I am a little confused. Christophers actually shows the history of how we got here and why it is structured the way it is so he clearly is aware that it could be has been and should be structured differently, including in a capitalist context. Christophers main thrust isn't an anti capitalist exactly one but emphasizes for public ownership or the need for heavy subsidizing of clean energy by states. We should change how the power industry is organized and if we can't do that then we need to subsidize. In fact he argues that capitalism isn't inherently environmentally destructive, it just is because it is profitable to do so at the moment which doesn't fit with how your framing him. Secondly he isn't saying there aren't willing entrants into clean energy production due to erratic and low profits but that erratic and low profits mean they aren't attractive to the financial firms they need for funding since unlike legacy operators they can't start with retained earnings. And he is careful to point out the results aren't the same in different market structures and why there is excess competition in power generation as opposed to other segments of the power industry. Its a fascinating study in the degree to which states produce markets in fact. I'd look forward to longer critique that gets more into the weeds. I think its hard to do so purely on the basis of theory.
From my point of view, it's almost like The Price Is Wrong is two different books. There is a book with a lot of interesting institutional and historical material, and then there is another book that wants to make a fundamental claim about the incompatibility of capitalism with renewable energy using elements of Marx's analysis. I don't have the book handy right now, but I think I am fairly presenting the way he frames his own argument.
The subsidy point is a key factual claim that I'm afraid I think Christopher's gets wrong. My understanding is that today, we have a great deal of new renewables investment going forward without subsidies. Now what is needed is an appropriate pricing regime, but that is not a subsidy -- it's important to empathize that electricity prices are always regulated.
I also don't think it is correct to say that low profits are a constraint on financing for clean energy; the fact that these are mostly smaller, newer firms is more important. The fact that almost all costs are fixed also means that financing is more important for renewables than for fossil fuels (or most other industries). The lack of attention to the question of fixed costs versus production costs is, to me, one of the biggest oversights in the book.
On the other hand, I agree with you that his attention to the split between energy generation, transition and distribution, and the problems this creates for free-standing renewable generating companies, is thoughtful and important.
Thanks for fixing this, Josh. I thought the argument in this book was incoherent too. As you know, I think there's a two-part reason for the opposition of capital to serious climate action. First, the "energy transition" frame is inaccurate, since increasing use of renewables, as beneficial as it is, does not automatically mean a corresponding decrease in fossil fuels. The fossil stuff needs to be directly limited. Then second, limiting fossil fuels to the extent needed to meet, say, Paris goals would lead to much higher energy prices, and there's an immense amount of capital stock that would be stranded in that case. For some reason people have focused on only fossil capital as subject to being stranded, whereas *on the demand side* tons of stuff would be stranded under higher energy prices. I made that case in the book, and, while I have shifted position a little on some things, that judgment still seems right. Unfortunately, my argument never made it to the wider world, and I realize I could have done a better job in foregrounding it.
I am a little confused. Christophers actually shows the history of how we got here and why it is structured the way it is so he clearly is aware that it could be has been and should be structured differently, including in a capitalist context. Christophers main thrust isn't an anti capitalist exactly one but emphasizes for public ownership or the need for heavy subsidizing of clean energy by states. We should change how the power industry is organized and if we can't do that then we need to subsidize. In fact he argues that capitalism isn't inherently environmentally destructive, it just is because it is profitable to do so at the moment which doesn't fit with how your framing him. Secondly he isn't saying there aren't willing entrants into clean energy production due to erratic and low profits but that erratic and low profits mean they aren't attractive to the financial firms they need for funding since unlike legacy operators they can't start with retained earnings. And he is careful to point out the results aren't the same in different market structures and why there is excess competition in power generation as opposed to other segments of the power industry. Its a fascinating study in the degree to which states produce markets in fact. I'd look forward to longer critique that gets more into the weeds. I think its hard to do so purely on the basis of theory.
Thanks for the comment.
From my point of view, it's almost like The Price Is Wrong is two different books. There is a book with a lot of interesting institutional and historical material, and then there is another book that wants to make a fundamental claim about the incompatibility of capitalism with renewable energy using elements of Marx's analysis. I don't have the book handy right now, but I think I am fairly presenting the way he frames his own argument.
The subsidy point is a key factual claim that I'm afraid I think Christopher's gets wrong. My understanding is that today, we have a great deal of new renewables investment going forward without subsidies. Now what is needed is an appropriate pricing regime, but that is not a subsidy -- it's important to empathize that electricity prices are always regulated.
I also don't think it is correct to say that low profits are a constraint on financing for clean energy; the fact that these are mostly smaller, newer firms is more important. The fact that almost all costs are fixed also means that financing is more important for renewables than for fossil fuels (or most other industries). The lack of attention to the question of fixed costs versus production costs is, to me, one of the biggest oversights in the book.
On the other hand, I agree with you that his attention to the split between energy generation, transition and distribution, and the problems this creates for free-standing renewable generating companies, is thoughtful and important.
So yes, a longer discussion is called for.
Thanks for fixing this, Josh. I thought the argument in this book was incoherent too. As you know, I think there's a two-part reason for the opposition of capital to serious climate action. First, the "energy transition" frame is inaccurate, since increasing use of renewables, as beneficial as it is, does not automatically mean a corresponding decrease in fossil fuels. The fossil stuff needs to be directly limited. Then second, limiting fossil fuels to the extent needed to meet, say, Paris goals would lead to much higher energy prices, and there's an immense amount of capital stock that would be stranded in that case. For some reason people have focused on only fossil capital as subject to being stranded, whereas *on the demand side* tons of stuff would be stranded under higher energy prices. I made that case in the book, and, while I have shifted position a little on some things, that judgment still seems right. Unfortunately, my argument never made it to the wider world, and I realize I could have done a better job in foregrounding it.
Yes, this all points tot he larger point that one really needs to discuss cost and price independently.
I also wish your book had gotten more attention. Maybe I'll pitch a piece somewhere discussing it and the Christopher's one together.