The CSR Newsletters are a freely-available resource generated as a dynamic complement to the textbook, Strategic Corporate Social Responsibility: Sustainable Value Creation.

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Monday, February 12, 2018

Strategic CSR - 100% renewable energy

The article in the url below raises the question: Is it possible to get to 100% renewable energy and, if so, at what cost? The article's starting point is a realistic assessment of the current situation. In spite of what you might have read about new renewable capacity last year being roughly the same as conventional fuel sources, all that means is that the gap is no longer getting larger. In reality, the vast majority of our fuel still comes from carbon-based sources, and will do for some time:
 
"Despite falling costs, wind and solar still produce only 5.5% of the world's electricity. Hydropower is a much more significant source of renewable energy, but its costs are rising, and investment is falling. Looking more broadly at energy demand, including that for domestic heating, transport and industry, the share of wind and solar is a miniscule 1.6%. It seems impossible to eliminate fossil fuels from the energy mix in the foreseeable future."
 
There is a lot of good detail in the article, for those wanting to know more. Ultimately, however, the article concludes that 100% sourcing of renewable energy is probably not possible and, if it is, it is probably not worth the cost of achieving it:
 
"The Senate in California, a state that is close to hitting its goal of generating one-third of its power from renewables by 2020, has proposed raising the target to 60% by 2030; Germany's goal is to become 80% renewable by 2050. But whether it is possible to produce all of a country's electricity with just wind, water and hydro is a subject of bitter debate."
 
More realistic is something like 80%, with other clean-ish fuels (like natural gas) making up the difference. Rather than investing large amounts to get beyond 80%, there are many more productive investments to be made in other areas of the economy, such as designing more energy efficient buildings. Ultimately, the goal must be to eradicate the majority of current and future emissions of greenhouse gasses (in particular, carbon dioxide) and then begin to remove past emissions from the atmosphere (e.g., carbon capture technology). The means by which this is achieved are less important. As such, governments should put in place a tax on carbon, incentivizing the market to develop the most cost-effective solution given our current technical knowledge.
 
Take care
David
 
 
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At what cost?
July 15, 2017
The Economist
61-62