The students of Oriental College were, just like in most college campuses, dressed informally during the summer. The students wore a smattering of blue jeans, shorts, T-shirts and sandals while walking towards their classes. Midas auditorium was at the end of a long hallway, past the courtyard on the right with the Venus de Milo statue whose base was a small pond teeming with tropical fish. Students were scattered all around the benches, some reading, some eating, while some simply spent their time chatting with their classmates.
"And so if we are to stop climate change, we must reduce the use of fossil fuels significantly," said the speaker on the podium. His name was Professor Ruiz, and he was a familiar figure on campus. Professor Ruiz often wore a blue long sleeved shirt and khaki pants; his look coupled with his brown horn rim glasses and his pepper grey hair reminded some students of a character straight from a 70s television rerun.
Some of the students in the auditorium were just lazing at the back, or engaged in their own private conversations. The students and some of the faculty upfront were attentive, and asked polite questions of the Professor. "Now the doubters will say that clean energy is still something that will only be practical a few years from now. This is no longer true. Some of those clean technologies have already reached grid parity," said the professor.
He explained to the students that grid parity was when the cost of electricity from renewable or clean energy already matched that of the typical fossil fuel sources used by the electric utilities.
Suddenly, a loud voice emanated from the right side of the auditorium.
"And how is that sir, if solar still costs $2/watt and coal only costs a few cents?" said a student clad in a white cotton T-shirt and jeans.
"The fuel companies are cleaning up their act, and surely their technology is more advanced given that they have been working at it for many decades," he added.
"Good question. What is your name?" asked Professor Ruiz, trying to glance at the student asking the question.
"It’s Daniel sir. I just graduated this term. Frankly sir, I don’t buy how people can say renewables are already competitive, given the cost," said Daniel.
"I agree with you Daniel, that renewables are still a bit expensive, but not if the government implements certain incentives and subsidies which make it competitive with fossil fuel based power," said Professor Ruiz.
He added that technology was advancing forward and tackling issues with efficiency and cost. "And you have to look at the social costs of added health care, the impact of climate change, and the pollution of the environment," he added.
Professor Ruiz added that there were many types of solar cells. Some, like silicon based photovoltaic cells, were a bit more expensive but were more efficient. Others, like thin film photovoltaics made of materials like Cadmium Telluride, were cheaper but were less efficient.
Daniel smirked. He softly whispered to his classmates nearby, "this guy is a tree hugger, and he can’t be serious that renewables are already ready for the market." Daniel stood up. "Sir, all these things are nice to hear, but the fact is that these technologies are still expensive. We can’t afford them. In the meantime, the fossil fuel and coal industries are cleaning up their act," said Daniel.
Some of the students at the back who were sleeping or chatting now focused their attention on the debate between the Professor and Daniel. Even the people upfront listened attentively at the discussions.
"There are ways that governments around the world have made clean energy attractive to investors. For example, there are, aside from the regular incentives like tax breaks and credits, new incentives like carbon credits and feed-in-tariffs," said Professor Ruiz. Daniel looked skeptical.
Another student walked towards the microphone. "Professor, I am Maria, one of your students," said the female student. The boys looked admiringly at the pretty co-ed, including Daniel. "Sir, for the benefit of the students, what do you mean by a feed-in-tariff?" asked Maria.
"Good question Maria, and thanks. A feed-in-tariff is an example of a new type of incentive to encourage investors to set up clean energy plants. Incentives like feed-in-tariffs and renewable portfolio standards mandate that electric utilities purchase a certain percentage of their electricity from clean energy sources by a certain year," he said.
Pausing to take a gulp from a glass of water on a nearby table, the Professor continued on. "Now there are slight differences between these incentives. The feed-in-tariff, for example, normally mandates electric utilities to purchase the renewable electricity at a higher cost as compared to fossil fuel based electricity. In turn, the utility can then pass on this added cost to consumers," he explained.
He took his horn rim glasses from his eyes, and placed them on his breast pocket. He explained that since the utility had thousands of customers, this added cost would be spread out among all the customers, so it would only show up as a minor adder to their electric bill.
Suddenly Daniel stood up again. "So that is what I mean Professor. You see, it is still an added cost to the consumer!" he said in a loud voice.
"Technically yes, of course it is still more expensive at the start.
But you have to remember that in order to spur massive adoption, which lead to economies of scale that will drop the cost of renewables in the future, sometimes governments have to enact these types of mandates," he said.
The Professor said that fossil fuels, because they had been the de facto standard for many decades, had already reached the point where their technology was mature. He admitted that there were still ways to clean up fossil fuels, but said that things could not go on as usual without damaging the environment.
As Professor Ruiz paced across the auditorium, the students who were seated lazily in their wooden seats straightened up. Some students were taking notes; while others were simply content to listen to him speak. "In addition, there are also other incentives that also rely on early adopters. The cap and trade system for example," said Professor Ruiz. He explained that in the cap and trade system, the government sets a maximum ceiling (a cap) for carbon emissions that a country cannot exceed. To enforce this, a trading system is setup.
"In a cap and trade system, those companies or entities that spend for carbon reduction projects get credits which they can then sell to other companies that did not make the necessary investments for them to meet the maximum carbon targets," Professor Ruiz said.
He walked back to the podium and took a drink from his glass of water.
Feeling the heat, he folded his shirtsleeves up to his forearms.
"Unless the amount of carbon we generate falls to less than the amount that the oceans and the plants can remove from the earth, we are going to see a spiraling rise in global temperatures and a corresponding rise in ocean levels," said Professor Ruiz.
He explained that the Intergovernmental Panel on Climate Change (IPCC) had concluded that climate change was accelerating because of a lack of significant action in cutting back fossil fuel emissions. "We are already seeing the melting of some polar ice caps and the thermal expansion of seawater, and this will cause sea levels to rise, threatening countries and places in low lying coastal areas," he added.
He paced across the room, and clasped his hands together while staring at the class." In fact, a 2009 study by the U.S. National Oceanic and Atmospheric Administration (NOAA) concluded that even if carbon dioxide emissions were to be stopped completely, the changes in surface temperature, rainfall, and sea level will be largely irreversible for more than 1,000 years," said the professor. He added that the U.S. Environmental Protection Agency (EPA) declared in 2009 that greenhouse gases were a threat to public health and welfare.
The discussions were getting interesting but suddenly the school bell rang. The students started to stand up and walk towards the exits.
"For those of you who want to attend the second part of my talk tomorrow, please be here at 2pm," said Professor Ruiz.
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Dennis Posadas is the Editor of Cleantech Asia Online, and the author of Jump Start: A Technopreneurship Fable (Singapore: Pearson Prentice Hall, 2009). This is an excerpt from his new book, a business fable on climate change and clean energy.