Are We Doing Decarbonization Totally the Wrong Way?

Tracy Alloway (0:02)

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Joe Weisenthal (0:17)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

Tracy Alloway (0:22)

And I'm Tracy Alloway.

Joe Weisenthal (0:23)

Tracy, here's something that really frustrates me, or I find kind of weird. I see these charts a lot of times, they get posted on Twitter, and it's like, oh, look at the incredible plunge in solar production costs, or the incredible advance in how much cheaper it is getting to install solar.

And then I see these charts where it's like, more and more of our energy is coming from solar. So it's like-

Tracy Alloway (0:48)

Why do you hate environmentalism, Joe?

Joe Weisenthal (0:50)

No, I don't. Don't say something I'm not saying. But if the thing is getting cheaper and the volume of it is growing, why aren't electricity bills like down 90%? Why has electricity not gotten any cheaper?

Tracy Alloway (1:02)

Yes. So, you know, I have that house in Connecticut, which means that I follow Eversource News quite closely.

And Eversource raised their rates because they said they needed to make more investment into renewable energy, and then just recently they said they're actually pulling back on some of their renewable energy investments. But unsurprisingly, perhaps rates aren't actually going down. But I think it's a frustration that a lot of people share and one that probably says a lot about the way renewable energy currently works.

Joe Weisenthal (1:34)

By the way, on that thing, it's like, oh, we have to raise prices because we're making these investments. That was actually a really interesting nugget that I had forgotten about from our recent episode when we went to Mount Airy and we talked to the CEO of Unifi, the textile company.

There was a line in there where he said, yeah, energy is obviously a big component of our costs and it's gone up because the utility is making all these renewable energy investments. There's something weird about this market for energy in which here you have this thing that's getting cheaper and cheaper. There's more and more of it.

Obviously, we know that decarbonization or electrification and decarbonization are major priorities. So, it's like, what's happening? Why? I just like, it's hard for me to wrap my head around, like, when are we going to see the fruits of all this?

Tracy Alloway (2:20)

Yeah. It feels like the natural path of capitalism here or technological adoption where you would expect as this particular technology becomes more popular, more efficient, more useful, prices would come down and it would start to proliferate. And it doesn't really seem to be happening quite that way.

Joe Weisenthal (2:39)

You know, we need that, like, the Kool-Aid man to jump through the window and bring up Jevons paradox here. It's like, aha, you made the fallacy of thinking that as energy comes down, it gets cheaper.

Tracy Alloway (2:50)

Where's the paradox klaxon? That's what we need, the air horn to go off.

Joe Weisenthal (2:55)

So obviously, especially in the US right now, but I think globally, they're probably doing some similar things in Europe. But certainly in the US, we have the Inflation Reduction Act. And you hear a lot about the public-private partnerships. And we're going to unleash the power of capitalism and we're going to unleash market forces. And because capitalism does something really well, which is like drive for cheapness and efficiency and all this, that's the sort of idea. And we're going to nudge it along with subsidies and tax credits, etc. We're going to sort of have these powerful capitalist actors come and deliver us this world of cheap, clean, electrified energy.

Tracy Alloway (3:31)

I mean, I do feel like things are changing a little bit on that front. And you mentioned the IRA just then. But yes, you're absolutely right. At least in the states and large parts of the West, a lot of the renewable energy transition is still this kind of weird half measure where it's like private capital meets, for the most part, government subsidies.

Joe Weisenthal (3:52)

Right. So the question is, are we doing it wrong? What is the role of private capital? Do we need private capital to invest in all this? Can the sort of the things that capitalism good at deliver us cheap, clean energy?

I'm very excited. We have the perfect guest today. We're going to be speaking with Brett Christophers. He's a professor of geography at Uppsala University in Sweden, and he's the author of a book that came out this year, The Price is Wrong, Why Capitalism Won't Save The Planet, and it's a deep dive into how these energy markets work. So Brett, thank you so much for coming on Odd Lots.