huge scales required, and it's pretty impressive - that's why I took a quick look at the magnitudes for renewables vs fossils & realized some big things were missing.

    In any case, no, it isn't within grasp now, however optimistic we want to be. Debate whether 10 years or 30 years, fine. Great that we're making progress year-by-year, fine.

    The "equivalent cost" is debatable, but show me the article and maybe it's obviously right. The ones that Hal picked out were nice, but not indicative of what he thought they were saying.

    Your point about current sources being subsidized are accurate, but unfortunately switching costs will still appear as impediments whatever we do. Grin & bear it? not terribly feasible politically, and in the real world politics matters. Perhaps another strategy will work.

    And no, I didn't cherry pick - I pulled the top articles off basic Googling like "energy consumption", "renewables yearly" or whatever I searched for.

    I pulled the top articles off basic Googling like "energy consumption", "renewables yearly" or whatever I searched for.

    You once mentioned that I argue with you just because I don't like you. It's not true that I don't like you, I don't know you. What I don't like is your style of debate and that comment is illustrative of why. You don't look for links to articles you remember reading that had what you thought were very convincing arguments. You just pick a couple of articles you find with a quick google. Quick, simple, easy for you, leaving others the hard work of making good arguments against an uneven collection of links. Occasionally a good link, often trash that isn't even worth considering yet to enter into a serious dialog one must take the time and do the research to counter quick search results linked without any attempt to discern value and at most a cursory perusal.

    What I, and most people here do, is link to articles that are part of our research on the subject over months or years. Quality articles that we feel inform the issue, not just the first couple of results of a cursory search. For example several months ago I read an excellent study by several scientists at a prominent university that claimed every nation could achieve all it's energy needs from renewables and detailed exactly what that would entail, number of wind generators, acres of solar panels etc. I did a quick search but couldn't find it. But here's the result of that quick search, a wikipedia article that claims solar grid parity has been achieved in in 19 countries. I don't usually link to wikipedia as I think the quality is very uneven and usually lack depth. But I did a quick skim of the article and it seems to support my view. And since your favorite go to link is wikipedia I figgered I'd just toss it out and let you do the research to argue against it. Lol, I mean do a quick google and pick the top results to link as a rebuttal.

    "What I, and most people here do, is link to articles that are part of our research on the subject over months or years. " - uh, it's not really necessary to research for years what the current % of energy use comes from renwables vs. fossil fuels, nor the current state of investment in renewable technology. If that's what you expect from me, simply stop reading what I write - you'll only be disappointed. Whether you think Hal's link expressed something better researched, who knows.

    If I comment on a thread I read everything posted by everyone and every link. But don't you see how quickly dialogs become trivial if you just google "energy consumption", "renewables yearly" and post the top couple of results and than I just google "solar parity" and link the top couple of results? Whether you call it cherry picking or not it's still just trading links without culling for value and quality. It's argument for argument's sake.

    You have the sequence off - I brought up some points, and Hal threw out some rather dubious links that he thought proved his points. I simply pulled out links that showed that 1) the magnitudes he was referring to were off, and 2) the state of renewables in Germany isn't as rosy as TPM touted.

    Do you think 1) 25 Megawatts of renewables proves anything in terms of global quantities, 2) that the German renewables effort is on track and sustainable to meet goals, and 3) that "clean green energy projects ... collectively could satisfy our current energy needs"???

    I disagree on all 3 points -you don't? where is your argument with me? That I should have spent a year proving what I proved [& anyone could prove] in 20 minutes? That's a great waste of time. Really, I don't get it.

    I included 3 links partly to check whether my contention was backed up with current statistics. Whatever the terms I Googled, I do look to see if they make sense in context. I still can't figure out what you think I got wrong in responding to Hal's contention. No, renewables will not satisfy our energy requirements without much more fossil fuels - sadly, but that's the way it is. Googling more or better ain't gonna change that.  10 years of future development might.

    PP - in your first response to my blog, you wrote: "[t]here's simply not enough new renewable energy to make a dent in our global energy needs."  That is a false statement.  There is right now enough renewable energy to satisfy all of our global energy needs.  The problem is harnessing it.  We agree that we don't have the capacity now to exploit sufficient clean green energy to satisfy all of our needs now but that is largely due to the lobbying of fossil fuel companies.  The sooner we make fossil fuel energy more expensive per killowatt than renewable energy the faster we will be in position to generate all of our power without burning our planet up.

    Oh my. Yes of course I meant renewable energy technology in place, not "renewable energy" - splitting a few atoms in front of your nose can supply the world for a thousand years. (Technically those atoms aren't renewed - they're used up - but hardly a scarce resource). And sun energy is on an average of 12 hours a day. Do you really want to get pedantic with me now? I contend the limits are not just lobbying, but also technical ability and economic business model. We're improving nicely, but not there yet. The EU's solar market *fell* 30% last year while globally it grew 8% - hardly a raging bull what with all the subsidies. Then against, low cost cracking takes away a lot of incentive - the high cost of oil and gas made renewables much more attractive - now it'll be a fight.

    Rely at bottom, for width purposes.

    You make it sound dirty, Q.

    He's just bigger than the rest of us.

    Nothing dirty. Until he starts.



    We as individuals get fat. That is the fat facts of life.

    Patton Oswalt has this riff about KFC and ITS BOWL OF DOG FOOD. Hahahaha

    We as individuals might jog or walk or use machines in a manner to counter-act our food stupidity.

    But, we as individuals in this country turn on the lights, and we turn on our ovens, and we turn on our air conditioners and we turn on our cars and….

    Our normal utilities are energized by our municipalities, basically.

    We turn on things, but we as individuals have no control over the providers of that energy.

    Scotland has no need to use fossil fuels.

    Through wind and solar and geothermal sources, Scotland now sustains its energy needs without fossil fuels.

    The Netherlands has almost reached this level of self sustaining energy needs as Scotland.

    Our nation is really, really changing.

    Wind power started to go nuts with BP’s intervention years ago.

    Solar power is not just some dream anymore. Big corporations like Wallmart have figured out that solar power SAVES MONEY.

    And Walker decides that there needs to be a study regarding solar power; but Wisconsin’s new investigation is limited to 250 grand. So five guys are going to accomplish something.

    Other states are attempting to charge individual home owners a fee to somehow diminish the savings of their homeowners.


    Oil producers wish to strangle the individuals who escape their fees.

    I have been thinking of my own blog on this subject.

    But it is clear to me that even looking back less than a decade, our energy needs are increasingly being met by what the repubs call: insignificant contributions.

    One thing that's interesting is that, in my experience, a lot of corporations prefer divestment over the very drawn out process of mostly non-binding shareholder resolutions.  I covered some shareholder activist campaigns concerning corporate compensation, for example, and the view of management was, "If you don't like it, please sell our stock."

    The response I got from really big institutions like The New York Common Fund is that they can't.  They are so large that they have no choice but to own the market.  If ExxonMobil is the largest constituent of the S&P 500 they're going to wind up owning it one way or another.  If it doesn't show up in their own, internally managed accounts, it will turn up in an account run by a subadvisor. Given their inabaility to get away from any one stock, they have no choice but to vote their proxies.

    Not everyone has these problems.  But the big public and corporate pension funds, along Vanguard, Fidelity, Capital Research & Management, Wellington, State Street, Bank of New York and the like all do.

    The problem for the big investment management firms is that they're deeply conflicted.  Fidelity could make ExxonMobil a better environmental actor but at great cost to itself as it no doubt wants mandates to manage the oil company's pension and 401(k) plans.

    Thanks Michael - I don't believe divestment is likely to effect oil companies.  That's why they don't care if pain-in-the-ass investors to sell.  The solution is to reduce consumption since consumption is what is causing AGW.  Shareholder activists can help the transition by stopping the fossil fuel companies from lobbying against intelligent government policies like a carbon tax and by investing profits in clean green energy research.

    "Shareholder activists can help the transition by stopping the fossil fuel companies from lobbying against intelligent government policies like a carbon tax and by investing profits in clean green energy research."

    Definitely.  But this is a tough role for an effective shareholder activist to find.  If you set aside anything but economic concerns (by which I mean, "maximizing value for shareholders") the activist has a rough road to walk.  First, you need enough assets so that you can buy enough stock so that management will care what you think.  Since the rules are that you can't buy more than 5% without disclosing, you will also need to prove to other shareholders that you have clout.  To convince those other shareholders, you'd better have a plan (and a track record) or maximizing shareholder value.  Basically, you cannot count on a shareholder activist campaign to succeed unless it walks hand in hand with a stock price increase over a foreseeable length of time.

    An activist with the goals you describe would have to have multiples of billions to deploy in order to get a foot in the door and then would have to convince allies to come along in exchange for massive economic gain within 12-24 months, with 8 months being preferable.

    Hal, I don't find Bowen's brief article objectionable. But this subject needs context. What is the overall university policy statement with respect to climate change, is student activism encouraged, and most importantly, what is the total range of actions the institution can take--assuming it's policies favor reduction of carbon emissions.

    The educational and research missions of a university can, in my opinion, do much more to effect change than can divestment of fossil fuel companies in the portfolio. Turning out students who are going to effect progressive change up and down the length of personal and business enterprises is the best way to impact emissions long term. Divesting seems a short term feel good thing which may have no impact at all in reducing emissions.

    But student activism is, imo, important and thus for an institution to ignore student petitions seems wrong. I notice that Stanford and Yale did respond, without endorsing divestment per se. Stanford divested its coal industry holdings. As a result of student activism Yale changed some of its procedures on voting shares and issued certain directives to money managers. Yale's internal guide to ethical investing does say that outright social injustice by companies, for example, would trigger divestment. 


    So, yeah, throw the student activists a bone from time to time.

    Oxy Mora - did you find any of Bowen's arguments in opposition to divestment persuasive?  While I don't believe divestment will help us solve anthropogenic global warming which is one or our two most serious problems, nothing Bowen wrote helped me come to this conclusion.  Frankly, I am deeply disappointed in his writing advocacy skills.

    He was succinct and he hit most of the important points to my satisfaction---but in doing so he glossed over my number one objection to divestment, efficacy. So I could fault him there.

    Through Google Scholar I read the Yale Committee response(to the events set in motion as a result of student advocacy) to the efficacy-of-divestment question. The response was quite thorough and as far as persuasive writing goes, better than Bowen's. (Sorry, having a computer problem, can't seem to post the Yale document---Committee's Response, etc. circa 2014).

    I only mention Yale because the scale of endowments is comparable to the subject university in the article.

    There are strong moral arguments which haven't been made yet but I leave that to folks who are closer to the scene.   

    I guess the arguments I made in the blog didn't persuade you that Bowen's logic was faulty in any respect much less all respects.  Rather than criticizing Bowen's written advocacy skills, I better focus on improving mine.  smiley

    Some thoughts on energy, climate change, divestment and the like.

    1. The last 2-3 years have basically seen a tidal wave of reports published by the big investment houses, all now reaching the same conclusion. Namely that... it's all over but the shouting.

    It'a not just that renewables have won, they have won so comprehensively that the only remaining questions concern the identity of the biggest winners, and the biggest losers.

    Technically, however, it's done. Renewables have won, have a nice day everyone else and thanks for coming out. 

    Here. Rather than get a bunch of arguments warmed up against me, just go read this article - lots of nice charts, easy. I encourage everyone to click the link at the article's end, and read it.

    It's Deutsche Bank. This kind of thing has now come out of ALL the big investment banks, many of them are investing themselves, ALL are recommending it to their big clients, etc. 


    2. For 20 years I've worked on this, and there's only been ONE key chart which was really worth paying attention to. But it's used by the big energy agencies, the big management consultants, etc. And that is the learning curve (or experience curve.)

    What it does is - in short - it says that as you build or install more of a particular technology, its price will fall. Makes sense to most of us. Usually, they measure it in "doubling times" - if you double the amount of a technology installed, its price will fall by x%. Like, for solar or wind-power or coal or gas etc.

    Thing is, most NEW technologies see their price fall at a faster rate per doubling than older ones.... Like, coal's costs might fall at a rate of 3% per doubling, while solar's fall at 20% per doubling. 

    PLUS, since there's less of the new ones already installed, they can double more quickly. Like, it's quite easy to double the amount of solar already built, because there's not that much. Whereas coal is massive. 

    But with technologies like solar and wind, this tends to mean their costs have been falling by 10%-20% or so every 2 or 3 years over the last 10-20 years.

    So the race was always one of, "How many doublings of these new renewable technologies do we need to have in order to get their costs down to those where they can compete, straight up, with coal and oil and gas? And can we speed that process along? Or... will their learning curves start to flatten out too soon, and we'll be stuck with high-cost techs?" 

    Bottomline answer is that... we've made it. Sounds stupid, but really, it IS over. 

    Take wind. Wind on the U.S. Great Plains costs 2-3-4 cents/kwh to produce. I encourage you all to look at your local utility bill and see just how good that is. Now, people will go on with their favourite irrelevant argument about how wind needs back-up and wind is great on the plains but not elsewhere, etc etc.

    But really, what they're not recognizing is that sure, hurdles exist, but like with computers and such, give them 5 years and these kinks work out. So, for example, they raised wind tower heights another 20-30 meters, and lo and behold, you can get wind power production now in the U.S. South as strong as they used to get on the Plains. 

    But wind is actually the less sexy cousin here. Solar is the deal, solar is the be-all and end-all. And solar is, though it always ran a good decade behind, now coming up to the price point that wind hit about a decade ago. Namely, in dozens of countries and hundreds of cities, worldwide, solar can now be produced cheaper than regular electricity.

    Again, people are gonna try to argue against that. They should save their breath. Here's why. Solar is going to be sold in these other countries and regions and cities every single day that the idiots bleat on about how "it can't work here." And every single one of those days... the COST of solar will fall, right? Because it's continuing down the learning curve, driven by SALES ELSEWHERE. No local party or utility can now stop the global solar machine.  

    It's. All. Over. 

    Solar/wind won.

    I know. I'm as shocked that it actually happened as you are. I kept saying, "Give it 20 years.... 15 years.... 10 years...." but now.... we're here. Maybe not in your region, or with your utility. But really, globally, it's over. 

    3. Ok. The PROCESS. The process during these kinds of changes are always... psychotic. Think about this. As computers and the internet and mobile phones came in, one company after another ruled the roost, and then.... went pitching off the side of a building.The IBM's and Dells and various cell-phone makers (anybody remember Canada's titans, NorTel and Blackberry?) But nobody would argue that the revolution they were driving wasn't winning, day after day after day. Firms and projects fail, the movement rolls on by. 

    Same here. All sorts of renewable energy companies, and suppliers, and projects and financiers are gonna go belly up. And all those idiots that promoted these things based on 20 year projected revenues and maintenance costs and all that shit, well.... those guys are selling you mortgages one day, and solar panels and wind farms the next.

    It'll take a long time fo the BUSINESS MODELS to get locked in, and for a whole wave of losers to get moved through. This happens every single industrial revolution. Automakers. Railroads. Computers. You name it. 

    4. As for Germany, well.... frankly, every single senior German renewable energy figure I've ever heard in serious conversation knew exactly what I was describing above. What they were TRYING to do wasn't to produce the cheapest possible energy for German consumers. Sorry. Nope. 

    They were trying to drive wind and solar and the like as fast as possible through it's doublings, bringing down the cost globally. It was an enormous sacrifice the Germans have made, and God bless 'em, because we North Americans were far too unstable about all this to be of more than fitful/occasional help. But nonetheless, the Germans... have won it. [Help and kudos to the Danes, a bit to the Japanese, to California, a bit to Ontario, etc.] 

    5. Ummmm, oh yeah, this also spells the end for oil. See, what more and more people are seeing that really, we are on our way to an electricity-based system. Because we can also drive our transport system AND our home heating systems off electricity. We've got Canadian homes, right now, which have clean, fossil-free electricity... and that use an electric vehicle and a heat pump... and thus, have effectively gone fossil free for their home energy needs. In fact this is gonna speed the transition, because EVs are helping to drive down the costs of batteries, and cheaper batteries are gonna make the whole grid happier as it has to handle a rising % of renewables. 

    So, we've got a double move afoot - "Decarbonize the electricity supply" and "Electrify society's energy needs."

    6. Will this process be smooth? Hell no. It's going to mean constant whipsaws in the price of fossil fuels.... as local utilities get smacked, they're going to play stop/start with their renewables policies.... stupid projects and companies will go under.... governments will over-subsidize and then cut bait.... all of this will require decades to work through and fully roll out. 

    7. But. That idea that this can't happen quickly? Wrong. It can. But the global numbers hide how. It's the old story of the kid given a choice between getting $1 million cash, or - sitting at a chessboard - having 1 penny, which was then doubled at every square.

    Take the doubling. 

    Solar firms today are adding 1,000 and 2,000 MWs of solar PV panel capacity annually. Why is this important? Because 5 years ago, the entire US didn't have 1,000 MWs installed, in total. 

    i.e. The solar kid has already doubled his penny, year upon year, for a while now, and his doubling's are now making a VISIBLE impact. You maybe didn't think it was important when it hit 0.5% of global energy in a year, but it's last doubling moved it toward 1% of global energy a year, and the next doublings coming are 2% a year, and the one after that is 4%.

    Tell me how many years you think solar needs if it begins to eat 4% of global energy demand before it's turned over the entire global energy system.

    Your kids, the ones alive now, will, within a decade, live in a world that almost certainly sees the majority of its energy come from solar + wind + hydro and the renewables.

    Anyway. Those're the thoughts form this corner. Weak on links, but Deutsch alone has enough of interest I think. Cheers.

    Thanks Q 

    Agree in principle on the movements, but half of all renewables remains hydroelectric, and the amount of solar global is still a tiny % of total energy consumed.

    I'd say to rephrase the lede, "it's all over but the transition". The technology efficiencies will play out, the prices will continue to drop, the installed capacity will continue to grow...

    The 2nd most important phrase, "give them 5 years and these kinks work out". Yep, we know the outcome - we see it on the near horizon. It's not here quite yet, but we'll be fine.

    (an area Q didn't mention are high volume batteries, which will have a big effect on home use as well as long-distance electric autos. Producing electricity is no good unless you can save it to use when needed. Stay tuned for Elon Musk's dual-purpose home-storage + recharging stations - means whatever amount you can get from solar - even in Michigan - you'll be able to conveniently save & use & feed into your grid. 5-10 years for streamlined mass usage to near total adoption? might be so)

    Is Moore's Law sustainable in solar & batteries? That's a big question - the Deutsch report for solar shows 15% CAPD decrease per annum, but confusingly says 40% in next 4-5 years and 40% by end of 2017 - 2 3/4 years. In any case we've reached huge scales in R&D & installation efficiencies for both of renewables, with very real near-term payoffs & market use for anyone who makes a significant leap - that factor drives new market entries like a gold rush.

    And like a gold rush, people get burned. The early entrants say in Germany found that their expected returns didn't pan out, and might not ever. Competition across the board will drive down everyone's profit as well. The consumer may win - the investor not so much - which can cause temporary dips in investment, entrants, installations.

    The Deutsche report notes that it's not electricity costs driving electric price hikes, but the heavy investment in Transmission & Distribution. The German power company I talked to wasn't investing anything in its traditional grid - that's all running fine - all its effort is on renewables, dealing with contribution networks & what it means to manage 5 million new houses inserting extra juice into the grid. Also those recharging stations.

    Additionally what's not addressed so much is change in consumption patterns. I just replaced all my house bulbs - about 7 times better than traditional ones, 3 times as good as the kinda crappy first generation energy efficient ones - now I can see in my flat. TV, computer, other equipment is using less juice, even as we substitute a remote cloud server for much of our home & office requirements - I don't have info on larger appliances like washers & refrigerators but imagine similar improvements. For petrol, much of the cost has been driving/shipping the liquids from one location to another and processing it. With renewables the conversion happens at the inputs & all we need is a nice high capacity grid to move it.

    Did I mention progress in superconductivity? here's the world's longest superconductor cable working without a hitch in an urban environment - needing only 1/10th the voltage through 10 times thinner cable at about twice the distance, lowering the number of expensive transform stations needed & drastically reducing heat energy loss through the cables  as well. (plus requiring smaller trenches & power towers to carry them)

    The Deutsche report showed a lot of warm-weather high-consumption countries like Iran, India & China being near-parity users of renewables - possibly because the electricity in many of these places is still expensive (not sure why Iran has expensive electricity, but might because of a crappy grid that wastes a lot of the power)

    Anyway, as Q says, we "kids" got a lot to look forward to in the next decade. Including of course the fracking vs. renewables rollout contest.

    A couple of additional thoughts.

    A transformation like this can't be COMPLETED in any short time-span. I mean, unless you're Stalin, you just can't do this in 10 years, or likely even 20. It's a good 30 year project, and to me, that's a great thing. I want kids and communities to be able to take jobs in work that will last for decades, not some 5 year burst. So let me adjust to say, renewables will almost certainly provide the majority (50% and up) of the world's energy needs by 2035 (that's 20 years out) and so on.

    As for the fossil fuel guys, well.... hell yes, they oppose things. And that's a pain in the arse. But people shouldn't think that's the only or even the MAIN problem. Right now, solar is just moving INTO the cost-competitive range. It's not fully there yet, and for many Americans/Canucks, it's still just plain too expensive. Same with a lot of the world. So... the COST of these technologies matters. Fortunately the biggest remaining chunks of price aren't so much in PV panels themselves, but in slow installations, poor marketing campaigns, approvals and overheads. The Germans install their panels waaaaaay cheaper than we do, for instance. 

    And let's just go back to the price of oil and such. I get that people want to see it get taxed more, and sure, that'd help a bit. But there is NO way to make up the gulf that just opened up with oil prices falling $60/barrel or whatever. So sure, put a tax on it, let's go, but more than anything, let's just keep on, year after year, growing the solar/wind side. Install 20% more this year than last year and we win the game outright.

    And again, divestment is great, but it doesn't win the game.

    If you're concerned locally, the place to focus your attention is on YOUR LOCAL UTILITY. It's those guys who can speed up or slow things the most. And who stand to be in deep trouble depending on how they handle this transition. For me, after 20 years of doing this, I'd shift like some of the US states are to a stance of "keep the f*cking utilities out of renewables entirely." Because frankly, all they ever do is sandbag it, slow it, over-charge it, delay, monopolize, you name it. To hell with them. We may have some sunk costs ove there we need to eventually step in and bail out, kor write off, but utilities can slow you for the rest of your life, and you'll end up in 2040 one of the hold-outs who still insists on using coal-power.

    Oh yeah, when I say the "transition" will get done,  this doesn't mean it'll be pretty. Huge bankruptcies, massive local political brawls, prices whipsawing, new technologies being rolled out than then turn out to be faulty, stop/start processes that eat up a decade at a time, high-profile firms that you thought would be winners turning out to be losers who crashed and burned, etc etc. Scams like we see in Italy and elsewhere are pretty much guaranteed as well, especially in an area without much experienced government or regulatory or banking or public oversight, right? Easy pickings.

    So take your time, if you're investing your own money, either in stocks or bonds or on your rooftop. Seriously. Walk it along until you're REALLY convinced of the people you're dealing with. 





    Quinn, it's great to have your contributions here.

    I wonder if you would explain the car battery angle better. One article explained the potential use of pods of cars/batteries fully charged smoothing the fixed cost investment of "power plants".  Also, the electricity could be stored in a low rate environment and put back into the grid during high rates, generating a profit. I'm considering getting an electric car and using it in connection with my farmette in Texas. I understand there are products which would allow me to convert the voltage for home use, and also to run my rural coop power meter backwards (can't go past zero). Running the meter backwards seems like a cool thing as does having backup power aside from a gas generator. But the economics of all this and any savings is a mystery. I remember a SOCAL engineer describing a plant in California which drained water from a lake, dropped it a half mile down a tunnel through granite rock to run a generator---during the day---and pumped it back up at night---and I thought he might be having me on.

    Edit to add. My daughter and son-in-law in the Boulder, Co. area installed SP for about 25K. Then bought a used Prius. They have no electric bill and no fuel costs on the one car. But it's a pretty long payback period.   

    The thing with modern electrical systems is that it is very very hard to constantly match up demand with supply. The standard is that during the Super Bowl, millions of people will go to the bathroom, or boil water, or shut off the TV in unison, and so demand spikes and drops and spikes and drops. And tt's expensive to have plants running on standby to meet these needs, right?

    With renewables, the problem is that they too rise and fall out of control of the grid operators. A cloud comes in and blocks the sun, the wind dies down, and again, the grid operators need to run more expensive systems to cover for it.

    Now, batteries are one way to help ease this problem. So that people's electric cars, if plugged in, could be used to store excess energy at times.... or could be drawn on for power at other times... back and forth. Anyway, that's the idea.

    However, while the utilities would have you believe these problems are massive and will cost billions and thus, you should have your rates increased, there are actually dozens of ways - beyond batteries - to handle it. Like adding hydro to your system (as you described.) Or by putting some users and some of their equipment on controls, so you turn them down when demand is too high. Lots of utilities used to drive vans around and actually control peoples hot water heaters this way, and give them a $10/month discount or whatever. There are dozens of ways to alter demand (e.g. shift various tasks to low demand hours) to help with this problem.

    So too does expanding the grid itself tend to help out, as you can ship power into and out of a jurisdiction. Because the spikes your town is facing are rarely exactly the same as in other towns, right? 

    This is one way places like Denmark are able to manage so much wind-power in their system. They have strong grid ties to Sweden (which has hydro for storage) and to Germany (which is so much larger Denmark's fluctuations barely matter.) And it's what Manitoba uses its hydro system for, to help Minnesota run their wind-farms, and Quebec does the same for New England.

    So... lots of ways to solve the problem as we expand renewables. But batteries are sexy as hell, and - key point - are likely going to be a big high-margin product that can be sold to individual end users, right? Thus, a lot of media attention on them.

    But we have lots of ways, including batteries, to help handle these problems as solar/wind expand.


    Much obliged. Thanks for the explanation.

    Not sure batteries are sexy, but they work. Disposing of them will be a pain however.

    Sexy batteries? Does this count?

    Sexy batteries…

    Well she's giving it her good old college best. Reminds me a bit of Who Sell Out. Kinda. Is this the renewables marketing scheme?

    Gives me a positive charge.

    Wow, just wow. Thanks for the information, Q. I've been following solar tech for a while now so I knew that we'd been making good progress on that front, but I'm still surprised by your analysis here, and I know you're not one to blow smoke up one's posterior, so I'm taking what you've presented as factual. It's really good to hear that "we're there".

    To play devil's advocate, one point I've heard the other side frequently bring up is solar's dependency (and advanced battery technology's dependency) on rare earths. Have you been hearing anything about issues with that, either with scarcity or the pollution issues with runoff?

    Hey VA. Rare earths are a thing, but there are more deposits of them globally than the scare stories usually mention. Also, if there ARE problems (most likely due to maneuvers re: China), they're likely to hit a whole swathe of products, not just energy, and that'll help sort them out. 

    Of course, there's no guarantee we won't see price spikes in some of these components, etc., as production expands. We already saw a big one of those in wind power a few years back, and they're incredibly frustrating when they happen, as it takes 2-3 years to get past, and it's only now that we're fully back on the downward price slope. 

    Think celery.

    Q, this comment should stand up for a blog post of its own. I'm happy to post it on your behalf (if you can't be bothered to log in)

    I kinda think a few of the comments should be re-done as a mashup, since Q's initial was the bright sunny future, the followup was a more come-to-Jesus about the road between here & there, etc. But yes, I thought about running this by my kids as a quick & dirty "what you can expect" 2-minute read.

    Hey Michael... Hmmmmmm . . .

    Either Quinn is Gregor McDonald (bio) or Quinn is "channeling" McDonald.

    For anyone here at DagBlog who has a Prime account at TPM, (and I know that you Michael have one) if you haven't already seen it, you should take a quick read of the 5-Part series that Josh is publishing at TPM Longform called "Renewable Energy Is Growing Faster Than You Realize."

    Parts One and Two are already up:

    And still to be posted:

    • Part Three: Case Study: Los Angeles
    • Part Four: Making Gains, But A Need For a Grid Storage Solution
    • Part Five: Winners and Losers

    Cherrios... (and fresh strawberries)


    I don't know what Quinn looks like but that picture cannot be of him. The guy in the picture looks like a fairly normal person.

    Thanks for the thought OGD, but:

    1) Can't see Josh ever hiring me, for some reason....

    2) That guy hardly swears at all.

    3) He's got TREMENDOUS eyebrows, that a man named MacDonald could truly be proud of. Those on here who know me in real life know I'm desperately envious of any and all hair that covers the head - on top, beard, sidebruns or even high-quality Scottish eyebrows. * sigh *

    Buckminster Fuller noted we already had a nuclear reactor called "the Sun" - didn't really need any closer to earth than that. Like so many things he predicted, this one is slowly coming true.

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