One of the main benefits of renewable energy is that we can meet our energy demands in a way that is more environmentally sustainable and through a medium that has a seemingly infinite supply. In contrast, fossil fuels are extracted through environmentally destructive means and will eventually run out, leaving behind a scarred earth and an oil and gas addicted population.
Renewable energy also creates jobs and was one of the few industries that actually grew during the last recession. So, what happens when the moral value behind promoting renewable energy runs up against the market reality of needing to make profit? Last week, I wrote about the brewing trade war between the U.S. and China over when state subsidies start to become market distortions that result in an over supply of solar products at artificially low prices. Building on that, a recent article highlights the tension between China and Germany over a glut of solar products in Germany. Capitalizing on strong government policies that created steady market demand for solar, Chinese companies flooded the German market with solar panels and now German solar companies are struggling to survive.
As a result, the pressure has increased on companies to deliver “German quality at Chinese costs,” and companies are aiming for 10 to 20 percent more output with the same workforce. This phenomenon of relentlessly pushing down production costs is hardly new—Wal-Mart pioneered the approach on a large scale and is a shining example of the economic destruction that it can bring. Cutting costs necessarily requires asking more from employees while giving them less. Workers in solar panel production plants in China work long shifts with little to no benefits, including 11-12 hour days and low wages.
Which brings us back to what happens when moral value meets market conditions? If we are successful at transitioning into renewable energy economy, but do so by exploiting workers and racing to produce more products at lower prices with its accompanying environmental destruction, are we any better off than if we continued using fossil fuels? And, if not, how do we start to reverse this trend that is beginning to look like a race to the bottom for renewables?
Part of the problem is that some of the advantages of using renewable energy are not monetized and therefore not counted, an idea that is highlighted in our Beyond GDP work. The value that sustainable renewable energy production adds by preventing destructive extraction measures is not reflected in any cost-benefit analysis. Likewise, the exploitation of workers is not negatively reflected in economic analyses. In fact, as long as it keeps costs down, low wages and no benefits are seen as a positive. As long as we keep measuring things only by what they contribute to our GDP, we will never make meaningful progress towards environmental or economic sustainability.
Increasingly, it seems that there needs to be fundamental rethink and shift of market-based economies. In the meantime, renewable energy advocates must take the responsibility to fight against the ends justifying the means. Energy generated at the expense of the environment and workers is dirty-- even if it comes from a renewable source.