Peter Z. Grossman is the author of U.S. Energy Policy and the Pursuit of Failure (Cambridge 2013) and is a professor of economics at Butler University. His column appears in Indiana newspapers.
It’s not clear who will come out winners from the Paris climate talks set to begin the end of November. Probably the wind and solar energy companies will do well, but for most of us the result will depend on whether or not there is an agreement and what the agreement entails.
More obvious is who will lose: the poor. That is especially true of the absolutely poor, the billion people in the world who have a money income of $1.25 per day or less and the billion or so more whose income only reaches $2 per day. Agreement or no agreement they will come off badly.
Even in rich countries like the U.S. the relatively poor will probably lose—especially if their governments decide to cut carbon dioxide emission whatever happens in Paris. Virtually all the alternative energy credits and subsidies have created a reverse Robin Hood effect: they benefit the wealthy at the expense of the poor. Rooftop solar panels, for example, lower electricity costs for people fortunate enough to own their own home and have the wherewithal to be able to put up the panels. But the rules require the electric power companies to pay for all the excess power generated by the panels at the retail price of electricity. That means that to maintain profitability power companies generally have to raise rates. In Germany, for example, the foremost example of green energy expansion, the poor and near poor who rent their homes are suffering from electricity costs that are per kilowatt–hour three times the average in the U.S., costs that have risen by over 50 percent in the last ten years.
But it is the desperately poor in the developing world that are the surest losers. Consider their plight: if there is no agreement and the world warms considerably, the poor are the most vulnerable. If they live in coastal areas, their possessions, few as they are, are at risk to flooding. Subsistence farmers whose crops grow on hillsides may see landslides from too much rain, while those depending on a great deal of rain may face prolonged droughts as climate patterns change. Diseases may spread more quickly and linger longer, especially among those weakened further by inadequate nutrition and limited access to modern medical care.
In contrast, rich countries and wealthy people can adapt. Scientific farmers can find seeds that resist drought or endure more rainfall. If rice won’t grow well, something else can be found that will. If the seas begin to encroach on cities, seawalls and even complex flood control gates can be constructed. Diseases can be treated especially where people have generally good health.
But if there is an agreement, the poor are still likely to come out losers. The rich countries want the poor to “go green,” to avoid using fossil fuels, especially coal for electricity—electricity that more than a billion poor people lack. We are telling the poor instead to build a renewable electric system using wind and solar power, in effect telling the poor, “Don’t make our mistake!”
But what was our mistake? We used fossil fuels to become wealthy enough so that if there are major adverse effects from climate change, we have the means to deal with them. “Don’t make our mistake” is a way of saying, “stay poor.”
Of course, solar and wind can produce electric power, but do so intermittently. The idea that people with no access to electricity today can leapfrog the steps we took is not just fantasy, it is unfair. A mature grid system with 15 percent wind and solar generation—which is approximately the German electric system today—requires fossil-fuel back-up generators, linkages to French nuclear power and other non-renewable systems, and careful computer monitoring of the system to make sure that the demand is met with an appropriate level of supply.
We are arrogant and confused to demand of countries that right now have little electric power to adopt a system that challenges first world technology.
Poor countries often choose coal because it is cheap and reliable, and because right now they are suffering without reliable electricity. Indoor air pollution from poorly ventilated stoves that burn wood or dried dung, the overwhelming reality for the world’s poorest, kills an estimated four million people annually. Reliable electricity would save lives.
But the bottom line is this: as things seem to be set up, the poor lose either way—unless the rich countries help them to grow rich before they demand that they turn green.