The cost of a green economy

Where are we today?

The uncertainty over carbon trading and its ability to achieve real reductions in emissions, the ongoing effects of the global financial crisis, and a crucial review of the CDM criteria are likely to reduce the rate of renewable energy manufacturing and generation development in China and parts of the developed world.

The global financial crisis is far from over and planned easing of unemployment across Europe and the US is reliant on a surge in manufacturing and public works.

China on the other hand is reporting an increase in economic growth based purely on massive infrastructure spending that is running in parallel with massive overcapacity in steel, aluminium and cement and the concealed level of real debt.

By the end of 2012, China will have developed a massive manufacturing and infrastructure capacity. Global demand however, will continue to grow slowly due to consumer credit constraints and demand. It is highly likely that this new capacity will exceed global demand well into the future.

Correcting this excess will be a serious challenge for Beijing, especially its banking sector that has underwritten manufacturing capacity, property development and infrastructure faced with falling property and stock markets.

Domestic consumption is still reliant on unlocking personal savings from those in the rural areas and on low incomes until China commits to funding a social welfare and environmental recovery program that will be far greater than the 2008 stimulus package, increasing China's consumer demand to the level needed. This is yet another growing challenge for Beijing.

Water demand

In Germany the solar arrays are in close proximity to cities and services, but in China, the US and other countries, solar is located in remote flat dry areas with abundant sunshine, on "cheap" land, but where transmission costs can be high.

Recent experience in the US has highlighted the immense thirst of solar arrays and power towers. The vast arrays of PV cells and mirrors consume quality water, that leaves no residue, to flush dust particles from surfaces that would otherwise reduce their efficiency. Power towers and concentrating PV systems also consume vast volumes of water for cooling.

To avoid major drawdown of scarce water resources in arid regions that serve cities and large communities some US states are refusing applications for large-scale arrays reliant on water resources. It comes down to priorities. Which is the more important - water or power?

Regardless of which politicians are in power, greening and greenhouse gas (GHG) emission reduction comes with an unavoidable price tag , no matter what the spin from government or others. Like health care, education and law enforcement, the government needs taxation revenues to pay the bills for growing consumer demands.

Germany, Spain, France, UK, Germany and Denmark are all cutting back on earlier rhetoric, while the Obama administration chases wind and solar options requiring balance with water availability and demand.

Obama plans to cut unemployment by creating jobs in the green energy sectors. The program will cost US$2.3 billion and comes with a bill of US$135,000 per job: it will be reliant on  large quantities of cheap imports, particularly Chinese components.