Editor’s Note: Arnold Schwarzenegger, former governor of California and founder of R20: Regions of Climate Action, serves as the Governor Downey Professor of State and Global Policy at University of Southern California, as well as chairman of the USC Schwarzenegger Institute for State and Global Policy. Per Espen Stoknes is an entrepreneur and part-time professor in economics and psychology at the Norwegian Business School. His latest book is “What We Think About When We Try Not To Think About Global Warming.” The opinions expressed in this commentary are solely those of the authors.
As a landmark climate agreement is reached in Paris, the issue of clean energy remains polarized in the U.S.
Arnold Schwarzenegger, Per Espen Stoknes: Republicans should take ownership of clean energy
Even as the international community signed a landmark climate agreement in Paris over the weekend, the issue of clean energy remains polarized at home in the United States.
Renewable energy is not a political issue, and it is time Republican leaders acknowledge the truth.
The politicization of clean energy has allowed Democrats to occupy the position of being pro-sun and pro-wind to such an extent that Republicans – in the eyes of many – are completely linked with coal and oil. But in fact, the energy revolution underway relies on inherently conservative principles and Republicans should take ownership of clean energy.
Core values of conservatism are about promoting free market competition, property rights, economic development and technological innovation. Conservatism is about cutting red tape for entrepreneurs, reducing taxes, killing unfair subsidies and giving consumers greater choices.
History is littered with examples of thought leaders who did not embrace coming technological shifts. The consequence was simple: You get left behind and become less and less relevant.
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In 1980, when IBM considered the growth of the personal computer to be peripheral to the mainframe computer industry, the company made the biggest blunder in its history. It continued to direct investments to mainframe technology because it missed the fact that the market was shifting to a distributed model. Today, in retrospect, it’s easy to see the company’s error in judgment.
In the energy arena, are we repeating IBM’s mistake on a global scale? We need only look at the data to see the shifts taking place. The cost curves of solar, wind and batteries are falling quicker than those of gas and coal. The solar industry is growing its market share and adding jobs nearly 10 to 20 times faster than the rest of the economy. We have seen this particularly in California.
Looking out 10 years, the economics of wind and solar power are poised to be on the winning side. According to Deutsche Bank, the ratio of coal-based, wholesale electricity to unsubsidized solar electricity cost was 7:1 four years ago. This ratio is now less than 2:1 and could likely approach 1:1 over the next 12 to 18 months.
Already, more than 50% of all new global power capacity is from renewables (solar, wind, hydropower). In the United States more than 78% was from renewables in the first half of 2015. Building fossil fuel power plants has never made less economic sense.
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According to financial analysts such as Citibank, Goldman Sachs, Deutsche Bank, HSBC, Bernstein Research, and leading investors, it’s now very obvious: Creative destruction will inevitably flow through the energy economy in the coming decade, and innovation in renewables will do to coal and oil what cars did to the horse and carriage industry, what digital cameras did to Kodak, PCs to IBM, mobile phones to fixed-line telecoms, Amazon to bookstores and Netflix to Blockbuster.
Republicans run a huge risk of being associated too closely with the old order, just as the IBM board did when it placed its faith in central mainframes. The psychology of such decision-making is well known. It arises from overconfidence in one’s own position and something that psychologists refer to as confirmation bias: the tendency to gravitate toward facts that support one’s existing viewpoint and ignore those that don’t.
Yet the tides are changing. Republican groups like Young Conservatives for Energy Reform, the ClearPath Foundation and RepublicEN all champion the transition to a clean energy economy as a conservative issue. As Debbie Dooley, a founder of the tea party movement states: “I believe that solar equals energy freedom.”
What’s needed is more free market competition and real energy democracy. It’s time to reduce the use of taxpayer money for government subsidies over the entire playing field. Old tax breaks to the energy sector, utility monopolies and lavish subsidies should be removed so the best technology and fittest players can win. Being resource efficient has always been an industrial and conservative core value.
The prevailing Democratic, environmentalist rhetoric that emphasizes climate doomsday and governmental regulations is flawed and based on negative psychology. Republicans have a huge opportunity to generate a positive storyline that supports our values: Stimulate business innovation in distributed energy, and don’t tax solar power!
Let’s avoid the mistakes of IBM or the fate of Kodak by communicating the tremendous opportunities of the energy shift, of responsible enterprise in revitalized markets, wise energy use, jobs growth and individual energy freedom.