The EPA’s proposed Clean Power Plan, meant to reduce carbon by 30% by 2030, is expected to be accomplished through a combination of improving existing power plants, switching to cleaner generation, boosting renewables, and improving energy efficiency. It is more than likely that the global economy’s ability to innovate and drive economies of scale will significantly ease this transition, providing as yet unknown but superior alternatives.
Consider this: the wind and solar industries barely existed five years ago. Today, costs of wind have fallen by 58% in the last five years, and the price of installed solar has plummeted by 75% over the same period. Deutsche Bank estimates solar may fall another 30% in the coming three years. On the efficiency front, LED lighting has improved by almost 50% in just three years
Meanwhile, Lockheed publicly states that it expects to develop a prototype 100 megawatt fusion reactor the size of a truck in five years; Stanford has developed peel and stick solar; and Rice University created a paint-on lithium ion battery technology. With ever-stronger supercomputers – some of which in five years may be capable of 1000x today’s computing power – innovation in energy technologies will further accelerate.
The Clean Power Plan will accelerate the process of innovation through necessity and increase the number of stakeholders involved. Quite possibly, we will reach the EPA 2030 goals with minimal difficulty or cost, via technologies we don’t even know about today, by virtue of the accelerating and unstoppable nature of technological progress.
Models and projections have not fully accounted for technology advances, market economies of scale and innovation, and our forecasts have been bad in the last five to ten years as a result. We should model them into the policy and energy planning processes, allowing us to fully capitalize on the benefits of innovation. At a minimum, every forecast should have an upside scenario explicitly associated with change related to technology.