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Google Study Projects Future Economic Gains from Clean Energy

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A new study by Google.org projects that breakthroughs in clean energy technologies stemming from aggressive federal and private-sector investment would add $150 billion in additional economic output and 1.1 million new jobs by 2030, with the gains continuing to grow in future years.

The study, "The New Prize: Clean Energy Innovation," is based on McKinsey & Co.'s Low Carbon Economics computer modeling. A key assumption is that technology breakthroughs can be made in solar, nuclear, wind and geothermal power, as well as in carbon capture and sequestration and electric vehicle batteries.

Then the model estimates the benefits for consumers and the entire economy as the costs of clean energy options continue to decline and their adoption spreads.

Bill Weihl, Google's "clean energy czar," said his company undertook the study out of a combination of self-interest, commitment to cleaner energy, and frustration with a national energy policy debate that seems to ask a lot of wrong questions.

"We decided to see if we could understand, from a jobs, economic growth and emissions standpoint, what various rates of innovation in key technologies might actually produce," he said. "And we wanted to see how those results might change when you combine technology advances with various policy changes."

The model produces different jobs and growth projections for a business-as-usual scenario with no technology breakthroughs or major new policies, and then generates different outcomes by factoring in new policies such as a national clean energy standards such as proposed by President Obama; increases in corporate average fuel economy standards; tougher environmental controls on coal-fired power generators; extended investment and production tax credits for clean energy sources and an expanded federal energy loan guarantee program.

Key finding: innovation + policy = economic growth

A third scenario includes a $30 per ton price on carbon dioxide emissions from power plants, redistributed to taxpayers through proportional tax payments.

"We see a lot of debate about, 'Should you invest in innovation, should you invest in these kinds of tax credits, or this kind of carbon management plan?' We wanted to understand a little better what the impact of the various options would be," Weihl said.

"The study shows pretty clearly that innovation can drive both emissions reductions and economic growth together, and innovation combined with policy can drive much faster emission reductions while still preserving economic growth."

When the model was run assuming only enactment of the clean energy policies, it showed a gain 458,000 net new jobs in 2030, and a small, $37 billion addition to the gross domestic product that year.

If technology advances were modeled without new policies, the economy added $150 billion in output and 1.1 million jobs that year. The combination of technology breakthroughs and the new policies produced 1.9 million more jobs and $244 billion in added output by 2030. Carbon emissions were reduced by 21 percent over the business-as-usual case. Consumer savings from the policy and innovation scenarios averaged $995 per household.

By comparison, the House-passed American Clean Energy and Security Act was estimated to raise household costs by $160 in 2020, the Google study noted.

Google said the study is limited by the decision not to try to project whether the targeted clean energy technology breakthroughs were achievable. "It is a model," Weihl said.

Taking leaps of faith on tech progress

The point, he added, was that if the breakthroughs can be made, the economic and employment gains are potentially massive.

The study projects dramatic economic transformations that could result from quantum gains in the cost and efficiency of batteries for electric vehicles.

"Breakthroughs in battery technology could push EV's [electric vehicles] over cost-performance tipping points, enabling mass adoption. In our model, achieving battery costs of $100 per kilowatt hour (kWh) with vehicle ranges of 300 miles could lead to 90 percent penetration of EVs, Hybrid Electric Vehicles (HEVs) and PHEVs [in new vehicle sales in 2030]." That would reduce U.S. oil consumption by 1.6 billion barrels per year by 2030 -- "more than Iran's entire 2009 production," the study said.

"By replacing high cost gasoline with cheap electricity, battery breakthroughs in our model yielded substantial economic benefits from new manufacturing and consumer savings. GDP increased by $86 billion per year by 2030 and jobs by 560,000. Perhaps most compelling, EV breakthroughs netted savings of $699 per household."

The Energy Department's Vehicle Technologies Office has estimated that large-scale manufacture of electric vehicle batteries with today's lithium-ion technology costs about $800 per kilowatt-hour of energy. The DOE project managers believe that that cost can drop to $300 by 2015. But breakthroughs in battery chemistry and design appear essential in order to hit a $100 per kWh goal, experts say. And no one knows whether those barriers can be scaled.

Weihl agrees that the technology progress assumed in the study represents huge stretches. "Those breakthroughs might come from funding R&D in universities and national labs. They might come from startups. They might come from the natural learnings that happen as people deploy more and more stuff.

"We didn't try to model which path would lead to the breakthroughs or what the likelihoods were. What we were trying to show was what were the benefits if you could achieve this. Then -- if the results seemed really beneficial -- what could we do now to make it more likely that we get them."

'We'd like much cleaner options'

Google's study asserts that the longer clean energy breakthroughs are delayed the more the future economic and climate benefits shrink.

The company did not reveal what it spent on the project, but its spending on clean energy ventures is big and growing. Google has invested $157 million in the Alta Wind Energy Center in Tehachapi, Calif., which will generate 1,550 megawatts of peak wind power when completed. It is committed to supply major backing for the proposed multibillion-dollar Atlantic Wind Connection, which hopes to deploy an offshore backbone transmission system to deliver energy from wind farms into mid-Atlantic states. Google's total green energy investments now total more than $780 million, the company said.

"We've been interested in innovation and innovation in clean energy particularly, and in how to move our overall economy to a cleaner energy infrastructure," Weihl said. "One, we use a lot of energy. We're connected to the same grid as everybody else ... and we'd like much cleaner options than we have. And second, sustainability really is a core value of the company. We'd like to help ourselves and we'd like to help the rest of the world in the process."

"We don't intend to be engaged in the details of this bill versus that bill," Weihl said. But the study has a message: "First of all, don't cut R&D. You need to invest in R&D to continue to get the scientific and technology improvements that we need to drive progress.

"Second, clean energy depends on stable markets. If the policy that helps insure those markets exist changes year to year, that makes it much harder for the companies in those industries to survive. We need to have consistent policies.

"You need to invest directly in science and engineering to drive innovation, but you also need to actually deploy what you've got, and drive iterative learning that way," he said.


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