Want to provoke some controversy and start a heated debate? All you need is to mention Germany’s Energiewende. The term refers to the ambitious project to power Germany with sustainable energy (if you thought the Manhattan Project or the Apollo project were something, you are just not thinking big enough). Through the rapid and extensive deployment of renewables, Germany is trying to simultaneously achieve a 80-95% reduction in greenhouse gases and a 60% renewable energy share by 2050, while dropping nuclear power.
Die Energiewende is the most important “big push” energy policy out there, but many other countries have implemented similar programs in the past and now. France went nuclear through an aggressive public construction program, China’s massive wind deployment was directed by the government, and India’s national solar mission is aiming at a rapid expansion of solar power during the next decade.
Debates about these policies often seem hopelessly confused. Although everyone has an opinion, proponents and opponents often speak past each other. Most importantly, there are no unified the criteria for evaluating the success or failure of a policy. Consider the following:
- From a national cost-benefit perspective, big push policies often seem hopelessly inefficient and sometimes inequitable. Surely, a carbon tax would have been a better solution?
- But, big push policies can trigger the kinds of global transformation that a nationally equivalent carbon tax would not have. Would we be talking about a solar energy revolution if Germany had not heavily subsidized solar, instead imposing a relatively low carbon tax to pick low-hanging fruit? Maybe. Maybe not.
These two viewpoints are difficult to reconcile for two reasons. First, the scale of the analysis is different. What makes no sense at the national level may be a global blessing. Second, the relative importance of costs versus benefits is different. Since big push policies are formulated in a messy and violent political process, they usually fail the cost-effectiveness criterion by a wide margin. This gives ammunition to their opponents. But, proponents point out, it is not as though aggressive, rational, and dynamic carbon pricing based on a global climate treaty is just around the corner.
My own suspicion is that this debate is going to remain unresolved for quite a while. First, no reliable method exists to fully quantify the global costs and benefits of Die Energywende and all that. It’s just not possible. We can sharpen our arguments by debating individual aspects of these policies, but that’s about it.
Second, the whole idea of an energy transition is ultimately a normative concept. Some people don’t want to sacrifice 0.5% of their income to increase the odds of a solution to climate change by a bit. Others would sacrifice 5% without wincing. I guess it should be pretty clear where I personally fall on this.